Incomnet Sees Deal Crumble, May Lose Its Nasdaq Listing

Incomnet Inc. said Monday that a much-needed financing deal with one of its largest creditors fell apart and that its stock may be removed from the Nasdaq SmallCap because it no longer meets listing requirements.

The Irvine-based long-distance service reseller said it is continuing to seek new sources of financing and is exploring several options, including selling assets, merging with another company, scaling back operations and restructuring debt.

Incomnet has lost money for seven consecutive quarters, including $1.54 million, or 8 cents a share, on sales of $8.7 million in the first quarter, ended March 31. In 1998, the company lost $19.1 million on sales of $54.8 million. Incomnet employs about 110 people.

The financing arrangement with Ironwood Telecom that was announced in June won’t be completed because of Incomnet’s deteriorating financial condition. Incomnet had planned to convert $16.8 million in secured debt owed to Ironwood into Incomnet preferred shares.

The deal would have brought the company into compliance with Nasdaq listing requirements.

In a prepared statement Monday, Incomnet officials said they plan to request a hearing with Nasdaq to discuss the situation. If Nasdaq delists the company, Incomnet plans to trade on the over-the-counter bulletin board.

Incomnet shares fell 58% Monday, or 34 cents, to a 52-week low of 25 cents a share.

Because of the financing changes, Incomnet canceled its Sept. 9 shareholder meeting. The company will reschedule the meeting for a later date.