e May Be Removed From Listing on the American Stock Exchange if We Fail to Meet
Continuing Listing Standards.
On June 22, 2005, we received a letter from the American Stock Exchange (the
"Amex") notifying us that we are not in compliance with certain of the Amex's
continued listing standards. Specifically, the Amex noted that the we are not in
compliance with the standards because we (i) have stockholders' equity of less
than $2,000,000 and losses from continuing operations and/or net losses in two
out of our three most recent fiscal years; (ii) have stockholders' equity of
less than $4,000,000 and losses from continuing operations and/or net losses in
three out of our four most recent fiscal years; and (iii) have stockholders'
equity of less than $6,000,000 and losses from continuing operations and/or net
losses in our five most recent fiscal years.
To maintain the listing of our common stock on the Amex, we must submit a plan
by July 22, 2005, advising the Amex of the actions we have taken, or will take,
to bring the Company into compliance with the continued listing standards within
a maximum of 18 months of receipt of the notification letter. Although we may be
able to continue our listing during the 18 month period, we will be subject to
periodic reviews to determine whether we are making progress consistent with the
plan. If we do not make progress consistent with the plan during the plan period
or if we are not in compliance with the continued listing standards at the
conclusion of the plan period, the Amex may initiate delisting proceedings as
appropriate. If we submit a plan that is not accepted by the Amex, we may be
subject to earlier delisting proceedings. We are currently analyzing specific
actions which we may take in response to the Amex's notification letter and we
intend to submit a plan to the Amex. Although we believe our plan will be
acceptable and meet the Amex guidelines for continued listing, there can be no
assurance that Amex will accept our plan or that we will achieve the objectives
required to comply with the continued listing standards.
The public trading of our common stock and the ability of our stockholders to
sell their shares could be significantly impaired if we fail to meet the
continued listing standards and are removed from the Amex. In that case, our
common stock would trade either on the OTC Bulletin board, on a regional
exchange, or in the pink sheets, which could have a detrimental impact on our
trading volume and/or share value.
Our Issuance of Warrants, Options and Stock Grants to Consultants for Services
and the Granting of Registration Rights for the Underlying Shares of Common
Stock May Have a Negative Effect on the Trading Price of Our Common Stock.
As we continue to look for ways to minimize our use of cash while obtaining
required services, we expect to continue to issue warrants and options at or
below the current market price or make additional stock bonus grants. During
2004, we issued approximately 2.1 million shares in payment for consulting
services and for the acquisition of intellectual property and equipment. During
the first quarter of 2005, we issued approximately 0.1 million shares and
approximately 1.2 million options at market in payment of consulting services.
In addition to the potential dilutive effect of issuing a large number of shares
or options, there is the potential that a large number of the shares may be sold
on the open market at any given time, which could place additional downward
pressure on the trading price of our common stock.
5
The Price of Our Common Stock Has Been Highly Volatile Due to Several Factors
Which Will Continue to Affect the Price of Our Stock.
Our common stock has traded as low as $0.18 per share and as high as $0.745 per
share in the twelve months ended March 31, 2005. We believe that some of the
factors leading to the volatility include:
o price and volume fluctuations in the stock market at large which do not
relate to our operating performance;
o fluctuations in our operating results;
o concerns about our ability to finance our continuing operations;
o financing arrangements which may require the issuance of a significant
number of shares in relation to the number of shares currently
outstanding, including anti-dilution provisions;
o announcements of technological innovations or new products which we or our
competitors make;
o FDA, SEC and international regulatory actions;
o availability of reimbursement for use of our products from private health
insurers, governmental health administration authorities and other
third-party payors;
o developments with respect to patents or proprietary rights;
o public concern as to the safety of products that we or others develop;
o changes in health care policy in the United States or abroad;
o changes in stock market analysts' recommendations regarding Calypte, other
medical products companies or the medical product industry generally;
o fluctuations in market demand for and supply of our products;
o certain world conditions, such as an economic downturn, natural disasters
or terrorist attacks; and
o anti-American sentiment in certain international markets where we market
or anticipate marketing our products.
We Are Subject to Governmental and Stock Exchange Regulations That Impose
Operational and Reporting Requirements.
The Sarbanes-Oxley Act of 2002 and our listing on the American Stock Exchange
(Amex) in August 2004 required us to modify or supplement some of our corporate
governance and securities disclosure and compliance practices. The Securities
and Exchange Commission and the Amex have revised, and continue to revise, their
regulations and policies. These developments have increased, and are expected to
increase, our legal, compliance and financial reporting costs. Failure to comply
with present or future laws, rules and regulations of any kind that govern our
business could result in suspension or cessation of all or a portion of our
operations, or the imposition of significant administrative, civil or criminal
penalties, any of which could harm our business.
Failure to Achieve and Maintain Internal Controls in Accordance With Section 404
of the Sarbanes-Oxley Act of 2002 Could Have A Material Adverse Effect on Our
Business and Stock Price.
We are in the process of examining and evaluating our internal control
procedures to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act,
which will require our management to annually assess the effectiveness of our
internal controls over financial reporting and our independent registered public
accounting firm to report on our assessment beginning with our Annual Report on
Form 10-KSB for the year ending December 31, 2006. While we expect to complete
our documentation, testing and remediation of any identified deficiencies in
time to meet the deadline for compliance with the requirements of Section 404,
there can be no assurance that we will do so. In addition, if we fail to
maintain the adequacy of our internal controls or fail to implement required new
or improved controls, as such control standards are modified, supplemented or
amended from time to time, we may not be able to ensure that we can conclude on
an ongoing basis that we have effective internal controls over financial
reporting in accordance with Section 404. Effective internal controls are
necessary for us to produce reliable financial reports and are important in the
prevention of financial fraud. If we cannot produce reliable financial reports
or prevent fraud, our business and operating results could be harmed, investors
could lose confidence in our reported financial information, and there could be
a material adverse effect on our stock price.
Gruß
C.O
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