In case anyone's interested...this comes from the NTFY SEC filing in Dec. 98.
IMO: These folks were seriously concerned about being delisted from NASDAQ. But I think the recent run-up has allayed those fears!
BTW: Has anyone seen/used/bought the "GotMail" product yet? It sounds neat in the press release.
Read on if your considering long position in this company:
Disclosure: I have no position in NTFY at this time.
From EDGAR:
Dependence on Limited Number of Potential Customers; Need to Develop
Marketing Channels. The Company believes its success, if any, will be largely dependent on its ability to either sell its products to or enter into joint marketing arrangements with the seven Regional Bell Operating Companies and approximately 20 large Local Exchange Carriers in the United States. In particular, the Company believes that its MessageAlert product and Caller-ID products can be sold profitably only if they are sold to or in conjunction with the RBOCs and LECs. The Company also expects to rely significantly on the RBOCs
and LECs as a channel for its Centex Receptionist product. To date, the Company has sold its products to five RBOCs and twelve LECs. Qualifying its product and developing the marketing relationships necessary to make these sales took substantially longer than the Company originally anticipated. RBOCs and LECs tend to be hierarchical organizations characterized by distributed decision- making authority and an institutional reluctance to take risks. Selling a product to or entering into a marketing relationship with an RBOC or LEC is generally a lengthy process requiring multiple meetings with numerous people in the organization. A failure by the Company to develop significantly enhanced relationships with the RBOCs and LECs would have a materially adverse effect on the Company's business and operating results.
Possible Delisting of Securities from The Nasdaq Stock Market. While the Company's Units, Common Stock and Warrants are currently listed on the Nasdaq SmallCap Market there can be no assurance that the Company will continue to meet the criteria for continued listing. Such requirements are (i) either at least $2,000,000 in tangible assets, a $35,000,000 market capitalization or net income of at least $500,000 in two of the three prior years, (ii) at least 500,000 shares in the public float valued at $1,000,000 or more, (iii) a minimum Common Stock bid price of $1.00, (iv) at least two active market makers, and (v) at least 300 holders of the Common Stock. For a period late in
fiscal year 1998, the bid price for the Company's Common Stock fell below $1.00. While the bid price has since risen above $1.00, if the Company is unable to satisfy Nasdaq's maintenance requirements, its securities may be delisted from Nasdaq. In such event, trading, if any, in the Units, Common Stock and Warrants would thereafter be conducted in the over-the-counter market in the so-called "pink sheets" or the NASD's "Electronic Bulletin Board."
Consequently, the liquidity of the Company's securities could be impaired, not only in the number of securities which could be bought and sold, but also through delays in the timing of transactions and lower prices for the Company's securities than might otherwise be attained.
Risk of Low-Price ("Penny") Stocks. If the Company's securities were to be delisted from Nasdaq, they could become subject to Rule 15g-9 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which imposes additional sales practice requirements on broker-dealers which sell such securities to persons other than established customers and "accredited investors" (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses).
For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to sale. Consequently, the rule may adversely affect the ability of broker-dealers to sell the Company's securities.
Commission regulations define a "penny stock" to be any non-Nasdaq equity security that has a market price (as therein defined) of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the Commission relating to the penny stock market. Disclosure is
also required to be made about commissions payable to both the broker-dealer and the registered representative and current quotations for the securities.
Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
The foregoing penny stock restrictions will not apply to the Company's
securities if such securities are listed on Nasdaq and have certain price and volume information provided on a current and continuing basis or if the Company meets certain minimum net tangible assets or average revenue criteria. There can be no assurance that the Company's securities will qualify for exemption from these restrictions. In any event, even if the Company's securities were exempt from such restrictions, it would remain subject to Section 15(b)(6) of
the Exchange Act, which gives the Commission the authority to prohibit any person that is engaged in unlawful conduct while participating in a distribution of a penny stock from associating with a broker-dealer or participating in a distribution of a penny stock, if the Commission finds that such a restriction would be in the public interest. If the Company's securities were subject to the rules on penny stocks, the market liquidity for the Company's securities could be severely adversely affected. |
