Pulse Beverage Corp. (PINK:PLSB) Announces Production, Crashes

On Friday shareholders of Pulse Beverage Corp. (PINK:PLSB) had to swallow a bitter pill as the stock crashed nearly 20%, losing 28 cents and settling on $1.16 at the bell. Trading was slow in the morning and the stock was steady but an early afternoon volume spike sent the price down.

The company announced completion of initial production of its PULSE® soft drink on February 20 and impending initial rollout in stores. Better late than never, as shareholders have been expecting this bit of news for quite some time. In a letter to shareholders dated November 2012, PLSB announced that the company will “readily be able” to launch PULSE® into its distributor network as early as December.

Additionally, the letter informed stockholders that the two largest natural food distributors, United Natural Food International and Nature’s Best, were “eagerly awaiting” the missed December launch. That statement has been toned down and the Feb 20 press release claimed that it is “expected” the same distributors will sell PULSE®.

The stock climbed in the wake of the steady stream of positive news released by the company, now unassisted by paid promotions that stopped on Feb 1, to the company’s credit. It seems the news for the expected product rollout did not excite investors all that much and the stock took a tumble. PLSB displayed the following numbers as of the date of its last financial report for Q3 of 2012:

• $235 thousand in cash
• $801 thousand in quarterly revenue
• $767 thousand in quarterly net loss

The abovementioned November letter to shareholders touts the Jan-Sep 2012 net sales of PLSB‘s Cabana lemonade worth over $2 million, on a 35% gross margins, failing to mention that the bottom line for the same period was a net loss in excess of $2 million as well, as per the quarterly filing. A large part of the net loss recorded was attributable to share-based compensation.

It remains to be seen whether PLSB has what it takes to consolidate its share price and whether it will sink or swim.