Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard;
Transfer of Listing.
On August 16, 2016, we received a letter from the Listing Qualifications
staff of The Nasdaq Stock Market LLC, notifying us that we are not in compliance with Nasdaq Listing Rules 5605(b)(1) and 5605(c)(2)(A).
Pursuant to Nasdaq Listing Rules 5605(b)(1) and 5605(c)(2)(A), respectively, we are required to have a majority of independent
directors on our board of directors and an audit committee consisting of at least three independent audit committee members, one
of whom must have financial sophistication, as evidenced by past employment experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience or background.
On August 1, 2016, we received a letter
of resignation from Mr. Kirk Taylor as a member of our board of directors and audit committee chairman, and as of August 1, 2016,
our board of directors consists of two independent directors and two employee directors and the audit committee consists of two
independent members. Although, Mr. Long resigned as our Chief Executive Officer effective August 4, 2016 and remained Chairman
of our board of directors, he is not considered independent under the Nasdaq Listing Rules because of his recent employment with
our Company.
On August 8, 2016, we notified Nasdaq of
our noncompliance with Nasdaq Listing Rules 5605(b)(1) and 5605(c)(2)(A) and expressed our intent to cure the deficiency as soon
as possible through ongoing efforts to interview potential replacements from whom we expect to appoint a suitable individual to
the board of directors to bring the Company back into compliance with the Nasdaq Listing Rules.
In accordance with Nasdaq Listing Rule
5605(b)(1)(A) and Listing Rule 5605(c)(4)(B), we will have until the earlier of our next annual shareholders’ meeting or
August 1, 2017; or if the next annual shareholders’ meeting is held before January 30, 2017, no later than January 30, 2017
to regain compliance with the Listing Rules. We are currently interviewing potential replacements and expect to come back into
compliance prior to this deadline.
The letter has no effect on the listing
or trading of our common stock at this time. However, there can be no assurance that we will be able to regain compliance with
Listing Rules 5605(b)(1) and 5605(c)(2)(A). In the event that we do not regain compliance with the Listing Rule prior to the expiration
of the compliance period, we will receive written notification that our securities are subject to delisting, at which time we may
appeal the delisting determination to a Hearings Panel.
This report contains forward-looking statements. Forward-looking
statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions
or any other statements related to our future activities, or future events or conditions. These statements are based on current
expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements
are not guarantees of future performances and involve risks, uncertainties and assumptions that are difficult to predict. Therefore,
actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to
numerous factors, including those risks discussed in our Annual Report on Form 10-K and in other documents that we file from time
to time with the SEC. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake
any obligation to update any forward-looking statement to reflect events or circumstances after the date of this report, except
as required by law.