"where did they state they weren't filing for an extension?"
It doesn't say they will but doesn't say they won't.
Reasons for the Reverse Split
The Board of Director’s primary objective in proposing the Reverse Split is to increase the per share trading price of our common stock on The NASDAQ Capital Market. The Board of Directors believes that by increasing the price per share of our common stock, the Company may meet and maintain compliance with the listing requirements of The NASDAQ Capital Market. The Board of Directors believes that the liquidity and marketability of our common stock will be adversely affected if it is not quoted on a national securities exchange, as investors can find it more difficult to dispose of, or to obtain accurate quotations as to the market value of, our common stock. The Board of Directors believes that current and prospective investors will view an investment in our common stock more favorably if our common stock remains quoted on The NASDAQ Capital Market.
The Board of Directors also believes that the Reverse Split and any resulting increase in the per share price of our common stock should also enhance the acceptability and marketability of our common stock to the financial community and investing public. Many institutional investors have policies prohibiting them from holding lower-priced stocks in their portfolios, which reduces the number of potential buyers of our common stock. Additionally, analysts at many brokerage firms are reluctant to recommend lower-priced stocks to their clients or monitor the activity of lower-priced stocks. Brokerage houses also frequently have internal practices and policies that discourage individual brokers from dealing in lower-priced stocks. Further, because brokers’ commissions on lower-priced stock generally represent a higher percentage of the stock price than commissions on higher priced stock, investors in lower-priced stocks pay transaction costs which are a higher percentage of their total share value, which may limit the willingness of individual investors and institutions to purchase our common stock.
If effected, we cannot assure you that the Reverse Split will have any of the desired effects described above. More specifically, we cannot assure you that after the Reverse Split the trading price of our common stock will increase proportionately to reflect the ratio for the Reverse Split, that the trading price of our common stock will not decrease to its pre-Reverse Split level, that our market capitalization will be equal to the market capitalization before the Reverse Split, or that we will be able to maintain our listing on The NASDAQ Capital Market.
NASDAQ Requirements for Continued Listing on The NASDAQ Capital Market
Our common stock is currently traded on The NASDAQ Capital Market. On April 12, 2016 we received a letter from the staff of the Listing Qualifications Department (the “Staff”) of NASDAQ notifying us that, for the previous 30 consecutive business days, the bid price for our common stock had closed below the minimum $1.00 per share requirement for continued listing on The NASDAQ Capital Market under NASDAQ’s Listing Rule 5550(a)(2), which requires a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”). In accordance with NASDAQ Listing Rule 5810(c)(3)(A), if during the 180 calendar days following the date of the notification, or prior to October 10, 2016, the closing bid price of our common stock is at or above $1.00 for a minimum of 10 consecutive business days, but generally no more than 20 consecutive business days, the Staff will provide us with written confirmation of compliance. If we do not achieve compliance with the Minimum Bid Price Requirement by October 10, 2016, we may be eligible for an additional 180 calendar days compliance period if we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The NASDAQ Capital Market, with the exception of the Minimum Bid Price Requirement, and provide written notice of our intention to cure the minimum bid price deficiency during the second compliance period, by effecting a reverse stock split, if necessary. However, if it appears to the Staff that we will not be able to cure the deficiency, or if we are otherwise not eligible, the Staff would notify us that our common stock would be subject to delisting. In the event of such notification, we may appeal the Staff’s determination to delist our common stock, but there can be no assurance the Staff would grant our request for continued listing. If our common stock were to be delisted, the liquidity of our common stock would be adversely affected and the trading price of our common stock could decrease.
The Board of Directors has considered the potential harm to the Company of a delisting from The NASDAQ Capital Market and believes it is in the best interests of the Company and our stockholders for the Company to regain compliance with the minimum bid price listing standard.
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Potential Disadvantages of a Reverse Stock Split
As noted above, the principal purpose of the Reverse Split would be to help increase the trading price per share of our common stock by a factor of up to seven. We cannot assure you, however, that the Reverse Split will accomplish this objective for any meaningful period of time. While we expect that the reduction in the number of outstanding shares of common stock will increase the trading price of our common stock, we cannot assure you that the Reverse Split will increase the trading price of our common stock by a multiple equal to the Reverse Split ratio to be determined by the Board of Directors, or result in any permanent increase in the trading price of our common stock, which is dependent upon many factors, including our business and financial performance, general market conditions, and prospects for future success. Should the trading price decline after the Reverse Split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the Reverse Split. In some cases, the per share stock price of companies that have effected reverse stock splits has subsequently declined back to pre-reverse split levels. In addition, a reverse stock split is often viewed negatively by the market and, consequently, can lead to a decrease in our overall market capitalization. If the per share trading price does not increase proportionately as a result of the Reverse Split, then the value of the Company as measured by our stock capitalization will be reduced, perhaps significantly.
The number of shares held by each individual stockholder would be reduced if the Reverse Split is implemented. This will increase the number of stockholders who hold less than a “round lot,” or 100 shares. Typically, the transaction costs to stockholders selling “odd lots” are higher on a per share basis. Consequently, the Reverse Split could increase the transaction costs to existing stockholders in the event they wish to sell all or a portion of their position.
Although the Board of Directors believes that the decrease in the number of shares of our common stock outstanding as a consequence of the Reverse Split and the anticipated increase in the trading price of our common stock could encourage interest in our common stock and possibly promote greater liquidity for our stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the Reverse Split.
Effecting the Reverse Split; Board Discretion to Implement Reverse Split
If approved by stockholders at the Annual Meeting and our Board of Directors decide that it is in the best interests of the Company and our stockholders to effect the Reverse Split, the Board of Directors will establish an appropriate ratio for the Reverse Split based on several factors existing at such time and the Company will subsequently file the Amendment. Our Board of Directors will consider, among other factors, prevailing market conditions, the likely effect of the Reverse Split on the trading price of our common stock, and on our compliance with applicable NASDAQ listing requirements, and the marketability and liquidity of our common stock. The Board of Directors will determine the timing of the filing of the Amendment with the Secretary of State of the State of Delaware to effect the Reverse Split. If, for any reason, the Board of Directors deems it advisable, the Board of Directors, in its sole discretion, may abandon the Reverse at any time prior to the effectiveness of any filing of the Amendment, without further action by our stockholders. The Reverse Split will be effective as of the date and time set forth in the Amendment (the “Effective Time”).
Upon the filing of the Amendment, without further action on the part of the Company or the stockholders, the outstanding shares of common stock held by stockholders of record as of the Effective Time would be converted into a lesser number of shares of common stock calculated in accordance with the terms of the Amendment, based on a reverse split ratio not to exceed 1-for-7. In the event of a Reverse Split at a ratio of 1-for-7, for example, if a stockholder holds 7,000 shares of common stock as of the Effective Time, such stockholder would hold 1,000 shares of common stock following such Reverse Split.
Effect on Outstanding Shares, Options, and Certain Other Securities
If the Reverse Split is implemented, the number of shares of our common stock owned by each stockholder will be reduced in the same proportion as the reduction in the total number of shares outstanding, such that the percentage of our common stock owned by each stockholder will remain unchanged except for any de minimis change resulting from the issuance of one whole share in exchange for any fractional shares that such stockholder would have received as a result of the Reverse Split. The number of shares of common stock that may be purchased upon exercise of outstanding options or other securities convertible into, or exercisable or exchangeable for, shares of our common stock, and the exercise or conversion prices for these securities, will also be adjusted in accordance with their terms, as of the Effective Time. Additionally, the aggregate number of equity-based awards that remain available to be granted under our equity incentive plans and other benefit plans will be reduced proportionately to reflect the Reverse Split.
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Pursuant to the Amended and Restated Rights Agreement (the “Rights Agreement”), dated as of March 16, 2016 between the Company and Broadridge Corporate Issuer Solutions, Inc. (the “Rights Agent”), following the Reverse Split, the number of rights (“Rights”) associated with each share of our common stock issued and outstanding will be proportionately increased by the factor of the Reverse Split. For example, if the Reverse Split is effected at a ratio of 1-for-7, then each share of common stock, which currently has five (5) Rights due to our 1-for-5 reverse stock split on October 16, 2009, following the Reverse Split will have seven 35 Rights. In accordance with Section 12 of the Rights Agreement, this Proxy Statement will also serve as the certificate relating to an adjustment of Rights that is required to be filed with the Rights Agent and mailed to each stockholder.
The Reverse Split will not change the number of shares of our 10.5% Series E Convertible Preferred Stock (the “Series E Preferred Stock”) issued and outstanding; however, pursuant to the Certificate of Designations and Rights and Preferences of our Series E Preferred Stock, the general conversion right with respect to the Series E Preferred Stock of $3.00 per share, following the Reverse Split, will be proportionately increased by the factor of the ratio of the Reverse Split. For example, if the Board of Directors determines to effect the Reverse Split at a ratio of 1-for-7, then the initial per share conversion of our Series E Preferred Stock would increase to $21.00 per share.
The following table contains approximate information relating to our common stock, assuming the Reverse Split is effected at a ratio of 1-for-7 and based on share information as of the close of business on April 30, 2016:
Common Stock Pre-Reverse Split Post-Reverse Split (2)
_____________
(1)
share by the conversion price, currently $3.00 per share (or $21.00 assuming a 1-for-7 Reverse Split ratio). If all outstanding Series E Preferred Stock were converted at the $3.00 per share conversion price (assuming no Reverse Split), the holders of Series E Preferred Stock would receive an aggregate of 13,145,333 shares of our common stock. If all outstanding Series E Preferred Stock were converted at the $21.00 per share conversion price (assuming a assuming a 1-for-7 Reverse Split ratio), the holders of Series E Preferred Stock would receive an aggregate of 1,877,905 shares of our common stock. However, we have reserved the maximum number of shares of our common stock that could be issued upon a change of control event assuming our shares of common stock are acquired for consideration of $0.855 per share or less (or $5.985 assuming a 1-for-7 Reverse Split ratio). In this scenario, each outstanding share of Series E Preferred Stock could be converted into 29 shares of our common stock (or approximately 4 shares of our common stock assuming a 1-for-7 Reverse Split ratio), representing the Share Cap.
Excludes the effect of the issuance of whole shares of common stock in lieu of any fractional shares to which any stockholders would otherwise be entitled as a result of the Reverse Split, in accordance with the procedures described below under “Treatment of Fractional Shares”.
No Effect on Par Value
If we file the Amendment and implement the proposed Reverse Split, the par value of our common stock will not be affected.
Effect on Registration and Stock Trading
Our common stock is currently registered under Section 12(b) of the Exchange Act and we are subject to the periodic reporting and other requirements of the Exchange Act. The proposed Reverse Split will not affect the registration of our common stock under the Exchange Act.
If we implement the proposed Reverse Split, our common stock will continue to trade on The NASDAQ Capital Market under the symbol “PPHM”. However, our common stock would have a new CUSIP number, which is a number used to identify our common stock.
Mechanics of Reverse Split
If this Proposal No. 3 is approved by the stockholders at the Annual Meeting and our Board of Directors decides that it is in the best interests of the Company and our stockholders to effectuate the Reverse Split (i.e., we have not otherwise regained compliance with NASDAQ’s minimum bid requirement), our stockholders will be notified that the Reverse Split has been effected. The mechanics of the Reverse Split will differ depending upon whether a stockholder holds its shares in brokerage accounts or “street name” or whether the shares are registered directly in a stockholder’s name and held in book-entry form or certificate form.
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Outstanding
236,930,485 after split 33,847,213
Reserved for issuance under outstanding options and available for issuance under our stock incentive plans
39,561,165 after split 5,561,595
Reserved for and available for issuance under our 2010 Employee Stock Purchase Plan
1,408,659 after split 201,237
Reserved for issuance upon exercise of outstanding warrants
273,280 after split 39,040
Reserved for issuance upon conversion of our outstanding Series E Preferred Stock (1)
45,745,760 after split 6,535,109
