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NASDAQ Listing Standards – Reduction in $4 Minimum Bid Price

The SEC recently approved an application by NASDAQ that reduces the minimum bid price to qualify for a NASDAQ listing to either $2 or $3 if certain listing requirements are met. This is as an alternative to the $4 minimum bid price initial listing requirement for the NASDAQ Capital Market. NASDAQ has established the lower stock price to compete with the NYSE Amex for initial listings of companies with securities priced between $2 and $4. In accordance with the new rule, a security would qualify for listing on the NASDAQ Capital Market if, for at least five consecutive business days prior to approval, the security has a minimum closing price of either of the following:

1. At least $3 per share, if the issuer meets either of the following standards:

I. Equity Standard:

(A) stockholders' equity of at least $5 million;

(B) market value of publicly held shares of at least $15 million; and

(C) two year operating history.

II. Net Income Standard:

(A) net income from continuing operations of $750,000 in the most recently completed fiscal year or in two of the three most recently completed fiscal years;

(B) stockholders' equity of at least $4 million; and

(C) market value of publicly held shares of at least $5 million.

2. At least $2 per share, if the issuer meets the Market Value of Listed Securities Standard:

(A) market value of listed securities of at least $50 million (this requirement and the price requirement must be met for 90 consecutive trading days prior to applying for listing under this standard);

(B) stockholders' equity of at least $4 million; and

(C) market value of publicly held shares of at least $15 million.

In addition, all issuers applying based on the new standards set forth above, must have either (a) net tangible assets as follows: (i) in excess of $2 million, if it has been in continuous operation for at least three years; or (ii) in excess of $5 million, if it has been in continuous operation for less than three years; or (b) average revenue of at least $6 million for the last three years.