According to what Majesco Chief Financial Officer Michael Vesey has told Joystiq today, the company will fend off a Nasdaq stock exchange delisting by launching a reverse stock split in April. Majesco has not been in compliance with Nasdaq rules which require that companies trading on the exchange maintain a minimum price per share of at least $1. The company has not been in compliance with that rule since March of 2013.
Pending shareholder approval, Majesco hopes to reverse stock split between 1-for-3 and 1-for-10 with shareholders in April. This would shift the stock, which is currently trading at around $0.53 a share, to somewhere between $1.09 and $5.30 a share. A reverse stock split will certainly buy the company some time, but for how long really depends on what Majesco can do to generate revenue.
The company said late last year that it planned to focus on its indie publishing label Midnight City – headed up by former IGN Editor-in-Chief Casey Lynch and Doug Kennedy, former president and CEO of public relations firm Reverb Communications. The company also said at the time that it would focus on making real-money casino games in regions where its allowed like Nevada, New Jersey and Delaware. But one of its biggest licenses – the Zumba fitness brand – will no longer be made by the publisher.
If the reverse stock split should fail, Majesco would likely end up trading "over the counter," according to one analyst who spoke to Joystiq.
"Plenty of companies trade 'over the counter' without affiliation to a major exchange," Jeff Reeves, editor at InvestorPlace explains. "While there's admittedly less legitimacy or prestige for stocks that trade off the NYSE or Nasdaq in the eyes of some investors here, it's not an unmanageable situation. In fact, European consumer giant Nestle actually doesn't affiliate with the NYSE or Nasdaq and chooses to list OTC."
We will continue to follow this story as it develops.