Universe Pharmaceuticals INC Receives Nasdaq Delisting Notice Subject to Hearing Request

Rhea-AI Summary

Universe Pharmaceuticals (Nasdaq: UPC) has received a delisting notice from Nasdaq on January 29, 2025, due to its share price closing below $1 for 30 consecutive business days, violating Nasdaq Listing Rule 5550(a)(2). Unlike typical cases where companies get 180 days to comply, UPC is ineligible for this grace period because it already implemented a reverse stock split on November 18, 2024.

The company has until February 5, 2025, to appeal the delisting determination to a hearing panel. If UPC appeals, its shares will continue trading on Nasdaq during the appeal process. Without an appeal, trading will be suspended on February 7, 2025. The company is exploring options to regain compliance, including considering another reverse stock split subject to shareholder approval.

Positive

• None.

Negative

• Received Nasdaq delisting notice due to share price below $1
• Not eligible for standard 180-day compliance period
• Previous reverse stock split in November 2024 failed to maintain compliance
• Risk of immediate trading suspension if appeal not filed by February 5, 2025
• Potential additional reverse stock split may lead to further share dilution

Insights

Financial Markets Analyst

The delisting notice from Nasdaq represents a severe threat to Universe Pharmaceuticals' market status and investor accessibility. The situation is particularly concerning as the company's previous attempt at a reverse stock split in November 2024 failed to maintain the required $1 minimum bid price, suggesting underlying structural issues beyond mere technical compliance.

The immediate implications are significant:

• The company has until February 5, 2025, to request a hearing, which would temporarily stay the delisting process
• If no appeal is filed, trading suspension would begin February 7, 2025
• A potential move to over-the-counter (OTC) markets would likely result in reduced liquidity and institutional investor interest

The company's consideration of another reverse stock split raises red flags, as multiple splits within a short period often indicate fundamental business challenges rather than temporary market conditions. Historical patterns show that companies requiring multiple reverse splits typically struggle to maintain long-term market compliance, often leading to eventual delisting despite these efforts.

For current shareholders, this situation presents heightened risk factors:

• Reduced trading volume and wider bid-ask spreads are likely, even if the appeal is successful
• Institutional investors may be forced to divest due to mandate restrictions
• The potential OTC transition could significantly impact share value and trading accessibility

The company's market capitalization of approximately $3.5 million and current share price of $0.405 suggest significant challenges in maintaining Nasdaq listing requirements without substantial business improvement or strategic alternatives.

Ji’an, Jiangxi, China, Feb. 03, 2025 (GLOBE NEWSWIRE) -- Universe Pharmaceuticals INC (the “Company”) (Nasdaq: UPC), a pharmaceutical producer and distributor in China, today announced that the Company received a letter from the Nasdaq Stock Market LLC (“Nasdaq”) on January 29, 2025, notifying the Company that the Nasdaq staff has determined to delist the Company’s ordinary shares from The Nasdaq Capital Market (the “Delisting Determination”), because the bid price of the Company’s listed securities has closed at less than $1 per share over the previous 30 consecutive business days, and therefore no longer complies with the Nasdaq Listing Rule 5550(a)(2) (the “Rule”). Normally, a company would be afforded a 180-calendar day period to demonstrate compliance with the Rule. However, pursuant to the Nasdaq Listing Rule 5810(c)(3)(A)(iv), the Company is not eligible for any compliance period specified in Nasdaq Listing Rule 5810(c)(3)(A) due to the fact that the Company effected a reverse stock split on November 18, 2024, or within the prior one-year period.

The Company was provided until February 5, 2025 to request an appeal of the Delisting Determination to the hearing panel. The Company intends to request such hearing to appeal the Delisting Determination before that date, which will stay the suspension of its securities from the date of the request, during which time such securities will continue to be listed on The Nasdaq Capital Market.

If the Company fails to request an appeal of the Delisting Determination by February 5, 2025, trading of the Company’s ordinary shares will be suspended at the opening of business on February 7, 2025, and a Form 25-NSE will be filed with the U.S. Securities and Exchange Commission, which will remove the Company’s securities from listing and registration on The Nasdaq Stock Market.

The Company is considering all potential options available to it to regain compliance with the aforementioned rules, including seeking shareholders’ approval for a reverse stock split.

About Universe Pharmaceuticals INC

Universe Pharmaceuticals INC, headquartered in Ji’an, Jiangxi, China, is a pharmaceutical producer and distributor in China. The Company specializes in the manufacturing, marketing, sales and distribution of traditional Chinese medicine derivatives products targeting the elderly with the goal of addressing their physical conditions in the aging process and to promote their general well-being. The Company also distributes and sells biomedical drugs, medical instruments, Traditional Chinese Medicine Pieces, and dietary supplements manufactured by third-party pharmaceutical companies. Currently, the Company’s products are sold in 30 provinces of China. For more information, visit the company’s website at http://www.universe-pharmacy.com/.

Forward-Looking Statements

All statements other than statements of historical fact in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and in its other filings with the U.S. Securities and Exchange Commission.

Contact:

Ms. Lin Yang,
Chief Financial Officer of Universe Pharmaceuticals INC
lin.yang@universe-pharmacy.com

FAQ

Why is Universe Pharmaceuticals (UPC) facing Nasdaq delisting in 2025?

UPC is facing delisting because its share price closed below $1 for 30 consecutive business days, violating Nasdaq Listing Rule 5550(a)(2).

When will UPC stock be suspended from Nasdaq trading?

If UPC doesn't appeal by February 5, 2025, trading will be suspended on February 7, 2025. However, if they appeal, trading will continue during the appeal process.

What options does UPC have to maintain its Nasdaq listing?

UPC can appeal the delisting determination by February 5, 2025, and is considering options including seeking shareholder approval for another reverse stock split.

Why isn't UPC eligible for the standard 180-day compliance period?

UPC is ineligible because it already implemented a reverse stock split on November 18, 2024, within the prior one-year period.

What happens if UPC fails to appeal the Nasdaq delisting notice?

If UPC doesn't appeal by February 5, 2025, trading will be suspended on February 7, 2025, and a Form 25-NSE will be filed to remove the company's securities from Nasdaq.