8-K: Collective Audience to Transition to OTC Markets Following Nasdaq Delisting

Collective Audience, Inc. will be suspended from trading on the Nasdaq Global Market and will transition to the OTC Markets Pink Open Market while it pursues a potential appeal.

Summary

• Collective Audience, Inc. has received notice of delisting from the Nasdaq Global Market, effective August 16, 2024.
• The company's stock will temporarily trade on the OTC Markets Pink Open Market starting August 16, 2024.
• Collective Audience is pursuing a request for reconsideration and contemplating an appeal to the Nasdaq Listing and Hearing Review Council.
• The company has a pending application to list on the OTC Markets OTCQB Market, for which it believes it qualifies.
• The Nasdaq appeal panel denied a grace period or extension, citing the drop in market trading price after the deSPAC in November 2023.
• The company's application to transfer to the Nasdaq Capital Market was also denied, despite meeting all requirements except for minimum bid price compliance.
• Collective Audience expects to generate positive EBITDA in 2024 on a pro forma basis, with annual pro forma revenues exceeding $7.5 million.
• The company has completed two acquisitions and is current with its SEC reporting requirements.

Sentiment

Score: 3

Explanation: The document conveys a negative sentiment due to the delisting from Nasdaq, despite the company's efforts to comply and achieve positive financial results. The management's disagreement with the decision and the uncertainty surrounding the appeal process further contribute to the negative sentiment.

Positives

• Collective Audience is current with its SEC reporting requirements.
• The company has recently completed two acquisitions.
• The company expects to generate positive EBITDA in 2024 on a pro forma basis.
• Annual pro forma revenues are expected to exceed $7.5 million.
• The company has a pending application to list on the OTC Markets OTCQB Market.

Negatives

• The company received a delisting notice from Nasdaq.
• The Nasdaq Hearings Panel denied a grace period or extension for the company to transition to the Nasdaq Capital Market.
• The delisting was influenced by the market trading price drop after the deSPAC in November 2023.
• The company's application to transfer to the Nasdaq Capital Market was denied.

Risks

• The company faces the risk of not being able to successfully appeal the Nasdaq delisting decision.
• There is no guarantee that the company's stock will be approved or continue to be traded on the OTCQB Venture Market.
• The company's stock price may be negatively impacted by the delisting from Nasdaq.
• The company's future financial performance is subject to various risks and uncertainties, including market conditions and regulatory changes.

Future Outlook

Collective Audience is focused on pursuing its listing options, including a potential appeal and/or applications to other national exchanges, while remaining committed to its mission and delivering value to shareholders.

Management Comments

• We strongly disagree with the Nasdaq Hearings Panels decision, which disregards our recent achievements and compliance efforts.
• It is unfortunate that despite our full compliance and the significant progress we've made, including our recent acquisition of BeOp, Nasdaq has chosen not to grant us the opportunity to continue trading based on volatile market conditions post-deSPAC back in November 2023.
• We are confident in our long-term strategy and remain focused on delivering value to our shareholders.

Industry Context

The delisting of Collective Audience highlights the challenges faced by companies that have gone public through a deSPAC process, particularly when market conditions become volatile. It also underscores the importance of maintaining compliance with listing requirements.

Comparison to Industry Standards

• Many companies that have gone public via SPAC mergers have faced challenges in maintaining their listing on major exchanges, particularly if they experience a significant drop in share price post-merger.
• The decision by Nasdaq to deny a grace period or extension is not uncommon for companies that have failed to maintain minimum bid price requirements and have experienced significant market volatility.
• Companies like WeWork and Lordstown Motors have also faced delisting challenges after going public via SPACs, highlighting the risks associated with this method of going public.
• The transition to the OTC markets is a common step for companies facing delisting, allowing them to continue trading while they pursue options for relisting on a major exchange.

Stakeholder Impact

• Shareholders will be impacted by the delisting from Nasdaq and the transition to the OTC Markets.
• The company's employees may experience uncertainty due to the delisting.
• Customers and suppliers may be impacted by the change in the company's listing status.

Next Steps

• The company will begin trading on the OTC Markets Pink Open Market on August 16, 2024.
• Collective Audience will pursue a request for reconsideration and contemplate filing an appeal to the Nasdaq Listing and Hearing Review Council.
• The company will continue to make all required SEC filings.
• The company will maintain compliance with all Nasdaq corporate governance requirements.
• The company will continue to provide annual financial statements audited by a Public Company Accounting Oversight Board auditor and unaudited interim financial reports.

Key Dates

Keywords

Delisting, Nasdaq, OTC Markets, CAUD, Trading Suspension, Appeal, EBITDA, Revenue, Acquisition, Compliance