Sielox to deregister
By Martha Entwistle
Updated Fri February 26, 2010
Yet another small public company has decided it's not worth the hassle to be public.
Today, Sielox has announced its intentions to deregister. The access control manufacturer that merged with video maker Costar in 2007 has been listed on the OTC Bulletin Board, but has grown tired of the costs of being public, and has fewer than 300 shareholders, and so can apply to deregister.
And while those costs of being public hurt, it didn't help that the company isn't exactly turning a profit:
As disclosed in the Company's Form 10-Q for the quarterly period ended September 30, 2009, the Company has continued to incur losses and negative cash flows from operations as the general economic slowdown has negatively impacted demand for the Company's products. As a result, the Company has implemented a wide variety of cost saving measures, including, among other things, the closing of the Company's facility in Anaheim, California, a reduction in staff and the termination of a consulting contract. In conjunction with the decision to deregister, the Company is in the process of implementing a number of additional measures to reduce expenses. These include further staffing cuts (bringing the total reduction in headcount since September 30, 2008 to ten employees, or approximately 22% of the Company's workforce), the elimination of certain marketing expenses and a 5% reduction in pay and the suspension of 401(k) matching benefits for all employees. "It is our belief that these actions will substantially improve the cost structure of the Company and better position Sielox for profitability in the future," stated Mr. Brunt.In its most recent filing, Sielox reported $22.68 million in annual earnings (down about 11 percent), which resulted in losses of $3.73 million, with just $267,000 in cash against more than $3 million in debt. There are roughly 35 million shares outstanding, valued most recently at just over 2 cents each. They're keeping their options open, though, for the access to capital that selling shares in the company offers:
The Company will notify the OTC Bulletin Board (the "OTCBB") of its decision to terminate its reporting obligations under the Exchange Act. As a result, the Company's shares will not continue to be quoted on the OTCBB. The Company expects that, following delisting, its shares will be quoted on the Pink Sheets, LLC ("Pink Sheets"), an electronic network through which participating broker-dealers can make markets, and enter orders to buy and sell shares of companies. A registered broker-dealer that currently makes a market in the Company's shares has indicated an intention to sponsor the Company's shares on the Pink Sheets, and to act as a market maker, if the Company delisted. The Company anticipates that there will be additional market makers for the Company's shares following delisting.
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