Item 2.05. Costs Associated with Exit or Disposal Activities
On January 10, 2023, Motus GI Holdings, Inc. (the "Company") announced that it
has initiated a process to explore a range of strategic and financing
alternatives focused on maximizing stockholder value and accelerating the
commercialization of the Pure-Vu System. The Company has engaged Lake Street
Capital Markets LLC ("Lake Street Capital") to advise the Company in this
process. Potential strategic alternatives that may be considered by the Company
are expected to include an acquisition, merger, reverse merger, other business
combination, sale of assets, licensing and other strategic transactions.
To support these objectives, on January 5, 2023, the Board of Directors of the
Company (the "Board") approved a strategic restructuring program aimed at
capital preservation. The Company expects to reduce its quarterly cash
expenditures by approximately 35% by eliminating approximately 45% of its
workforce during the first quarter of 2023. In connection with the
restructuring, the Company expects to incur a non-recurring charge of
approximately $1.0 to $2.0 million in the first quarter of 2023. In addition,
the non-management members of the Board agreed to defer their Board fees until a
future date.
Also, on January 5, 2023, the Compensation Committee of the Board and the Board
determined that it would not be approving any management increases in salary or
any cash bonus or equity compensation for 2022 performance but did approve
retention payments as follows: Timothy P. Moran, the Company's Chief Executive
Officer - $150,000; Mark Pomeranz, the Company's President and Chief Operating
Officer - $100,000; and Andrew Taylor, the Company's Chief Financial Officer -
$75,000. Payments are expected to be made on or around April 14, 2023.
The planned restructuring is intended to position the Company to explore all
strategic alternatives, continue supporting its existing customers utilizing
Pure-Vu EVS for colonoscopies, as well as targeting pipeline opportunities with
contracted health systems. In addition, the Company intends to continue to
advance its Pure-Vu EVS Gastro development program, which is designed for use
during an Upper GI endoscopy to improve visualization by clearing debris and may
help improve procedure times and outcomes especially in high acuity situations
like an upper GI bleed. The Company recently announced it intends to seek U.S.
regulatory approval for the Pure-Vu EVS Gastro device in the second half of
2023.
The Company intends to continue to evaluate and identify other areas of its
business to enhance efficiencies and improve processes, with a goal to further
lower its operating expenses and capital needs. There can be no assurance that
this strategic review process will result in any changes to the Company's
current business plans or lead to any specific action or transaction. The
Company does not intend to discuss or disclose further developments during this
strategic review process unless and until its Board of Directors has approved a
specific action or the Company otherwise determines that further disclosure is
appropriate.
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
On January 4, 2023, the Company received notice (the "Notice") from The Nasdaq
Stock Market LLC ("Nasdaq") indicating that it is not in compliance with Nasdaq
Listing Rule 5550(b)(1) which requires companies listed on Nasdaq to maintain a
minimum $2,500,000 in stockholders' equity for continued listing. The Company
reported stockholders' equity of $762,000 in its quarterly report on Form 10-Q
for the period ended September 30, 2022, and, as a result, does not currently
satisfy Listing Rule 5550(b)(1).
The Notice has no immediate impact on the listing of the Company's common stock,
which will continue to be listed and traded on Nasdaq, subject to the Company's
compliance with the other continued listing requirements. The Notice provides
the Company with 45 calendar days, or until February 18, 2023, to submit a plan
to regain compliance. If the plan is accepted, the Company will be granted up to
180 calendar days from January 4, 2023, to evidence compliance. There can be no
assurance that the Company will be able to regain compliance with all applicable
continued listing requirements or that its plan will be accepted by the Nasdaq
staff. In the event the plan is not accepted by the Nasdaq staff, or in the
event the plan is accepted and the compliance period granted but the Company
fails to regain compliance within the compliance period, the Company would have
the right to a hearing before an independent panel. The hearing request would
halt any suspension or delisting action pending the conclusion of the hearing
process and the expiration of any additional extension period granted by the
panel following the hearing.
2
The Company intends to take all reasonable measures available to regain
compliance under the Nasdaq Listing Rules and remain listed on Nasdaq. The
Company is currently evaluating its available options to resolve the deficiency
and regain compliance with the Nasdaq minimum stockholders' equity requirement.
The Company intends to submit the compliance plan by the Nasdaq deadline.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
See the description of the retention payments under Item 2.05. Costs Associated
with Exit or Disposal Activities.
Item 7.01. Regulation FD.
On January 10, 2023, the Company issued a press release announcing that it has
initiated the process of exploring strategic alternatives after engaging Lake
Street Capital as an advisor and has implemented an internal restructuring plan
to preserve capital. A copy of the press release is attached hereto as Exhibit
99.1.
The information in this Current Report on Form 8-K under Item 7.01, including
the information contained in Exhibit 99.1, is being furnished to the Securities
and Exchange Commission, and shall not be deemed to be "filed" for the purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that section, and shall not be
deemed to be incorporated by reference into any filing under the Securities Act
of 1933, as amended, or the Exchange Act, except as shall be expressly set forth
by a specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) The following exhibit is furnished with this report:
Exhibit No. Description
99.1 Press Release issued by Motus GI Holdings, Inc., dated January 10,
2022.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
3
© Edgar Online, source Glimpses