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Medify Solutions Limited (pink Sheets - MFYS) announces Reverse Stock Split

TORONTO, Sept 19, 2006 /PRNewswire-FirstCall via COMTEX/ -- The board of Medify Solutions Limited approved a 1 for 12 reverse stock split. Due to the company's current position and current partners, it was agreed that the share price was not a true reflection of the company position. In line with current plans, Medify needs to be able to reflect its true position through its share price to attract Institutional Investment and mirror it's position as partner to some of the worlds leading corporations.

Under the adjusted quote, Medify Solutions new ticker symbol will be -
pink sheets - MDFY

Below is a full explanation of the split, it's reasoning and actions.


What is a reverse stock split?



A reverse stock split is very similar to a stock split. In a reverse stock split, however, the number of shares you own is reduced by the split ratio and the market price per share is increased accordingly.
When was the reverse stock split announced?
On September 19, 2006, Medify Solutions Limited announced that its Board of Directors had declared a one-for-twelve reverse stock split of Medify Solutions Limited common stock.
When will the reverse stock split take place?
The reverse split will take effect at 5:00 p.m., Eastern Time, on Tuesday, September 19, 2006. So when the stock opens on Wednesday, September 20, it will trade on a split-adjusted basis.
Who will the reverse stock split affect?
The reverse split will affect Medify Solutions Limited shareholders of record as of 5:00 p.m., Eastern Time, September 19, 2006.
Why is Medify Solutions Limited implementing a reverse split?
Medify Solutions Limited's Board believes that effecting a one-for-twelve reverse stock split at this time is in the best interest of shareholders. The purposes of the reverse split are to increase the per share trading price of Medify Solutions Limited's common stock, thereby appealing to a broader range of investors; and to provide investors with more useful information in making period-to-period comparisons of Medify Solutions Limited's earnings per share. To the extent that the reverse split does succeed in attracting more investor interest in the stock, shareholders may also benefit from improved trading liquidity of the stock.
What is the effect of implementing a reverse split?
As a result of the reverse stock split, each twelve shares of outstanding Medify Solutions Limited common stock will be reclassified and combined into one share of common stock.

In addition, upon effectiveness of the reverse split, the total
number of Medify Solutions Limited's shares of common stock
outstanding will be proportionately reduced from approximately
117 million shares to approximately 9.7 million shares.

Finally, with the start of trading on Wednesday, September 20, 2006,
the price per share will increase to reflect the effect of the
reverse split. Medify Solutions Limited stock price tends to be
volatile, and it is not possible to predict the post-split price
exactly, but it should be approximately twelve times the pre-split
price. (For example, if Medify's stock closes at $0.10 on Thursday,
September 14, 2006, it should trade on Friday, September 15, 2006 at
about $1.20. The actual price could, of course, be higher or lower.)

The reverse split will NOT:

- Affect any shareholder's percentage ownership interest in Medify
Solutions Limited;
- Affect any shareholder's proportionate voting power;
- Substantially affect the voting rights or other privileges of any
shareholder (unless the shareholder holds fewer than twelve shares
of Medify Solutions Limited common stock); or,
- Alter the relative rights of common shareholders, warrant holders
or holders of equity compensation plan awards.

How will the reverse split affect Medify Solutions Limited's market
capitalization?



The mechanics of the reverse split will have no effect on Medify's market capitalization. It is impossible to predict the performance of the stock price after the reverse split, however, and changes in the price due to trading would, of course affect the market capitalization.
What are the risks associated with implementing a reverse split?
Medify Solutions Limited can outline certain risks associated with a reverse stock split as follows:

Effecting the reverse stock split may not attract institutional or
other potential investors, or result in a sustained market price that
is high enough to overcome the investor policies and practices.

The trading liquidity of Medify's common stock could be adversely
affected by the reduced number of shares outstanding after a reverse
stock split.



Some shareholders may own less than 100 shares of Medify common stock. A purchase or sale of less than 100 shares (an "odd lot") transaction) may result in incrementally higher trading costs through certain brokers, particularly "full service" brokers. Therefore, those shareholders who own less than 100 shares following the reverse stock split may be required to pay higher transaction costs if they should then determine to sell their shares of Medify common stock.
How will fractional shares be addressed?
Medify will not issue any fractional shares of its common stock as a result of the reverse split. Instead, Medify's transfer agent will aggregate all fractional shares collectively held by Medify shareholders into whole shares and arrange for them to be sold on the open market. Shareholders that would otherwise be entitled to fractional shares will receive a cash payment in an amount equal to the shareholder's pro rata share of the total net proceeds of these sales. Shareholders will not be entitled to receive interest for the period of time between the effective date of the reverse stock split and the date the shareholder receives his or her cash payment.
Shareholders holding fewer than twelve shares of Medify common stock will receive only cash in lieu of fractional shares and will no longer hold any shares of Medify common stock as of the effective time of the split.
As a shareholder, what do I need to do?
There is nothing you need to do now. After the reverse stock split is effective on September 14, 2006, Medify's transfer agent, Fidelity Transfer, will send shareholders of record a Letter of Transmittal to effect the exchange for new shares. Once you receive the Letter of Transmittal, complete it and return it to Fidelity Transfer, along with your existing stock certificates as instructed. When your existing stock certificates are received, they will be exchanged for new certificates representing post-reverse split adjusted shares.
(xx) Please do not send any stock certificates to Medify Solutions Limited. Please do not send any stock certificates to Fidelity Transfer prior to receiving a Letter of Transmittal.(xx)
What if I hold my shares through my broker (in other words, in "street
name")?
If you hold your shares in street name, you should contact your broker to see if any action is required.
Will I receive new stock certificates if I do not surrender my existing
stock certificates?
No. If you are a shareholders of record, you must surrender your existing stock certificates along with a properly executed Letter of Transmittal in order receive a new stock certificate.
What should I do if I have not received a Letter of Transmittal?
If you are a shareholder of record and have not received a letter of transmittal by October 10, contact Fidelity Transfer Shareholder Services at 801 484 7222.
What if I have lost or otherwise do not have my stock certificates?
If you have lost or are missing your stock certificates, or if your stock certificates have been destroyed, follow the instructions contained in the Letter of Transmittal.

What if I have more questions about the mechanics of exchanging my stock
certificates?

Contact Fidelity Transfer Shareholder Services at 801 484 7222.

Will I owe taxes because of the reverse split?



First, please understand that we do not provide tax advice and the response below needs to be read with that in mind. Second, please remember that individual circumstances vary, and therefore, we recommend that anyone who has a question about income taxes (federal, state, local or foreign), consult a tax professional.
Generally speaking, the reverse stock split is not a taxable transaction. Accordingly, except with respect to any cash received in lieu of fractional shares, a shareholder will not recognize any gain or loss as a result of the receipt of post-reverse split common stock.
The aggregate tax basis of the shares of post-reverse split common stock for each shareholder will be the same as the shareholder's aggregate tax basis for the pre-split shares, reduced by the basis allocable to any fractional shares for which the shareholder receives cash. For purposes of determining whether there is a capital gain or loss, a shareholder's holding period for the shares will not be affected by the reverse split.
Shareholders who receive cash in lieu of fractional shares will generally be treated as if they had sold the fractional shares and will recognize a gain or loss in an amount equal to the difference between the cash received and the portion of their basis for the pre-reverse split common stock allocated to the fractional shares.
Shareholders who receive cash for all of their holdings (as a result of owning fewer than twelve shares) and who are not related to any person or entity that holds common stock immediately after the reverse split, will recognize a gain or loss for federal income tax purposes equal to the difference between the cash received and their basis in the pre-reverse split common stock.
Again, because individual circumstances may vary, we recommend you consult a tax professional.
How are Restricted Stock Units treated?
Like stock options, any Restricted Stock Units (RSU's) are subject to the same reverse split ratio and treatment as outstanding shares. As a result, the number of shares underlying an RSU grant will be proportionately reduced.
Three potential reverse split ratios were discussed. Why did the Board
choose 1-for-12?
The Board selected the ratio taking into account a number of factors, including the trading price and market for Medify stock at the time of the split, the prices of peer companies, and overall stock market and economic conditions.


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