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Technology Stocks : Infonautic's In2000: Low Cost Year 2000 Coversion -- Ignore unavailable to you. Want to Upgrade?

To: Louis Riley who wrote (41)	11/13/1998 2:56:00 PM
From: Moneysmith	Respond to of 206

Here is some more comment: Despite the potential of the Company Sleuth, there is a cloud hanging over Infonautics' shares since the stock is under the threat of being delisted by Nasdaq since the company doesn't meet the exchange's net tangible assets requirement. Among other criteria, a company must have net tangible assets - which are total assets minus total liabilities minus goodwill - of at least $4 million to be listed on Nasdaq's National Market, said Mike Shokouhi, a spokesman for the exchange. According to Harrold of Boca Consulting, however, the recent jump in Infonautics' share price could potentially remove this issue. This is because a company that does not meet the net tangible assets requirement can remain listed on the National Market if it meets an alternative set of criteria. These include a minimum bid price of $5 a share for its stock. In addition,the company must have either a $50 million market capitalization or total assets and revenue of $50 million for the most recently completed fiscal year or for two of the past three fiscal years. With about 9.7 million shares outstanding, Infonautics would meet these first two requirements if its share price gets above a little over $5. Morris, Infonautics' CEO, would not comment on the possibility that the stock won't be delisted other than to say that the delisting decision is "at Nasdaq's discretion." But he did explain that Infonautics does not meet the exchange's net tangible assets requirement because of the accounting rules governing how the company must recognize revenue from its main business, the Electric Library, which provides online reference materials to schools, libraries and individual subscribers. Because Infonautics must recognize revenue from Electric Library subscriptions ratably over the life of a subscription, it must record much of the sale of a subscription for the service as deferred revenue - which shows up on the liabilities side of the balance sheet, Morris said. These accounting rules, he added, are "particularly punitive for a young growing company because as sales increase, deferred revenues increase." "It's choking them," Harrold said. "But it's only an accounting issue." At the end of the third quarter, Infonautics had $8 million in deferred revenue on the liability side of its balance sheet, Morris said. (MORE) DOW JONES NEWS 11-13-98 02:32 PM