8-K: System1, Inc. Receives Notice of Non-Compliance from NYSE Due to Low Share Price

System1, Inc. was notified by the NYSE that it is not in compliance with listing standards because its average share price fell below $1.00 over a 30-day period, but the company intends to regain compliance.

Summary

• System1, Inc. received a notice from the New York Stock Exchange (NYSE) on January 6, 2025, indicating non-compliance with Section 802.01C of the NYSE Listed Company Manual.
• The non-compliance is due to the average closing price of System1's Class A Common Stock being less than $1.00 over a consecutive 30 trading-day period.
• The notice does not result in immediate delisting of the company's stock.
• System1 plans to notify the NYSE by January 21, 2025, of its intention to cure the deficiency and return to compliance.
• The company has a six-month period to regain compliance.
• To regain compliance, System1 needs to have a closing share price of at least $1.00 and an average closing share price of at least $1.00 over the 30 trading-day period ending on the last trading day of any calendar month within the cure period.
• System1 intends to consider all available alternatives to address the stock price non-compliance.
• The company's stock will continue to be listed and trade on the NYSE during this period, subject to ongoing compliance with other listing standards.

Sentiment

Score: 4

Explanation: The sentiment is slightly negative due to the non-compliance notice, but the company's intention to regain compliance and the lack of immediate delisting provide some reassurance.

Positives

• The notice does not result in the immediate delisting of System1's Common Stock from the NYSE.
• System1 has a six-month period to regain compliance with the NYSE listing standards.
• The company intends to consider all available alternatives to cure the stock price non-compliance.

Negatives

• System1's average share price fell below $1.00 for a sustained period, triggering the NYSE non-compliance notice.
• The company faces the risk of delisting if it fails to regain compliance within the specified timeframe.

Risks

• Failure to regain compliance with NYSE listing standards could lead to delisting, which may negatively impact the company's stock price and investor confidence.
• The company's ability to raise capital may be hindered if the stock price remains depressed.
• Negative market sentiment could further depress the stock price, making it more difficult to regain compliance.

Future Outlook

System1 intends to cure the stock price deficiency and regain compliance with NYSE listing standards within the six-month cure period.

Management Comments

• System1 intends to consider available alternatives to cure the stock price non-compliance.

Industry Context

Many companies, especially smaller ones or those in volatile sectors, can face similar challenges in maintaining share price compliance with exchange listing requirements. This situation highlights the importance of consistent financial performance and investor confidence.

Comparison to Industry Standards

• Companies like Blue Apron (APRN) andExpress, Inc. (EXPR) have faced similar delisting warnings from the NYSE and NASDAQ due to low share prices.
• These companies often implement strategies such as reverse stock splits or focus on improving financial performance to regain compliance, similar to what System1 intends to do.

Stakeholder Impact

• Shareholders may experience concern due to the potential for delisting and the impact on stock value.
• Employees may face uncertainty regarding the company's future prospects.
• The company's reputation and relationships with customers and partners could be affected.

Next Steps

• System1 will notify the NYSE by January 21, 2025, of its intention to cure the stock price deficiency.
• The company will consider all available alternatives to cure the stock price non-compliance.
• System1 needs to achieve a closing share price and a 30-day average closing share price of at least $1.00 within the six-month cure period.

Key Dates