8-K: Broadway Financial Corporation Receives Nasdaq Non-Compliance Notice for Late 10-Q Filing

Broadway Financial Corporation has been notified by Nasdaq of non-compliance due to its overdue quarterly financial report, though its stock listing remains unaffected for now as the company prepares a compliance plan.

Summary

• Broadway Financial Corporation (BYFC) received a notice from The Nasdaq Stock Market LLC on May 28, 2025, indicating non-compliance with Nasdaq Listing Rule 5250(c)(1) for continued listing.
• The non-compliance stems from the company's failure to timely file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, within the period prescribed by SEC rules.
• The delay is primarily due to the need for additional time to determine the value of a Securities Purchase Option Agreement related to repurchasing Series C Preferred Stock issued to the U.S. Treasury under the Emergency Capital Investment Program.
• Additional time is also required to address fair value measurements disclosure and for the company's independent registered public accounting firm, Crowe LLP, to complete its review procedures for disclosure controls and procedures.
• The Nasdaq notice has no immediate effect on the listing or trading of Broadway Financial's common stock.
• The company has 60 calendar days from May 28, 2025, to submit a plan to Nasdaq to regain compliance.
• If Nasdaq accepts the plan, the company may be granted up to 180 days from the prescribed due date (until November 17, 2025) to file the Form 10-Q and regain compliance.
• Broadway Financial Corporation intends to submit its compliance plan and file the Form 10-Q as promptly as reasonably practicable, prior to the 60-day deadline.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the company's non-compliance with Nasdaq listing rules and the delay in filing a crucial financial report. While there's no immediate delisting, the underlying issues (complex valuations, auditor review delays) and the risk of Nasdaq rejecting the compliance plan or further delays create uncertainty and concern for investors.

Positives

• The Nasdaq notice has no immediate effect on the listing or trading of Broadway Financial Corporation's common stock.
• The company has a clear 60-day period to submit a plan to regain compliance, and potentially up to 180 days to fully comply if the plan is accepted.
• Management has expressed intent to file the Form 10-Q promptly and regain compliance in the near future.

Negatives

• Broadway Financial Corporation is currently not in compliance with Nasdaq's periodic financial reporting requirements.
• The Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, was not filed by the SEC's prescribed deadline.
• The delay is attributed to complex valuation issues and extended auditor review, indicating potential challenges in financial reporting processes.
• Failure to successfully implement a compliance plan or further delays could ultimately lead to the delisting of the company's stock from Nasdaq.

Risks

• Nasdaq may reject the company's plan to regain compliance, which could lead to delisting proceedings.
• There is a risk of a material delay in the company's financial reporting beyond current expectations, potentially impacting investor confidence.
• Further delays in filing the Form 10-Q or other SEC reports could negatively impact the listing or trading of the company's common stock.
• The complexity of determining the value of the Securities Purchase Option Agreement and addressing fair value measurements disclosure could prolong the delay.
• The independent auditor, Crowe LLP, may require more time than anticipated to complete its review procedures for disclosure controls and procedures.

Future Outlook

Broadway Financial Corporation expects to file its Form 10-Q as promptly as reasonably practicable and prior to the 60-day deadline for submitting a compliance plan to Nasdaq. The company intends to submit a plan to regain compliance within the 60-day period and currently expects to regain compliance in the near future.

Management Comments

• "The Company expects to file the Form 10-Q as promptly as reasonably practicable and prior to the 60-day deadline for submitting a compliance plan to Nasdaq."
• "The Company intends to submit a plan to regain compliance within the 60-day period."
• "The Company currently expects to regain compliance in the near future."

Industry Context

This announcement highlights a common challenge faced by publicly traded companies in meeting stringent SEC reporting deadlines, particularly when complex accounting valuations or auditor review processes require extended time. While not indicative of broader industry trends in financial performance, it underscores the regulatory pressures and operational complexities inherent in financial reporting for banking institutions, especially those involved in government programs like the Emergency Capital Investment Program.

Stakeholder Impact

• Shareholders: Face uncertainty regarding the company's compliance status and potential delisting if compliance is not regained. The delay in financial reporting also limits access to timely financial information.
• Regulatory Authorities (SEC, Nasdaq): The company is under scrutiny for non-compliance, requiring active engagement to resolve the issue.
• Auditors (Crowe LLP): Require additional time to complete their review, indicating potential complexities in the company's financial statements or internal controls.

Next Steps

• Broadway Financial Corporation must submit a plan to Nasdaq to regain compliance within 60 calendar days from May 28, 2025.
• The company plans to file the Form 10-Q as promptly as reasonably practicable and prior to the 60-day deadline for submitting the compliance plan.
• If Nasdaq accepts the plan, the company has until November 17, 2025, to file the Form 10-Q and regain compliance.
• If Nasdaq does not accept the plan, the company will have the opportunity to appeal the decision to a Nasdaq Hearings Panel.

Key Dates

Recommendation

Keywords

Broadway Financial Corporation, BYFC, Nasdaq, Form 10-Q, Late Filing, Non-compliance, Delisting Notice, Financial Reporting, SEC Filing, Banking, City First Bank, Emergency Capital Investment Program, Preferred Stock