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September 26, 2007

Nasdaq Small Cap Listing Requirements

posted by MR WAVETHEORY at 9/26/2007 12:29:00 PM
I've doing some research on Nasdaq Small Cap and found that there are several listing requirements:

$2.5 million stock holder's equity or
$35 million market cap or
$500,000 in net income (in latest fy or 2 of the last 3 fy)

That probably explains the big move in stocks like VerticalNet (Nasdaq VERT) which has run up and just about doubled in the past 2 days on just 1 million shares of trading.

VerticalNet fails on all three continued listing requirements:

-$.9 million stock holder's equity
$11 market cap
-$24, -13, -9 million in net income (last 3 fiscal years)

So, how will VerticalNet stay listed?

The remedy is to either inject $3.5 million of capital into the company.
Triple the stock price from $6 to $18 per share.
Earn $125,000 for the next four quarters.

The rapid rise of VERT in the last 2 days suggest the company is pursuing tripling the stock price. The stock was just $3.50 two days ago and today it is close to $7.

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