Stocks Facing Delisting Deadlines

NEW YORK (TheStreet) -- Sirius XM (SIRI) isn't alone in staring down a March 15 delisting deadline.

Sirius XM, like several other companies, has until Monday to satisfy a Nasdaq listing rule that requires a stock to maintain a minimum bid price of $1. With time running out, investors in these companies are left wondering what the future will look like for their penny stock picks. In addition to Sirius XM, the following 10 stocks, ranked by revenue over the trailing 12 months, are on the Nasdaq's list of deficient companies as of March 9 and are in danger of being delisted.

ChipMOS

Closing price: 73 cents (March 11)

Revenue: $364.3 million (trailing 12 months)

Received Nasdaq notice: Sept. 16, 2009

Management's expected action: On Feb. 8, ChipMOS ( IMOS) said it submitted an application to transfer its listing to the Nasdaq Capital Market from the Nasdaq Global Select Market. "If the transfer listing application for listing its securities on the Nasdaq Capital Market is approved, Nasdaq will notify the company that it has been granted an additional 180 calendar day compliance period, commencing on March 16, 2010," ChipMos said.

TSC Ratings call: Sell. Its third-quarter loss widened to $32 million, or 41 cents, from $18 million, or 22 cents, a year earlier. Revenue declined 4.9% to $105 million. The operating margin delved deeper into negative territory, hitting -31%. ChipMOS holds $154 million of cash and $551 million of debt. Its stock tripled in the past year, hitting a high of 99 cents. It currently trades at 72 cents. Shares are cheap based on book value and sales.

Analysts International

Closing price: $2.80 (March 11)

Revenue: $143.2 million (trailing 12 months)

Received Nasdaq notice: Sept. 15, 2009

Management's expected action: Analysts International ( ANLYD) completed a 1-for-5 reverse stock-split that took effect on March 1.

TSC Ratings call: Sell. Analysts International is an information technology consultant, specializing in staffing services, technology integration and outsourcing. Its fourth-quarter loss dropped to $3.2 million, or 13 cents a share, from $7.6 million, or 30 cents, a year earlier. Revenue halved to $27 million. Its stock gained 78% in the past year and currently costs $2.95. Shares are cheap based on book value, sales and cash flow. Still, we rate Analysts International "sell" since there is no discernible trough in its business.

Cosi

Closing price: 91 cents (March 11)

Revenue: $121.1 million (trailing 12 months)

Received Nasdaq notice: Sept. 15, 2009

Management's expected action: Cosi ( COSI) said it will consider "all available options" to resolve the deficiency and regain compliance with the Nasdaq minimum bid price requirement.

TSC Ratings call: Sell. Restaurant-owner and franchiser Cosi is consistently unprofitable. It has suffered net losses for eleven consecutive quarters. In the third-quarter, its loss narrowed 24% to $2.4 million, but revenue tumbled 15% to $30 million. The company holds $4.6 million of cash and minimal debt. Its stock has soared 309% in the past twelve months and currently commands 91 cents. Its price-to-book ratio of 2.9 and price-to-sales ratio of 5.7 reflect discounts to the restaurant peer-group average.

Xoma

Closing price: 56 cents (March 11)

Revenue: $113.9 million (trailing 12 months)

Received Nasdaq notice: Sept. 15, 2009

Management's expected action: Xoma ( XOMA) said it will consider available options to resolve the deficiency and regain compliance with the Nasdaq minimum bid price requirement.

TSC Ratings call: Sell. Biopharmaceutical developer Xoma enjoys a royalty interest in RAPTIVA, a drug used to treat immune system disorders. The company on late Thursday reported a drop in net income to $3 million, or a penny per share, compared with net income of $10 million, or 7 cents per share in the fourth quarter of 2008. Fourth-quarter total revenues came in at $21.6 million, vs. $36.9 million in the same period last year. It swung to a third-quarter profit of $1.5 million, or 1 cent, from a loss of $20 million, or 15 cents, a year earlier. Revenue soared 247% to $27 million. The operating margin rose from negative territory to 24%. Xoma holds $28 million of cash and $13 million of debt. The stock advanced 7.8% to 56 cents in the past year.

Vertro

Closing price: 36 cents (March 11)

Revenue: $103.3 million (trailing 12 months)

Received Nasdaq notice: Sept. 15, 2009

Management's expected action: On Feb. 16, Vertro ( VTRO) was notified that a Nasdaq Listing Qualifications Panel granted the company's request to transfer to the Nasdaq Capital Market and continue its listing on the market. The panel's decision is subject to the condition that, among other things, Vertro demonstrates compliance with all continued listing standards of the Nasdaq Capital Market on or before June 14.

TSC Ratings call: Sell. Vertro owns a portfolio of Internet software products. Its third-quarter loss decreased 94% to $650,000, or 5 cents, but revenue fell 29% to $7.4 million. Its stock has gained 139% over the past twelve months, but commands just 35 cents. It is grossly undervalued when considering sales per share. Still, a shareholders' deficit and continued operating weakness are mitigating factors. The company's operating margin remains in double-digit negatives.

Vaughan Foods

Closing price: 64 cents (March 11)

Revenue: $96.6 million (trailing 12 months)

Received Nasdaq notice: Sept. 15, 2009

Management's expected action: On Feb. 10, Vaughan Foods ( FOOD) said it does not expect that its stock will achieve the required threshold for continued listing by March 15 and has already informed the Nasdaq of its plans to transfer to the OTC Bulletin Board prior to the delisting event. " Management does not intend to appeal Nasdaq's expected action to delist the company's stock since it believes its efforts are better directed towards improving the company's performance and executing its business plan," Vaughan Foods said in a release.

TSC Ratings call: Sell. Vaughan Foods makes refrigerated food products, including vegetables, fruits, salads and dips. Its losses have narrowed considerably in 2009. In the third-quarter, its net loss fell 81% to $220,000, or 5 cents, as revenue inched up 1% to $24 million. Its stock has rallied 38% in the past year, currently costing 65 cents. Its balance sheet stores $830,000 of cash, translating to a weak quick ratio of 0.4, and $12 million of debt.

Veraz Networks

Closing price: 86 cents (March 11)

Revenue: $82.8 million (trailing 12 months)

Received Nasdaq notice: Sept. 15, 2009

Management's expected action: Veraz Networks ( VRAZ) said it will consider available options to resolve the deficiency and regain compliance with the Nasdaq minimum bid price requirement.

TSC Ratings call: Sell. Veraz Networks sells voice infrastructure software to telecom companies. The company reports fourth-quarter results Thursday. Its third-quarter loss lessened 70% to $1.6 million, or 4 cents, as revenue dropped 19% to $19 million. The operating margin ascended from negative territory to 0.2%. Veraz holds $29 million of cash and no debt. Its stock more than doubled in the past year to 91 cents. Shares are cheap relative to those of software peers based on book value and sales.

Pet DRx

Closing price: 41 cents (March 11)

Revenue: $65.3 million (trailing 12 months)

Received Nasdaq notice: Sept. 15, 2009

Management's expected action: "We value our Nasdaq listing and will consider available options, including consummation of a reverse stock split, to resolve the deficiency and regain compliance with the Nasdaq minimum bid price requirement," Pet DRx ( VETS) Chairman and CEO Gene Burleson said in a statement.

TSC Ratings call: Sell. Pet DRx offers primary and specialty veterinary services in California. Its third-quarter loss decreased by 43% to $1.8 million, or 8 cents, as revenue declined 9.1% to $16 million. The operating margin remained in shallow negative territory. Pet DRx holds $3.7 million of cash and $16 million of debt. Its stock, which has a beta value of 2.5, appreciated 60% in the past twelve months to 40 cents. Shares are inexpensive when considering book value and sales. The losses hinder the stock's grade.

Zanett

Closing price: $3.16 (March 11)

Revenue: $42.7 million (trailing 12 months)

Received Nasdaq notice: Sept. 17, 2009

Management's expected action: On March 3, Zanett ( ZANE) confirmed that it expects to receive a delisting determination letter from the Nasdaq by March 15. Zanett expects to request a hearing to appeal the Nasdaq Staff's determination within seven days of receipt of the letter. "We at Zanett plan to file an appeal with the hearing panel, and to vehemently fight to maintain our current Nasdaq listing," Dennis Harkins, Zanett's president, said in a release. "Although the outcome of any appeal process is never known, we believe we stand a good chance for success." Zanett's stock pushed solidly above the $1 mark on March 4 after the company set an in-house corporate record for contracts closed in January and February, with over $12 million dollars in new business closed, although it still finds itself on the Nasdaq's deficiency list.

TSC Ratings call: Sell. Zanett sells customized IT-solutions to mid-sized companies. It swung to a third-quarter loss of $820,000, or 9 cents, from a profit of $130,000, or 2 cents, a year earlier. Revenue decreased 22% to $9.9 million. Zanett's operating margin fell into shallow negative territory. Its balance sheet contains $90,000 of cash and $13 million of debt. The stock has risen eleven-fold in the past year, currently costing $2.88. Shares are cheap based on book value and sales.

Orange 21

Closing price: 70 cents (March 11)

Revenue: $35 million (trailing 12 months)

Received Nasdaq notice: Sept. 16, 2009

Management's expected action: Orange 21 said it will consider available options to resolve the deficiency and regain compliance with the Nasdaq minimum bid price requirement.

TSC Ratings call: Sell. Orange 21 ( ORNG) designs "action-sport" apparel. It swung to a third-quarter loss of $1.1 million, or 10 cents, from a profit of $10,000, or break-even, a year earlier. Revenue dropped 27% to $8.8 million. The company's operating margin fell from 0.3% into the negatives. Its balance sheet stores $720,000 of cash and $4.2 million of debt. The stock has fallen 25% in the past year to 69 cents, underperforming benchmarks. Shares are inexpensive relative to those of apparel peers based on book value, sales and cash flow.

-- Reported by Robert Holmes and Jake Lynch in Boston.

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