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Strategies & Market Trends : Shorting stocks: The root thread
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To: drakes353 who wrote (9)6/7/1997 3:19:00 PM
From: Q.  Read Replies (1) of 41
 
Drakes, re. delisting & Net Tangible Assets:

Both NYSE and NASDAQ National Market require that listed companies maintain their net tangible assets above a certain threshold. For Nasdaq it is $4 M, for NYSE it is $12 M.

On any balance sheet, you will find near the bottom a line that says 'shareholders equity'. Often this is the same thing as net tangible assets. If you look up in the assets part of the balance sheet and find anything called "Goodwill", howevever, you must subtract that.

NTA = shareholders equity - goodwill.

Both exchanges routinely identify companies that have NTA below their continued listing requirements. In the case of Nasdaq, when a co. files a 10Q quarterly or 10k annual report, an analyst looks at the NTA. If it is out of compliance, they send a letter to the co. telling them they will be delisted by date X, but they may appeal. The co. then appeals, and may try to line up a private placement of equity to sell some common or preferred stock to get the shareholders equity & NTA back up. If they can't, they are delisted. Sometimes they can be listed then on Nasdaq Small Cap Market where the listing requirement is a shareholders equity of $1 M. If not that, they move to bulletin board or pink sheets.

Nice to see you here Drakes :-)
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