The statement means that the company will be submitting a request to perform a 1:40 reverse split. The result will mean that the price of the stock will multiply by 40 and the number of shares that one has will be reduced by a factor of 40.
Example:
Pre-split one owns 4000 shares at a current stock price of $0.032/share = value of $128
Post-split, one would own 100 shares (4000 divided by 40) at a price of $1.28/share ($0.032 x 40) = value of $128
If a company was wanting to list on a bigger exchange, this might be a strategy to get the stock price up to meet the minimum listing requirement on a bigger exchange (i.e. AMEX, NASDAQ, NYSE). Since $1.28 will not meet the minimum requirements for any of these, one can conclude that the management is simply incapable of raising the price out of the gutter.
In general, penny stocks that do a reverse split are predominently seen as bad for investors. One reason might be the fact that with a higher stock price, the margin requirements for shorting are reduced, thus making it an attractive short if the company continues to have no prospects of ever having a legitimate business (as is the case with OBJE in my opinion).
Conversely, forward splits are generally seen as "good" to investors as they make the price more easily purchased in round lots (i.e. lots of 100) and are generally indicative of a stock that continues to grow in value.
