Nasdaq has threatened to delist three struggling Connecticut technology companies from trading on its exchange, after shares of their stocks fell below $1 over the last month.
Distributed Energy Systems of Wallingford, Vion Pharmaceuticals of New Haven and Electro-Energy Inc. of Danbury, have six months to raise their stock price, or risk being booted off the exchange to the Nasdaq-run Over the Counter Bulletin Board – home for so-called “penny stocks”.
A delisting letter often precipitates a reverse stock-split, a last ditch effort by companies to double their share price by halving the amount of outstanding stock. Companies seldom correct their fortune without some type of a fundamental change in a company’s ownership structure – including a buyout or a merger with a larger firm.
All three firms have seen their revenues shrink and losses widen over the last quarter.
Distributed Energy posted a quarterly net loss of $10.3 million on sales of $9.4 million. Both were down from a loss of $6.5 million on sales of $6.8 million in the same quarter last year. Distributed Energy, which builds products and equipment for the alternative energy industry, has struggled to stay afloat over the last few months, as its losses forced it to sell most of its stock to a Washington D.C.-based private equity firm, Perseus, in exchange for a $15 million injection of cash.
Likewise, Vion, a development stage company, saw its second quarter losses widen to $8.8 million, up from $6.9 million, on nearly non-existent revenue. The company is developing a new treatment for a form of leukemia.
Electro-Energy, which manufactures batteries for industrial and aerospace applications, saw its losses widen last quarter to $3.1 million, from $1.5 million in the comparable, year-earlier period. Late last week, the company announced that it has hired Bridgeport law firm Zeisler & Zeisler to help in its efforts to capital structure and develop operating liquidity.”
Shares of Distributed and Vion traded around 82 cents this afternoon. Shares of Electro Energy were down to 54 cents.