Vertro Regains Compliance With Nasdaq Stockholder Equity Rule & More
After the close yesterday, Vertro management announced a $250,000 placement under the reserve equity agreement that was designed to ensure the company’s compliance with the Nasdaq’s minimum stockholder equity requirement prior to the June 14 deadline. We feel that this event is quite favorable to Vertro shareholders, given that the agreement allowed placement of up approximately 8x that amount ($2 million) and the company (as promised) was able to achieve that goal with minimal dilution to existing shareholders. The shares sold amount to less than 2% of the shares outstanding.
Additionally, the company announced that shareholders have approved a reverse stock split that will allow the company’s board of directors to execute a split of between 2 for 1 and 5 for 1 between now and December 31, 2010. Of course, the purpose of this reverse split is to ensure that the company’s stock will meet or exceed the $1.00 minimum bid requirement prior to the Nasdaq’s September 14, 2010 deadline, so any such action by the board would likely be prior to that deadline.
Today’s announcement heralds the dawn a new era for Vertro shareholders. Given the company’s reported $2.3 million stockholder equity on March 31, 2010, the injection of an additional $240,000 pursuant to today’s transaction and what we expect to be another strong quarter of EBITDA profitability to further enhance stockholder’s equity; all that remains is the formality of the Nasdaq’s confirmation that this issue is now history. Additionally, the shareholders’ approval of a reverse split means that Vertro’s board of directors now has an arrow in its quiver with which it can put the final Nasdaq issue ($1.00 minimum bid requirement) to rest at will. Thus, for the first time in Vertro’s history, management can now devote 100% of their efforts to accelerating this growth story without the last of the major distractions inherited from the old Miva operations.
Entry filed under: Uncategorized.