The Nasdaq National Market System has notified eChapman Inc. that it intends to delist the shares of the Baltimore investment company because it has fallen below the stock exchange's minimum requirements, a move eChapman intends to contest, the company said yesterday.
"There will be no delisting," said Nathan A. Chapman Jr., eChapman's president, chairman and founder. Chapman said his company has requested a hearing on the matter.
If delisted, eChapman's shares would no longer be traded on the Nasdaq, which in recent years has emerged as a powerful rival of the New York Stock Exchange. Such a move would make it more difficult for investors to trade eChapman's stock because the shares would be relegated to the "pink sheets," the home of thousands of small and lesser-known public companies. Pink-sheet shares tend to be much less liquid.
eChapman said it received the delisting notification June 3, with the Nasdaq indicating that the local company no longer met the minimum requirements for having its shares included on its exchange: Its stock price had fallen below $1, and it didn't meet other key financial minimums.
Chapman is trying to engineer a rebound for his company, which has suffered a number of setbacks. In February, the state pension board dropped eChapman as manager of about $175 million in retirement funds after it learned that the company was under investigation by the Securities and Exchange Commission in relation to its June 2000 initial stock offering.
eChapman fired beleaguered Arthur Andersen as its accounting firm and delayed releasing its financial statements for last year, The company's shares have plunged from their $13 initial public offering price, closing yesterday at 23 cents, down 3 cents on the day.
The company has also struggled financially. eChapman suffered an operating loss of $4.3 million and a net loss of $11.6 million last year after a net loss of $3.5 million in 2000, according to recently released audited financial statements for last year.
It reported a net profit of $245,000 for this year's first quarter after losing $1.6 million in the corresponding period last year.
Nasdaq spokesman Michael DeMeo said the exchange does not confirm delisting actions and declined to comment on whether eChapman had received such a notification.
"We cannot confirm whether a letter went out" to that company, DeMeo said.
Chapman said its request for a hearing has delayed the delisting.
While awaiting the hearing before the Nasdaq's Listing Qualifications Panel, Chapman said, the company is investigating ways to qualify for continued listing on the exchange. He declined to detail those strategies.
The company, which has about 12.3 million shares outstanding, could "reverse-split" its stock. By consolidating five current shares into one new share, eChapman could expect to get the price of its stock up to $1 or more. Reverse splits don't always work, however.
In recent months, the company has also been focusing on cutting costs. As part of that initiative, eChapman intends to move out of its Inner Harbor offices on the 28th floor of Baltimore's World Trade Center, most likely to Howard County, where a surplus of office space has resulted in significantly lower lease rates, Chapman said yesterday.
Maryland Port Administration spokeswoman Judi Scioli said the agency has received nothing in writing about Chapman's plans to leave the office tower. She could not say whether there had been discussions between eChapman and the agency.
The port administration oversees the World Trade Center.
Chapman said the company is looking at "several situations" for new quarters but has yet to make a decision.