Critical Path Faces Delisting
Critical Path has requested a hearing on Jan. 30 to appeal, and its stock will stay on Nasdaq until then. Nasdaq originally issued a non-compliance notice to Critical Path on Oct. 15.
The company's stock closed yesterday at 53 cents per share.
In November, Critical Path reported a net loss of $26 million for third-quarter 2002, which ended Sept. 30, compared with a net loss of $35.6 million for the preceding quarter.
Possible delisting is the latest negative development since Critical Path said in February 2001 that an internal audit found "financial irregularities" and that the company would have to restate its earnings for third- and fourth-quarter 2000 and for 2001.
In January 2001, the San Francisco company reported an unexpected loss of $11.5 million, or 16 cents per share, for the fourth quarter. Shareholders filed more than a dozen class-action lawsuits as a result. In November 2001, the company said it settled the suits for $17.5 million.
The financial irregularities also resulted in charges against two former executives. The Securities and Exchange Commission in February filed civil charges against David Thatcher, Critical Path's former president, and Timothy Ganley, the company's former vice president of sales, accusing them of "participating in a scheme to inflate the company's earnings for fiscal 2000."
Thatcher and Ganley simultaneously settled the charges as they were filed against them, the SEC said. Thatcher agreed to pay a penalty of $110,000 and was banned from acting as an officer or director of a public company for five years. Ganley was fined $105,900 in penalties.