SyQuest on board, barely

SyQuest falls out of compliance with Nasdaq requirements but receives a temporary exception to remain listed.

CNET News staff
SyQuest (SYQT), a portable hard drive maker that has lost market share in recent years, said today that it has fallen out of compliance with Nasdaq requirements but has received a temporary exception to remain listed.

The National Association of Securities Dealers, which operates the Nasdaq exchange, requires companies maintain $2 million in net worth to remain listed, but SyQuest fell out of compliance several months ago, said Ron Brown, vice president of marketing. Brown declined to disclose the length of the temporary agreement.

SyQuest hopes to increase its net worth and raise operating funds via the sale of up to 40 million new shares of common stock. Shareholders will vote on the issue at the September 26 annual meeting.

But a key question remains: Will there be a market for the stock?

SyQuest's shares spiked to about $19 in May but quickly fell and hovered around $6 over the past 180 days.

The company also announced Wharton Capital of New York has proposed a $30 million preferred stock investment via its investors. That would mark the second investment Wharton's investors have provided the company--with the last in June of $20 million.

"That piece is being managed now and the sitatuation is improving," Brown said.