Three firms might fall from listing in NASDAQ 'cleanup.'

San Diego Business Journal, March 30, 1992 by Sandy Hock

"We're in the process of cleaning up the company," Benz said. "We're just now getting to the point where we're getting our heads above water."

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Benz doesn't expect his firm will ever return to the Nasdaq market. If the company is delisted, it must meet even stricter requirements if it wants to return. Along with the standards for companies currently listed on Nasdaq, the NASD is also imposing tighter entry requirements for companies' initial listing. New companies must have a minimum of $4 million in assets, $2 million in shareholder equity, compared to the former entry requirements of $2 million in assets and $1 million in shareholder equity.

"Why not grandfather these companies?" Benz said. "When companies do come back, they should be listed without having to go through the new requirements. What they're saying is that we're a poor relation."

Lancer Orthodontics has also decided it can't fight its delisting. The company is expecting to hear from the NASD about a way to salvage its Nasdaq listing. But as of last week, Lancer had not heard from Nasdaq, said Scott Striblen, the firm's controller.

"It looks to me as if we're not going to qualify for it," Striblen said.

Lancer's stock traded for almost 38 cents a share last week, below the $1 minimum. The company's shareholder equity totaled $1.04 million, also less than the $2 million required by the NASD. Lancer designs, manufactures and sells orthodontic products.

This month, the NASD started notifying companies that don't meet the new standards. The firms will be allowed to prove they have a chance of improving their financial status.

With its stock selling at 50 cents a share, Decom Systems also needed to meet the $2 million shareholder equity requirement. In a financial statement released by Decom last month, the aerospace telecommunications company reported shareholder equity of $1.01 million. Steve Borgardt, Decom's vice president of finance, did not return phone calls about the company's Nasdaq status.

Green of PaineWebber said he considers the higher Nasdaq standards a positive step.

"They're trying to clean up their own backyard," Green said.

Jim Biddle, president of The Securities Center Inc. in Chula Vista, said the new requirements will give Nasdaq issues more credibility.

"The NASD is clearly out to compete with the big exchanges," Biddle said.

The NASDwants large, successful companies to join such notables as San Diego-based Price Co. in its National Market System. And the NASD could attract more of those companies by weeding out smaller, unhealthy firms, Biddle said.