Info from the www.spongetech.com website:
Reverse Stock Split FAQ's
What is a reverse stock split?
A reverse stock split reduces the total number of a company’s issued and outstanding common shares. As a result of the reduction in the number of common shares, the price per common share is intended to increase upon completion of a reverse stock split.
With a reverse stock split, a shareholder has fewer, but higher-priced, shares, intended to keep the total investment the same when the market opens on the date the reverse stock split becomes effective.
How will the reverse stock split affect the stock price? Will the value of my SpongeTech® stock stay absolutely the same after the reverse stock split?
Although the reverse stock split is intended to increase the stock price per share, SpongeTech® cannot predict what the stock price will be after the reverse stock split is effected. As always, SpongeTech®’s stock price is subject to overall market conditions and SpongeTech®’s future financial results. SpongeTech® cannot assure that the price will rise in proportion to the ratio of the reverse split and the ultimate trading price might be higher or lower than expected.
Why has SpongeTech® Delivery Systems effected the reverse stock split?
The purpose of the reverse stock split is to increase the per share market price of SpongeTech® stock, enabling it to qualify for a listing on NASDAQ, which SpongeTech® believes is in the best interests of all shareholders. SpongeTech® believes that the reverse stock split will also enhance the desirability and marketability of SpongeTech® common stock to the financial community and investment public. In addition, SpongeTech® believes it will help mitigate the reluctance of certain brokers and investors to trade in SpongeTech® common stock at pre-reverse split prices.
What is the exchange ratio for the reverse stock split?
The reverse stock split exchange ratio will be 1-for-100. Thus, every 100 common shares will become one common share and 100 shares trading at, for example, $0.20 before the split will become one share at $20.00.
When will the reverse stock split become effective?
The reverse stock split is expected to become effective as of 5:00 P.M. on Tuesday, September 22, 2009, subject to the receipt of necessary regulatory approvals. For trading purposes, the split is expected to become effective on September 22, 2009.
How will fractional shares of SpongeTech® be treated in the reverse stock split?
No fractional shares will be issued. Any fractional share which might result from the reverse stock split will be rounded up to the nearest whole share.
Will the CUSIP number for SpongeTech®’s common stock change?
Yes, SpongeTech was required to obtain a new CUSIP number in order to effect the reverse stock split. The new CUSIP number for SpongeTech®’s common stock will appear on the new stock certificates.
What should I do with the shares of SpongeTech® that I currently own?
If your SpongeTech® shares of common stock are held in a brokerage account, your broker is authorized to exchange the shares for you and the number of shares you own after the split should be reflected in your account. You can contact your broker for more information.
If you hold the stock certificates yourself, you will receive a letter from SpongeTech®’s transfer agent outlining how you may exchange your certificates for new certificates. You should receive the information in the mail in about a week after the reverse stock split takes effect.
Whom should I call if I have questions regarding how the reverse stock split will impact my shares of SpongeTech® common stock?
If you are a beneficial shareholder (in other words, if you hold your shares through a broker, bank or other nominee), you should contact your broker, bank or other nominee directly. You can also contact SpongeTech®’s investor relations consultant, Lippert/Heilshorn & Associates, at hfried@lhai.com or 212.838.3777.
What is the effect on existing shares of SpongeTech® common stock?
The proposed reverse stock split would affect all of SpongeTech®’s stockholders uniformly and would not affect any stockholder’s percentage ownership in SpongeTech®. Voting rights and other rights and preferences of the holders of common stock will not be affected by the reverse stock split.
What is the impact of SpongeTech®’s reverse stock split on Class B stock, preferred stock, options, warrants and other stock-based awards?
The same 1-for-100 reverse stock split ratio will be used to effect the reverse stock split of SpongeTech®’s issued and outstanding common stock, its Class B Stock and preferred stock. Accordingly, all stockholders will be affected proportionately. Options, warrants and other stock-based awards will be adjusted on a similar basis.
