ChyronHego Avoids NASDAQ Delisting as Shareholder Equity Rises After Merger

Posted by Joe Zaller
Aug 13 2013

ChyronHego, said in a regulatory filing that the company believes that it has regained compliance with NASDAQ Listing Rule 5450(b)(1)(A), which requires companies listed on the NASDAQ Global Market to maintain a minimum of $10,000,000 in stockholders’ equity.

On August 9, 2013, Chyron received a letter from NASDAQ stating that the Exchange has determined Chyron now complies with the continued listing requirement for shareholders’ equity, subject to the Chyron providing evidence of its compliance upon filing its quarterly report on Form 10-Q for the quarter ended June 30, 2013.

This notification formally puts to rest an issue that Chyron has been dealing with for the past six months.

In March 2013, Chyron received notice of potential delisting from NASDAQ because its stockholder’s equity has fallen below the minimum $10m threshold set by rules of the Exchange.

At that time, Chyron explained that its stockholder’s equity fell below the $10m threshold at the end of 2012 because it took a $19.5m accounting charge against deferred tax assets. Because this allowance reduced the company’s shareholders’ equity by $19.5m, Chyron company ended the year 2012 with shareholders’ equity of about $1.9m, which put it in violation of NASDAQ’s listing requirement.

In accordance with NASDAQ Listing Rules, Chyron had 45 calendar days from the date of the notice to submit to NASDAQ a plan to regain compliance with its listing requirement.

In April 2013 Chyron submitted to NASDAQ its plan to regain compliance with the minimum stockholders’ equity requirement. NASDAQ granted Chyron an extension to regain compliance with the stockholders’ equity requirement until August 15, 2013, by which date the company will be required to file its quarterly report on Form 10-Q for the quarter ended June 30, 2013.

A key factor in Chyron’s plan to regain compliance was the company’s then-proposed merger with Hego, which has now been successfully completed.

Under the terms of the Chyron – Hego Stock Purchase Agreement Chyron paid $1,000 in cash and issued 12,199,431 shares of its common stock to the former Hego stockholders in exchange for all of the issued and outstanding shares of Hego. The issuance of the 12,199,431 shares, at a value of $1.36 per share at the closing of the transaction, resulted in an increase in the Company’s shareholders’ equity of approximately $16.6m.

The company says that as a result of the Hego merger, and following the release of Chyron’s Q2 2013 results, its shareholders’ equity was approximately $17.9m June 30, 2013, comfortable above the minimum threshold set by NASDAQ.

Following the announcement of its Q2 2013 earnings, Chyron filed an 8-K with regulators that disclosing that it has received a letter NASDAQ  stating that once the company files its Form 10-Q for the period ended June 30, 2013, it will officially be compliant with all NASDAQ listing requirements.

In the same filing, Chyron published its management incentive compensation plan for the second half of 2013.  The company says that it terminated its previous 2013 incentive plan and adopted a new plan that include new executive officers and management and aligns the interests of all members of management, including certain members of management that became executive officers of the Company upon the consummation of the business combination with Hego during the second quarter of 2013.

On Chyron’s Q2 2013 earnings call, company CEO Michael Wellesley-Wesley briefly discussed the delisting, saying “As instructed by NASDAQ, we notified the SEC directly and, thus, the NASDAQ indirectly this morning via a current report on Form 8-K that was filed at the SEC before market opened of our compliance with NASDAQ’s minimum shareholders equity requirement and we now consider the matter closed.”

Wellesley-Wesley has long assured shareholders that the company would do whatever it takes to avoid delisting.

On the company’s Q1 2013 earnings call in May 2013 he said: “The bottom line is this – these shares are not going to be delisted. There are all kinds of ways that we can get back in compliance. We’ll make sure that we don’t get delisted.”

With this latest filing, it looks as though Wellesley-Wesley has made good on his promise to ChyronHego shareholders.

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Related Content:

Chyron 8-K Filing: Notice of Renewed Compliance with NASDAQ Listing Rule 5450(b)(1)(A)

Chyron 8-K Filing: Company believes it has regained compliance with NASDAQ’s shareholders’ equity requirement

ChyronHego Corporation: Second Half of 2013 Management Incentive Compensation Plan

Hego Merger Drives 39 Percent Revenue Increase for Chyron in Q2 2013

Chyron Q2 2013 Earnings Call Transcript

Chyron Revenue Up 2 Percent in Q1 2013, Gives Update on Merger, Layoffs, and Potential NASDAQ Delisting

Chyron Lays Off 20 Employees, Says it will Save $3 Million per Year

Chyron Receives Another Delisting Notice From NASDAQ

More Broadcast Vendor M&A: Chyron to Acquire Hego Group in All-Stock Deal

Chyron – Hego Stock Purchase Agreement

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