Walter: "Can EDIG sustain a >$4 price w/out a reverse split in 2000?
I assume that your concern may be about sustaining a NASDAQ listing once reacquired. I contacted NASDAQ today and spoke to a listing examiner at length about the requirements for National Market Listing. In brief, these are the key elements:
1. Net tangible assets of $4 million or
Market capitalization of $50 million or
Net income of $750,000 (latest year or 2 of last 3 years)
2. Public float of 1 million shares
3. Market value of public float of $5 million
4. Minimum bid price of $4/share
5. At least 3 market makers
6. At least 300 round lot shareholders
7. Operating history of at least 1 year
8. Corporate governance requirements (SEC reporting, 2 independent directors, audit committee, shareholder meetings)
It does not matter whether the firm is applying for the first time or for a relisting (as in the case of e.Digital). The criteria are the same in both cases.
e.Digital meets all but two of these requirements today. The share price and a portion of the corporate governance elements do not comply with NASDAQ standards.
On the share price issue, I was told that the criteria is a sustained price above $4.00 for a period of 30 to 60 days and throughout the examination period. The company, upon satisfying the share price level for 30 to 60 days, may then apply for listing and NASDAQ takes two to three months to make a decision following application. Therefore, the earliest e.Digital could achieve NASDAQ status would be about three months after it first crossed the $4.00 price level. More realistically, it would be five months after first crossing $4.00/share.
The corporate governance issue can be resolved by adding another independent director to the board of e.Digital. Currently only one director would fit the "independent" definition (Skip Matthews). I expect that e.Digital will be adding another director fairly soon, probably someone with experience in a high potential (current or future) e.Digital market segment.
If e.Digital meets the criteria and applies for listing on the NASDAQ National Market, I would not expect them to achieve success in that effort before the middle of the first quarter in 2000.
Now, back to your comment. Having achieved NASDAQ status, maintenance of that listing does not require that the stock remain above $4.00/share. The stock merely has to maintain a minimum price of $1.00, so even a temporary severe price weakness would not put the listing in jeopardy.
So rest easy Walter. Let's get the NASDAQ listing first before we begin to worry about losing it.
Jim |
