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Monday, Dec 4, 2023

Stock Exchange Warns American Apparel

American Apparel Inc. said it received a delisting warning from the NYSE Amex exchange and added that it is still unsure when it will file its quarterly report with regulators.

The Los Angeles clothing manufacturer and retailer, which warned last week that it may not have enough liquidity to continue to operate for the next year, said late Monday that it received a warning letter from NYSE Amex. The company, which submitted a compliance plan to the exchange in June, said it now has provided supplemental information to the Amex on how it could regain compliance by Nov. 15.

The company in an Aug. 17 regulatory filing provided a “going concern” warning, saying it expected another quarterly loss and was close to breaching a loan covenant for the second time this year. Its accounting firm Deloitte & Touche resigned last month, citing “material weaknesses in internal controls over financial reporting.”

American Apparel hired as a replacement auditor Marcum LLP, which needs sufficient time to complete review procedures for the quarter ended June 30, hence the delay in filing its report.

“However, no assurances can be given as to when the form 10-Q will ultimately be filed,” the company said Monday.

American Apparel has received a subpoena from the U.S. attorney’s office for the Southern District of New York and an inquiry from the U.S. Securities and Exchange Commission over the change in accounting firms.

Shares were down 3 cents, or 4 percent, to 71 cents in midday trading Tuesday.

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