continue to be listed on Nasdaq underIf the symbol “WHLR” immediately followingCompany does not regain compliance (which would require the Reverse Stock Split, although it is possible that Nasdaq may add a letter to the end of the trading symbol for a period of 20 trading days after the Reverse Split Effective Date to indicate that the Reverse Stock Split had occurred.
Effective Date
The proposed Reverse Stock Split would become effective at 5:00 p.m., Eastern Time, on the date of filing of the proposed charter amendment with SDAT, or such later date and time as is set forth in the proposed charter amendment, which date we refer to in this proposal as a “Reverse Split Effective Date.” As of the Reverse Split Effective Date, shares of Common Stock issued and outstanding immediately prior thereto will be combined, automatically and without any action on the part of us or our stockholders, into a reduced number of shares of our Common Stock in accordance with the Reverse Stock Split ratio determined by our Board of Directors within the limits set forth in this Proposal 5 and stockholders who would have otherwise been issued a fractional share of the Company’s Common Stock as a result of a Reverse Stock Split will instead receive a cash payment in lieu of such fractional share in an amount equal to the applicable fraction multiplied by the closing bid price of the Company’s Common Stock to be at least $1.00 per share for a minimum of ten consecutive business days) by June 4, 2024, then Nasdaq may:
grant the Company a second 180 calendar day period to regain compliance if certain other listing standards are met on Nasdaq onJune 4, 2024 (for example, that the Reverse Split Effective Date (as adjusted formarket value of the Reverse Stock Split), without any interest.
Effect on Beneficial Holders (i.e., Stockholders Who Hold in “Street Name”)
If the proposed Reverse Stock Split is approved and effected, we intend to treatCompany’s Common Stock held by stockholders in “street name,” through a bank, broker or other nominee, in the same manner as stockholders whose sharesis at least $1 million and there are registered in their own names. Banks, brokers or other nominees will be instructed to effect the Reverse Stock Split for their customers holding Common Stock in “street name.” However, these banks, brokers or other nominees may have different procedures than registered stockholders for processing the Reverse Stock Split. If you holdat least 1 million shares of Common Stock outstanding); or
determine that it is not possible for the Company to cure its minimum bid price deficiency and issue a Staff Delisting Determination notification.
If the Company were to receive a Delisting Determination notification, it would plan to appeal that determination to a Nasdaq hearings panel (“Hearings Panel”) within seven calendar days of the date of the Delisting Determination notification. A timely request for a hearing will ordinarily stay the suspension and delisting action pending the issuance of a written Hearings Panel decision. The Hearings Department would schedule a hearing to take place, to the extent practicable, within 45 calendar days of the request for a hearing. The Company would be required to provide a written submission to the Hearings Department, stating with specificity the grounds on which the Company is seeking to review the Delisting Determination notification, and would include a written plan of compliance. After the hearing, the Hearings Department would issue a panel decision (the “Panel Decision”) that has been approved by each member of the Hearings Panel. The Panel Decision would be effective immediately upon issuance. The Hearings Panel may grant a further exception to the listing standards (not to exceed 180 days from the date of the Delisting Determination notice), suspend and delist the Company’s securities, or find that the Company is in compliance with all applicable listing standards.
The Board of Directors deems it advisable for it to have the authority to effect a reverse stock split by May 31, 2024 in order for the Company to have the strongest chance of regaining compliance with Nasdaq’s Bid Price Rule and avoiding the risk that on June 4, 2024 Nasdaq may not grant the Company a second 180 calendar day compliance period.
Because the Company is not currently in compliance with Nasdaq’s Bid Price Rule, any reverse stock split that the Board of Directors may effect is constrained by Nasdaq listing rules that state that a company whose stock fails to meet the continued listing requirement for minimum bid price and that has effected reverse stock splits over the prior two-year period with a bank, brokercumulative ratio of 250 shares or other nomineemore to one will not be eligible for any compliance periods. Because the Company is not currently in compliance with the Bid Price Rule and have any questions in this regard, you are encouraged to contact your bank, broker or other nominee.
Effect on Registered “Book-Entry” Holders (i.e., Stockholders That are Registered on the Transfer Agent’s Books and Records but do not Hold Certificates)
Somehad effected a one-for-10 reverse stock split of our registered holders ofits Common Stock may hold some or allon August 17, 2023, this means that the Board of their shares electronicallyDirectors cannot (while the Company is not in book-entry form with our transfer agent, Computershare, Inc. These stockholders do not have stock certificates evidencing their ownership of Common Stock. They are, however, provided withcompliance) effect a statement reflecting the number of shares registered in their names. If a stockholder holds registered shares in book-entry form with our transfer agent, no action needs to be taken to receive post-reversereverse stock split shares. Ifof greater than one-for-24.
Even if the Company’s stockholders approve this proposal, there is no guarantee that the Board of Directors would exercise its discretion to effect a stockholder is entitled to post-reverse stock split shares, a statement will automatically be sent to the stockholder’s address of record indicating the number of shares of Common Stock held following the Reverse Stock Split. However, the Board of Directors deems it advisable that the Company’s stockholders grant it the authority to effect a Reverse Stock Split if the Board of Directors deems it advisable and in the best interests of the Company for the reasons stated in this proposal.
STOCKHOLDERS WHO HOLD PRE-SPLIT STOCK CERTIFICATES SHOULD NOT DESTROY ANY PRE-SPLIT STOCK CERTIFICATE AND SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL THEY ARE REQUESTED TO DO SO.
Accounting Consequences
AlthoughTo potentially improve the par valuemarketability and liquidity of our Common Stock will increase in proportion to the Reverse Stock Split ratio chosen by the. Our Board of Directors believes that the Board will exercise its right under Section 2-605(a)(2)increased market price of the MGCL to thereafter immediately reduce the resulting par value of the post-splitour Common Stock so that it would remain at $0.01 per share.
The Company’s stockholders’ equity in its consolidated balance sheet would not change in total. However, the Company’s stated capital (i.e., $0.01 par value times the number of shares issued and outstanding) would be proportionately reduced based on the reduction in shares of Common Stock outstanding. Additional paid in capital would be increased by an equal amount, which would result in no overall change to the balance of stockholders’ equity.
Additionally, net income or loss per share for all periods would increase proportionatelyexpected as a result of theeffecting a Reverse Stock Split since there would be a lower numbercould improve the marketability and liquidity of shares outstanding. Net income or loss per shareour Common Stock and number of shares for all previous years presented will be adjusted for comparability purposes.
We do not anticipate that any other material accounting consequences would arise as a result of a Reverse Stock Split.
Potential Anti-Takeover Effect
Even though the proposed Reverse Stock Split would resultencourage interest and trading in an increased proportion of unissued authorized shares to issued shares, which could, under certain circumstances, have an anti-takeover effect (for example, byour Common Stock.
• | Stock Price Requirements: We understand that many brokerage houses, institutional investors and funds have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers or by restricting or limiting the ability to purchase such stocks on margin. Additionally, a Reverse Stock Split could help increase analyst and broker interest in our Common Stock as their internal policies might discourage them from following or recommending companies with low stock prices. |
• | Stock Price Volatility: Because of the trading volatility often associated with low-priced stocks, many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Some of those policies and practices may make the processing of trades in low-priced stocks economically unattractive to brokers. |
• | Transaction Costs: Investors may be dissuaded from purchasing stocks below certain prices because brokers’ commissions, as a percentage of the total transaction value, can be higher for low-priced stocks. |