Can Great Basin Scientific Inc (NASDAQ:GBSN) Survive Delisting?


Great Basin Scientific Inc (NASDAQ:GBSN) has been put on notice by the NASDAQ Stock Market over its substandard stock price. The company is required to maintain a minimum bid price of $1 for at least 10 consecutive days before it can be deemed to be in compliance with continued listing requirement on NASDAQ.

A company whose stock has fallen below the minimum bid price is typically allowed six months to regain compliance, failure to which it can be delisted. In the case of GBSN, the management has said that it will take advantage of the grace period to regain compliance. But, is it possible?

Reverse stock split

To raise the minimum bid price on its stock, Great Basin Scientific Inc (NASDAQ:GBSN) said it will consolidate its stock. The company asked shareholders about the issue of consolidating the stock and they said no problem, approving a 1-for-80 reverse split. In that case, every 80 shares of GBSN will be combined into one share with a higher value.

The consolidated stock of GBSN was slated to begin trading on Sept. 16. Following the reverse split, the outstanding shares of GBSN were to reduce to just about 1 million from 78.4 million before the consolidation.

What about the spike in the stock price?

Interestingly, even before Great Basin Scientific Inc (NASDAQ:GBSN) could consolidate its stock to raise its minimum bid price, the stock shot sharply up in the last session, registering a whopping 4,861.9% gain. With that, the GBSN stock gained $5.62 to sit pretty above the minimum bid price of $1 required for continued listing on NASDAQ. Nevertheless, GBSN will still go ahead with the planned reverse split, which will further take away the risk of delisting because of the stock falling below the minimum bid price.

The steep rise in Great Basin Scientific Inc (NASDAQ:GBSN) stock can be linked to the failed bid by the company to raise its authorized shares. The board had sought shareholder approval to increase the number of authorized shares to 350 million from the current 200 million. However, shareholders said no way, fearing that raising authorized shares would give the management and the board more room to dilute GBSN stock.


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