Physicians Formula has received a NASDAQ Staff Deficiency Letter threatening the company with delisting if it does not fulfill requirements for its executive board.
The struggling skin care and color cosmetics provider has fallen foul of NASDAQ listing requirements specifying that it no longer complies with requirements for the number of independent directors on its board.
NASDAQ Staff Listing requirements specify that each company’s board of directors has a majority of independent directors appointed to the board, stressing that certain circumstances can preclude a person from being classified as an independent director.
Executive reshuffle causes bother
Following the resignation of former CFO Joseph Jaeger in April of this year, Jeff Berry resigned from his position on the company’s board of directors to take up the position of interim CFO.
In a letter dated June 1, NASDAQ officials have pointed out that of the remaining four company directors, only two are independent, which means the company is not fulfilling requirements for a majority of independent directors on the board.
NASDAQ has given Physicians Formula until November 25 to comply with this requirement, in order to ensure its continued listing.
In a statement Physicans Formula said it was currently evaluating qualified independent candidates to serve on the board, and said it aimed to make an appointment before the cut off date.
Delisting threat follows poor financial results
The news is the latest blow to the company following record losses during the past two quarters.
For its full year 2008 the company posted a total loss of $19.77m compared to a profit of $8.75m the previous year, a figure that was largely attributable to a $24.50m loss in its fourth quarter bought on by a big dip in sales.
Things took an even worse turn earlier this week, when it posted a 52 percent dip in sales for its first quarter, at $20.2m, which the company said was largely attributable to the weak economy and retail environment in North America.
Reflecting the tough ride the company is having, its shares are currently trading at $1.25, down from a 52-week high of $11.11.