eChapman posts profit of 2 cents a share

Company had a loss in year-earlier quarter

May 17, 2002|By Julie Bell | Julie Bell,SUN STAFF

Baltimore financial services company eChapman Inc. said it earned a first-quarter profit of $245,000, or 2 cents a share, on revenue of $1.7 million. That compares with a loss of $1.6 million, or 13 cents a share, on revenue of $1.4 million in last year's first quarter.

The company attributed the improved results to cutting costs and a revised strategy that de-emphasizes Internet operations.

As part of the moves, eChapman is seeking a buyer for NetNoir, an African-American-oriented Internet portal the company agreed to acquire last July, General Counsel James P. Wu said yesterday.

"The company's repositioned cost structure, combined with its focus on key revenue drivers, resulted in significant improvement," said Chief Executive Officer Nathan A. Chapman Jr.

eChapman's shares rose 12 cents yesterday, closing at 36 cents on the Nasdaq stock market.

Nasdaq had notified eChapman in a Feb. 15 letter that the company's bid price - the highest price prospective buyers of shares are ready to pay - had fallen below listing requirements, according to the company's annual report filed with the Securities and Exchange Commission.

Nasdaq stocks must maintain a bid price of at least $1, according to Nasdaq's Web site.

eChapman filed its annual report April 24 with the SEC under a commission rule that allows former clients of Arthur Andersen LLP to release unaudited results. The accounting firm faces an obstruction-of-justice charge in the Enron scandal. eChapman said the firm couldn't finish its audit in a timely fashion.

But the report also revealed that Arthur Andersen claims its work was slowed because eChapman's executives failed to tell the accountants that the company's initial public offering was under SEC investigation. The accounting firm also claims management did not inform it that eChapman had received an SEC letter "describing certain deficiencies noted by the Securities and Exchange Commission in connection with a routine annual audit and examination of the books and records of the Chapman Funds ... and Chapman Capital Management," the annual report said.

Wu said eChapman learned in early December of the SEC inquiry but didn't know at the time that the inquiry involved its stock offering.

Wu said the company is in compliance with the SEC's net capital requirements, though it was in violation at the end of 2000. eChapman reported assets of $17.7 million and liabilities of $1.1 million as of March 31.

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