eChapman loses battle to keep Nasdaq listing

Shares decline to 10 cents on the `pink sheets'

August 21, 2002|By William Patalon III | William Patalon III,SUN STAFF

Baltimore-based brokerage house eChapman Inc. has lost its bid to keep its shares listed on the Nasdaq stock market, the company's chairman said late yesterday.

The Nasdaq National Market System notified eChapman yesterday that its shares were delisted, rebuffing arguments the company made during a hearing last month, eChapman Chairman and Chief Executive Officer Nathan A. Chapman Jr. said.

The shares - which will trade on the so-called "pink sheets" - were delisted because the company failed to meet the minimum requirements of the exchange, the company said. In June, the Nasdaq had announced its plans to delist eChapman shares.

During the hearing, "we talked about the possibility of doing a reverse stock split and certainly [pointed out] our positive earnings trends, even though the shares" were below the Nasdaq's minimum price requirements, Chapman said.

Nasdaq officials could not be reached for comment last night.

The move to the pink sheets - also known as over-the-counter bulletin boards - will make the shares less liquid and harder to trade. When asked whether a reverse stock split is still in the offing, Chapman said only that "we're still considering our options" about ways to boost the price of eChapman's shares. The stock closed yesterday at 10 cents, down 2 cents per share.

With a reverse split, the company could consolidate 10 of its currently outstanding shares into one new share, which presumably would result in a new share price of $1. Reverse splits don't always work that way, however.

Chapman said the company is continuing to look for ways to cut costs even as its profits continue to increase with the approach of the fourth quarter - typically a strong stretch for brokerage firms, he said.

After suffering a net loss of $3.5 million in 2000 - and then an operating loss of $4.3 million and a net loss of $11.6 million last year - the company has reported profits for the first two quarters of this year.

For this year's first quarter, eChapman reported a profit of $245,000, compared with a loss of $1.6 million in last year's first quarter. Last week, eChapman reported a second-quarter net profit of $15,000, which translated to an operating profit of $33,000 after several noncash charges were factored out.

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