Facing a delisting notice from the Nasdaq Stock Market, struggling mobile software company Motricity is currently weighing a reorganization plan in which it would become a wholly owned subsidiary of a newly-formed Delaware corporation by the name of Mobile Systems Corp.
In a SEC filing today, Motricity said that it received a delisting notice from the Nasdaq on December 13th which indicated that it would be removed from the stock exchange on December 24th if it did not file an appeal before 1 p.m. tomorrow. The company said it plans to request a hearing to regain compliance with the Nasdaq standards, and as part of that plan it will propose a reverse stock split.
Motricity’s stock is currently trading at 65 cents. It has fallen 27 percent so far this year. The company, which has seen a number of layoffs an executive departures in the past year, including last month’s departure of CEO Jim Smith and last year’s departure of co-founder and CEO Ryan Wuerch last year, plans to seek approval for the reorganization plan at its annual shareholder’s meeting on January 29th.
The consolidated assets and liabilities of Mobile Systems Corp. immediately after the merger would be the same as the consolidated assets and liabilities of Motricity immediately prior to the merger. The sole purpose of the Reorganization is to protect the long-term value to the Company of its substantial net operating loss carryforwards against limitations that could be imposed as a result of certain “ownership changes” as specified under the Internal Revenue Code, which will be accomplished by imposing certain restrictions on the transfer of the common stock of Mobile Systems Corp.