Mobivity Holdings to Sell Substantially All Operating Assets, Authorize Massive Dilution, and Issue Highly Dilutive Preferred Stock

summarizeSummary

Mobivity Holdings Corp. is selling substantially all of its operating assets for $5 million cash and equity, while also authorizing a massive increase in common and a new preferred stock with highly dilutive anti-dilution features, fundamentally altering its business and shareholder structure.

check_boxKey Events

• Sale of Substantially All Operating Assets

  The company has approved the sale of substantially all of its operating assets for $5,000,000 in cash and 6,328,991 Class B common shares of Holdings, with potential for additional earn-out equity interests. This transaction will significantly reduce the company's business, assets, and revenue base.

• Massive Increase in Authorized Common Stock

  The number of authorized common shares has been increased from 100,000,000 to 200,000,000. If all authorized shares were issued, this would represent a potential dilution of over 170% to existing common shareholders.

• Authorization of Highly Dilutive Preferred Stock

  A new class of 150,000,000 shares of 'Non-Voting Preferred Stock' has been designated, which includes full ratchet anti-dilution protection. This feature is highly unfavorable for common shareholders as it protects preferred holders from future dilutive equity raises.

• Convertible Note Restructuring into Preferred Stock

  Certain outstanding convertible notes will automatically convert into the newly designated Non-Voting Preferred Stock, further disadvantaging common shareholders due to the preferred stock's superior anti-dilution terms.

auto_awesomeAnalysis

Mobivity Holdings Corp. is undergoing a fundamental strategic transformation by selling substantially all of its operating assets. While the $5 million cash consideration is significant relative to the company's current market capitalization, this transaction will drastically reduce the company's business, assets, and revenue base, raising serious questions about its future operations and the viability of its common stock trading on the OTCQB Venture Market. Furthermore, the authorization of an additional 100 million common shares and 150 million shares of a new non-voting preferred stock, which includes highly dilutive full ratchet anti-dilution protection, poses a severe risk of future dilution for existing common shareholders. The conversion of existing convertible notes into this new preferred stock further solidifies the disadvantage for common equity. The substantial compensation package for the President in connection with these transactions also warrants attention. Investors should be aware of the significant negative implications for the company's ongoing business and the potential for substantial dilution of common stock.