After a disappointing second quarter report, Word Poker Tour Enterprises continue to be under fire as NASDAQ gave them an ultimatum: get their stock value above $1 or be delisted.
The official WPTE press release regarding this issue was markedly laconic:
WPT Enterprises, Inc. (NASDAQ:WPTE) today announced that the Company received a Nasdaq Staff Determination Letter on August 14, 2008, notifying the Company that it was not in compliance with the minimum stock listing price requirements of Nasdaq Marketplace Rule 4450(a)(5) as a result of the closing bid price for the Company’s common stock being below $1.00 for 30 consecutive business days. This notification has no effect on the listing of the Company’s common stock at this time. The Nasdaq Marketplace Rules provide the Company with 180 calendar days to regain compliance, which will require the bid price of the Company’s common stock to remain above $1.00 for a minimum of 10 consecutive business days. The Company will continue to execute its business plan to provide an opportunity to demonstrate value to the investment community and regain Nasdaq compliance.
In plain English, this means that:
a) WPTE stock price has been below $1 for 30 consecutive business days
b) This is against NASDAQ rules
c) WPTE has 180 days to get its stock above $1 and keep it there for at least 2 weeks
d) If this condition is not met, the stock could be delisted
What went wrong? WPTE’s second quarter report was a sad affair, explaining loss after loss: domestic and international TV licensing revenues went down by almost 50% due to a renegotiation of lower fees per episode. Budweiser backed off from sponsorship in the second quarter, which was also a significant setback. On top of this, expenses rose because of the greater administrative costs associated with WPT China and ClubWPT.com businesses.
On the bright side, the company declared it had no debt as of June 29, 2008.
Steve Lipscomb, President and CEO of WPT, made a statement following the second quarter results, stating among other things that
We continue to be disappointed in our online gaming results and have begun directing resources in our growing sponsorship business. On the other hand, we continue to be encouraged by the strength of our brand in the domestic and international marketplace. We announced two important collaborations with the Fox Sports Network subsequent to the end of the quarter.
The company expects revenues to be in the range of $2.2 – $2.6 million for the third quarter. The plans to improve profitability include implementing cost cutting measures – such as reducing headcount and administrative costs –while revenue should increase through looking for better sponsorship opportunities, increasing subscriptions to ClubWPT.com and starting to make profits from the China operations.
