It is Back Home For Jones Soda After NASDAQ De-listing (JSDA)

After failing to meet up with the NASDAQ minimum bid price requirement, Jones Soda (OTC: JSDA) is back trading in the OTC market after a span of seven years. The share price, partially on account of management’s refusal to conduct a reverse stock split to protect the interests of shareholders, withstood the bear onslaught and gained 12.1% at the close.

The Seattle, Washington, distributor of premium beverages and WhoopAss Energy Drink brands spent the first quarter of the year arranging $2 million credit facility initially and a $3.2 million registered direct offering later on to support the cash flow. The announcement of the direct offering on February 2, 2012, led the slide in share price to $0.50 per share from $0.85 per share two days earlier.

Four months later, on June 28, 2012, the CEO William Meissner and board chairman Richard Eiswirth both resigned while the company eliminated the CFO, thus resulting in a power vacuum. The declared second-quarter results saw the loss narrowed to $459,000 (a loss of 10 cents per diluted share) from $1.8 million (a loss of 6 cents per share) in the corresponding quarter a year ago. The revenue also rose 7% to $5.3 million from the previous year’s second quarter. The result declared on August 11, 2012, pushed the stock price to $0.47 per share in two trading days. However, lack of continued interest from traders brought the stock price to around $0.30 per share by the end of August.

On September 11, 2012, Jones Soda received an official communication from the NASDAQ stating that on account of the company’s failure to demonstrate a $1.00 minimum bid price for its stock, the company’s shares would be delisted from the NASDAQ capital market effective September 20, 2012. Jones, after careful evaluation of the alternatives available for the company to continue listing, decided not to request an appeal hearing regarding the delisting.

Commenting on the company’s decision, Michael Fleming, Chairman of the Board, stated, “Based on our research of other companies that conducted reverse stock splits to satisfy Nasdaq’s minimum bid price requirements, we felt that the likely outcomes and cost to our shareholders in terms of significant reduction in market valuation were too high to warrant approval.”

Fleming also added, “We are committed to organic stock price growth based on achieving fundamental improvement in the Company’s results and ultimately, sustainable profitability.”

Despite getting delisted from the NASDAQ, the stock price continued to hold steam. The company grew fundamentally when it remained listed in the OTC market from 2000 to 2005. Again, this time around, the market hopes that history is re-written for Jones Soda. Jones Soda is scheduled to release the results for the quarter ending September 30 on November 8, 2012. The market will watch for those results before making its next move.

Jones Soda ended the day at $0.325 per share, up $0.035 or 12.1% on a volume of 657,394 shares.

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Published by Duncan Oleinic

Duncan Oleinic is from New Yourk. After graduating with a degree in physics, he began his career as an analyst in a broking firm. Through this experience he was able to advance to the role of correspondent for a U.S based financial news provider, where he worked from 2001 to 2007. He subsequently joined a merchant banking firm as a financial analyst focused on valuing unlisted companies in the sub-continent. Over the course of his two years here, he performed valuations of several media companies which were later acquired by peers.

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