Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
On September 15, 2020, Town Sports International Holdings, Inc. (the "Company")
received a determination letter from the Listing Qualifications Department of
Nasdaq notifying the Company that in accordance with its authority under Nasdaq
Listing Rule 5101 ("Listing Rule 5101"), the Nasdaq Staff (the "Staff") has
determined that the continued listing of the Company's securities on The Nasdaq
Stock Market ("Nasdaq") is no longer warranted. Pursuant to Listing Rule 5101,
the Staff has broad discretionary authority to impose additional or more
stringent criteria for continued listing of Nasdaq-listed securities. The Staff
determined to use its discretion under Listing Rule 5101 as a result of concerns
related to (i) the recent petitions for relief filed under Chapter 11 of the
United States Bankruptcy Code by certain of the Company's subsidiaries (such
entities, the "Debtors", and such cases, the "Chapter 11 Cases"), (ii) the
residual equity interest of the existing listed securities holders and (iii) the
Company's ability to sustain compliance with all requirements for continued
listing on Nasdaq, given the Company's current non-compliance with Nasdaq
Listing Rules 5450(a)(1) (Minimum Bid Price) and 5450(b)(3)(C) (Market Value of
Publicly held Shares). In addition, the Staff noted that the Company's failure
to timely file its Quarterly Report on Form 10-Q for the period ended June 30,
2020 serves as an additional and separate basis for delisting in accordance with
Nasdaq Listing Rule 5250(c)(1).
The letter advises that unless the Company requests an appeal of the Staff's
determination, trading in the Company's common stock will be suspended at the
opening of business on September 24, 2020, and the Staff will file a Form 25-NSE
with the Securities and Exchange Commission ("SEC"), thereby removing the
Company's common stock from listing and registration on Nasdaq. At this time,
the Company does not intend to file an appeal of the Staff's determination.
Accordingly, the Company expects that its common stock will be delisted from
Nasdaq after the completion of the Staff's filing of Form 25-NSE with the SEC.
The Company anticipates that its common stock may be immediately eligible to be
quoted on the OTC Bulletin Board or in other over-the-counter trading markets.
However, there can be no assurance that the Company's common stock will be
admitted to trading on the OTC Bulletin Board or any similar over-the-counter
trading markets.
Forward-Looking Statements
Certain statements in this Current Report regarding the Registrant's future
intentions contain "forward-looking" statements within the meaning of the
Private Securities Litigation Reform Act of 1995. You can identify these
forward-looking statements by the use of words such as "outlook," "believes,"
"expects," "potential," "continues," "may," "will," "should," "seeks,"
"approximately," "predicts," "intends," "plans," "estimates," "anticipates,"
"target," "could," or the negative version of these words or other comparable
words. Such statements are subject to various risks and uncertainties, many of
which are outside our control, including, among others, the impact of and risks
and uncertainties related to the Chapter 11 Cases, the Debtors' ability to
obtain timely approval of the motions filed in the Chapter 11 Cases, the
Debtors' ability to obtain debtor-in-possession financing, objections to any
such debtor-in-possession financing facility or other pleadings that could
protract the Chapter 11 Cases, employee attrition and the Company's ability to
retain senior management and other key personnel, risks arising from the
delisting of the Company's common stock from Nasdaq, the duration and severity
of the COVID-19 pandemic, actions that may be taken by governmental authorities
to contain the COVID-19 outbreak or treat its impact, the potential negative
impacts of COVID-19 on the economy in the United States and the impact of
COVID-19 on our financial condition and business operations, and other specific
risk factors disclosed in our prior SEC filings. We believe that all
forward-looking statements are based on reasonable assumptions when made;
however, we caution that it is impossible to predict actual results or outcomes
or the effects of risks, uncertainties or other factors on anticipated results
or outcomes and that, accordingly, one should not place undue reliance on these
statements. Forward-looking statements speak only as of the date when made, and
we undertake no obligation to update these statements in light of subsequent
events or developments. Actual results may differ materially from anticipated
results or outcomes discussed in any forward-looking statement.
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