Nasdaq thaws iced tea maker’s pivot to blockchain

Nasdaq is looking to give iced tea maker-turned-cryptocurrency miner the boot for attempting to dupe investors with its strange pivot. The U.S.-based, publicly traded Long Island Iced Tea Corp. (LTEA) tripped out analysts in December when it announced it’d be changing its name to Long Blockchain Corp. and announcing plans to invest in cryptocurrency mining and blockchain firms, sending the stock skyrocketing 280 percent.

But on February 15, Nasdaq sent a letter to Long Blockchain announcing its case for delisting the company, stating that “the Staff believed that the Company made a series of public statements designed to mislead investors and to take advantage of general investor interest in bitcoin and blockchain technology, thereby raising concerns about the Company’s suitability for exchange listing.”

Nasdaq’s determination to delist the company is part of an ongoing row with the brand, In October, the stock exchange warned the iced tea maker that, if it didn’t get its market share above $35 million for 10 consecutive days, it would be delisted. Nasdaq gave the company until early April.

The iced tea maker’s wildcard response – announcing plans to pivot into blockchain – worked, but it raised eyebrows at the exchange.

Shaking the teapot

In mid-January, the newly-minted Long Blockchain announced it was entering into a letter-of-intent with Stater Blockchain, a U.K.-based tech company focused on blockchain to acquire 1,000 bitcoin mining “rigs.”

Shortly after, Long Blockchain called off a planned stock sale to fund the purchase of the “rigs” and announced it was abandoning that part of the merger.

“While we continue to believe in the value of mining equipment to the blockchain ecosystem, the purchase of these machines — which was negotiated as a no-risk option to the company — was just one of the multiple strategic avenues we have been considering,” Shamyl Malik, chairman of the company’s blockchain strategy committee, said in a statement. “We will continue to evaluate the purchase of mining equipment for bitcoin and other digital currencies as part of our larger blockchain initiative, which includes, among other potential transactions, the proposed merger with Stater.”

By mid-February, the company announced that Malik would be taking over as CEO of Long Blockchain, sending the shares falling from the initial highs seen in December. Philip Thomas, the outgoing CEO, the company told investors, will take a position as a director of an iced tea subsidiary spinoff in the second quarter of 2018.

“It was always our intention to spin off our beverage business following our shift to blockchain technology and we believe that it is currently the appropriate time to take such action,” said Thomas in a release. “Shamyl has shown great initiative and leadership since joining the team, and his appointment as CEO and our planned spinoff will allow the company to execute on a clear, focused blockchain strategy.”

The story is still ongoing. Long Blockchain has since appealed Nasdaq’s delisting decision. At press time, Long Blockchain’s market cap sat around $30.5 million, below Nasdaq’s warned $35 million cut-off.

The juicy swap

Naturally, amidst the strange days of crypto-mania, Long Blockchain isn’t the first drink company to capitalize on the buzz of new tech.

Last March, SkyPeople Fruit Juice announced it was changing its name to Future FinTech. Stocks for the company soared 200 percent on the news. The company started making strategic moves to pursue its plan, with its subsidiary GlobalKey Supply Chain Ltd., announcing in December an agreement with another technology player to create “a customized Globally Shared Shopping Mall blockchain software system.”

The former juice company followed that up in mid-January with its subsidiary DigiPay FinTech Limited, announcing an agreement to acquire “60 percent of the digital assets associated with DCON, a blockchain development project that has developed 100 communities utilizing blockchain technology.”

The whole thing reminds us of a satirical takedown by Fortune magazine of companies with no real expertise in blockchain looking to elevate their stocks.

The tongue-in-cheek and completely made-up quote from the CEO of State Fair Corn Dogs which was announcing plans to, absurdly, change its name to Crypto Dogs, sums up the whole craze:

“We are committed to maintaining the highest standards in our line of delicious food products, while also mastering the arcana of one of computer science’s most challenging subfields, coming up with an application and business model that none of the people who have been developing cryptocurrency for nearly 10 years have managed to conceive so far, and finding sterling talent to execute our vision at a time when blockchain engineers are mostly busy buying yachts.”

Maybe Long Blockchain should take the delisting as a blessing and stick to selling iced tea.


Andrew Seale

Andrew Seale is a Toronto-based business writer who contributes frequently to Yahoo Canada Finance, The Globe and Mail's Report on Business and The Toronto Star.