Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
On May 20, 2016, COPsync, Inc. (the “Company”) received a notice (the “Notice”) from The NASDAQ Capital Market (“NASDAQ”) indicating that the Company no longer meets the continued listing requirement as set forth in NASDAQ Rule 5550(b), based on the information presented in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2016. NASDAQ Rule 5550(b) requires the Company to meet one of the following three requirements:
(1) minimum stockholders’ equity of $2.5 million;
(2) market value of listed securities of $35 million; or
(3) net income of $500,000 from continuing operations in the latest fiscal year or in two of the last three fiscal years.
NASDAQ stated in its letter that, pursuant to NASDAQ listing rules, the Company has 45 calendar days from the date of the Notice to submit a plan to regain compliance. If NASDAQ accepts the Company’s plan, NASDAQ may grant the Company a 180-calendar-day extension from the date of the Notice to regain compliance. If the plan is not accepted by NASDAQ, the Company may appeal the decision to a NASDAQ Hearings Panel.
The Company is currently evaluating various alternative courses of action to regain compliance and intends to timely submit a plan to regain compliance with NASDAQ continued listing standards pursuant to the applicable rules. The Company’s plan may include the sale of additional equity securities to meet the $2.5 million minimum stockholder’s equity requirement or efforts to meet the market value of listed securities of $35 million, or both. However, there can be no assurance that the Company’s plan will be accepted or that if it is, the Company will be able to regain compliance within the allotted timeframe.
The Company has already received one term sheet from a group of investors who have expressed an interest in investing additional capital in the Company. The Company anticipates receiving other indications of capital investment interest in the near term as well.
If the Company elects to raise additional capital to meet the $2.5 million minimum stockholders’ equity requirement, the Company plans to use the capital to accelerate the growth of the Company’s business as the Company:
· continues expanding its law enforcement real-time communication system and data interoperability network (the “COPsync Network”) and its COPsync911 threat alert system throughout the United States; and
· moves toward profitability, which the Company expects to occur in the first half of 2017.
