The cupcake craze may be getting stale.
Crumbs Bake Shop said in a filing with the Securities and Exchange Commission on Thursday that the Nasdaq stock market had denied its request to keep its common stock listed on the exchange. According to the filing, Nasdaq will suspend trading of the company's stock on July 1.
Crumbs, the country's largest cupcake chain, has been on the verge of a delisting for some time. Its most recent quarterly filing noted that a number of factors, including insufficient profit to offset operating expenses, raised "substantial doubt as to Crumbs' ability to continue as a going concern." As a result, the filing said, "Crumbs may be forced to curtail or cease its activities."
The company can appeal the decision, but did not indicate in the filing that it would follow that route. The Nasdaq's determination followed initial letter of noncompliance sent in April and Crumbs' submission of a plan outlining the efforts it was taking to regain compliance.
Shares of Crumbs ended the day on Thursday at 23 cents.
Crumbs, known for its candy-laden signature 4-inch cupcake with names like "Blackout" and "Princess," went public in 2011 through a $66 million merger with an investment company, the 57th Street General Acquisition Corporation. At the time, companies like Sprinkles, based in Los Angeles, and New York's Magnolia Bakery dominated the cupcake landscape.
Started by Jason Bauer, and his wife, Mia, in 2003 with a single bakery in New York, Crumbs grew rapidly. As of March 31, the company operated 65 stores across 12 states and in Washington. When it went public, it had 34 stores in six states. Mr. Bauer said at the time that he planned to expand to 200 locations by 2014.
In its filing, Crumbs said the Nasdaq had based its decision to delist the company on its failure to comply with a minimum stockholders equity requirement of at least $2.5 million.
—By The New York Times' Sydney Ember