Well, as with all reverse splits, there will be no immediate effect on shareholders other than they will own 10% of the share quantity that they used to own and, technically, each share will be worth 10x what it was worth before - so, if you owned 10,000 shares valued at $0.02 you will own 1,000 shares at $0.20
There are some good reasons for companies to do this from time to time - generally, potential investors will be more interested in a 20 cent share than a 2 cent share (and real investors will be more interested in a $2 share that a 20 cent one). The problem, of course, is ascertaining how the shares got to 2 cents in the first place which can be a consequence of many factors (lack of business, inability to make a profit, incompetent management, poor governance, dilution, excessive compensation / greed, etc.) - in our case, all of these things apply to some degree.
The real problem is that the authorized number of shares is remaining at 250 million and is not being proportionately reduced. So, potentially, an unchecked management could simply grant themselves, say, 100 million shares at no cost and basically wipe everyone else out.
Proposal 3 is even worse as it asks shareholders to allow the issuance of "blank check" preferred shares whenever the Board decides and subject to whatever rules they determine. It takes real balls to craft something that is as insulting as this to shareholders, many of whom have owned their shares for several years.
I haven't studied the re-incorporation proposal(s) but my current advice to all shareholders is (1) make sure you vote every share that you own, and (2) vote against EVERY proposal in the proxy (though I think I will probably approve the accounting firm). The company has done nothing to earn our trust and is clearly attempting to gain majority control such that they won't have to bother with dissatisfied shareholders in the future.
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