SCHEDULE 14C INFORMATION STATEMENT
June 20, 2016
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
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Filed by the registrant
[ ] Filed by a party other than the registrant
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[ ] Preliminary Information Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))
[X]
Definitive Information Statement
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SIMLATUS CORPORATION
(Name of Registrant as Specified In Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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[X]
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No fee required.
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Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
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Title of each class of Securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.
3) Filing Party:
4) Date Filed:
SCHEDULE 14C INFORMATION STATEMENT
Pursuant to Regulation 14C of the Securities Exchange Act
of 1934 as amended
SIMLATUS CORPORATION
175 Joerschke Drive, Suite A
Grass Valley, California 95945
Dear Simlatus Corporation Stockholders;
NOTICE IS HEREBY GIVEN THAT on June 15, 2016, the Board of Directors of Simlatus Corporation., a Nevada corporation (hereinafter the “Company,” “we,” “our”), approved the following action:
To authorize a 1 for 1,000 reverse split of the Company’s outstanding shares of common stock.
On May 12, 2016, all Stockholders of record of Simlatus Corporation, were mailed a Proxy Statement requesting their vote and inviting them to a Shareholder’s meeting held on June 15, 2016, at 11:00 a.m. PST at the corporate office of Simlatus. Additionally, the Proxy Statement was filed with the Securities and Exchange Commission. No Shareholders of Simlatus Corporation, other than the President/CEO and the CFO, attended the Shareholder meeting and the Company received zero votes via US Postal Service, from Shareholders. The Company received written consent from four Shareholders holding a majority of the voting shares of the Company.
At the Shareholder’s meeting, the Board of Directors, and the majority shareholders, via written consent, voted for a 1 for 1,000 reverse split of the Company’s outstanding shares of common stock; the members of the Board of Directors present at the meeting, approved the reverse split. Accordingly, your consent is not required and is not being solicited in connection with the approval of the Reverse Split. No action is required by you.
The Company obtained the written consent of four stockholders holding 1,000 issued and outstanding shares of the Company’s Series B Voting Preferred Stock, which are equal to approximately 75% of the voting power of the Company’s outstanding capital stock, as of June 15, 2016 (the “Majority Stockholders”), to effect that reverse stock split (the “Reverse Split”). Pursuant to Rule 14c-2 promulgated pursuant to the Securities Exchange Act of 1934, as amended, the Reverse Split will not be effective until twenty (20) days after the date a Definitive Information Statement is filed with the Securities and Exchange Commission and a copy thereof is furnished to each of the Company’s stockholders. Notwithstanding the foregoing, we must notify the Financial Industry Regulatory Authority of the Reverse Split by filing the Issuer Company Related Action Notification Form no later than ten (10) days prior to the anticipated effective date of the Reverse Split.
This Information Statement (the “Information Statement”) has been filed with the Securities and Exchange Commission and is being furnished, pursuant to Section 14C of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to the holders (the “Stockholders”) of the common stock, par value $.00001 per share (the “Common Stock”), of Simlatus Corporation., a Nevada Corporation (the “Company”), to notify such Stockholders that on or about June 15, 2016, the Company received written consents of Stockholders holding 13,738,434,045 shares of voting securities representing approximately 75% of the 18,317,912,060 total shares of voting stock of the Company (the “Majority Stockholders”) to authorize the Company’s Board of Directors to approve the following:
(1) to effect a 1 for 1,000 Reverse Split of the Company’s issued and outstanding shares.
On May 11, 2016, the Board of Directors of the Company approved the Reverse split, subject to Stockholder approval. A Shareholder’s meeting was called, scheduled for June 15, 2016, and notice was given to all Stockholders of record on May 12, 2016. Only the officers and two of the directors attended the meeting on June 15, 2016, at the corporate offices of the Company; the Majority Stockholders approved the Reverse Split by written consent. Accordingly, your consent is not required and is not being solicited in connection with the approval of the Reverse Split. The Reverse Split will become effective when we file the Certificate of Amendment (the “Amendment”) with the Secretary of State of the State of Nevada, twenty (20) days after the Definitive Information Statement is filed and furnished to Stockholders of Record, and approval is obtained from the Financial Industry Regulatory Agency (FINRA).
No action is required by you. The accompanying Information Statement is furnished only to inform our stockholders of the Reverse Split before it occurs, in accordance with the requirements of United States federal securities laws. This Information Statement is being mailed, or made available electronically, on or about June 20, 2016, to all of the Company’s stockholders of record as of the close of business on June 15, 2016.
By: Order of the Board of Directors.
/s/Gary Tilden
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Name: Gary Tilden
Title: Chief Executive Officer
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY.
SIMLATUS CORPORATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934
This Information Statement is distributed to inform our stockholders of a corporate action taken via a Shareholders meeting and consent of the holders of the majority of the outstanding voting power of the Company.
THE REVERSE SPLIT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE FAIRNESS OR MERIT OF THE REVERSE SPLIT NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS INFORMATION STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A PROXY
This Information Statement has been filed with the Securities and Exchange Commission (the “Commission”) and is being furnished by the Board of Directors of Simlatus Corporation. a Nevada corporation (the “Company”) (the “Board”), to the holders of record at the close of business on June 15, 2016, of the Company’s outstanding capital shares, par value $0.0001, pursuant to Rule 14c-2 promulgated pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 78.320 of the Nevada Revised Statutes.
The cost of preparing and furnishing this Information Statement will be paid by the Company. We will furnish this Information Statement to our registered stockholders and certain beneficial stockholders, when requested by brokerage houses, nominees, custodians, fiduciaries and other similar parties.
This Information Statement informs stockholders of the 1 for 1,000 reverse stock split (the “Reverse Split”) approved by written consent by the Board and Majority Stockholders holding 1,000 issued and outstanding shares of the Company’s Series B Voting Preferred Stock, which was equal to approximately 75% of the voting power of the Company’s outstanding capital stock on June 15, 2016 (the “Majority Shareholders”).
Accordingly, all necessary corporate approvals to effectuate the Reverse Split have been obtained. The Company is not seeking approval from its remaining stockholders. This Information Statement is furnished solely for the purpose of informing our stockholders, in the manner required pursuant to the Exchange Act, and the Nevada Revised Statutes, of the Reverse Split. Pursuant to Section 14(c) of the Exchange Act and Rule 14c-2 promulgated pursuant thereto, the Reverse Split will not be effective until twenty (20) days after the date a Definitive Information Statement is filed with the Commission and a copy thereof is mailed, or made electronically available, to each of our stockholders. The Reverse Split is expected to become effective on or after July 18, 2016, or such later date as all conditions and requirements to effectuate the Reverse Split are satisfied. Therefore, this Information Statement is being sent to you for informational purposes only. Notwithstanding the foregoing, we must notify the Financial Industry Regulatory Authority of the Reverse Split by filing the Issuer Company Related Action Notification Form no later than ten (10) days prior to the anticipated effective date of the Reverse Split.
CORPORATE ACTION APPROVED – 1 for 1,000 Reverse Split of all issued and outstanding shares of the Company’s Common Stock.
Amended Certificate of Incorporation
The Company has filed a Certificate of Amendment to the Articles of Incorporation with the State of Nevada in order to effect the Reverse Split.
FORWARD-LOOKING STATEMENTS
This Information Statement and the documents to which we refer you in this Information Statement may contain forward-looking statements that involve numerous risks and uncertainties which may be difficult to predict. The statements contained in this Information Statement that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act, including, without limitation, the management of the Company and the Company’s expectations, beliefs, strategies, objectives, plans, intentions and similar matters. All forward-looking statements included in this Information Statement are based on information available to the Company on the date hereof. In some cases, you can identify forward-looking statements by terminology such as “may,” “can,” “will,” “should,” “could,” “expects,” “plans,” “anticipates,” “intends,” “believes,” “estimates,” “predicts,” “potential,” “targets,” “goals,” “projects,” “outlook,” “continue,” “preliminary,” “guidance,” or variations of such words, similar expressions, or the negative of these terms or other comparable terminology.
Forward-looking statements involve a number of risks and uncertainties, and actual results or events may differ materially from those projected or implied in those statements.
We caution against placing undue reliance on forward-looking statements, which contemplate our current beliefs and are based on information currently available to us as of the date a particular forward-looking statement is made. Any and all such forward-looking statements are as of the date of this Information Statement. We undertake no obligation to revise such forward-looking statements to accommodate future events, changes in circumstances, or changes in beliefs, except as required by law. In the event that we do update any forward- looking statements, no inference should be made that we will make additional updates with respect to that particular forward-looking statement, related matters, or any other forward- looking statements. Any corrections or revisions and other important assumptions and factors that could cause actual results to differ materially from forward-looking statements may appear in the Company’s public filings with the SEC, which are available to the public at the SEC’s website at www.sec.gov. For additional information, please see the section titled “Where You Can Obtain Additional Information” below.
INTRODUCTION
Simlatus Corporation, a Nevada corporation with principal executive offices located at 175 Joerschke Drive, Suite A, Grass Valley, California 95945 (the “Company”), is providing this Information Statement to you. We encourage you to read this entire Information Statement carefully, any exhibits attached hereto and the documents referred to in this Information Statement. You may obtain additional information about the Company by following the instructions in “Where You Can Obtain Additional Information” below.
The Board and Majority Shareholders have authorized the Reverse Split. Any fractional shares will be rounded up to the next whole number. Stockholders have no rights pursuant to the NRS, the Company’s Articles of Incorporation, or the Company’s Bylaws, to exercise dissenters’ rights of appraisal with respect to the Reverse Split.
The Board believes the Reverse Split is necessary and advisable in order to maintain the Company’s financing and capital raising ability, comply with the terms and conditions of certain debt instruments and generally maintain our flexibility in today’s competitive and rapidly changing environment.
Accordingly, it is the Board’s opinion that the Reverse Split would better position the Company to comply with its contractual obligations, to attract potential business candidates and provide our stockholders a greater potential return.
The Nevada Revised Statutes (NRS) provide that the written consent of the holders of outstanding shares of voting capital stock having not less than the minimum number of votes which would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted can approve an action in lieu of conducting a special stockholders' meeting convened for the specific purpose of such action. The NRS, however, require that in the event an action is approved by written consent, a company must provide prompt notice of the taking of any corporate action without a meeting to the stockholders of record who have not consented in writing to such action and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the company. Accordingly, this Information Statement is to provide that notice. The Company held a Shareholders meeting on June 15, 2016, following Notice given on May 12, 2016, to all Shareholders of record on May 12, 2016.
This Information Statement contains a brief summary of the material aspects of the Reverse Split, approved by the Board and the Majority Stockholders.
OUTSTANDING SHARES AND VOTING RIGHTS
As of the date of this Information Statement, the Company’s authorized capitalization consisted of (i) 7,500,000,000 shares of common stock, of which 4,579,478,015 shares are issued and outstanding, and (ii) 20,000,000 shares of preferred stock, of which (a) 1,519,500 shares of Class A Non-Voting Convertible Preferred Stock are issued and outstanding and (b) 1,000 shares of Series B Voting Preferred Stock are issued and outstanding.
Common Stock
Each share of the Company’s common stock entitles its holder to one vote on each matter submitted to the Company’s stockholders. Each share of the Company’s Series B Voting Preferred Stock entitles its holder to votes equal to and counted as 4 times the votes of all of the shares of the Company’s (i) common stock and (ii) other voting preferred stock issued and outstanding on the date of the vote or consent of each matter submitted to the Company’s stockholders. The Company held a Shareholders meeting on June 15, 2016, and invited, via a Proxy Statement sent on May 12, 2016, and filed with the Securities and Exchange Commission on May 12, 2016, asking all stockholders of record to attend and vote on the Reverse Split.
Series A Non-Voting Preferred Stock
The holders of the Class A Non-Voting Convertible Preferred Stock may convert each of their Series A Preferred Stock into one share of the Company’s common stock; however the Series A Preferred Shares have no voting rights.
Series B Voting Preferred Stock
On July 15, 2015, by unanimous written consent of the Board (as permitted pursuant to Nevada law), the number, designation, rights, preferences and privileges of the Series B Voting Preferred Stock were established by the Board (as is permitted pursuant to Nevada law).
On July 1, 2015, the Company filed a Certificate of Designation with the Secretary of State of the State of Nevada (the “Certificate of Designation”) pursuant to which the Company set forth the voting powers, designations, preferences and relative rights of the Series B Voting Preferred Stock.
Among other things, each share of Series B Voting Preferred Stock has voting rights equal to and counted as 4 times the votes of all of the shares of the Company’s (i) common stock and (ii) other voting preferred stock issued and outstanding on the date of the vote or consent of each matter submitted to the Company’s stockholders. For purposes of illustration only, if the total issued and outstanding shares of our Common Stock eligible to vote on the dates of a particular vote is 5,000,000, the voting rights of one share of the Series B Voting Preferred Stock is equal to 20,000,000.
By written consent of the Board, the Company issued 1,000 shares of Series B Voting Preferred Stock to the Majority Stockholders. As a result of the voting rights granted to the Series B Voting Preferred Stock, the Majority Stockholders held approximately 75% of the total voting power of all issued and outstanding voting capital stock of the Company on June 15, 2016.
As of June 15, 2016, there were issued and outstanding (i) 4,579,478,015 shares of Common Stock; (ii) 1,519,500 shares of Class A Non-Voting Preferred Stock; and (iii) 1,000 shares of Series B Voting Preferred Stock.
Based on the foregoing, as of June 15, 2016, the total aggregate amount of votes entitled to vote regarding the approval of the Reverse Split was 18,317,912,060. Pursuant to the NRS at least a majority of the voting equity of the Company, or at least 9,158,956,031 votes are required to approve the Reverse Split by written consent. The Majority Stockholders, which held 13,738,434,045 votes equal to approximately 75% of the voting equity of the Company, has voted in favor of the Reverse Split, thereby satisfying the requirement pursuant to the NRS that at least a majority of the voting equity vote in favor of a corporate action by written consent.
The following table sets forth the name of the holder of Series B Voting Preferred Stock, the number of shares of Series B Voting Preferred Stock held by such holder, the total number of votes that such holder voted in favor of the Reverse Split and the percentage of the issued and outstanding voting equity of the Company that voted in favor thereof:
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Name of Series B Voting Stockholder
(1)
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Number of Shares of Series B Voting Preferred Stock Held
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Number of votes held by such Series B Voting Stockholder
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Number of votes that voted in favor of the Reverse Split
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Percentage of voting equity that voted in favor of the Reverse Split
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Robert Stillwaugh
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250
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2,434,608,511.25
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2,434,608,511.25
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18.75%
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Gary Tilden
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250
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2,434,608,511.25
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2,434,608,511.25
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18.75%
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Mike Schatz
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250
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2,434,608,511.25
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2,434,608,511.25
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18.75%
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Donna Marie Murtaugh
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250
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2,434,608,511.25
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2,434,608,511.25
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18.75%
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(1)
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Robert Stillwaugh is the Chairman of the Board of the Company; Gary Tilden and Mike Schatz are Officers and Directors of the Company. Donna Marie Murtaugh does not have any other ownership interest in the Company, and there exists no other relationship or arrangement between Ms. Murtaugh and the Company.
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REASON FOR REVERSE SPLIT
The Board believes the Reverse Split is necessary and advisable in order to maintain financing and capital raising ability, comply with the terms and conditions of certain financial commitments and related debt instruments and, generally, maintain flexibility in today’s competitive and rapidly changing environment.
The Reverse Split will have the effect of creating newly authorized shares of our common stock. Any issuance of additional shares of our common stock would probably have the effect of diluting the earnings per share and book value per share of outstanding shares of common stock. Any additional shares of our common stock, when issued, would have the same rights and preferences as the shares of common stock presently outstanding. Additional shares of our common stock will be available for issuance by the Board for stock splits or stock dividends, acquisitions, raising additional capital, conversion of debt to equity, stock options, or other corporate purposes. The Company does not anticipate that it would seek authorization from its stockholders for issuance of such shares, unless required by applicable law.
An immediate purpose for the Reverse Split is to provide enough shares of our common stock required to satisfy certain financial commitments evidenced by our convertible debt instruments. The Board determined that the settlement of these outstanding financial commitment could exceed our authorized shares of common stock.
We can provide no assurance that we will not be required to settle all or a portion of our financial commitments prior to effectiveness of the Reverse Split. If we were required to do so, we would be in default pursuant to certain outstanding convertible debt instruments, which could cause the full principal amount of those certain instruments, together with interest and other amounts owing in respect thereof, to the date of acceleration to become, at the holder’s election, immediately due and payable, which could have a materially adverse effect on our business.
There is no assurance that any effect on the price of the Company's common stock will result, or that the market price for the Company's common stock, immediately or shortly after the Reverse Split becomes effective, will increase, or that any increase which may occur will be sustained. The Company cannot control the market's reaction. Further, there can be no assurance that an increased market price, if it occurs as a result of the Reverse Split, will encourage more broker-dealers or investors to become involved in the Company's common stock.
The Board believes that the Reverse Split and any resulting increase per share price of our common stock could also enhance the acceptability and marketability of our common stock to the financial community and investing public. Many institutional investors have policies prohibiting them from holding lower-priced stocks in their portfolios, which reduces the number of potential buyers of our common stock. Additionally, analysts at many brokerage firms are reluctant to recommend lower-priced stocks to their clients or monitor the activity of lower-priced stocks. Brokerage houses also frequently have internal practices and policies that discourage individual brokers from dealing in lower-priced stocks due to, among other reasons, the trading volatility often associated with lower-priced stocks. Some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers. Further, because brokers’ commissions on lower-priced stock generally represent a higher percentage of the stock price than commissions on higher priced stock, investors in lower-priced stocks pay transaction costs which are a higher percentage of their total share value, which may limit the willingness of individual investors and institutions to purchase our common stock.
Potential investors who might consider making investments in the Company may be unwilling to do so when the Company has a large number of shares issued and outstanding with little or no stockholders' equity. In other words, the "dilution" which new investors could experience could discourage them from investing. A reduction in the total outstanding shares of our common stock may, without any assurance, make the Company's capitalization structure more attractive.
For these reasons, the Board has chosen to adopt and recommend the Reverse Split. The Company is not, however, a party to any binding agreement, acquisition agreement or agreement to raise additional working capital, nor can we be certain that the Reverse Split will have a long-term positive effect on the market price of our common stock or increase the Company’s abilities to enter into financing arrangements in the future.
EFFECT OF THE REVERSE SPLIT
The principal effect of the Reverse Split will be the reduction in the number of shares of our common stock issued and outstanding on the effective date of the Reverse Split, from 4,579,478,015 shares, as of the effective date, to approximately 4,579,478 shares (without giving effect to the conversion of the then outstanding convertible indebtedness) depending on the number of whole shares issuable for fractional shares resulting from the Reverse Split).
The Reverse Split will affect all of our common stockholders uniformly. The Reverse Split, however, will adversely affect our common stockholders’ percentage ownership interests in the Company and their proportionate voting power, as the number of shares of the Series B Voting Preferred Stock, and the shares of the Class A Non-Voting Convertible Preferred Stock will not be decreased. Accordingly, the Reverse Split will dilute the equity interests and earnings per share of the existing holders of our common stock. The shares of our common stock issued pursuant to the Reverse Split will remain fully paid and non-assessable. The Reverse Split will not increase or decrease the market capitalization of the Company, although the capitalization will increase upon the conversion of indebtedness. The Reverse Split is not intended as, and will not have the effect of, a “going private transaction” under Rule 13e-3 of the Exchange Act.
The other primary effect of the Reverse Split will be to provide us with additional shares of common stock that will be available for various corporate purposes. We may use the shares of our common stock for, among other things:
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raising working capital through equity issuances;
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providing equity incentives to employees, officers or directors;
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establishing strategic relationships with other companies;
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expanding our business through acquisitions and other investment opportunities;
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paying existing and future obligations and commitments; and
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for general corporate purposes.
Other than the shares of our common stock issuable upon conversion of the indebtedness, we have no definitive plans or arrangements to issue any such shares, although we evaluate, from time to time, potential transactions that may result in the issuance of such shares. The Board believes that it is advisable and in our best interests to have available additional authorized but unissued shares of common stock adequate to provide for our future needs. The unissued shares of our common stock will be available for issuance from time to time as may be deemed advisable or required for various purposes, including the issuance of shares in connection with financing or acquisition transactions.
The history of similar reverse stock splits for companies in similar circumstances is varied. If the Reverse Split is effected and the market price of our common stock declines, the percentage decline as an absolute number and as a percentage of the Company’s overall market capitalization may be greater than would occur in the absence of the Reverse Split.
The liquidity of our common stock could be affected adversely by the decreased number of shares of our common stock outstanding after the Reverse Split. Although the Board believes that a higher stock price could help generate investor interest and increased volume in trading of our common stock, there can be no assurance that the Reverse Split will result in a per share price that will attract institutional investors or investment funds, or that such share price will satisfy the investing guidelines of institutional investors or investment
funds. As a result, the decreased liquidity that may result from having fewer shares issued and outstanding may not be offset by increased investor interest in our common stock.
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The Reverse Split will increase the number of shareholders who own odd-lots. An odd-lot is fewer than 100 shares. Such shareholders may experience an increase in the cost of selling their shares and may have greater difficulty in making sales.
CUSIP Number
When the Reverse Split is effectuated, the Company’s common stock will receive a new CUSIP number, which is the number used to identify the Company’s equity securities, and stock certificates with the older CUSIP number will need to be exchanged for stock certificates with the new CUSIP number. Our common stock will continue to be quoted on the OTC Markets.
Anti-Takeover Effects of the Reverse Split
A possible effect of the Reverse Split may be to discourage a merger, tender offer or proxy contest, or the assumption of control by a holder of a large block of the Company’s voting securities and the removal of incumbent management.
The Board could use the additional shares of our common stock available for issuance to resist or frustrate a third-party take-over effort favored by a majority of the independent stockholders that would provide an above market premium by issuing additional shares of our common stock.
The Reverse Split is not the result of the Board’s knowledge of an effort to accumulate any of the Company’s securities or to obtain control of the Company by means of a merger, tender offer, solicitation or otherwise. Nor is the Reverse Split a plan by the Board to adopt a series of amendments to the Articles of Incorporation or our Bylaws to institute an anti- takeover provision. We do not have any plans or proposals to adopt other provisions or enter into other arrangements that may have material anti-takeover consequences. As specified above, the reason for the Reverse Split is to increase the amount of shares of common stock that we are able to issue in order to effect the conversion of indebtedness, attract potential investors and conduct equity financings.
Although the Reverse Split is not being undertaken by the Board to institute an anti-takeover provision, in the future the Board could, subject to its fiduciary duties and applicable law, use the unissued shares of our common stock to frustrate persons seeking to take over or otherwise gain control of the Company by, for example, privately placing shares with purchasers who might side with the Board in opposing a hostile takeover bid. Shares of our common stock could also be issued to a holder that would thereafter have sufficient voting power to assure that any proposal to amend or repeal the Company’s Bylaws or certain provisions of the Articles of Incorporation would not receive the requisite vote. Such uses of our common stock could render more difficult, or discourage, an attempt to acquire control of the Company, if such transactions were opposed by the Board. However, it is also possible that an indirect result of the anti-takeover effect of the Reverse Split could be that our shareholders will be denied the opportunity to obtain any advantages of a hostile takeover, including, but not limited to, receiving a premium to the then current market price of our common stock, if the same was so offered by a party attempting a hostile takeover of the Company. We are not aware of any party’s interest in or efforts to engage in a hostile take-over attempt as of the date of this Information Statement.
EFFECTIVE DATE AND EFFECTS OF THE REVERSE SPLIT
Pursuant to Rule 14c-2 promulgated pursuant to the Exchange Act, the Reverse Split will not be effective until at least twenty (20) days after the date on which this Information Statement is filed with the Commission and a copy hereof has been mailed, or furnished, to each of our stockholders. The Company anticipates that this Information Statement will be mailed, or furnished, to our stockholders on or about June 20, 2016. Therefore, the Company anticipates that the Reverse Split will be effective on or about July 18, 2016, or such later date as all conditions and requirements to effectuate the Reverse Split are satisfied. Notwithstanding the foregoing, we must notify the Financial Industry Regulatory Authority of the Reverse Split by filing the Issuer Company Related Action Notification Form no later than ten (10) days prior to the anticipated effective date of the Reverse Split.
Exchange Act Registration
We will continue to be subject to the periodic reporting requirements of the Exchange Act. Our common stock is, currently, registered pursuant to Section 12(g) of the Exchange Act and, as a result, we are subject to periodic reporting and other requirements. The Reverse Split will not affect the registration of our common stock pursuant to the Exchange Act.
Accounting Consequences
Upon the Reverse Split becoming effective, the par value per share of our common stock will remain unchanged at $0.00001 per share. As a result, on the effective date of the Reverse Split, the stated capital on the Company's balance sheet attributable to our common stock will be reduced proportionally, based on the exchange ratio of the Reverse Split, from its present amount, and the additional paid-in capital account will be credited with the amount by which the stated capital is reduced. The net income or loss and net book value per share of common stock will be increased, because there will be fewer shares of our common stock outstanding. It is not anticipated that any other accounting consequences will result from the Reverse Split.
Effect of the Reverse Split on Convertible Securities
Proportionate adjustments will be made based on the ratio of the Reverse Split to the number of shares our common stock issuable upon the conversion of all outstanding convertible securities entitling the holders to convert into shares of our common stock. This will result in approximately the same aggregate conversion ratio required to assure the same value of shares of our common stock being delivered upon such conversion immediately following the Reverse Split as was the case immediately preceding the Reverse Split. The number of shares of our common stock reserved for issuance pursuant to these securities will be proportionately based upon the Reverse Split ratio, subject to the Company’s treatment of fractional shares.
No Going Private Transaction
Notwithstanding the decrease in the number of outstanding shares of our common stock following the Reverse Split, the Board does not intend for the Reverse Split to be the first step in a series of plans or proposals of a “going private transaction” within the meaning of Rule 13e-3 promulgated pursuant to the Exchange Act.
Beneficial Holders of Common Stock (shareholders who hold shares in street name)
Upon the implementation of the Reverse Split, the Company intends to treat shares of its common stock held by shareholders through a bank, broker, custodian or other nominee in the same manner as registered shareholders whose shares of common stock are registered in their names. Banks, brokers, custodians or other nominees will be instructed to effectuate the Reverse Split for their beneficial holders holding our common stock in street name. However, those banks, brokers, custodians or other nominees may have procedures different than those for registered shareholders for processing the Reverse Split. Shareholders who hold shares of our common stock with a bank, broker, custodian or other nominee and have any questions in this regard are encouraged to contact their banks, brokers, custodians or other nominees.
Registered “Book-Entry” Holders of Common Stock (shareholders that are registered on our transfer agent’s books and records but do not hold stock certificates)
Certain of the Company’s registered shareholders may hold some or all of their shares of our common stock electronically in book-entry form with our transfer agent. These shareholders do not have stock certificates evidencing their ownership of our common stock. They are, however, provided with statements identifying the number of shares of our common stock registered in their accounts.
Shareholders who hold shares of our common stock electronically in book-entry form with our transfer agent will not need to take action to receive whole shares of post-Reverse Split common stock (the exchange will be automatic), subject to adjustment for treatment of fraction shares.
Holders of Certificated Common Shares
Shareholders holding shares of the Company’s common stock in certificated form will be sent a transmittal letter by the Company’s transfer agent after the Reverse Split is effective. The letter of transmittal will specify instructions regarding how a shareholder should surrender his, her or its certificate(s) representing the Company’s common stock to our transfer agent in exchange for certificates representing the appropriate number of whole shares of post-Reverse Split common stock. No new certificates will be issued to a shareholder until such shareholder has surrendered all old certificates, together with a properly completed and executed letter of transmittal, to our transfer agent. No shareholder will be required to pay a transfer or other fee to exchange his, her or its old certificate(s). Shareholders will then receive new certificates representing the number of whole common shares that they are entitled to as a result of the Reverse Split, subject to the treatment of fractional shares. Until surrendered, the Company will deem outstanding old certificates held by shareholders to be cancelled and only represent the number of whole post-Reverse Split shares of our common stock to which those shareholders are entitled, subject to such treatment of fractional shares. Any old certificates submitted for exchange, whether because of a sale, transfer or other disposition, will automatically be exchanged for new certificates. If an old certificate has a restrictive legend, the new certificate will be issued with the same restrictive legend.
SHAREHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATES AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATES UNTIL REQUESTED TO DO SO.