The American Stock Exchange has notified The Sports Club Company that it had not met certain of the Exchange's continued listing standards as set forth in the Exchange's Company Guide. Specifically, the Exchange noted that the Company's failure to timely file its Form 10-K for the fiscal year ended December 31, 2004 was a violation. In order to maintain listing of the Company's Common Stock on the Exchange, the Company must submit a plan by May 4, 2005, advising the Exchange of the action the Company has taken, or will take, that would bring it into compliance with the applicable listing standards.
If the Exchange accepts the plan, the Company will remain listed during the plan period but will be subject to review by the Exchange to determine whether the Company is making progress consistent with the plan. If the Exchange does not accept the Company's plan, or if the plan is accepted but the Company is not in compliance with the continued listing standards as set forth in Sections 134, 1101 and 1003(d) by June 15, 2005 or does not make progress consistent with the plan during such period, the Exchange may initiate delisting proceedings with respect to the Common Stock.
Further, as previously reported, the Exchange had notified the Company on September 13, 2004, that it did not meet certain other of the Exchange's continued listing standards. Specifically, the Exchange noted that the Company's stockholders' equity is less than $2 million, and the Company has reported net losses in two of the its most recent fiscal years; and the Company has sustained losses which are so substantial in relation to the Company's overall operations or its existing financial resources, or the Company's financial condition has become so impaired, that it appears questionable, in the opinion of the Exchange, whether the Company will be able to continue operations or meet its obligations as they mature. The Exchange has afforded the Company an 18-month period (ending March 13, 2006) in which to regain compliance with these specific listing requirements.
Therefore, even if the Company satisfies the plan and regains compliance with Sections 134, 1101 and 1003(d) by June 15, 2005, it will not be relieved of its obligations to regain compliance with Sections 1003(a)(i), 1003(a)(ii) and 1003(a)(iv) by March 13, 2006. Failure to gain compliance may subject the Company to delisting procedures.
