Covington Stock Will Be Delisted From NASDAQ : OTC market: Fullerton-based residential builder no longer meets financial qualifications for continued listing.

Financially ailing Covington Development Group Inc. said Wednesday that its stock will no longer be listed on the over-the-counter market’s electronic quotation system, NASDAQ, because the company no longer possesses the minimum $1 million in capital and cash surplus required for continued listing.

The announcement came less than two months after the company’s auditors issued a qualified opinion expressing their concern about Covington’s financial well-being in the wake of a series of losses and defaults on its bank loans.

The so-called delisting from the National Assn. of Securities Dealers Automated Quotation system will take effect today, said George Reinhardt, vice president of the Fullerton-based residential builder.

The 14 million shares of Covington common stock outstanding will continue to be traded in the over-the-counter market, Reinhardt said. About 10% of Covington’s common stock is held by officers and directors; the remaining shares are held by about 3,800 individual stockholders.

Covington is a 30-year-old firm that builds homes and develops residential land. It was last profitable in 1989, when it earned $4.2 million but has lost more than $15 million since then. Between 1980 and the end of 1991, the company’s net losses have totaled $24.8 million.

Covington is in default on about $14 million in debt, and in its annual report for 1991, filed with the Securities and Exchange Commission in April, it said that its net worth had plunged to negative $3.4 million from a positive $9.6 million at the end of 1990.

The company currently has 14 projects with about 1,000 homes and apartments under construction in Arizona, Nevada, Oregon and California.