Cannapharmarx Inc (CPMD)

[flemsnopes]

From 14A (3/19/2008)

Proposal #3: REVERSE SPLIT OF COMMON STOCK ISSUED AND OUTSTANDING

We are asking shareholders to approve a pro-rata reverse split of our
common stock, by which up to each three shares would become one share.
Fractional shares will be rounded up to the next whole share. The effective date
of the reverse split will be when the Board decides to effectuate the split
within one year after date of the meeting. This is not a "going private"
transaction, and no shareholders will be reduced to less than one share.

We believe the recent per share price of the common stock has had a
negative effect on the marketability of the existing shares, the amount and
percentage of transaction costs paid by individual stockholders, and impairs the
potential ability of the Company to raise capital by issuing new shares due to
the low price.

We believe that reverse split will be advantageous to us and to all
shareholders, because it may provide the opportunity for higher share prices
based upon fewer shares. It is also a factor that most brokerage houses do not
permit or favor lower-priced stocks to be used as collateral for margin
accounts. Certain polices and practices of the securities industry may tent to
discourage individual brokers within those firms from dealing in lower-priced
stocks. Some of those polices and practices involve time-consuming procedures
that make the handling of lower priced stocks economically unattractive. The
brokerage commissions on the purchase or sale of lower priced stocks may also
represent a higher percentage of the price than the brokerage commission on
higher priced stocks.

Shareholders should note that, after the reverse split, the number of
our authorized shares will remain unchanged, while the number of issued and
outstanding shares of our company will be reduced by the factor of the reverse,
i.e. up to one for one hundred shares. It is important to realize that the
issuance of additional shares is in the discretion of the Board of Directors, in
their best business judgment, and our shareholders will have no right to vote on
future issuances of shares except in the event of a merger under Colorado law.
This means that, effectively, our shareholders will have no ability or capacity
to prevent dilution by the issuance of substantial amounts of additional shares
for consideration that could be considerably less than what our existing
shareholders paid for their shares. In many events, control of our company could
effectively be changed by issuances of shares without shareholder approval.