WASHINGTON, N.C. -- In a Report on Form 8-K filed yesterday with the Securities and Exchange Commission, Fountain Powerboat Industries, Inc. (AMEX:FPB) reported that, on June 11, 2008, it received notice from the American Stock Exchange that it is not in compliance with one of the Amex standards for the continued listing of the company's common stock.
Specifically referencing Part 10 of the Amex Company Guide, the statement said that "...the Company is not in compliance with Section 1003(a)(iv) of the Company Guide in that it has sustained losses which are so substantial in relation to its overall operations or its existing financial resources, or its financial condition has become so impaired that it appears questionable, in the opinion of the Exchange, whether such company will be able to continue operations and/or meet its obligations as they mature.”
Fountain said the notice was based on Amex’s review of the boat builder’s quarterly report, which outlined a 13.7-percent year-over-year decrease in net sales ($14.22 million), when compared to the same quarter of the previous year ($16.48 million), and a net loss of nearly $2 million. Read “International sales keep Fountain afloat.”
As a result of the circumstances described above, the notice states that Fountain has become subject to Amex's suspension and delisting procedures set forth in Section 1009 of the Company Guide. The boat builder must submit a plan to Amex by July 11, 2008, addressing how it intends to regain compliance, including specific milestones, quarterly financial projections and details related to any strategic initiatives it plans to complete, according to the release.
At that point, the release states, Amex's Listings Qualifications Department will evaluate Fountain’s plan and make a determination as to whether Fountain has made a reasonable demonstration of an ability to regain compliance within the specified timeframe. If Fountain’s plan is accepted, the release says, it may be able to continue its listing during the plan period, subject to periodic reviews to determine whether the company is making progress consistent with the plan.
If Fountain does not submit a plan, or if any plan it submits is not accepted by Amex, Fountain will be subject to delisting proceedings. Likewise, even if a plan Fountain submits is accepted by Amex, but Fountain is not in compliance with all continued listing standards of the Company Guide by Dec. 11, 2008 – or if Fountain does not make progress consistent with the plan during the plan period – Amex may initiate delisting proceedings, according to the release.
Fountain said in its report that it intends to “carefully evaluate how it will respond to Amex's letter, including whether it will be able to submit a plan with a viable chance of success.” This will require Fountain to talk with its lenders and evaluate its expenses and sources of revenues, the release states. Fountain recently acquired assets to build Baja boats, and the builder says that it will “evaluate how that new line of boats and any new business resulting from it will fit in with any plan it may develop to respond to Amex's notice.”
At the time of acquisition, Fountain suggested that it would have to make “substantial operational changes” to operate the Baja business profitably. Read more.
“Until the Company's Board of Directors evaluates the recommendations of the Company's officers with respect to a plan,” Fountain wrote, “the Company is unable to make any more definite statement about its intention to submit a plan or its prospects for submitting an acceptable plan.”
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