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ITEM 3.03
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MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS.
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The Board of Directors (the “Board”) of Abraxas Petroleum Corporation, a Nevada corporation (the “Company”), has approved a reverse stock split of the Company’s authorized, issued and outstanding shares of common stock, par value $0.01 per share (the “Common Stock”), at a ratio of 1-for-20 (the “Reverse Stock Split”). The Reverse Split will be effective as of 12:01 a.m. on October 19, 2020 (the “Effective Date”).
Reason for the Reverse Stock Split
The Company is effecting the Reverse Stock Split in an effort to regain compliance with the NASDAQ Stock Market LLC listing rules that require that the minimum average bid price of the Company’s Common Stock be at least $1.00 per share.
Effects of the Reverse Stock Split
Effective Date; Symbol; CUSIP Number. The Reverse Stock Split becomes effective and the Common Stock will begin trading on a split-adjusted basis at the open of business on the Effective Date. In connection with the Reverse Stock Split, the CUSIP number for the Common Stock will change to 003830304. The trading symbol for the Company, AXAS, remains unchanged.
Split Adjustment; Treatment of Fractional Shares. On the Effective Date, the total number of shares of Common Stock held by each stockholder of the Company will be converted automatically into the number of shares of Common Stock equal to the number of issued and outstanding shares of Common Stock held by each such stockholder immediately prior to the Reverse Stock Split divided by 20. 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, determined at the beneficial owner level by share certificate. As a result, no fractional shares will be issued in connection with the Reverse Stock Split and no cash or other consideration will be paid in connection with any fractional shares that would otherwise have resulted from the Reverse Stock Split. The Company intends to treat stockholders holding shares of Common Stock in “street name” (that is, held through a bank, broker or other nominee) in the same manner as stockholders of record whose shares of Common Stock are registered in their names. Banks, brokers or other nominees will be instructed to effect the Reverse Stock Split for their beneficial holders holding shares of our Common Stock in “street name;” however, these banks, brokers or other nominees may apply their own specific procedures for processing the Reverse Stock Split.
Also on the Effective Date, all options, warrants and other convertible securities of the Company outstanding immediately prior to the Reverse Stock Split will be adjusted by dividing the number of shares of Common Stock into which the options, warrants and other convertible securities are exercisable or convertible by 4, and multiplying the exercise or conversion price thereof by 4, all in accordance with the terms of the plans, agreements or arrangements governing such options, warrants and other convertible securities and subject to rounding to the nearest whole share.
Certificated and Non-Certificated Shares. Stockholders who are holding their shares in electronic form at brokerage firms do not need 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 and registrar, Securities Transfer Corporation (“Securities Transfer”) at the address set forth below. Securities Transfer will issue a new stock certificate reflecting the Reverse Stock Split to each requesting stockholder. Securities Transfer can be contacted at (877) 248-6417 or (718) 921-8317.
AST Financial
6201 15th Avenue
Brooklyn, NY 11219
www.astfinancial.com
Email: info@astfinancial.com
Nevada State Filing. The Company effected the Reverse Stock Split pursuant to the Company’s filing of a Certificate of Change (the “Certificate”) with the Secretary of State of the State of Nevada on September 29, 2020, in accordance with Nevada Revised Statutes (“NRS”) Section 78.209. Under Nevada law, no amendment to the Company’s Articles of Incorporation was required in connection with the Reverse Stock Split. A copy of the Certificate is attached hereto as Exhibit 3.1 and is incorporated herein by reference.
No Stockholder Approval Required. Under Nevada law, because the Reverse Stock Split was approved by the Company’s Board in accordance with NRS Section 78.207, no stockholder approval is required. Pursuant to NRS Section 78.207, the Company may effect the Reverse Stock Split without stockholder approval if (i) both the number of authorized shares of the Common Stock and the number of issued and outstanding shares of the Common Stock are proportionally reduced as a result of the Reverse Stock Split; (ii) the Reverse Stock Split does not adversely affect any other class of stock of the Company; and, (iii) the Company does not pay money or issue scrip to stockholders who would otherwise be entitled to receive a fractional share as a result of the Reverse Stock Split. As described herein, the Reverse Stock Split complies with such requirements.
Capitalization. The Company was authorized to issue 400,000,000 shares of Common Stock. As a result of the Reverse Stock Split, the Company will be authorized to issue 20,000,000 shares of Common Stock. As of October 15, 2020, there were 168,069,305 shares of Common Stock outstanding. As a result of the Reverse Stock Split, there will be approximately 8,453,466 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.
The Reverse Stock Split does not affect the Company’s authorized preferred stock. There are no outstanding shares of the Company’s preferred stock. After the Reverse Stock Split, the Company’s authorized preferred Stock of 1,000,000 shares will remain unchanged.
Immediately after the Reverse Stock Split, each stockholder’s percentage ownership interest in the Company and proportional voting power will remain virtually unchanged 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.