Carmel-based Determine Inc., a 22-year-old software company that has yet to turn an annual profit, has been delisted from the Nasdaq market because its shareholder equity has dipped too low.
Determine’s shareholder equity—its assets minus its liabilities—recently fell below Nasdaq’s minimum requirement of $2.5 million. The company’s shareholder equity, which stood at $8.4 million as of Sept. 30, 2017, had dropped to a negative $2.1 million as of Sept. 30 of this year.
“We got notice about six months ago (from Nasdaq) that there was a deficiency from an equity perspective,” Determine CEO Patrick Stakenas told IBJ Wednesday afternoon. “It really isn’t in our best interest to appeal the delisting decision.”
Effective Thursday morning, shares of Determine instead will trade on the OTCQB Venture Market. The OTCQB describes itself as a market for early stage and developing companies.
Determine is still considered a publicly traded company and remains subject to Securities and Exchange Commission reporting rules, Stakenas said.
“Our employees are approaching everything as ‘business as usual,’” Stakenas said. “We’re going to continue to drive the business forward.”
Stakenas presented the delisting as a positive in that it will reduce the company’s expenses. “It costs a lot of money to be traded on the Nasdaq.”
Stakenas said Determine had been paying a “six-figure” annual fee to be part of the Nasdaq exchange. According to OTCQB’s website, that exchange charges a $12,000 fee plus a one-time $2,500 application fee.
Determine, which moved from Silicon Valley to Carmel in 2016, sells software that helps companies manage suppliers, contracts and procurement. Its tools help automotive manufacturers, grocers, theme parks and others find suppliers, hash out contracts, order goods or services—then analyze it all.
The company has not turned an annual profit since its founding in 1996 under the name Selectica Inc. In the six months ended Sept. 30, it reported a loss of $7.6 million on $11.8 million in revenue. In the same period a year earlier, it lost $4.8 million on $13.9 million in revenue.
Determine had an accumulated deficit of $321.7 million as of March 31, according to the company’s most recent annual report.
Shares of Determine closed at 29 cents Wednesday. The stock has traded between $2.34 and 25 cents over the past 52 weeks.