Item 8.01 Other Events.
On
Our Amended and Restated Articles of Incorporation currently authorizes the
issuance of Five Hundred Million (500,000,000) shares divided into four hundred
ninety-five million (495,000,000) shares of common stock with a par value of
From and after the Effective Time, certificates representing the Old Common Stock shall be deemed for all corporate purposes to evidence ownership of New Common Stock in the appropriately reduced whole number of shares. No certificates or script representing fractional share interests in New Common Stock will be issued, and no cash payments will be made therefore. In lieu of any fraction of a share of New Common Stock to which the holder would otherwise be entitled, the holder will receive one (1) whole share of the New Common Stock.
Reasons for the Reverse Split
We believe the Reverse Split will potentially increase the trading price of our
stock price on the OTC Markets. On
Impact of the Reverse Split
Upon effectiveness, the Reverse Split will automatically apply to all issued and
outstanding shares of our common stock, and each shareholder will own a reduced
number of shares of our common stock. Based on our capitalization as of
• the number of shares of our authorized common stock would remain unchanged at 495,000,000 shares;
• the number of shares of our common stock issued and outstanding would be reduced from 23,016,330 shares to approximately 153,442 shares;
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• the rights, preferences and designations of the 5 million shares of our authorized preferred stock, 1,500,000 of which are designated as Series D preferred stock of which 915,500 shares are outstanding and 1,500,000 of which are designated as Series E Preferred Stock of which no shares are outstanding, would remain unchanged; and
• the par value of our common stock and preferred stock would remain
unchanged at
Certain Risk Factors Associated with the Reverse Split or Nasdaq Delisting
A Reverse Split may negatively impact the market for our common stock.
Factors such as our financial results, market conditions and the market perception of our business may adversely affect the market price of our common stock. As a result, there can be no assurance that the total market capitalization of our common stock after the Reverse Split will be equal to or greater than the total market capitalization before the Reverse Split or that the per share market price of our common stock following the Reverse Split will increase in proportion to the reduction in the number of shares of common stock outstanding before the Reverse Split. A decline in the market price of our common stock after the Reverse Split may result in a greater percentage decline than would occur in the absence of a Reverse Split, and the liquidity of our common stock could be adversely affected following such a Reverse Split.
In addition, the Reverse Split may increase the number of shareholders who own odd lots (less than 100 shares). Any shareholder who owns fewer than 15,000 shares of common stock prior to the Reverse Split will own fewer than 100 shares of common stock following the Reverse Split. Shareholders who hold odd lots typically experience an increase in the cost of selling their shares and may have greater difficulty in effecting sales. Furthermore, some shareholders may cease being shareholders of ours following the Reverse Split. Any shareholder who owns fewer than 150 shares of common stock prior to the Reverse Split will own less than one share of common stock following the Reverse Split, and therefore such shareholder will cease being a shareholder of ours.
The Reverse Split would increase our number of authorized but unissued shares of stock, which could negatively impact a potential investor if they purchased our common stock.
Because the number of authorized shares of our common stock will not be reduced proportionately, the Reverse Split, like the two Reverse Splits previously implemented by us, will increase the Board's ability to issue authorized and unissued shares without further shareholder action. Without taking into account the impact of the Reverse Split, we already have a substantial number of authorized but unissued shares of stock, the issuance of which would be dilutive to our existing shareholders and may cause a decline in the trading price of our common stock. With respect to authorized but unissued and unreserved shares, we could use such shares to oppose a hostile takeover attempt or delay or prevent changes in control or changes in or removal of management, including transactions that are favored by a majority of the shareholders or in which the shareholders might otherwise receive a premium for their shares over then-current market prices or benefit in some other manner. We could also use the shares that are available for future issuance in dilutive equity financing transactions. We plan to seek additional financing in the last second quarter of 2022. Other than the foregoing, we have no existing plans to issue any of the authorized but unissued and unreserved shares, whether available as a result of the Reverse Split or otherwise.
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We believe that we will need to raise additional capital to fund our operations, and if additional capital is not available, we will have to delay, reduce or cease operations.
We believe that we will need to raise additional capital to fund our operations. Changing circumstances may cause us to consume capital significantly faster than we currently anticipate and could adversely affect our ability to raise additional capital. Additional financing may not be available when we need it or may not be available on terms that are favorable to us. In addition, the risk that we may not be able to continue as a going concern may make it more difficult to obtain necessary additional funding on terms favorable to us or at all. If we raise additional funding through the issuance of equity securities, our shareholders may suffer dilution and our ability to use our net operating losses to offset future income may be limited. If we raise additional funding through debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, require us to use our cash to make payments under such indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions. If we are unable to secure additional funding, our development programs and our commercialization efforts would be delayed, reduced, or eliminated, our relationships with our suppliers and manufacturers may be harmed, and we may not be able to continue our operations.
Procedure for Effecting the Reverse Split
At or prior to the Effective Time, we will promptly file the Articles of
Amendment with the Secretary of State of the
After the Reverse Split effective date, our common stock will have a new CUSIP number, which is a number used to identify our securities. At such time, each stock certificate representing pre-Reverse Split shares will be deemed for all corporate purposes to evidence ownership of post-Reverse Split shares.
SHAREHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATES AND CERTIFICATES REPRESENTING THE OLD COMMON STOCK WILL BE AUTOMATICALLY ADJUSTED TO REFLECT THE APPROPRIATE NUMBER OF NEW COMMON SHARES AT THE EFFECTIVE TIME.
No Appraisal Rights
Under
Material Federal Income Tax Consequences
The following discussion of certain
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This discussion addresses the
Shareholders are advised to consult their own tax advisers regarding the
No gain or loss will be recognized by a shareholder upon such shareholder's exchange of pre-Reverse Split shares for post-Reverse Split shares pursuant to the Reverse Split. The aggregate tax basis of the post-Reverse Split shares received in the Reverse Split, including any fractional share deemed to have been received, will be equal to the aggregate tax basis of the pre-Reverse Split shares exchanged therefor, and the holding period of the post-Reverse Split shares will include the holding period of the pre-Reverse Split shares.
Item 9.01. Financial Statements and Exhibits. (c) Exhibits. 3.13 Amended and Restated Articles of Incorporation 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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