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Saturday, November 13, 2010 4:29:21 PM
Why was the action approving the Reverse Stock Split taken?
Our Common Stock is traded on the OTC Bulletin Board. The OTC Bulletin Board is an inter-dealer, over-the-counter market that provides significantly less liquidity than national securities exchanges, such as The NASDAQ Capital Market. We would like to have the flexibility to consider listing our Common Stock, in conjunction with a public offering or otherwise, on a NASDAQ market or on another national securities exchange, but we do not currently meet the listing requirements for a NASDAQ market or any other national securities exchange. To list our Common Stock on The NASDAQ Capital Market, we would be required to have a minimum bid price of $4.00 per share. As of the Reverse Stock Split Authorization Record Date, the closing price of our Common Stock, as quoted on the OTC Bulletin Board, was $ per share. Additionally, the Board of Directors believes that the current market value per share of our Common Stock has reduced the effective marketability of the shares of our Common Stock because institutional investors and investment funds are generally reluctant to invest in lower priced stocks and many brokerage firms are generally reluctant to recommend lower priced stocks to their clients.
The purpose of seeking stockholder approval of a range of exchange ratios from 1-for-2 to 1-for-10 (rather than a fixed exchange ratio) is to provide the Company with flexibility to determine an appropriate reverse split ratio and bring it into effect on short notice, when, and if, needed to meet the listing requirements of a national securities exchange in connection with the potential listing of our common equity on such national securities exchange. The Board of Directors would effect the Reverse Stock Split only upon the determination that a reverse stock split would be in the best interests of the Company at that time. If the Board of Directors were to effect a Reverse Stock Split, the Board of Directors would set the timing for such a split and select the specific
http://www.sec.gov/Archives/edgar/data/866970/000119312510259023/dpre14c.htm
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