Only talk of a Reverse Split? Well let me enlighten you just a bit on this matter...
PROPOSAL 1 — REVERSE SPLIT
Background
As of February 9, 2009, the Company had 291,271,790 shares of Common Stock issued and outstanding. The closing price of Solomon Common Stock on the Over-the-Counter Bulletin Board on February 17, 2009, was $.0053, and over the prior 52 weeks our stock price has ranged from $0.25 to $0.0053 per share.
Purpose of the Reverse Stock Split
The Board of Directors believes that it is in the best interests of the Company and its stockholders to reduce the number of issued and outstanding shares through a reverse stock split. Immediately following the completion of the reverse stock split, the number of shares of Solomon Common Stock issued and outstanding will be reduced proportionately based on the reverse stock split ratio of 1-for-100. If the reverse stock split is approved by the Company’s stockholders and implemented by the Board of Directors, the total number of shares authorized for issuance will be reduced to 50,000,000 from 500,000,000.
The Board of Directors believes implementing a reverse stock split is likely to increase the market price for the Solomon Common Stock because substantially fewer shares will be outstanding. The Board of Directors further believes that the increased market price of Solomon Common Stock expected as a result of implementing the reverse stock split may improve marketability and liquidity and encourage interest and trading in Solomon Common Stock.
For example, the Board of Directors believes that some institutional investors and investment funds are reluctant to invest, and in some cases may be prohibited from investing, in lower-priced stocks and that brokerage firms may be reluctant to recommend lower-priced stocks to their clients. Further, brokerage commissions, as a percentage of the total transaction, tend to be higher for lower-priced stocks. As a result, certain investors may also be dissuaded from purchasing lower-priced stocks. A higher stock price after the reverse stock split may reduce this concern.
Board Discretion to Implement the Reverse Stock Split
No further action on the part of stockholders will be required to either implement or abandon the reverse stock split. If the proposal is approved by stockholders and the Board of Directors decides to implement the reverse stock split, the Company will communicate additional details regarding the reverse stock split to the public prior to its effective date. The Board of Directors reserves the right to elect not to proceed with the reverse stock split if, before July 1, 2009, it determines, in its sole discretion, that the proposal is no longer in the best interests of the Company or its stockholders.
Certain Risks Associated with the Reverse Stock Split
There can be no assurance that after the reverse stock split the market price of Solomon Common Stock will increase in proportion to the reduction in the number of shares of Solomon Common Stock issued and outstanding before the proposed reverse stock split. The total market capitalization of Solomon Common Stock after the proposed reverse stock split may be less than the total market capitalization before the proposed reverse stock split for reasons unrelated to the reverse stock split.
Determination of Reverse Stock Split Ratio
In determining the reverse stock split ratio, our Board of Directors considered numerous factors, including:
• the historical and projected trading prices of Solomon Common Stock and volume levels before and after the reverse stock split; • the impact of the reverse split on our ability to raise additional equity capital; • prevailing market conditions; • general economic and other related conditions prevailing in our industry and in the marketplace generally; • the projected impact of the reverse stock split ratio on trading liquidity in Solomon Common Stock and our potential in the future to list our Common Stock on the NASDAQ or American Stock Exchange; • our capitalization (including the number of shares of Solomon Common Stock issued and outstanding); and • the potential devaluation of our market capitalization as a result of a reverse stock split.
Impact of the Proposed Reverse Stock Split if Implemented
The reverse stock split would affect all of Solomon’s stockholders uniformly and would not affect any stockholder’s percentage ownership interest or proportionate voting power except to the extent that a stockholder’s ownership is increased by rounding up the number of shares issued to the next whole share. See “Fractional Shares”, below. The other principal effects of our reverse stock split would be that:
• the number of issued and outstanding shares of Solomon Common Stock will be reduced proportionately based on the reverse stock split ratio;
• the per share exercise price of all outstanding option awards will be increased proportionately, and the number of shares of Solomon Common Stock issuable upon the exercise of all outstanding option awards will be reduced proportionately. These adjustments will result in approximately the same aggregate exercise price being required to be paid for all outstanding option awards upon exercise, although the aggregate number of shares issuable upon the exercise of such option awards will be reduced proportionately following the reverse stock split;
the per share exercise price of all outstanding Common Stock purchase warrants will be increased proportionately, and the number of shares of Solomon Common Stock issuable upon the exercise of all outstanding Common Stock purchase warrants will be reduced proportionately. These adjustments will result in approximately the same aggregate exercise price being required to be paid for all outstanding warrants upon exercise, although the aggregate number of shares issuable upon the exercise of such warrants will be reduced proportionately following the reverse stock split;
• the number of shares reserved for issuance and any maximum number of shares with respect to which equity awards may be granted to any participant under the Company’s equity-based compensation plans will be reduced proportionately based on the reverse stock split ratio; and
• the reverse stock split will likely increase the number of stockholders who own odd lots (less than 100 shares). Stockholders who hold odd lots may experience an increase in the cost of selling their shares and may have greater difficulty in executing sales.
Further, if the reverse split is implemented, the Board of Directors will implement Proposal 2, if Proposal 2 is approved by the stockholders, to reduce the number of authorized shares of Solomon Common Stock to 50,000,000 from 500,000,000.
Although the number of outstanding shares of Solomon Common Stock would decrease following the proposed reverse stock split, the Board of Directors does not intend for the reverse stock split to be the first step in a “going private transaction” within the meaning of Rule 13e-3 of the Securities Exchange Act of 1934.
Fractional Shares
No fractional shares of common stock will be issued in connection with the reverse stock split. If, as a result of the reverse stock split, a stockholder would otherwise hold a fractional share, the stockholder will receive one whole share instead of the fractional share.
Effect on Registered and Beneficial Stockholders
Upon the reverse stock split, we intend to treat stockholders holding shares of Solomon Common Stock in “street name” (that is, held through a bank, broker or other nominee) in the same manner as registered stockholders whose shares of Solomon Common Stock are registered in their names. Banks, brokers or other nominees will be instructed to effect the reverse stock split for their beneficial holders holding shares of Solomon Common Stock in “street name;” however, these banks, brokers or other nominees may apply their own specific procedures for processing the reverse stock split. If you hold your shares of Solomon Common Stock with a bank, broker or other nominee, and if you have any questions in this regard, we encourage you to contact your nominee.
Effect on Registered “Book-Entry” Stockholders
The Company’s registered stockholders may hold some or all of their shares electronically in book-entry form. These stockholders will not have stock certificates evidencing their ownership of Solomon Common Stock. They are, however, provided with a statement reflecting the number of shares of Solomon Common Stock registered in their accounts.
• If you hold registered shares of Solomon Common Stock in a book-entry form, you do not need to take any action to receive your post-reverse stock split shares of Solomon Common Stock in registered book-entry form.
• If you are entitled to post-reverse stock split shares of Solomon Common Stock, a transaction statement will automatically be sent to your address of record as soon as practicable after the effective date of the reverse stock split indicating the number of shares of Solomon Common Stock you hold.
Some registered stockholders hold their shares of Solomon Common Stock in certificate form or a combination of certificate and book-entry form. If any of your shares of Solomon Common Stock are held in certificate form, you will receive a transmittal letter from the Company’s transfer agent as soon as practicable after the effective date of the reverse stock split. The transmittal letter will be accompanied by instructions specifying how you can exchange your certificate representing the pre-reverse stock split shares of Solomon Common Stock for a new certificate.
STOCKHOLDERS SHOULD NOT DESTROY ANY SHARE CERTIFICATES AND SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL REQUESTED TO DO SO.
Accounting Consequences
The par value per share of Solomon Common Stock will remain unchanged at $0.001 per share after the reverse stock split. As a result, on the effective date of the reverse stock split, the stated capital on the Company’s balance sheet attributable to Solomon Common Stock will be reduced proportionately based on the final reverse stock split ratio determined by the Board of Directors, from its present amount, and the additional paid-in capital account shall be credited with the amount by which the stated capital is reduced. After the reverse stock split, net income or loss per share, and other per share amounts will be increased because there will be fewer shares of Solomon Common Stock outstanding. In future financial statements, net income or loss per share and other per share amounts for periods ending before the reverse stock split would be recast to give retroactive effect to the reverse stock split. As described above under “Impact of the Proposed Reverse Stock Split If Implemented,” the per share exercise price of outstanding option awards and Common Stock purchase warrants would increase proportionately, and the number of shares of Solomon Common Stock issuable upon the exercise of outstanding options and warrants would decrease proportionately based on the reverse stock split ratio of 1-for-100. The Company does not expect that any other accounting consequences would arise as a result of the reverse stock split.
No Appraisal Rights
Stockholders will not have dissenters’ or appraisal rights under Delaware corporate law or under the Company’s Certificate of Incorporation, as amended, in connection with the proposed reverse stock split.
Procedure for Effecting Reverse Stock Split
If the stockholders approve the proposal and the Board of Directors decides to implement the reverse stock split, the reverse stock split will become effective at the time and on the date of the filing of, or at such later time as is specified in, the Amendment to the Company’s Certificate of Incorporation. Beginning on the effective date of the reverse stock split, each certificate representing pre-reverse stock split shares of Solomon Common Stock will be deemed for all corporate purposes to evidence ownership of post-reverse stock split shares of Solomon Common Stock.
Federal Income Tax Consequences of the Reverse Stock Split
The following is a discussion of certain material U.S. federal income tax consequences of the reverse stock split. This discussion is included for general information purposes only and does not purport to address all aspects of U.S. federal income tax law that may be relevant to stockholders in light of their particular circumstances. This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), and current Treasury regulations, administrative rulings and court decisions, all of which are subject to change, possibly on a retroactive basis, and any such change could affect the continuing validity of this discussion.
All stockholders are urged to consult with their own tax advisors with respect to the tax consequences of the reverse stock split. This discussion does not address the tax consequences to stockholders that are subject to special tax rules, such as banks, insurance companies, regulated investment companies, personal holding companies, foreign entities, partnerships, nonresident alien individuals, broker-dealers and tax-exempt entities. This summary also assumes that the pre-reverse stock split shares were, and the post-reverse stock split shares will be, held as a “capital asset” as defined in Section 1221 of the Code.
As used herein, the term “U.S. holder” means a holder that is, for U.S. federal income tax purposes:
• a citizen or resident of the United States;
• a corporation or other entity taxed as a corporation created or organized in or under the laws of the United States or any political subdivision thereof;
• an estate the income of which is subject to U.S. federal income tax regardless of its source; or
• a trust (A) if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more “U.S. persons” (as defined in the Code) have the authority to control all substantial decisions of the trust or (B) that has a valid election in effect to be treated as a U.S. person.
No gain or loss should be recognized by a stockholder upon the exchange of pre-reverse stock split shares for post-reverse stock split shares. The aggregate tax basis of the post-reverse stock split shares will be the same as the aggregate tax basis of the pre-reverse stock split shares exchanged in the reverse stock split. A stockholder’s holding period in the post-reverse stock split shares will include the period during which the stockholder held the pre-reverse stock split shares exchanged in the reverse stock split.
Vote Required for Approval
The affirmative vote of holders of a majority of the issued and outstanding shares of Solomon Common Stock entitled to vote at the Special Meeting is required to approve the Company’s proposal to (i) authorize the Board of Directors to effect the reverse stock split and (ii) approve the corresponding amendment to the Certificate of Incorporation, subject to the Board of Directors’ authority to abandon such amendment.
PROPOSAL 2 – REDUCTION IN AUTHORIZED SHARES OF COMMON STOCK
Background
The Certificate of Incorporation of the Company allows the Company to issue a total of 500,000,000 shares of Common Stock. The Company believes that if the 1-for-100 reverse split of Common Stock is approved by stockholders and subsequently implemented by the Board of Directors, it would be appropriate to reduce the number of authorized shares of Common Stock. Accordingly, the Board of Directors proposes that the number of authorized shares of Common Stock be reduced by 90 percent, to 50,000,000 from 500,000,000.
Vote Required for Approval
The affirmative vote of holders of a majority of the issued and outstanding shares of Solomon Common Stock entitled to vote at the Special Meeting is required to approve the Company’s proposal to (i) authorize the Board of Directors to reduce the number of shares of authorized Common Stock to 50,000,000 from 500,000,000, and (ii) approve the corresponding amendment to the Certificate of Incorporation, subject to the Board of Directors’ authority to abandon such amendment if (and only if) the proposal to reverse split the shares of Common Stock is not approved by stockholders and implemented by the Board of Directors
Market Data 
Markets 
AI
