After a leadership shakeup, Tuesday Morning Corp. has announced that it has notified the Nasdaq Stock Market of its decision to voluntarily delist its common stock as it addresses financial difficulties.
In a company Form 8-K filed with the United States Securities and Exchange Commission on November 10, 2022, the Tuesday Morning audit committee was reduced to two members in connection with the appointment of Andrew Berger as the company’s new CEO. As such, the company currently is not compliant with Nasdaq rules that require that audit committees consist of at least three independent directors each of whom is an independent director pursuant to the Nasdaq Listing Rules. When Berger became CEO, he left the audit committee, resulting in non-compliance, the company stated.
The delisting is the first step in a longer-term plan for the company to deregister as a public reporting company and end its obligations to file with the SEC, a process Tuesday Morning expects to complete in September 2023.
The company made the decision to delist and deregister in consideration of its current financial situation, Tuesday Morning noted, including lower-than-forecasted sales, increased insurance costs and costs relating to the separation with senior company executives in November 2022. As such, Tuesday Moning is facing near-term capital constraints and is actively seeking to raise additional capital.
The company expressed a belief that delisting and deregistration provide several potential benefits, including:
- Greater flexibility in raising capital to solidify its liquidity position
- Lower operating costs and management time commitment to compliance and reporting activities
- Lower regulatory and operating expenses
- Simpler corporate governance structure
Tuesday Morning maintained that the company anticipates the appearance of its common stock on the Pink Sheets platform or other markets operated by OTC Markets Group. Tuesday Morning intends to continue providing information to its stockholders and taking such actions within its control to enable the quoting of the company’s common stock in the Pink Sheets or on another OTC platform so that a trading market may continue to exist for its common stock. It does not guarantee, however, that a broker will continue to make a market in the common stock and that trading of the common stock will continue on an OTC market or otherwise.
Tuesday Morning currently operates 487 stores in 40 U.S. states.
