Corio Inc. , a San Carlos, Calif.-based enterprise ASP, announced late Friday that its board of directors has approved a reverse stock split. The company reports that it expects the split to take place in the first quarter of 2003 at a ratio of approximately 1 for 5.
In a statement released Friday, Corio said its expects the reverse split to re-establish compliance with NASDAQ’s minimum bid requirements that require a stock price of at least $1.00 per share.
Reverse stock splits decrease the number of shares, but not the total value of shares of stock held by shareholders. Shareholders maintain the same percentage of equity as before the split.
For example, Corio’s 1-for-5 split means that stockholders would own one share for every five shares owned before the split. On Friday Corio closed at 89 cents per share. After the split, in theory, a share would be worth $4.45.
Corio reports that it was prompted to make the change when on Nov. 15 it received a NASDAQ staff determination letter indicating noncompliance with NASDAQ Marketplace Rule 4450(a)(5), the minimum bid price requirement, and that, as a result, the company’s securities are subject to delisting.
Corio reports that it has requested a hearing before the NASDAQ Listing Qualifications Panel and intends to present its plan to effect a reverse split and to become compliant with the listing standards. The request for a hearing will suspend the delisting action until the NASDAQ Listing Qualifications Panel reaches a final decision on the company’s appeal, according to Corio.
“We continue to meet our objectives as measured by the growth of our revenue base and improved efficiencies of our operations. With the reverse stock split, we intend to become fully compliant with NASDAQ’s listing standards while continuing to implement our business plan,” said George Kadifa, chairman, CEO, and president of Corio, in a statement.
Last month, Corio reported a third-quarter loss of $10.2 million ($0.19 a share) on revenues of $13.4 million. However, the company claimed it was “making significant progress” toward reaching EBITDA (earnings before interest, taxes, depreciation and amortization) profitability in 2003 (see Corio Reports Profitability in Sight).
The company’s optimism is based increasing acceptance of the ASP model, its ability to lower its expenses and its recent acquisition of of Qwest Cyber.Solutions (see Corio Snaps Up Qwest’s ASP Business).
Corio issued fourth-quarter revenue guidance of $17-18 million with a net loss of approximately $11 million for the quarter.
Corio is listed by ASPnews as a Top 20 Service Provider.
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