Nasdaq has told PacificNet (PACT.PK) that as a result of the resignation of one of the company's directors, PacificNet is no longer in compliance with the independent director requirement of Rule 4350 of Nasdaq's Marketplace Rules.
But PacificNet says the letter was sent to an incorrect email address at PacificNet on February 29, and it was not made aware of the deficiency notification until after the appointment of Stephen Crystal to the company's board of directors, which was reported on March 3, 2008. PacificNet says it believes it is now in full compliance with the independent director requirement of Rule 4350 and although it has not yet received a compliance letter from Nasdaq in this regard, it expects that one will be issued in due course.
PacificNet has been stung by other stock market listing irregularities over the last eighteen months. In March 2007, PacificNet revealed that the company had perhaps previously improperly accounted for option grants. The company's prior independent public accounting firm, Clancy & Co. P.L.L.C, had withdrawn its audit reports for PacificNet's financial statements for the years ended December 31, 2004 and 2005. Clancy's decision to withdraw its reports after its resignation was the result of some uncertainties it now has as to whether option grants made by the PacificNet in 2004 and 2005 were properly accounted for.
In April 2007, the company's failure to file its Annual Report on Form 10-K for the fiscal year ended December 31, 2006 with the Securities and Exchange Commission by April 17, 2007 resulted in a threat of delisting. Nasdaq Marketplace Rule 4310(c)(14) required Pacificnet to file all required reports with Nasdaq on or before the date they are required to be filed with the Securities and Exchange Commission.