NOTICE IS HEREBY GIVEN to inform the holders of record of shares of our common stock that on 29th day of December, 2014 our board of directors and stockholders holding a majority of our voting shares authorized the following actions:
- adoption of the 2015 Omnibus Equity Incentive Plan; - adoption of an amendment to our articles of incorporation to effect a reverse stock split by a ratio of 1-for-17;
REASONS FOR REVERSE SPLIT
The reverse stock split combines the outstanding shares of our common stock into a lesser number of outstanding shares in the ratio of one for 17.
In accordance with the terms of the Agreement and Plan of Reorganization among American Liberty Petroleum Corp., Avant Acquisition Corp., Avant Diagnostics, Inc. and the stockholders of Avant Diagnostics, Inc. dated December 29, 2014, we issued certificates that automatically convert to 74,354,139 shares of common stock on the Effective Date of the actions described in this information statement. Each certificate has the number of votes equal to the number of common shares into which the certificate is convertible. However the number of common shares authorized by our present articles of incorporation are not sufficient to issue shares of our common stock upon conversion of the certificates. Therefore, we have authorized a reverse split of shares of common stock that will reduce the number of outstanding shares and provide sufficient authorized and unissued shares to accommodate the conversion. When the reverse split is effective, additional shares are authorized and the certificates will automatically convert to common stock without any action on the part of the shareholders or the company.
Another reason for approving the reverse stock split is to increase the per share price of our common stock to meet the listing requirements of the NYSE listing standards. Our board of directors believes that listing our common stock on the NYSE is in the best interests of the company and its stockholders(aka THE DREAM). If the common stock is listed on the NYSE (it won't), our board of directors believes that the liquidity in the trading market for the common stock could be significantly increased, which could increase the trading price. However, despite approval of the reverse stock split by our board of directors and our stockholders, there is no assurance that our minimum bid price would be or remain following the reverse stock split over the minimum bid price requirement, and the common stock may not be listed on the NYSE.
Our board of directors further believe that an increased stock price may encourage investor interest and improve the marketability of the common stock to a broader range of investors. We believe that the reverse stock split will make our common stock more attractive to a broader range of institutional and other investors, as we have been advised that the current market price of our common stock may affect its acceptability to certain institutional investors, professional investors and other members of the investing public. Many brokerage firms and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. In addition, some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers. Moreover, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of common stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially higher. We believe that the reverse stock split will make our common stock a more attractive and cost effective investment for many investors, which will enhance the liquidity of the holders of our common stock. Accordingly, we believe that authorizing the reverse stock split is in the company’s and our stockholders’ best interests.
Reducing the number of outstanding shares of our common stock through the reverse stock split is intended, absent other factors, to increase the per share market price of our common stock. However, other factors, such as the results of clinical development of our product candidates, our financial results, general market conditions and the market perception of our Company, may adversely affect the market price of our common stock. As a result, there can be no assurance that the reverse stock split, if completed, will result in the intended benefits described above, that the market price of our common stock will increase following the reverse stock split or that the market price of our common stock will not decrease in the future. Additionally, we cannot assure you that the market price per share of our common stock after a reverse stock split will increase in proportion to the reduction in the number of shares of our common stock outstanding before the reverse stock split. Accordingly, the total market capitalization of our common stock after the reverse stock split may be lower than the total market capitalization before the reverse stock split.
The reverse stock split alone would have no effect on our authorized capital stock, and the total number of authorized shares would remain the same as before the reverse stock split. This would have the effect of increasing the number of shares of common stock available for issuance (rinse and repeat...), which the board of directors feels is important to provide us with flexibility and as many alternatives as possible to obtain financing. The board of directors is also mindful about the potential dilutive effect on existing stockholders. For the reasons discussed below, the board of directors has approved and recommended a range of reverse stock split ratios which would result in more shares becoming available than we believe are necessary for reasonably foreseeable future needs. Accordingly, the board of directors and stockholders have approved an amendment to our articles of incorporation implementing of the reverse stock split, to reduce the authorized number of shares of our common stock.
In connection with approving the reverse split, our board of directors and majority shareholders considered, among other things, the historical trading price and trading volume of our common stock; the number of shares of our common stock outstanding; the then-prevailing trading price and trading volume of our common stock; the anticipated impact of the reverse stock split on the trading market for our common stock and prevailing general market and economic conditions.
The form of amendment to our articles of incorporation to effect the reverse stock split is attached as an exhibit to this information statement. The amendment to our articles of incorporation to effect the reverse stock split includes the reverse stock split ratio fixed by our board of directors and our stockholders.
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