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Item
3.03.
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Material
Modification to Rights of Security Holders.
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As
previously disclosed, on October 15, 2019, stockholders holding a majority of the outstanding voting shares of the Company, approved
resolutions authorizing a reverse stock split of the outstanding shares of our common stock in the range from one-for-two (1-for-2)
to one-for-ten (1-for-10), and provided authority to our Board of Directors to select the ratio of the reverse stock split in
their discretion (the “Stockholder Authority”). On February 12, 2020, the Board of Directors approved a stock
split ratio of 1-for-6 (“Reverse Stock Split”) in connection with the Stockholder Authority and the Company
filed a Certificate of Amendment with the Secretary of Delaware to affect the Reverse Stock Split. The reverse stock split was
undertaken to allow us to meet the minimum share price requirement of the NASDAQ Capital Market (see also the discussion of the
Uplisting under Item 8.01, below).
Reason
for the Reverse Stock Split
The
Reverse Stock Split was effected solely to enable the Company to meet the minimum share price requirement of the NASDAQ Capital
Market (i.e., $4.00 per share).
Effects
of the Reverse Stock Split
Effective
Date; Symbol; CUSIP Number. The Reverse Stock Split became effective at 12:01 a.m. Eastern Standard Time on February 13,
2020 (the “Effective Date”), whereupon the shares of common stock began trading on a split-adjusted basis.
In connection with the Reverse Stock Split and the Uplisting (discussed below under Item 8.01), the Company’s shares of
common stock will trade on the Nasdaq Capital Market under the symbol “MEDS” and will trade under a new CUSIP
Number, 89846A 207.
Split
Adjustment; No Fractional Shares. On the Effective Date, the total number of shares of the Company’s common stock
held by each stockholder were converted automatically into the number of whole shares of common stock equal to (i) the number
of issued and outstanding shares of common stock held by such stockholder immediately prior to the Reverse Stock Split, divided
by (ii) 6.
No
fractional shares will be issued, and no cash or other consideration will be paid. Instead, the Company will issue one whole share
of the post-Reverse Stock Split common stock to any stockholder who otherwise would have received a fractional share as a result
of the Reverse Stock Split.
Non-Certificated
Shares; Certificated Shares. Stockholders who are holding their shares in electronic form at brokerage firms do not have
to take any action as the effect of the Reverse Stock Split will automatically be reflected in their brokerage accounts.
Stockholders
holding paper certificates may (but are not required to) send the certificates to the Company’s transfer agent at the address
given below. The transfer agent will issue a new share certificate reflecting the terms of the Reverse Stock Split to each requesting
stockholder.
Action
Stock Transfer Corporation
2469
E. Fort Union Blvd., Suite 214
Salt
Lake City, UT 84121
Telephone:
(801) 274-1088
Fax:
(801) 274-1099
Please
contact Action Stock Transfer Corporation for further information, related costs and procedures before sending any certificates.
Certificate
of Amendment to Certificate of Incorporation. The Reverse Stock Split was affected by the Company filing a Certificate
of Amendment to its Certificate of Incorporation (the “Certificate”) with the Secretary of State of the State
of Delaware on February 12, 2020. The Certificate was not effective until the Effective Date. As discussed above, the stockholders
previously granted authority to the Board of Directors of the Company to complete the Reverse Stock Split pursuant to the Stockholder
Authority, which authority the Board of Directors relied upon in approving the filing of the Certificate.
Capitalization.
As of February 13, 2020 (immediately prior to the Effective Date, and without including any shares agreed to be sold in the Offering),
there were 39,236,459 shares of common stock outstanding. As a result of the Reverse Stock Split, there are approximately 6,539,410
shares of common stock outstanding (subject to adjustment due to the effect of rounding fractional shares into whole shares).
The Reverse Stock Split will not have any effect on the stated par value of the common stock or the number of authorized shares
of common stock (100,000,000 shares).
The
Reverse Stock Split does not affect the Company’s authorized preferred stock. After the Reverse Stock Split, the Company’s
authorized preferred Stock of 10,000,000 shares remained unchanged. Additionally, the Reverse Stock Split will not affect the
par value of the preferred stock, or previously designated series of preferred stock, except to affect, where applicable, the
conversion rates and voting rights of such preferred stock.
Each
stockholder’s percentage ownership interest in the Company and proportional voting power remains virtually unchanged as
a result of the Reverse Stock Split, except for minor changes and adjustments that will result from rounding fractional shares
into whole shares. The rights and privileges of the holders of shares of common stock will be substantially unaffected by the
Reverse Stock Split.
Generally,
options, warrants and convertible securities of the Company outstanding immediately prior to the Reverse Stock Split will be appropriately
adjusted by dividing the number of shares of common stock into which the options, warrants and convertible securities are exercisable
or convertible by 6 and multiplying the exercise or conversion price thereof by 6, as a result of the Reverse Stock Split.
A
copy of the Certificate of Amendment to the Certificate of Incorporation as filed with the Secretary of State of Delaware is filed
herewith as Exhibit 3.1.