Hi WT,
Further to the response you got from Debbie, which I had also received, I had asked her to clarify the confusion in the ratios.
Here is her reply.
Quote
There are two distinct proposals. The reverse split of between 1:40 and 1:60 and the reduction in authorized shared from 1.35 billion to 500 million.
The reverse split is being proposed to increase the per share price of our common stock to meet the listing requirements of either the NASDAQ Capital Market (“NASDAQ”) or the NYSE MKT (“NYSE MKT”).
NASDAQ requires a minimum bid price of $4.00 or a minimum closing price of $2.00 or $3.00 per share (depending upon the applicable listing standard) in connection with the initial listing application while the NYSE MKT requires a minimum price of $2.00 or $3.00 per share in connection with the initial listing application.
With respect to the decrease in authorized shares, the language below is taken from the proxy statement as well.
We are currently authorized to issue 1,350,000,000 shares of common stock. Although the proposed reverse stock split described in this Proposal No. 2 will not affect the rights of stockholders or any stockholders’ proportionate equity interest in the Company (except to the extent of a cash-out or rounding up of fractional share interests as further described below), the number of authorized shares of common stock will not be reduced proportionately to the ratio in the reverse stock split. Accordingly, if the Board of Directors implements the reverse stock split, there will be a significant number of authorized but unissued shares of our common stock available as compared to the number of shares of common stock then issued and outstanding. For example, if a 1-for-50 reverse stock split is implemented, we would have approximately 16,548,446 shares of common stock issued and outstanding (based on the number of shares issued and outstanding on July 11, 2014, the record date), with 1,333,451,554 shares of common stock available for issuance. Because the Board is mindful about the potential dilutive effect on existing stockholders, and because the approved and recommended range of exchange ratios would result in more shares becoming available than the Board believes are necessary for reasonably foreseeable future needs, the Board of Directors has also approved and recommended an amendment to our certificate of incorporation to decrease, subject to stockholder approval and implementation of the reverse stock split, the authorized number of shares of our common stock from 1,350,000,000 to 500,000,000. Our Board of Directors believes this number of authorized shares of common stock will provide the Company sufficient shares of authorized capital available to be issued for any proper corporate purpose without further stockholder action.
I hope that this helps.
Unquote.
In short, the 1:40 or 1:60 ratio is for the outstanding share capital and the authorized share capital is being reduced in relation to the revised outstanding shares.
