INFORMATION STATEMENT

SCHEDULE 14C INFORMATION

(Rule 14c-101)

Information Statement Pursuant to Section 14(c)

of the Securities Exchange Act of 1934

Check the appropriate box:

IEG HOLDINGS CORPORATION

(Name of Registrant As Specified In Its Charter)

Payment of Filing Fee (Check the appropriate box):

Payment of Filing Fee (Check the appropriate box):

IEG HOLDINGS CORPORATION

6160 West Tropicana Ave., Suite E-13

Las Vegas, NV 89103

(702) 227-5626

INFORMATION STATEMENT

PURSUANT TO SECTION 14(C) OF THE SECURITIES EXCHANGE ACT OF 1934

Approximate Date of Mailing: __________________, 2017

TO THE STOCKHOLDERS OF IEG HOLDINGS CORPORATION:

WE ARE NOT ASKING YOU FOR A PROXY

AND YOU ARE REQUESTED NOT TO SEND US A PROXY

THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDERS’ MEETING WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN.

This notice and accompanying Information Statement is furnished to the holders of shares of common stock, par value $0.001 per share (“Common Stock”), of IEG HOLDINGS CORPORATION, a Florida corporation (the “Company”) pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulation 14C and Schedule 14C thereunder, in connection with the approval of the actions described below (collectively, the “Corporate Actions”) taken by unanimous written consent of the Board of Directors of the Company and by written consent of the holder of a majority of the voting power of the issued and outstanding capital stock of the Company:

The purpose of this Information Statement is to notify our stockholders that on June 14, 2017 (the “Record Date”), a stockholder holding a majority of the voting power of our issued and outstanding shares of Common Stock executed a written consent approving the Corporate Actions. In accordance with Rule 14c-2 promulgated under the Exchange Act, the Corporate Actions will become effective no sooner than 20 days after we mail this notice and the accompanying Information Statement to our stockholders.

The written consent that we received constitutes the only stockholder approval required for the Corporate Actions under Florida law and the Company’s certificate of incorporation and bylaws, each as amended. As a result, no further action by any other stockholder is required to approve the Corporate Actions and we have not and will not be soliciting your approval of the Corporate Actions. Notwithstanding, the holders of our Common Stock of record at the close of business on the Record Date are entitled to notice of the stockholder action by written consent.

This notice and the accompanying Information Statement are being mailed to our holders of Common Stock of record as of the Record Date on or about ________________, 2017. This notice and the accompanying Information Statement shall constitute notice to you of the action by written consent in accordance with Rule 14c-2 promulgated under the Exchange Act.

NO VOTE OR OTHER ACTION OF THE COMPANY’S STOCKHOLDERS IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT. WE ARE NOT ASKING FOR A PROXY AND YOU ARE NOT REQUESTED TO SEND US A PROXY.

IEG HOLDINGS CORPORATION

Information Statement Pursuant to Section 14C
of the Securities Exchange Act of 1934

This Information Statement is being mailed on or about _____________, 2017, to all holders of record on June 14, 2017 (the “Record Date”), of the $0.001 par value common stock (the “Common Stock”) of IEG Holdings Corporation, a Florida corporation (the “Company”), in connection with the vote of the Board of Directors of the Company and the approval by written consent of the holders of a majority of the voting power of the issued and outstanding capital stock of the Company to effect a reverse 1-for-1,000 stock split (the “Reverse Split”), followed immediately by a forward 1,000-for-1 stock split (the “Forward Split”) of the Common Stock. As permitted under Florida state law, registered shareholders whose shares of stock are converted into less than one (1) share in the Reverse Split will receive cash payments equal to the fair value of those fractional interests. We refer to the Reverse and Forward Splits, together with the related cash payments to our shareholders with less than 1,000 shares of Common Stock, as the “Reverse/Forward Split.” We also refer to our record shareholders, whose shares of the Company’s Common Stock are registered in their names as “Registered Shareholders.”

Currently, the Company has authorized 300,000,000 shares of Common Stock. As of the Record Date, there were 668 Registered Shareholders of our Common Stock and 9,714,186 shares of our Common Stock were issued and outstanding. In January 2017, the Company commenced an offer (the “Tender Offer”) to exchange 20 shares of the Company’s Common Stock for each share of common stock of OneMain Holdings, Inc. (“OneMain”), par value $0.01 per share, up to an aggregate of 6,747,723 shares of OneMain common stock, representing approximately 4.99% of OneMain’s outstanding shares as of May 1, 2017, validly tendered and not properly withdrawn in the Tender Offer. The Company filed a Schedule TO and a registration statement on Form S-4 relating to the Tender Offer (the “Registration Statement”) with the SEC. The SEC declared the Registration Statement effective on May 19, 2017 and the Tender Offer expired at 5 p.m., Eastern time, on June 15, 2017. An aggregate of 151,994 OneMain shares were tendered for exchange in the Tender Offer. Accordingly, an aggregate of 3,039,880 shares of Company Common Stock were issued to the tendering OneMain stockholders (the “Tendering Stockholders”) in exchange for the OneMain shares tendered by the Tendering Stockholders. As a result, as of June 19, 2017, following the expiration of the Tender Offer, there were 668 Registered Shareholders of our Common Stock and 12,754,066 shares of our Common Stock were issued and outstanding.

Each share of our Common Stock has one vote per share. Paul Mathieson, our Chief Executive Officer, owns 6,900,000 shares of our Common Stock, representing approximately 71.03% of the Company’s issued and outstanding Common Stock as of the Record Date (and 54.1% as of June 19, 2017), which constitutes a majority of the voting power of our issued and outstanding capital stock. The Board of Directors of the Company and Mr. Mathieson approved the Reverse/Forward Split by actions by written consent on June 14, 2017. Since the Board of Directors of the Company and the holder of a majority of the voting power of the Company’s issued and outstanding shares of capital stock have voted in favor of the Reverse/Forward Split, all corporate actions necessary to authorize the Reverse/Forward Split have been taken.

We expect that the Reverse/Forward Split will be effective on or about July 25, 2017 (the “Effective Date”), which date shall be no sooner than 20 days after we mail this notice and the accompanying Information Statement to our stockholders. Our Board retains the authority to abandon the Reverse/Forward Split for any reason at any time prior to the Effective Date. Because the Reverse/Forward Split has already been approved by holders of a majority of the Company’s outstanding shares of Common Stock, you are not required to take any action. This Information Statement provides to you notice that the Reverse/Forward Split has been approved. You will receive no further notice of the approval nor of the Effective Date of the Reverse/Forward Split other than pursuant to reports which the Company will be required to file with the Securities and Exchange Commission in the future.

The Company’s Common Stock is traded over the counter on the OTCQB under the symbol IEGH. The per share closing price of our Common Stock as reported on the OTCQB was $3.60 on the Record Date. The per share closing price of our Common Stock as reported on the OTCQB was $1.25 on June 19, 2017, following expiration of the Tender Offer.

In determining to proceed with the Reverse/Forward Split, the Board considered, among other things, the financial impact upon the Company of continuing to perform customary administrative functions required of it in connection with persons holding less than 1,000 shares and, also, the effect upon such shareholders of the Company’s paying them in cash the fair value of their shares rather than allowing them to continue as shareholders. The Board of Directors concluded that given the relative illiquidity of the Company’s Common Stock, the sporadic trading activity in the Common Stock, and the costs of sale of less than 1,000 shares, it would be appropriate for both the Company and such small shareholders that the Company cash out those shareholders in accordance with the terms described in this Information Statement. In arriving at a determination of the fair value of the per-share cash-out price, the Board of Directors considered the book value of the Company’s shares of Common Stock and historical closing prices of the Company’s stock. See “Determination and Fairness of the Cash-Out Price.”

WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY

REVERSE STOCK SPLIT FOLLOWED BY A FORWARD STOCK SPLIT

Summary

The following summary describes the material terms of the Reverse/Forward Split. This Information Statement contains more detailed descriptions of such terms. We encourage you to read the entire Information Statement and the documents we have incorporated by reference.

Description of the Reverse/Forward Split

Upon the completion of the Reverse Split, shareholders holding only fractional shares will receive a payment equal to the fair value of each share of Common Stock. The fair value of each share of Common Stock will be determined by the average closing price of our shares of Common Stock over the 30 calendar days preceding the Effective Date. Upon completion of the Reverse Split, shareholders with less than 1,000 pre-split shares will have no further interest in the Company and will become entitled only to payment for their pre-split shares. We expect to pay approximately $123,506 in the aggregate to such holders, and no shareholder with a single account is expected to receive more than approximately $1,246 as a result of the cash-out, assuming the cash-out of approximately 98,805 shares held by an aggregate of 247 shareholders each having less than 1,000 shares of Common Stock and a fair value of $1.25 per share, which the Company assumes will be the approximate historical closing price upon which the cash-out price will be determined. See “Structure of the Reverse/Forward Split” and “Background and Purpose of the Reverse/Forward Split.”

Immediately after the effective time of the Reverse Split, we will effect the Forward Split on a 1,000-for-1 share basis, so that each share of Common Stock outstanding after the Reverse Split will be converted into 1,000 shares of Common Stock on a post-split basis. Thus, shareholders who hold 1,000 or more shares prior to the Reverse Split will have the same number of shares of Common Stock following the Forward Split.

Effect of the Reverse/Forward Split on the Company

The Reverse/Forward Split will reduce the number of shareholders of record, which will in turn reduce the Company’s administrative costs associated with such shareholder accounts. Such costs include the cost of printing and mailing annual reports, proxy materials and information statements, as well as any other information which the Company provides to its shareholders on a voluntary or mandatory basis. See “Background and Purpose of the Reverse/Forward Split,” “Structure of the Reverse/Forward Split,” “Effect of the Reverse/Forward Split on the Company,” and “Determination and Fairness of the Cash-Out Price.”

Approving Vote of the Board of Directors and Consenting Shareholders

The Company’s Board of Directors has determined that the Reverse/Forward Split is in the best interests of the Company. The Company has received the approving consent of the holder of a majority of the voting power of the issued and outstanding capital stock of the Company entitled to vote on the Reverse/Forward Split. Accordingly, no additional vote of the Company’s shareholders is required to approve the Reverse/Forward Split. See “Vote Required for Approval.”

Escheat Laws

Under state escheat law, any payment for fractional interest not claimed by a shareholder entitled to such payment may be claimed by various states.

Fairness of the Process

The Board of Directors did not obtain a report, opinion, or appraisal from an appraiser or financial advisor with respect to the Reverse Split and no representative or advisor was retained on behalf of the unaffiliated shareholders to review or negotiate the transaction. The Board of Directors concluded that the expense of these procedures was not reasonable in relation to the size of the transaction contemplated and concluded that the Board of Directors could adequately establish the fairness of the Reverse Split without such outside person. See “Determination and Fairness of the Cash-Out Price.”

Effective Date

We expect that the Reverse/Forward Split will be effective on or about July 25, 2017, which date shall be no sooner than 20 days after we mail this Information Statement and accompanying notice to our stockholders. See “Amendment of the Articles of Incorporation.” Our Board retains the authority to abandon the Reverse/Forward Split for any reason at any time prior to the Effective Date.

Tax Consequences

The Reverse/Forward Split will be treated as a tax-free recapitalization for federal income tax purposes. Accordingly, shareholders who are not cashed out will not recognize gain or loss, and their adjusted tax basis in their stock will not change. Shareholders who receive cash in lieu of fractional shares will recognize capital gain or loss to the extent of the difference between the shareholder’s tax basis in such shares and the amount of cash received in exchange therefor. See “Material U.S. Federal Income Tax Consequences.”

Dissenters’ and Appraisal Rights

Florida law does not provide dissenters’ or appraisal rights as the result of a reverse or forward stock split. See “Appraisal Rights.”

BACKGROUND AND PURPOSE OF THE REVERSE/FORWARD SPLIT

As of the Record Date, we had approximately 668 record stockholders. As of the Record Date, approximately 247 record holders of our Common Stock owned fewer than 1,000 shares. At that time, these 247 stockholders represented approximately 37% of the total number of holders of Common Stock, but held in the aggregate approximately 98,805 shares, or only about 1% of the total number of outstanding shares of Common Stock. As of June 19, 2017, following expiration of the Tender Offer, we had approximately 668 record stockholders. As of June 19, 2017, approximately 247 record holders of our Common Stock owned fewer than 1,000 shares. At that time, these 247 stockholders represented approximately 37% of the total number of holders of Common Stock, but held in the aggregate approximately 98,805 shares, or only about 0.77% of the total number of outstanding shares of Common Stock.

Although the Company intends that the Reverse/Forward Split will affect shareholders holding the Company’s stock in street name, nominees may have different procedures with respect to the Reverse/Forward Split. Accordingly, shareholders holding Common Stock in street name should contact their nominees to determine whether they will be affected by the Reverse/Forward Split.

In the ordinary course, management has from time to time updated our Board on the then current and anticipated costs related to administering the Company’s stockholder accounts, including transfer agent and administration fees and printing and postage costs associated with the mailing of proxy materials and annual reports to each stockholder. Our Board has evaluated the appropriateness and fairness to the Company’s stockholders of a transaction in the form of a reverse stock split followed by a forward stock split, which could create future cost savings for the Company related to the administration of its stockholder accounts.

We expect to benefit from substantial cost savings as a result of the Reverse/Forward Split. The cost of administering each Registered Shareholder’s account is the same regardless of the number of shares held in that account. Therefore, our costs to maintain such small accounts are disproportionately high when compared to the total number of shares involved. In 2016, we incurred costs for Registered Shareholders of approximately $62,022 for transfer agent and other administrative fees, as well as printing and postage costs to mail stockholder materials, and incurred additional costs of approximately $29,951 for printing and postage costs to mail stockholder materials to street name holders and nominees. We expect that these costs will only increase over time. In light of these disproportionate costs, the Board of Directors believes that it is in the best interest of the Company and its shareholders as a whole to eliminate the administrative burden and costs associated with such small accounts. It is expected that the total cost of administering stockholder accounts will be reduced by at least $36,596 per year if the Reverse/Forward Split is completed.

In addition to reducing administrative costs, the Reverse/Forward Split will provide shareholders with fewer than 1,000 shares of Common Stock with a cost-effective way to cash out their investments, because the Company will pay all transaction costs in connection with the Reverse/Forward Split. Otherwise, shareholders with small holdings would likely incur brokerage fees which would be disproportionately high relative to the market value of their shares if they wanted to sell their shares. The Reverse/Forward Split will eliminate these problems for most shareholders with holdings of less than 1,000 shares of Common Stock.

After undertaking a thorough analysis of the advisability of the Reverse/Forward Split and considering the totality of the circumstances, our Board believed that it is fair to the stockholders of the Company, from a financial point of view, and in the best interests of us and our stockholders, including stockholders owning less than 1,000 shares of Common Stock who would be cashed-out in connection with the Reverse Split and stockholders owning 1,000 or more shares of Common Stock who would continue as owners of the Company. The effectuation of the Reverse/Forward Split is conditioned on our Board’s consideration of the totality of the circumstances.

The Company commenced an offer (the “Tender Offer”) to exchange 20 shares of the Company’s Common Stock for each share of common stock of OneMain Holdings, Inc. (“OneMain”), par value $0.01 per share, up to an aggregate of 6,747,723 shares of OneMain common stock, representing approximately 4.99% of OneMain’s outstanding shares as of May 1, 2017, validly tendered and not properly withdrawn in the offer. The Company filed a Schedule TO and a registration statement on Form S-4 relating to the Tender Offer (the “Registration Statement”) with the SEC. The SEC declared the Registration Statement effective on May 19, 2017 and the Tender Offer expired at 5 p.m., Eastern time, on June 15, 2017. An aggregate of 151,994 OneMain shares were tendered for exchange in the Tender Offer. Accordingly, an aggregate of 3,039,880 shares of Company Common Stock are issuable to the tendering OneMain stockholders (the “Tendering Stockholders”) in exchange for the OneMain shares tendered by the Tendering Stockholders.

STRUCTURE OF THE REVERSE/FORWARD SPLIT

The Reverse/Forward Split includes both a reverse stock split and a forward stock split of the Common Stock. The Reverse Split is expected to occur at 6:00 P.M. on the Effective Date and the Forward Split is expected to occur at 6:01 P.M. on the Effective Date. Upon consummation of the Reverse Split, on the Effective Date, each Registered Shareholder will receive one (1) share of Common Stock for each 1,000 shares of Common Stock held in his or her account at that time. If a Registered Shareholder holds 1,000 or more shares of Common Stock in his or her account, any fractional share in such account will not be cashed out after the Reverse Split and the total number of shares held by such holder will not change as a result of the Reverse/Forward Split. Any Registered Shareholder who holds fewer than 1,000 shares of Common Stock in his or her account at the time of the Reverse Split (also referred to as a “Cashed-Out Shareholder”) will receive a cash payment instead of fractional shares. This cash payment will be determined and paid as described below under the caption “Determination and Fairness of the Cash-Out Price.” Immediately following the Reverse Split, all shareholders who are not Cashed-Out Shareholders will receive one (1) share of Common Stock for each 1,000 shares of Common Stock which they held prior to the Reverse Split.

AMENDMENT OF THE ARTICLES OF INCORPORATION

To effect the Reverse/Forward Split, the Company will amend its amended and restated articles of incorporation, as amended (the “Amended and Restated Articles”). The first amendment to be filed will amend the Amended and Restated Articles to provide for the Reverse Split, becoming effective at 6:00 P.M. on the Effective Date, and will accordingly state that each share of Common Stock outstanding prior to the Reverse Split will be automatically reclassified and changed into 1/1,000 ^th of a fully paid and non-assessable share of Common Stock, without increase or decrease in the par value of thereof. The amendment will also provide that no fractional shares shall be issued with respect to any shares of Common Stock held by any shareholder in any one account, which account has fewer than 1,000 shares of Common Stock prior to the effective time of the amendment, and that the Company will pay to the holders of such fractional shares cash in the amount of the fair value of such shares based on the formula described under the caption “Determination and Fairness of the Cash-Out Price,” below. Immediately after the filing of the amendment effecting the Reverse Split, the Company will file the amendment effecting the Forward Split, becoming effective at 6:01 P.M. on the Effective Date, which amendment will provide for the reclassification of each share existing after the Reverse Split into 1,000 shares of Common Stock. See Appendices A and B for the text of the amendments which the Company intends to file to effect the Reverse/Forward Split.

EFFECT OF THE REVERSE/FORWARD SPLIT ON THE COMPANY’S SHAREHOLDERS

Registered Shareholders with Fewer than 1,000 Shares of Common Stock:

When we complete the Reverse/Forward Split and if you are a Cashed-Out Shareholder (that is, a shareholder holding fewer than 1,000 shares of Common Stock immediately prior to the Reverse Split):

Registered “Book-Entry” Holders of Common Stock (i.e., stockholders that are registered on the transfer agent’s books and records but do not hold stock certificates) :

Some of our Registered Shareholders may hold their shares electronically in book-entry form with the transfer agent. These stockholders do not have stock certificates evidencing their ownership in our common stock. They are, however, provided with a statement reflecting the number of shares registered in their accounts.

If you are a Cashed Out Shareholder, upon our transfer agent’s receipt of your pre-reverse stock split certificate(s) if you hold your shares in certificated form and, if required, appropriate tax documentation, you will receive cash payment due to you in lieu of fractional shares. In the event we are unable to locate certain stockholders or if a stockholder fails properly return their pre-reverse stock split certificate(s) if held in certificated form with, if required, appropriate tax documentation, any funds payable to such holders pursuant to the Reverse/Forward Split will be held in escrow until a proper claim is made, subject to applicable abandoned property laws. All shares of Common Stock held by Cashed-Out Shareholders will be void after the Effective Date whether or not the Company receives the Cashed-Out Shareholder’s pre-reverse stock split certificate(s) if held in certificated form or, if required, appropriate tax documentation. All amounts owed to you will be subject to federal income tax and state abandoned property laws. You will not receive any interest on cash payments owed to you as a result of the Reverse/Forward Split. 

Holders of Certificated Shares of Common Stock:

Some of the registered holders of our Common Stock hold their shares in certificate form. If you hold shares in certificate form, you will receive from our transfer agent, VStock Transfer, LLC, as soon as practicable after the Effective Date of the Reverse/Forward Split, instructions on how to surrender your certificate(s) representing the shares you own prior to the Reverse/Forward Split to our transfer agent. Upon our transfer agent’s receipt of your pre-reverse stock split certificate(s) and, if required, appropriate tax documentation, if you are a Cashed-Out Shareholder, you will receive cash payment due to you in lieu of fractional shares. If you are not a Cashed-Out Shareholder, you will receive a new stock certificate representing your post-split shares. In the event we are unable to locate certain stockholders or if a stockholder fails properly to return the stock certificate and appropriate tax documentation, if required, to the transfer agent, any funds payable to such holders pursuant to the Reverse/Forward Split will be held in escrow until a proper claim is made, subject to applicable abandoned property laws. Please do not send your certificates to our transfer agent until you receive instructions from the transfer agent. All shares of Common Stock held by Cashed-Out Shareholders will be void after the Effective Date whether or not the Company receives the Cashed-Out Shareholder’s stock certificate. All amounts owed to you will be subject to federal income tax and state abandoned property laws. You will not receive any interest on cash payments owed to you as a result of the Reverse/Forward Split.

Registered Shareholders with 1,000 or More Shares of Common Stock:

If you are a Registered Shareholder with 1,000 or more shares of Common Stock as of 6:00 P.M. on the Effective Date, we will first reclassify your shares into 1/1,000 ^th of the number of shares you held immediately prior to the Reverse Split. One minute after the Reverse Split, at 6:01 P.M. on the Effective Date, we will reclassify your shares in the Forward Split into 1,000 times the number of shares you held after the Reverse Split, which will result in the same number of shares you held before the Reverse Split. As a result, the Reverse/Forward Split will not affect the number of shares that you hold if you hold at least 1,000 shares of Common Stock immediately prior to the Reverse Split. To illustrate, if we were to effect the 1-for-1,000 Reverse/1,000-for-1 Forward Split and you held 1,000 shares of Common Stock in your account immediately prior to the Reverse Split, your shares would be converted into one share in the Reverse Split and then back to 1,000 shares in the Forward Split.

Street Name Holders of Common Stock:

The Company intends for the Reverse/Forward Split to treat shareholders holding Common Stock in street name through a nominee (such as a bank or broker) in the same manner as shareholders whose shares are registered in their names. Nominees will be instructed to affect the Reverse/Forward Split for their beneficial holders. However, nominees may have different procedures and shareholders holding Common Stock in street name should contact their nominees.

STOCK CERTIFICATES

The Reverse/Forward Split will not affect any certificates representing shares of Common Stock held by Registered Shareholders owning 1,000 or more shares of Common Stock immediately prior to the Reverse Split. Existing certificates held by any of these shareholders will continue to evidence ownership of the same number of shares as is set forth on the face of the certificate.

DETERMINATION AND FAIRNESS OF THE CASH-OUT PRICE

In order to avoid the expense and inconvenience of issuing fractional shares to shareholders who hold less than one share of Common Stock after the Reverse Split, under Florida state law the Company may pay cash for their fair value. Florida law provides that the cash payment for fractional shares is determined by the Company’s Board of Directors. Under Florida law, the good faith judgment of the Board of Directors as to the fair value is conclusive. The Board has determined that the cash-out payment for fractional shares will be an amount per share equal to the average closing price of the Company’s shares of Common Stock on the OTCQB for the 30 calendar days ending on the trading day prior to the Effective Date, without interest. In general, the “closing price” of a security is the final price at which a security is traded on a given trading day and represents the most up-to-date valuation of a security until trading commences again on the next trading day.

In reaching its determination to proceed with the Reverse/Forward Split, the Board of Directors determined that the direct cost savings to the Company, which the Company estimates to be $36,596 annually, from decreasing the administrative burdens attributable to the distribution of reports and the maintenance of records for holders of less than 1,000 shares of Common Stock will represent significant cost savings to the Company.

Based on the factors noted below, the Board of Directors considered the price to be paid for fractional shares to be fair to Cashed-Out Shareholders, to those persons who remain shareholders of the Company, and to the Company as a whole. The Company’s Common Stock trades on the OTCQB, which is the principal, and in most cases the sole, outlet for a shareholder who wished to dispose of his or her shares of Common Stock. The Board of Directors viewed that market as the best indicator of what a willing buyer would pay to a willing seller, neither of whom is under any compulsion to buy or sell, after considering such factors as its estimate of the Company’s value as a whole, its earnings and performance history, its prospects, the prospects of the industry as a whole, market liquidity, and other factors that typically bear on a common stock purchase or sale decision. The Board of Directors gave particular weight to the current closing prices of the Company’s Common Stock in the over-the-counter market, and noted the relative illiquidity of the Common Stock in that market and the sporadic nature of trades in the Company’s Common Stock. The Board of Directors also noted that if a shareholder prefers not to receive cash in lieu of his or her fractional shares but instead would prefer to remain a shareholder of the Company, such shareholder can purchase (subject, of course, to the availability of shares for purchase in the over-the-counter market) additional shares of Common Stock through the OTCQB market in order to make his or her holdings of Common Stock equal to or greater than 1,000 shares, so that such shareholder would not be a fractional shareholder upon the completion of the Reverse Split. By purchasing sufficient additional shares, a holder of less than 1,000 shares of Common Stock may, prior to the Effective Date, elect to remain a shareholder and continue to participate in the equity of the Company.

The Board of Directors recognizes that as the Company’s stock is not traded as actively as many other companies, this may be a factor in the market price of the Company’s stock. Accordingly, as a reasonableness test of the market price of the Company’s Common Stock, and therefore the cash price to be paid for fractional shares, the Board of Directors considered the relationship between the market price and the net book value per share of the Company. The Board of Directors noted that the net book value per share of the Company’s Common Stock on March 31, 2017, was $0.65, or $2.63 less than what the Company calculates to be the average closing price at that date. Accordingly, while the Board considered the relationship of market value to net book value important in its deliberations, the Board of Directors did not view net book value alone to be a reliable measure of fair value. The Board of Directors noted that net book value does not state all assets and liabilities at market value, nor does it take into account the other considerations that might be part of a transaction between a willing buyer and a willing seller, which transactions the Board of Directors believes to be the best measure of the fair value of the Company’s Common Stock.

EFFECT OF THE REVERSE/FORWARD SPLIT ON THE COMPANY

The Reverse/Forward Split will not affect the public registration of the Common Stock with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. Similarly, we do not expect that the Reverse/Forward Split will affect the continued quotation of the Common Stock on the OTCQB. The Reverse/Forward Split is not intended to make the Company a privately-held company or otherwise to constitute a “going private” transaction.

The number of authorized shares of Common Stock will not change as a result of the Reverse/Forward Split. Upon payment in cash for the fractional shares of the Cashed-Out Shareholders, the total number of outstanding shares of Common Stock will be reduced by the number of shares held by the Cashed-Out Shareholders immediately prior to the Reverse Split. The Company anticipates that its Registered Shareholders will be reduced to approximately 421 as a result of the Reverse/Forward Split.

Although the Company knows the approximate total number of shares that will be cashed out, the total cash to be paid by the Company is more difficult to determine at this time. However, by way of example, if the 1-for-1,000 Reverse/1,000-for-1 Forward Split had been completed using the close price as of June 19, 2017, when the closing price per share was $1.25, then the total cash payments that would have been issued to all Cashed-Out Shareholders, including both Registered Shareholders and street name holders, would have been approximately $123,506. The actual amounts will also depend on the number of Cashed-Out Shareholders on the Effective Date, which may vary from the number of such shareholders on June 19, 2017.

The par value of the Common Stock will remain at $0.001 per share after the Reverse/Forward Split.

The Reverse/Forward Split will reconstitute the Company’s capital so that its stated capital, which consists of the par value per share of Common Stock multiplied by the number of shares of Common Stock issued, will decrease from $2,233,182 to approximately $2,233,083, and additional paid-in capital will decrease from $29,698,025 to $29,574,618. Upon completion of the Reverse/Forward Split, the number of shares of Common Stock issued will be reduced to approximately 9,615,381 shares. As the fractional shares acquired by the Company from Cashed-Out Shareholders in exchange for cash will be retired, based upon the Company’s unaudited financial statements at March 31, 2017, the Reverse/Forward Split will (on a pro forma basis):

The Reverse/Forward Split will increase the percentage ownership of each remaining shareholder of the Company (whether affiliated or unaffiliated) by approximately 1.01%. As the number of shares anticipated to be retired by the Company pursuant to the Reverse/Forward Split constitutes a very small percentage of the total number of issued and outstanding shares, the percentage of issued and outstanding shares of Common Stock held by any shareholder will not change materially as a consequence of the Reverse/Forward Split. See “Security Ownership of Certain Beneficial Owners and Management.”

Any shares acquired from Cashed-Out Shareholders pursuant to the Reverse/Forward Split will be held by the Company as issued but not outstanding stock and may be reissued by the Company for such consideration as the Board of Directors may determine.

The Reverse/Forward Split will not alter voting rights or other rights of shareholders other than Cashed-Out Shareholders.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

We summarize below the material United States federal income tax consequences to the Company and to shareholders resulting from the Reverse/Forward Split. This summary is based on the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), the Treasury Regulations (the “Regulations”) issued pursuant thereto, and published rulings and court decisions in effect as of the date hereof, all of which are subject to change. This summary does not take into account possible changes in such laws or interpretations, including amendments to the Code, applicable statutes, Regulations and proposed Regulations or changes in judicial or administrative rulings, some of which may have retroactive effect. No assurance can be given that any such changes will not adversely affect the federal income tax consequences of the Reverse/Forward Split.

This summary does not address all aspects of the possible federal income tax consequences of the Reverse/Forward Split and is not intended as tax advice to any person or entity. In particular, and without limiting the foregoing, this summary does not consider the federal income tax consequences to shareholders of the Company in light of their individual investment circumstances nor to shareholders subject to special treatment under the federal income tax laws, including, without limitation, foreign corporations and non-resident aliens (collectively, “Non-U.S. Holders”), financial institutions, regulated investment companies, real estate investment trusts, holders who are dealers in securities or foreign currency, traders in securities that elect to use a mark-to-market method of accounting for securities holdings, tax-exempt organizations, insurance companies, holders that received their Common Stock pursuant to the exercise of employee stock options or otherwise as compensation, persons liable for alternative minimum tax, holders who hold their Common Stock as part of a hedge, straddle, conversion, constructive sale or other integrated transaction, or holders whose functional currency is not the U.S. dollar. In addition, this summary does not address the tax consequences of the Reverse/Forward Split arising under the unearned income Medicare contribution tax or under the laws of any foreign, state or local jurisdiction or any U.S. federal tax consequences other than federal income taxation, including any U.S. federal estate or gift tax consequences. The discussion below neither binds nor precludes the Internal Revenue Service (the “IRS”) from adopting a position contrary to that expressed below, and the Company cannot assure holders that such a contrary position could not be asserted successfully by the IRS and adopted by a court if the position were litigated.

We will not obtain a ruling from the IRS or an opinion of counsel regarding the federal income tax consequences to the shareholders of the Company as a result of the Reverse/Forward Split. Accordingly, you are encouraged to consult your own tax advisor regarding the specific tax consequences of the proposed Reverse/Forward Split, including the application and effect of state, local, and foreign income and other tax laws.

This summary assumes that you are one of the following: (i) a citizen or resident of the United States; (ii) a domestic corporation; (iii) an estate the income of which is subject to United States federal income tax regardless of its source; or (iv) a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust. This summary also assumes that you have held and will continue to hold your shares as capital assets for federal income tax purposes.

You should consult your tax advisor as to the particular federal, state, local, foreign, and other tax consequences applicable to your specific circumstances.

The decision to engage in the Reverse/Forward Split at this time is not the result of any tax consequences of the Reverse/Forward Split. We believe that the Reverse/Forward Split will be treated as a tax-free “recapitalization” for federal income tax purposes. This should result in no material federal income tax consequences to the Company or to the shareholders who do not receive cash in the Reverse/Forward Split. However, if you are a Cashed-Out Stockholder receiving cash in the Reverse/Forward Split, you may not qualify for tax free “recapitalization” treatment for federal income tax purposes.

Federal Income Tax Consequences to Shareholders Who Do Not Receive Cash in Connection with the Reverse/Forward Split

If you (i) continue to hold stock directly immediately after the Reverse/Forward Split and (ii) you receive no cash as a result of the Reverse/Forward Split, you should not recognize any gain or loss in the Reverse/Forward Split for federal income tax purposes. Your aggregate adjusted tax basis in your shares of stock held immediately after the Reverse/Forward Split will be equal to your aggregate adjusted tax basis in your shares of stock held immediately prior to the Reverse/Forward Split and you will have the same holding period in your stock as you had in such stock immediately prior to the Reverse/Forward Split.

Federal Income Tax Consequences to Shareholders Who Receive Cash in Connection with the Reverse/Forward Split

If you (i) receive cash in exchange for fractional shares as a result of the Reverse/Forward Split, (ii) you do not continue to hold any stock directly immediately after the Reverse/Forward Split, and (iii) you are not related to any person or entity that holds stock immediately after the Reverse/Forward Split, you will recognize capital gain or loss on the Reverse/Forward Split for federal income tax purposes, with such gain or loss measured by the difference between the cash you receive for your cashed out stock and your aggregate adjusted tax basis in such stock.

If you receive cash in exchange for fractional shares as a result of the Reverse/Forward Split, but either continue to directly own stock immediately after the Reverse/Forward Split, or are related to a person or entity who continues to hold stock immediately after the Reverse/Forward Split, you will recognize capital gain or loss in the same manner as set forth in the previous paragraph, provided that your receipt of cash either (i) is “not essentially equivalent to a dividend,” (ii) constitutes a “substantially disproportionate redemption of stock,” or (iii) constitutes a “complete termination of interest,” as described below.

(i) “Not Essentially Equivalent to a Dividend.” You will satisfy the “not essentially equivalent to a dividend” test if the reduction in your proportionate interest in the Company resulting from the Reverse/Forward Split (taking into account for this purpose the stock owned by persons related to you) is considered a “meaningful reduction” given your particular facts and circumstances. The Internal Revenue Service has ruled that a small reduction by a minority shareholder whose relative stock interest is minimal and who exercises no control over the affairs of the corporation will satisfy this test.

(ii) “Substantially Disproportionate Redemption of Stock.” The receipt of cash in the Reverse/Forward Split will be a “substantially disproportionate redemption of stock” for you if the percentage of the outstanding shares of stock of the Company owned by you (and by persons related to you) immediately after the Reverse/Forward Split is (a) less than 50% of all outstanding shares and (b) less than 80% of the percentage of shares of stock owned by you (and by persons related to you) immediately before the Reverse/Forward Split.

(iii) “Complete Termination of Interest.” To satisfy the “complete termination of interest” test, you cannot continue to hold any stock directly immediately after the Reverse/Forward Split. If you are treated as owning shares of stock actually or constructively owned by certain individuals and entities related to you, you may still satisfy the requirements of this test if you (a) retain no interest in the corporation immediately after the Reverse/Forward Split (including any interest as an officer, director, or employee), other than an interest as a creditor, (b) do not acquire an interest in the corporation within ten years after the date of the Reverse/Forward Split, and (c) agree to notify the Internal Revenue Service of the acquisition of any interest in the corporation within that ten-year period. You should consult your tax advisor for details if you find that these facts describe your situation and you wish to recognize capital gain or loss on the receipt of cash for your cashed out stock.

In applying these tests, you will be treated as owning shares of stock actually or constructively owned by certain individuals and entities related to you. If your receipt of cash in exchange for stock is not treated as capital gain or loss under any of the tests, it will be treated first as ordinary dividend income to the extent of your ratable share of the Company’s current and accumulated earnings and profits, then as a tax-free return of capital to the extent of your aggregate adjusted tax basis in your shares, and any remaining amount will be treated as capital gain. For a more detailed discussion, please see “Capital Gain and Loss” and “Special Rate for Certain Dividends” in this section below. If your receipt of cash in exchange for stock is treated as ordinary dividend income, you may not receive any tax benefit from your basis in such shares.

Capital Gain and Loss

For individuals, net capital gain (defined generally as your total capital gains in excess of capital losses for the year) recognized upon the sale of capital assets that have been held for more than 12 months generally will be subject to tax at a rate not to exceed 15%. Net capital gain recognized from the sale of capital assets that have been held for 12 months or less will continue to be subject to tax at ordinary income tax rates. Capital gain recognized by a corporate taxpayer will continue to be subject to tax at the ordinary income tax rates applicable to corporations. There are limitations on the deductibility of capital losses.

Special Rate for Certain Dividends

In general, dividends are taxed at ordinary income rates. However, you may qualify for a 15% rate of tax on any cash received in the Reverse/Forward Split that is treated as a dividend as described above, if (i) you are an individual or other non-corporate shareholder, (ii) you have held the share of stock with respect to which the dividend was received for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date, as determined under the Code, and (iii) you were not obligated during such period (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. You are urged to consult with your tax advisor regarding your applicability for, and the appropriate federal, state, local, foreign or other tax treatment of, any such dividend income.

Backup Withholding

Shareholders will be required to provide their social security or other taxpayer identification numbers (or, in some instances, additional information) to the Transfer Agent in connection with the Reverse/Forward Split to avoid backup withholding requirements that might otherwise apply. The instruction letter will require each shareholder to deliver such information when the Common Stock certificates are surrendered following the Effective Date of the Reverse/Forward Split. Failure to provide such information may result in backup withholding at a rate of 28%.

As explained above, the amounts paid to you as a result of the Reverse/Forward Split may result in dividend income, capital gain income, or some combination of dividend and capital gain income to you depending on your individual circumstances. You should consult your tax advisor as to the particular federal, state, local, foreign, and other tax consequences of the Reverse/Forward Split, in light of your specific circumstances.

Tax Consequences of the Reverse/Forward Split to the Company

With respect to the Reverse/Forward Split, the Company generally should not recognize any gain or loss for U.S. federal income tax purposes. Under the Code, an “ownership change” with respect to a corporation can significantly limit the amount of pre-ownership change net operating losses (“NOLs”) and certain other tax assets that the corporation may utilize after the ownership change to offset future taxable income. Very generally, an ownership change occurs if the aggregate stock ownership of holders of at least 5% of a corporation’s stock increases by more than 50 percentage points over the preceding 3-year period. The Company does not expect the Reverse/Forward Split to have a material impact on its NOLs or other relevant tax assets, as determined for U.S. federal income tax purposes.

THE PRECEDING DISCUSSION OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE/FORWARD SPLIT IS GENERAL AND DOES NOT INCLUDE ALL CONSEQUENCES TO EVERY SHAREHOLDER UNDER FEDERAL, STATE, LOCAL, OR FOREIGN TAX LAWS. ACCORDINGLY, EACH SHAREHOLDER SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO IT OF THE REVERSE/FORWARD SPLIT, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE LAW.

APPRAISAL RIGHTS

Shareholders do not have appraisal rights under Florida state law or under the Company’s Amended and Restated Articles of Incorporation or By-laws in connection with the Reverse/Forward Split.