Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
On April 7, 2017, the Company received three deficiency notification letters from the Listing Qualifications Department (the “Staff”) of The NASDAQ Stock Market (“Nasdaq”).
The first letter provided notification that the Company no longer complies with the audit committee composition requirement under Listing Rule 5605(c)(2). Previously, on July 14, 2016, the Staff notified the Company that it was eligible for a cure period, through June 24, 2017, to comply with Rule 5605(c)(2) due to the fact that there was one vacancy on the Company’s audit committee. However, due to the resignation of Tommy Eng from the Company’s board of directors effective April 1, 2017, the Company’s audit committee is comprised of only one independent director, and therefore, the Company is no longer eligible for the cure period described in the Staff’s July 14, 2016 notification letter. Under Rule 5605(c)(2), the Company has 45 calendar days to submit a plan to regain compliance. If the Company’s plan is accepted, the Staff can grant an extension of up to 180 calendar days from the date of the letter to evidence compliance. If the Staff does not accept the Company’s plan, the Company will have the opportunity to appeal that decision before a Nasdaq Hearings Panel (“Panel”).
The second letter provided notification that the Company no longer complies with Nasdaq’s compensation committee requirement, as set forth in Listing Rule 5605(d)(2)(A). Nasdaq Listing Rule 5605(d)(2)(A) requires a listed company to have a compensation committee comprised of at least two independent members. Chi-Ping Hsu, a former independent director and member of the Company’s compensation committee, resigned from the board of directors effective February 28, 2017. As a result, the number of independent directors on the Company’s compensation committee was reduced from two to one. The second letter also states that the Company will be provided: (i) until the earlier of the Company’s next annual shareholders’ meeting or February 28, 2018 or (ii) if the next annual shareholders’ meeting is held before August 28, 2017, then the Company must evidence compliance no later than August 28, 2017. If the Company does not regain compliance during this period, then the Staff will provide notice that the Company’s securities will be subject to delisting. At such time, the Company may appeal the delisting determination to a Panel. The Company would remain listed pending the Panel’s decision. There can be no assurance that, if the Company does appeal a subsequent delisting determination by the Staff to the Panel, that such appeal would be successful.
The third letter provided notification that the Company no longer complies with Nasdaq’s independent director requirement, as set forth in Listing Rule 5605(b)(1). Nasdaq Listing Rule 5605(b)(1) requires a majority of the board of directors of a listed company to be comprised of independent directors, as defined in Rule 5605(b)(1). As a result of Tommy Eng’s resignation from the Company’s board of directors effective April 1, 2017, the Company’s board of directors is no longer comprised of a majority of independent directors. The third letter also states that the Company will be provided: (i) until the earlier of the Company’s next annual shareholders’ meeting or April 2, 2018 or (ii) if the next annual shareholders’ meeting is held before September 28, 2017, then the Company must evidence compliance no later than September 28, 2017. If the Company does not regain compliance during this period, then the Staff will provide notice that the Company’s securities will be subject to delisting. At such time, the Company may appeal the delisting determination to a Panel. The Company would remain listed pending the Panel’s decision. There can be no assurance that, if the Company does appeal a subsequent delisting determination by the Staff to the Panel, that such appeal would be successful.
These notifications have no immediate effect on the listing or trading of the Company’s common stock, which will continue to trade on The Nasdaq Capital Market under the symbol “MOSY.”