Found it. thanks Chuck. Well that sucks. Bunch of clowns running the show here. Already in too deep to sell now... Maybe shrinking the float will make this thing run harder if we ever get real news...
PROPOSAL 7. APPROVAL OF AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT.
Our Board has adopted and is submitting for shareholder vote three amendments to our Certificate that would grant to our Board the discretion to effect a reverse split of all outstanding shares of our common stock, if the Board deems that it is in our and our shareholders’ best interests, at a ratio of (i) one-for-two, (ii) one-for-five or (iii) any amount in between one-for-two and one-for-five (any of which we refer to as a “Reverse Stock Split”). Until one year from the Annual Meeting, our Board will have the sole discretion to elect, as it determines to be in the best interests of Vapor and our shareholders, whether or not to effect a Reverse Stock Split, and if so, at which of the approved exchange ratios. If our Board elects to implement one of the Reverse Stock Splits, the Board would abandon the remaining approved Reverse Stock Splits without need for any further shareholder action. Our Board believes that approval of a proposal granting this discretion to the Board, rather than approval of an immediate Reverse Stock Split at a specified ratio, would provide the Board with maximum flexibility to react to current market conditions and to therefore achieve the purposes of the Reverse Stock Split, if implemented, and to act in the best interests of Vapor and our shareholders.
To effect the reverse stock split, our Board would authorize our management to file a Certificate of Amendment to our Certificate with the Delaware Secretary of State. If our Board elects to implement one of the approved Reverse Stock Splits, the number of issued and outstanding shares of our common stock would be reduced in accordance with the ratio for the selected Reverse Stock Splits. The par value of our common stock would remain unchanged at $0.001 per share, and the number of our authorized shares of common stock would remain unchanged. Our Board may elect not to implement any of the approved Reverse Stock Splits at its sole discretion, even if all of the proposed Reverse Stock Splits are approved by our shareholders. Our Board has approved the proposed grant of discretion to affect a Reverse Stock Split. You may elect to vote in favor of each of the proposed ratios, some of the proposed ratios or none of the proposed ratios. The proposed form of amendment to our Certificate to implement the Reverse Stock Split is attached to this Proxy Statement as Annex C .
Purpose of the Reverse Stock Split
The reasons for the reverse stock split are generally to increase the per share market price of our common stock which we believe will have several benefits to us and our shareholders. Our Board believes that the Reverse Stock Split would, among other things, (i) better enable us to maintain the listing of our common stock on Nasdaq, (ii) facilitate higher levels of stock ownership by institutions whose investment policies generally prohibit investments in lower-priced securities and (iii) better enable us to raise funds to finance our planned operations.
Our common stock is currently listed on the Nasdaq Capital Market. In order to maintain listing on the Nasdaq Capital Market, we must continue to meet certain financial and corporate governance qualifications including a minimum listing price of $1.00. As of the record date, our common stock’s closing price was $_____.
In the event we are unable to maintain compliance with the Nasdaq Capital Market listing requirements, our common stock would be delisted in the future. Following any such delisting, our common stock would be traded over-the-counter on one of the tiers of the OTC Markets. These alternative markets, however, are generally considered to be less efficient than, and not as prestigious as, the Nasdaq Capital Market. Many OTC stocks trade less frequently and in smaller volumes than securities traded on a major exchange like Nasdaq markets, which could have a material adverse effect on the liquidity of our common stock. Moreover, if not listed on a major stock exchange, our common stock would be deemed a “penny stock” under the Securities and Exchange Commission’s rules unless it traded at or above $5.00 per share.
Our Board also believes that an increased stock price may encourage investor interest and improve the marketability of our common stock to a broader range of investors, and thus improve liquidity. Due to the trading volatility often associated with low-priced stocks, many brokerage firms and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Our Board believes that the anticipated higher market price resulting from the reverse stock split would enable institutional investors and brokerage firms with policies and practices such as those described above to invest in our common stock.
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Risks of the Reverse Stock Split
The Reverse Stock Split may not increase our market capitalization, which would prevent us from realizing some of the anticipated benefits of the Reverse Stock Split. The market price of our common stock is based on a number of factors which may be unrelated to the number of shares outstanding. These factors may include our performance, general economic and market conditions and other factors, many of which are beyond our control. The market price per share may not rise, or it may remain constant in proportion to the reduction in the number shares outstanding before the Reverse Stock Split. Accordingly, the total market capitalization of our common stock after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split. In the future, the market price of common stock following the Reverse Stock Split may not equal or exceed the market price prior to the Reverse Stock Split.
Effects of the Reverse Stock Split
Reduction of Shares Held by Individual Shareholders . After the effective date of the Reverse Stock Split, each common shareholder will own fewer shares of our common stock. However, the Reverse Stock Split will affect all of our common shareholders uniformly and will not affect any common shareholder’s percentage ownership interests in us, except to the extent that the Reverse Stock Split results in any of our shareholders owning a fractional share as described below. As discussed further below, we will pay of cash in lieu of fractional shares. The number of shareholders of record will not be affected by the Reverse Stock Split (except to the extent that any shareholder holds only a fractional share interest and receives cash for such interest after the Reverse Stock Split). However, if the Reverse Stock Split is approved, it will increase the number of shareholders who own “odd lots” of less than 100 shares of our common stock. Brokerage commissions and other costs of transactions in odd lots may be higher than the costs of transactions of more than 100 shares of common stock.
Reduction in Total Outstanding Shares. The proposed Reverse Stock Split will reduce the total number of outstanding shares of common stock by a factor based on the ratio of the split. The following table shows the number of shares of our common stock outstanding both before the Reverse Stock Split and after the Reverse Stock Split:
Shares of Common Stock
Outstanding Before the
Reverse Stock Split
Shares of Common Stock
Outstanding After the
Reverse Stock Split
One-for-two split 33,776,263 16,888,132
One-for-five split 33,776,263 6,755,253
If the Reverse Stock Split is between the two numbers in the table above, the number of outstanding shares will be proportionately reduced.
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