BOSTON ( TheStreet) -- Small-cap stocks, measured by the Russell 2000 Index, were little changed in March, beating the broader market during a time of crisis in Japan and the Middle East.Still, many carry risks rarely present at larger peers, including the inability to remain compliant with listing standards of the Nasdaq, spurring delisting warnings from the exchange. Overall, March was a losing month for most equities, with the S&P 500 and Nasdaq Composite each down more than 1%. Cisco Systems ( CSCO), a constituent of the S&P 500, dropped 7% this month alone. Investors, though, bid up small-cap stocks, which is odd considering this class of stocks usually gets punished when the market is weak. But some smaller companies, which typically expose investors to greater volatility, suffer from deficiencies ranging from violations of the minimum bid-price rule, as share prices of some penny stocks have languished below $1, to violations of board independence, delinquency and market value. Companies faced with a delisting often meet their fate with large losses. Fuqi International ( FUQI.PK), a Chinese jewelry company, landed on the Nasdaq's list of non-compliant companies back in April 2010 due to delinquency in filing its annual report. Fuqi, which has faced accounting errors like other Chinese companies, was delinquent in filing other quarterly reports and also failed to hold its annual shareholder meeting. The stock is down more than 50% this year and traded on the Pink Sheets as of Tuesday. Because companies on exchanges' watch lists record higher-than-average volatility, risk-friendly investors have the chance to make lots of money, either by shorting the stocks on expectations shares will fall, or going long on the hopes they will live to fight another day. Companies like eDiets.com ( DIET) and Star Buffet ( STRZ), both slapped with delisting warnings, are up 73% and down 21%, respectively, over the past two months. Nevertheless, the following 16 companies were notified in March that they're in violation of listing requirements and could be kicked off the Nasdaq. The companies now have a limited window of time to regain compliance with the exchange's listing rules.
StemCells ( STEM) Company Profile: StemCells researches, develops and commercializes stem cell therapeutics. Its research and development programs are focused on its cellular medicine programs, where it identifies and develops cell-based therapeutics. Current Share Price: 86 cents (March 29) Listing Violation: Bid price. The listing rule requires that a company maintains a minimum closing bid price of $1 per share for its common stock. StemCells shares last closed above $1 on Jan. 18. Received Nasdaq Notice: March 3 Management's Expected Action: StemCells said in a regulatory filing that the company will continue to monitor the closing bid price for its common stock and consider its available options to regain compliance with the Nasdaq minimum bid price requirement, which may include applying for an extension of the compliance period or an appeal to a Nasdaq Listing Qualifications Panel. The company has until Aug. 30 to regain compliance with the rule.
Brooklyn Federal Bancorp ( BFSB) Company Profile: Brooklyn Federal operates as the holding company for Brooklyn Federal Savings Bank, which provides various banking products and services in Brooklyn, Nassau, and Suffolk, New York Current Share Price: 66 cents (March 29) Listing Violation: Bid price. The listing rule requires that a company maintains a minimum closing bid price of $1 per share for its common stock. Brooklyn Federal shares last closed above $1 on Jan. 19. Brooklyn Federal has been hit with several delisting warnings over the past few months, relating to its market value of publicly held shares and delinquency in filing its 10-K for the quarter ended Sept. 30 and 10-Q report. Received Nasdaq Notice: March 7 Management's Expected Action: The company has until Sept. 6 to regain compliance with the minimum bid price requirement. Brooklyn Federal said the filings of its 10-K and 10-Q have been delayed due to the resignation of the company's independent registered public accounting firm on Dec. 20. The audit committee engaged a new registered public accounting firm, but it has completed only the initial stages of the 10-K audit. Meanwhile, Brooklyn Federal has until July 11 to regain compliance with the requirement for a minimum market value of publicly held stock of $5 million.
Parametric Technology ( PMTC) Company Profile: Parametric Technology develops, markets and supports product-development software solutions and related services that help companies design products, manage product information and improve their product development processes. Current Share Price: $21.90 (March 29) Listing Violation: Board independence. The listing rule requires the board of directors to have a majority of members who are independent. Received Nasdaq Notice: March 15 Management's Expected Action: Parametric said the company is conducting a search for an additional member of its board of directors with the intention of appointing the new director "as soon as practicable." After Parametric had an annual meeting of shareholders March 9, the company had an equal number of independent and non-independent directors. The company said it has until Sept. 6 to regain compliance.
Tidelands Bancshares ( TDBK) Company Profile: Tidelands Bancshares is a bank holding company engaged in the business of accepting demand, savings and time deposits insured by the FDIC and providing commercial, consumer and mortgage loans to the general public. Current Share Price: 69 cents (March 29) Listing Violation: Bid price. The listing rule requires that a company maintains a minimum closing bid price of $1 per share for its common stock. Tidelands shares last closed above $1 on Feb. 10. Tidelands is also in violation of a Nasdaq listing requirement that the company maintains a minimum market value of publicly held shares of $5 million. Received Nasdaq Notice: March 16 Management's Expected Action: Tidelands has until Sept. 12 to regain compliance with the bid price rule, although the company did not provide any statement regarding its course of action. Separately, Tidelands has until June 15 to satisfy the minimum market value rule.
China MediaExpress Holdings ( CCME) Company Profile: China MediaExpress operates a television advertising network on inter-city express buses in China. Current Share Price: $11.88 (Trading halted since March 11) Listing Violation: Delinquency. China MediaExpress failed to file its annual 10-K report with the SEC in a timely manner. Received Nasdaq Notice: March 16 Management's Expected Action: China MediaExpress is required to submit a plan of compliance regarding the filing of its Form 10-K not later than March 31, according to the Nasdaq. The company said it intends to comply with Nasdaq's requirements on or before the deadline. China MediaExpress has more pressing issues to deal with. On March 14, China MediaExpress said its audit firm, the Chinese affiliate of Deloitte & Touche, had determined it "was no longer able to rely on the representations of management, and recommended that certain issues encountered during the audit be addressed by an independent investigation." China MediaExpress CFO Jacky Lam also resigned. The news came weeks after short sellers, who profit from a stock's decline, accused China MediaExpress of fraud. Shares of China MediaExpress, halted since March 11, are down 25% this year.
China Agritech ( CAGC) Company Profile: China Agritech sells fertilizer products and organic liquid compound fertilizer in China. Current Share Price: $6.88 (March 29) Listing Violation: Delinquency. China Agritech failed to file its annual 10-K report with the SEC in a timely manner. Received Nasdaq Notice: March 21 Management's Expected Action: China Agritech is required to submit a plan of compliance to the Nasdaq no later than March 31. The company said it intends to comply with the Nasdaq's requirements on or before the deadline. China Agritech announced the receipt of the Nasdaq's warning letter not long after the company disclosed in a regulatory filing that it had fired its accounting firm, Ernst & Young Hua Ming. China Agritech faces securities fraud class-action lawsuits due to a research report by a short seller. The report alleges that China Agritech inflated its revenue, failed to account for millions of investor dollars and has virtually no product in the market.
America Service Group ( ASGR) Company Profile: America Service Group provides or administers health-care services to over 160 correctional facilities throughout the U.S. It is also a non-governmental provider and/or administrator of correctional health-care services. Current Share Price: $25.68 (March 29) Listing Violation: Audit committee composition. The listing rule requires that a majority of the board of directors must be comprised of independent directors and that the company's audit committee have at least three members, all of whom must be independent. Received Nasdaq Notice: March 21 Management's Expected Action: America Service Group said John McCauley, who served as a member of the company's audit committee, has filled the newly created position of chief risk officer as of March 1. The Nasdaq has given America Service Group a cure period to satisfy the requirement. The company says it anticipates replacing McCauley on the audit committee prior to the next audit committee meeting.
OmniVision Technologies ( OVTI) Company Profile: OmniVision Technologies designs, develops and markets semiconductor image-sensor devices. Its main product is image-sensing devices CameraChip. Current Share Price: $33.35 (March 29) Listing Violation: Board independence and audit committee composition. The board of directors must comprise a majority of independent directors and that the audit committee must consist of at least three members, each of whom must be independent. Received Nasdaq Notice: March 21 Management's Expected Action: Andrew Wang, one of OmniVision's independent directors, retired and resigned effective as of Feb. 24. OmniVision said it is currently conducting a search for a qualified candidate to fill the vacancy left on its board and expects that it will regain compliance with Nasdaq listing requirements within the cure period provided.