AERT gets Nasdaq stay

But firm has only until Oct. 2 to get stock above $1

— Advanced Environmental Recycling Technologies on Wednesday said Nasdaq, the country's largest electronic stock exchange, granted the deck board manufacturer a three-month extension to comply with "continued listing" requirements.

However, the Springdale business remained out of compliance with another Nasdaqregulation that will more immediately affect its financial accounting.

AERT, which uses recycled plastic and waste wood to make deck boards, needs to comply before the end of next week with the exchange's $1-per-share minimum closing price regulation.

AERT's stock has traded below $1 since December 2007. Shares have traded as high as 75 cents and as low as 3 centsper share over the past 52-week period.

The firm's shares fell 5 cents, or 7.6 percent, to 60 cents per share Wednesday on the Nasdaq stock market.

A stock de-listing has negative connotations with investors and stock receives less visibility when taken off an exchange, experts have said.

In the same news release, AERT officials said that if by Oct. 2, its stock failed to closeabove $1 per share for a minimum of 10 consecutive trading days, it "will seek input from Nasdaq at that time and submit a plan to regain compliance."

AERT officials did not confirm Wednesday that a 20-to-1 reverse stock split was imminent, however, the company's board of directors authorized that measure in June, according to the news release.

On the topic of continued listing requirements, AERT's Chairman Joe Brooks expressed confidence about achieving compliance by the new Dec. 23, deadline.

"Our management team has done a good job of moving us on the track toward profitability,'' Brooks said. AERT employs about 500 people in Northwest Arkansas.

Under Nasdaq's rules AERT has the option of achieving compliance through three different measurements.

Companies must achieve $2.5 million in stockholder's equity, list $35 million in registered securities or record a profit of at least $500,000 in the latest fiscal year or in two of the past three fiscal years, according to Nasdaq's Web site.

AERT has needed since April to reverse negative stockholders' equity, which represents capital received from investors in exchange for stock, donated capital and retained earnings, according to Investopedia.com.

The business posted net losses of $35.92 million and $9.52 million, respectively, for fiscal year 2008 and 2007, according to a U.S. Securities and Exchange Commission filing.

Brooks said investors should recognize that the composite deck board maker is demonstrating it can "weather the storm" and make a profit - a reference to net income of $1.34 million in the second quarter.

And, he said, AERT's Watts, Okla.-based manufacturing plant that is expected to lower production costs will start operating by the end of the year.

Lower costs for AERT might come at a time when the broader, remodeling market begins an upward climb, said Keith Johnson, an equity analyst who covers an AERT competitor for Morgan Keegan & Co., a Memphis-based investment bank.

According to remodeling indices, we "still see some head winds in the remodeling business,'' Johnson said.

"Home values are still down and there's a recession and unemployment is an issue,'' he said.

For AERT, it's important that Nasdaq granted the extension, Johnson said. It gives them a chance to assure customers that they are a viable, long-term supplier in the business.

"With any building-materials business, customers want to make sure the supplier is secure over the long term,'' he said.

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Business, Pages 25, 26 on 09/24/2009

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