AXM Pharma receives delisting notice from Amex, submits plan to achieve compliance

By Elaine Rigoli

Tampa, Fla., March 8 - AXM Pharma, Inc. said it received a further delisting notice from the American Stock Exchange but added that it has also submitted a plan for regaining compliance.

The latest notice says the company is not in compliance with the exchange's corporate governance rules, according to an 8-K filed with the Securities and Exchange Commission. The company has until March 20 to respond to the stock exchange.

Specifically, the Amex letter cited the company's failure to have a majority of independent directors; to maintain an audit committee with at least three independent directors; to have at least one financially sophisticated director on the audit committee; to have a nominating committee comprised solely of independent directors; and to maintain a compensation committee comprised solely of independent directors.

However, the notification of noncompliance is a direct result of three independent director resignations occurring on Feb. 28 and March 2, according to a company news release.

The company must submit a plan to Amex no later than March 20 advising Amex of its plans to correct these corporate governance deficiencies, the release said.

AXM said its board of directors has met to consider these matters and has identified potential candidates to fill the vacancies resulting from the three resignations.

AXM also said it has submitted a letter to Amex outlining the company's plans to strengthen its financial condition and bring itself into compliance with Amex's continued listing standards.

As previously announced, the company has received a 10 million yuan interest-free loan from the Shenyang Municipal Government (not a grant as AXM said before).

In addition, the company said it has obtained an agreement in principle with a Chinese company for a three-year loan of 50-100 million yuan ($6.2-12.4 million), subject to receiving a first lien on the Shenyang facility. The Shenyang facility is currently subject to a lien securing a $3 million loan from another Chinese company.

Finally, the company's chief executive officer Wang Weishi and members of her immediate family are prepared to sell or pledge as many as 5 million shares in order to raise funds for loans they would provide AXM.

Located in Shenyang, in the province of Liaoning, China, AXM Pharma is a manufacturer of proprietary and generic pharmaceutical products.

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