on higher-priced stocks, a low average price per share of common stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share value
than would be the case if the share price were higher.
The Company is seeking approval from the stockholders to approve an amendment,
substantially in the form as set forth on
Appendix B
, to the Companys Amended and Restated Articles of Incorporation to effect the Reverse Stock Split and grant authorization to the Board of Directors to determine, in its sole
discretion, whether to implement the Reverse Stock Split. If the stockholders approve this proposal, the Board of Directors will have the sole authority to elect, in its sole discretion, without the need for any further action on the part of our
stockholders, whether to implement the Reverse Stock Split, as well as its specific timing. Notwithstanding approval of the Reverse Stock Split by the stockholders, the Board of Directors may, in its sole discretion, abandon the proposed amendment
and determine prior to the effectiveness of any filing with the Marshall Islands Registrar of Corporations not to effect the Reverse Stock Split.
Reducing the number of outstanding shares of our common stock through the Reverse Stock Split is intended, absent other factors, to increase
the per share market price of our common stock. However, other factors, such as our financial results, market conditions and the market perception of our business may adversely affect the market price of our common stock. As a result, there can be
no assurance that the Reverse Stock Split, if completed, will result in the intended benefits described above, that the market price of our common stock will increase following the Reverse Stock Split or that the market price of our common stock
will not decrease in the future. Additionally, we cannot assure you that the market price per share of our common stock after the Reverse Stock Split will increase in proportion to the reduction in the number of shares of our common stock
outstanding before the Reverse Stock Split. Accordingly, the total market capitalization of our common stock after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split.
Effect of the Reverse Stock Split on Holders of Outstanding Common Stock
In the Reverse Stock Split, every ten shares in aggregate of existing common stock will be combined into one new share of common stock. Based
on 124,706,280 shares of common stock issued and outstanding as of the record date, immediately following the Reverse Stock Split the Company would have approximately 12,470,628 shares of common stock issued and outstanding.
The Reverse Stock Split will affect all holders of our Common Stock uniformly and will not affect any stockholders percentage ownership
interest in the Company, except that as described below in Fractional Shares, record holders of Common Stock otherwise entitled to a fractional share as a result of the Reverse Stock Split will receive cash in lieu of such
fractional shares. In addition, the Reverse Stock Split will not affect any stockholders proportionate voting power.
The Reverse
Stock Split may result in some stockholders owning odd lots of less than 100 shares of Common Stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally
somewhat higher than the costs of transactions in round lots of even multiples of 100 shares.
Because the number of issued
and outstanding shares of common stock will decrease, the number of shares of common stock remaining available for issuance will increase. Under the Amended and Restated Articles of Incorporation of the Company, our authorized capital stock consists
of 250,000,000 shares of common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $ 0.0001 per share. Other than as has been publicly disclosed, the Company does not currently have any other plans, proposal or
arrangement to issue any of its authorized but unissued shares of common stock, other than shares that may be issued in connection with equity incentive grants to its employees and directors.
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