False. The Company clearly stated the purpose in the required SEC Form Def 14A uploaded on 11/19/2019.
Purpose of Proposed Reverse Stock Split
On September 16, 2019, we received a Bid Price Deficiency Notice (the “Notice”) from OTC Markets Group that our bid price had closed below $0.01 for more than 30 consecutive calendar days and thus no longer met the Standards for Continued Eligibility for OTCQB as per the OTCQB Standards Section 2.3(2). The Notice stated that, pursuant to Section 4.1 of the OTCQB Standards, we were granted a cure period of 90 calendar days during which the minimum closing bid price for our common stock must be $0.01 or greater for ten consecutive trading days in order to continue trading on the OTCQB marketplace. If this requirement is not met by December 15, 2019, we will be removed from the OTCQB marketplace. On November 7, 2019, the Company’s cure period was extended until February 5, 2020.
We are submitting this proposal to our stockholders for approval in an attempt to continue to trade on the OTCQB and also in preparation for a potential “uplisting” of our Common Stock from the OTCQB Marketplace to The Nasdaq Capital Market, and to help attract institutional investors with minimum trading price requirements. We believe increasing the trading price of our Common Stock will also assist in our capital-raising efforts by making our Common Stock more attractive to a broader range of investors. Accordingly, we believe that the reverse stock split is in our stockholders’ best interests.
In connection with any potential application for listing our shares on The Nasdaq Capital Market, we believe that the reverse stock split is our best option to meet one of the criteria to obtain an initial listing. The Nasdaq Capital Market requires, among other criteria, an initial bid price of least $4.00 per share and, following initial listing, maintenance of a continued price of at least $1.00 per share. On November 7, 2019, the last reported sale price of our Common Stock on the OTCQB was $0.0082 per share. A decrease in the number of outstanding shares of our Common Stock resulting from the reverse stock split should, absent other factors, assist in ensuring that our per share market price of our Common Stock remains above the required price. However, we cannot provide any assurance that (i) we will pursue a listing on The Nasdaq Capital Market, or (ii) even if we do, our minimum bid price would remain over the minimum bid price requirement of The Nasdaq Capital Market following the reverse stock split.
In addition, an increase in the per share trading value of our Common Stock would be beneficial because it would:
? improve the perception of our Common Stock as an investment security;
? reset our stock price to more normalized trading levels in the face of potentially extended market dislocation;
? appeal to a broader range of investors to generate greater investor interest in us; and
? reduce stockholder transaction costs because investors would pay lower commission to trade a fixed dollar amount of our stock if our stock price were higher than they would if our stock price were lower.
You should consider that, although our Board of Directors believes that a reverse stock split will in fact increase the price of our Common Stock, in many cases, because of variables outside of a company’s control (such as market volatility, investor response to the news of a proposed reverse stock split and the general economic environment), the market price of a company’s shares of Common Stock may in fact decline in value after a reverse stock split. You should also keep in mind that the implementation of a reverse stock split does not have an effect on the actual or intrinsic value of our business or a stockholder’s proportional ownership in our Company. However, should the overall value of our Common Stock decline after the proposed reverse stock split, then the actual or intrinsic value of the shares of our Common Stock held by you will also proportionately decrease as a result of the overall decline in value.
Bruce Lake wrote:
The problem here is that because the company never really articulated clearly the need for their previous RS, all we are left with is speculation.
