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Technology Stocks : CYOE / Diana Corp. Why has the SEC not halted this pig? -- Ignore unavailable to you. Want to Upgrade?

To: TheLineMan who wrote (57)	3/3/1999 10:52:00 AM
From: Q.	Respond to of 242

BeWhere, I've followed a lot of delisting plays, and I'm confident when I say that your expectations as a shortseller do not coincide those of the NASD's regarding how pretty a company must be to remain listed. What do you mean when you say: <<Even if NASDAQ doesn't care about their business practices they will have to delist CYOE without a cash infusion within the next 2 quarters (by their own rules). >> To answer the question of the previous poster, the NASD has a net tangible assets (NTA) requirement of $4 M if the stock price is below $5. The NASD also requires that the stock price exceed $1. See their web page: nasdaq-amex.com This NTA is not computed as a per share amount. The NASD computes it as the assets minus liabilities minus goodwill, which is generally the same as shareholders equity minus goodwill. You might think that the the term 'net tangible assets' means that they subtract everything listed on the balance sheet as intangibles, but this isn't so. I've talked to NASD auditors about it several times, so I know what they do. If the entry on the balance sheet doesn't say 'goodwill' then they don't subtract it in computing the NTA. In the case of CYOE the entry says 'intangible assets' so the NASD won't subtract it. That means that the full $14 M of shareholders equity will count as NTA for the purpose of staying listed. This means they are presently well above the delisting threshold for NTA.