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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, pursuant to the authorization provided by the Company’s stockholders at the Company’s February
19, 2019, annual meeting (pursuant to which the Company’s stockholders granted authority to the Board of Directors, in its
sole discretion, to determine whether to proceed with a reverse stock split and, if the Board of Directors so determined, to select
the reverse stock ratio, in a ratio of between 1-for-5 and 1-for-25), the Board of Directors approved, on July 1, 2018, a 1-for-25
reverse stock split of the Company’s issued and outstanding shares of common stock (the “
Reverse Stock Split
”).
Reason
for the Reverse Stock Split
The
Reverse Stock Split was effected solely to enable the Company to expeditiously meet the low price per share selling price requirements
of the NYSE American (which the Company was previously advised it would be in non-compliance with, and was formally notified of
non-compliance with pursuant to the Deficiency Letter, as discussed above in
Item 3.01
), to reduce the risk of the Company
being automatically delisted from the NYSE American due to the trading price of its common stock falling below $0.06 per share,
which typically triggers the NYSE American to begin delisting procedures regarding a listed company’s securities, and to
position the Company’s capitalization for the planned closing of the Lineal Star Holdings transaction as previously disclosed.
Effects
of the Reverse Stock Split
Effective
Date; Symbol; CUSIP Number
. The Reverse Stock Split became effective at 12:01 a.m. Central Standard Time on July 8, 2019,
and was reflected with the NYSE American and in the marketplace at the open of business on July 8, 2019 (the “
Effective
Date
”), whereupon the shares of common stock began trading on a split-adjusted basis. In connection with the Reverse
Stock Split, the Company’s shares of common stock will continue to trade on the NYSE American under the symbol “
CEI
”
but will trade under a new CUSIP Number, 13200M 409.
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) 25.
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.
ClearTrust,
LLC
16540
Pointe Village Dr, Suite 205
Lutz,
Florida 33558
Phone: (813)
235-4490
Fax: (813)
388-4549
Please
contact ClearTrust, LLC for further information, related costs and procedures before sending any certificates.
Certificate
of Amendment to Articles of Incorporation
. The Reverse Stock Split was affected by the Company filing a Certificate of
Amendment to its Articles of Incorporation (the “
Certificate
”) with the Secretary of State of the State of
Nevada on July 3, 2019. 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 at the February 19, 2019 annual
meeting, which authority the Board of Directors relied upon in approving the filing of the Certificate.
Capitalization
.
As of July 8, 2019 (immediately prior to the Effective Date), there were 53,874,930 shares of common stock outstanding. As
a result of the Reverse Stock Split, there are approximately 2,154,998 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 (250,000,000
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.
All
options, warrants and convertible securities of the Company outstanding immediately prior to the Reverse Stock Split (to the extent
they don’t provide otherwise) 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 25 and multiplying the exercise or conversion
price thereof by 25, as a result of the Reverse Stock Split.