Item
8.01 Other Items.
Reverse
Stock Split
On
August 27, 2020, the Company’s Board of Directors, acting pursuant to Article Thirteen of its Amended Articles of Incorporation,
unanimously approved a one-for-10 (1:10) reverse split of the Company’s common stock (the “Reverse Stock Split”).
The record date for the Reverse Stock Split is August 28, 2020 with an effective date of ten days following the record date or
upon approval by the Financial Industry Regulatory Authority (“FINRA”). The Company will obtain a new CUSIP number
for shares of common stock of the Company in connection with the Reverse Stock Split.
Certain
Risks Associated with the Reverse Stock Split
There
can be no assurance that the total projected market capitalization of the Company’s common stock after the proposed Reverse
Stock Split will be equal to or greater than the total projected market capitalization before the proposed Reverse Stock Split
or that the per share price of the Company’s common stock following the Reverse Stock Split will either exceed or remain
higher than the current anticipated per share.
There
can be no assurance that the market price per new share of the Company common stock (the “New Shares”) after the Reverse
Stock Split will rise or remain constant in proportion to the reduction in the number of old shares of the Company common stock
(the “Old Shares”) outstanding before the Reverse Stock Split.
Accordingly,
the total market capitalization of the Company’s common stock after the proposed Reverse Stock Split may be lower than the
total market capitalization before the proposed Reverse Stock Split and, in the future, the market price of the Company’s
common stock following the Reverse Stock Split may not exceed or remain higher than the market price prior to the proposed Reverse
Stock Split. In many cases, the total market capitalization of a company following a Reverse Stock Split is lower than the total
market capitalization before the Reverse Stock Split.
A
decline in the market price for the Company’s common stock after the Reverse Stock Split may result in a greater percentage
decline than would occur in the absence of a Reverse Stock Split, and the liquidity of the Company’s common stock could
be adversely affected following a Reverse Stock Split.
The
market price of the Company’s common stock will also be based on the Company’s performance and other factors, some
of which are unrelated to the number of shares outstanding. If the Reverse Stock Split is effected and the market price of the
Company’s 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 a Reverse Stock Split. In many cases, both the
total market capitalization of a company and the market price of a share of such company’s common stock following a Reverse
Stock Split are lower than they were before the Reverse Stock Split. Furthermore, the liquidity of the Company’s common
stock could be adversely affected by the reduced number of shares that would be outstanding after the Reverse Stock Split.
The
Company can make no assurances as to when or if FINRA may or may not approve the Reverse Stock Split.
Principal
Effects of the Reverse Stock Split
In
addition to those risk factors noted above, the Reverse Stock Split will have the following effects:
General
Corporate Change - (i) ten (10) Old Shares owned by a stockholder will automatically convert into one (1) New Share, and
(ii) the number of shares of the Company’s common stock issued and outstanding will be decreased proportionately based on
the Reverse Stock Split.
As
approved and effected, the Reverse Stock Split will be effected simultaneously for all of the Company’s common stock. While
the intent is for the proposed Reverse Stock Split to affect all of the Company’s stockholders uniformly, the process of
rounding up when any of the Company’s stockholders own a fractional share will result in a non-material change in each stockholder’s
percentage ownership interest in the Company.
The
Reverse Stock Split does not materially affect the proportionate equity interest in the Company of any holder of common stock
or the relative rights, preferences, privileges or priorities of any such stockholder.
Fractional
Shares - Any fractional shares of common stock resulting from the Reverse Stock Split will “round up” to the
nearest whole number. No cash will be paid to any holders of fractional interests in the Company.
Authorized
Shares - The Reverse Stock Split will not change the number of authorized shares of common stock of the Company, as states
in the Company’s Articles of Incorporation, as amended.
Preferred
Shares - The Reverse Stock Split will not change the number of authorized Preferred shares of the Company, as stated in
the Company’s Articles of Incorporation, as amended.
Accounting
Matters - The Reverse Stock Split will not affect the par value of the Company’s common stock. As a result, as of
the effective time of the Reverse Stock Split, the stated capital on the Company’s balance sheet attributable to the Company’s
common stock will be increased proportionately based on the Reverse Stock Split ratio, and the additional paid-in capital account
will be credited with the amount by which the stated capital is increased. The per share net income or loss and net book value
of the Company’s common stock will be restated because there will be a greater number of shares of the Company’s common
stock outstanding.