Are CyberDefender Corp.’s days on Nasdaq numbered? Yes, unless the company can manage a stunning comeback.
Delisting notifications have been pouring in for the downtown L.A. security software company over the last month. The company is in violation of four requirements to list on the stock exchange and will likely be moved to a smaller market as a result.
But being demoted won’t hurt CyberDefender’s prospects much, said James Ragan, an analyst with downtown broker Crowell Weedon & Co.
“There’s probably not a lot of advantages now for them to be listed,” said Ragan, who owns CyberDefender shares and believes there’s little interest for the stock among investors.
Last month, Nasdaq notified CyberDefender that the market value of its shares owned by the public had fallen below the $15 million requirement. The company has until March to comply before it is delisted.
But that’s just one of several Nasdaq requirements that CyberDefender no longer meets. The total value of the company’s listed securities has fallen below the minimum level of $50 million, shares are trading below the $1 limit and last year’s revenue fell below the minimum $50 million.
CyberDefender reported revenue of $45.6 million last year, up 143 percent from $18.8 million in 2009. Its annual net loss was $39.6 million, compared with a loss of $19.8 million the year before.
Marie Clark, CyberDefender’s director of investor relations, said in a statement to the Business Journal last week that the company hopes to stay on Nasdaq through expense reductions, operational improvements and strategic changes.
“Management is doing, and will continue to do, everything in its power to regain compliance as soon as possible,” she said in the statement.
Gary Guseinov, co-founder and chief executive, resigned in August and the board appointed Kevin Harris, chief financial officer, as interim head.
Meanwhile, CyberDefender is reorganizing to focus more on its live technical support service. As a result, the company will stop developing software to protect customers from malware and begin licensing those products from other companies.
The company began trading on Nasdaq in June last year after a promotion from over-the-counter trading. At first, its shares traded above $4 but the price has closed below $1 every day since July 19. The Sept. 28 closing price was 33 cents.
Ragan said CyberDefender’s best chance at a turnaround is finding the money to stabilize cash flow and to refocus the business.
“I think their challenge now is to prove that technical (support) services is a viable business for them,” he said.
