UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[x] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
CRYSTALIX GROUP INTERNATIONAL, INC.
(Name of Registrant As Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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CRYSTALIX GROUP INTERNATIONAL, INC.
1181 GRIER DRIVE, SUITE B, LAS VEGAS, NEVADA 89119
INFORMATION STATEMENT
This information statement pursuant to Section 14 of the Securities
Exchange Act of 1934, as amended, and Regulation 14C and Schedule 14C thereunder
(the "INFORMATION STATEMENT") has been mailed on or about February 17, 2006 to
the stockholders of record as of February 3, 2006 (the "RECORD DATE") of
Crystalix Group International, Inc., a Nevada corporation (the "COMPANY") in
connection with certain actions to be taken pursuant to the written consent,
dated as of January 31, 2006, of the stockholders of the Company holding a
majority of the outstanding shares of common stock.
The actions to be taken pursuant to the written consent shall be
implemented on or about March 9, 2006, 20 days after the mailing of this
information statement.
THIS IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO
STOCKHOLDER MEETING WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN.
By Order of the Board of Directors,
/s/ Kevin T. Ryan
Kevin T. Ryan
CHIEF EXECUTIVE OFFICER
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
1
NOTICE OF ACTIONS TO BE TAKEN PURSUANT TO THE WRITTEN CONSENT OF
STOCKHOLDERS HOLDING A MAJORITY OF THE OUTSTANDING SHARES OF
COMMON STOCK OF THE COMPANY IN LIEU OF A SPECIAL MEETING OF
THE STOCKHOLDERS, DATED JANUARY 31, 2006
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the following actions will be taken
pursuant to the written consent of stockholders holding a majority of the
outstanding shares of common stock dated January 31, 2006, in lieu of a special
meeting of the stockholders. Such action will be taken on or about March 9,
2006:
1. The articles of incorporation of the Company, as amended (the
"ARTICLES OF INCORPORATION"), will be amended and restated to change the
Company's name from "Crystalix Group International, Inc." to "Seaena, Inc."; and
2. The Articles of Incorporation will be amended and restated to
effect a one (1) for thirty-five (35) reverse stock split, whereby, as of the
Record Date, each stockholder shall receive one share for every thirty-five
shares then owned.
OUTSTANDING SHARES AND VOTING RIGHTS
As of the Record Date, the Company's authorized capitalization
consisted of 300,000,000 shares of common stock ("COMMON STOCK"), of which
286,895,972 shares were issued and outstanding, 10,000,000 shares of Class A
preferred stock, none of which were issued and outstanding, and 5,000,000 shares
of Class B preferred stock, none of which were issued and outstanding. No
stockholders of the Company have any preemptive or similar rights to acquire or
subscribe for any additional shares of capital stock of the Company.
Each share of Common Stock entitles its holder to one vote on each
matter submitted to the stockholders. However, no proxies or consents are being
solicited in connection with the matters described in this Information Statement
because the holders of a majority of the outstanding shares of Common Stock have
already voted in favor of such matters by executing and delivering to the
Company a majority written consent dated January 31, 2006. The shares
represented by the aforementioned written consent constituted sufficient voting
power to approve the matters described in this Information Statement.
Pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as
amended, the proposals will not be adopted until a date at least 20 days after
the date on which this Information Statement has been mailed to the
stockholders. The Company anticipates that the actions contemplated herein will
be effected on or about the close of business on March 9, 2006.
The Company has asked brokers and other custodians, nominees and
fiduciaries to forward this Information Statement to the beneficial owners of
the Common Stock held of record by such persons and will reimburse such persons
for out-of-pocket expenses incurred in forwarding such material.
AMENDMENTS TO THE ARTICLES OF INCORPORATION
On October 28, 2005, the board of directors of the Company (the "BOARD
OF DIRECTORS") and the stockholders of the Company holding a majority of the
outstanding shares of common stock of the Company approved amendments to the
Articles of Incorporation:
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o To change the Company's name from Crystalix Group International, Inc.
to Seaena, Inc.; and
o To effect a one (1) for thirty-five (35) reverse stock split, whereby,
as of the record date, each stockholder shall receive one share for
every thirty-five shares then owned.
THE CHANGE OF THE COMPANY'S NAME
The amendments to the Articles of Incorporation will change the
Company's name from Crystalix Group International, Inc. to Seaena, Inc. The
Company is changing its name as part of its acquisition of the business of U.C.
Laser, Inc.
THE REVERSE STOCK SPLIT
The Board of Directors and the stockholders of the Company holding a
majority of the outstanding shares of common stock of the Company have approved
an amendment to the Articles of Incorporation to effect a reverse stock split of
the Company's common stock.
The Company currently has 300,000,000 shares of Common Stock
authorized, and 286,895,972 shares of Common Stock are outstanding as of the
Record Date. As part of the U.C. Laser, Inc. acquisition transaction, the
Company will be issuing a number of shares of its Class B Preferred Stock of as
will collectively have voting rights equal to 45% of all voting rights of all
Crystalix capital stock outstanding immediately after the closing, determined on
a fully diluted basis. The shares to be issued to U.C. Laser will be convertible
into a total number of shares of its common stock as would, immediately after
such conversion, represent 45% of all shares of capital stock of Crystalix then
outstanding on a fully diluted basis. By implementing a reverse split on the
issued and outstanding shares of Common Stock, more shares will then be
available in the event of conversion of the Class B Preferred Stock.
Also, the Board of Directors believes that the price of the Common
Stock is too low to attract investors to buy the stock. To proportionally raise
the per share price of the Common Stock by reducing the number of outstanding
shares, the Board of Directors believes that it is in the best interests of the
Company's stockholders to implement a reverse stock split. In addition, the
Board of Directors believes that the share price of the Common Stock is a factor
in whether the Common Stock meets investing guidelines for certain institutional
investors and investment funds. Finally, the Board of Directors believes that
the Company's stockholders will benefit from relatively lower trading costs for
a higher priced stock. The combination of lower transaction costs and increased
interest from institutional investors and investment funds may ultimately
improve the trading liquidity of the Common Stock. The Board of Directors is not
implementing the reverse stock split in anticipation of any "going private"
transaction.
MATERIAL EFFECTS OF THE REVERSE STOCK SPLIT
The reverse stock split will be effected simultaneously for all of the
Common Stock, and the ratio will be the same for all of the Common Stock. The
reverse stock split will affect all of the Company's stockholders uniformly and
will not affect any stockholder's percentage ownership interests in the Company,
except to the extent that the reverse stock split results in fractional share
ownership.
The principal effect of the reverse stock split will be to reduce the
number of shares of the Common Stock issued and outstanding from 286,895,972
shares as of January 31, 2006, to approximately 8,197,028 shares. In addition,
the reverse stock split will increase the number of stockholders who own
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odd lots (less than 100 shares). Stockholders who hold odd lots may experience
an increase in the cost of selling their shares and may have greater difficulty
in effecting sales.
EFFECT ON FRACTIONAL STOCKHOLDERS
Stockholders will not receive fractional post-reverse stock split
shares in connection with the reverse stock split. Instead, affected
stockholders will receive a cash payment in an amount equal to $0.035 per
pre-split share. After the reverse stock split, stockholders will have no
further interest in the Company with respect to any fractional share. The
Company currently has approximately 650 record holders of the Common Stock. The
reverse stock split may have a material effect on the number of record holders
of the Common Stock.
EFFECT ON REGISTERED AND BENEFICIAL STOCKHOLDERS
Upon the reverse stock split, the Company intends to treat stockholders
holding the Common Stock in "street name", through a bank, broker or other
nominee, in the same manner as registered stockholders whose shares are
registered in their names. Banks, brokers or other nominees will be instructed
to effect the reverse stock split for their beneficial holders holding the
Common Stock in "street name". However, such banks, brokers or other nominees
may have different procedures than registered stockholders for processing the
reverse stock split. Stockholders who hold their shares with such a bank, broker
or other nominee and who have any questions in this regard are encouraged to
contact their nominees.
EFFECT ON REGISTERED CERTIFICATED SHARES
Stockholders whose shares are held in certificate form will receive a
transmittal letter from our transfer agent, Interwest Transfer Company, as soon
as practicable after the effective date of the reverse stock split. The letter
of transmittal will contain instructions on how to surrender certificate(s)
representing pre-reverse stock split shares to the transfer agent. No new shares
will be issued until outstanding certificate(s) are surrendered, together with
properly completed and executed letter of transmittal, to the transfer agent.
Stockholders should not submit any certificate(s) until requested to do so.
PROCEDURE FOR EFFECTING REVERSE STOCK SPLIT
The Company will promptly file a Certificate of Amendment to the
Articles of Incorporation with the Secretary of State of the State of Nevada to
amend its existing Articles of Incorporation. The reverse stock split will
become effective on the date of filing the Certificate of Amendment, which is
referred to as the "effective date." Beginning on the effective date, each
certificate representing pre-reverse stock split shares will be deemed for all
corporate purposes to evidence ownership of post-reverse stock split shares. The
text of the Certificate of Amendment is set forth in APPENDIX A to this
Information Statement. The text of the Certificate of Amendment is subject to
modification to include such changes as may be required by the office of the
Secretary of State of the State of Nevada and as the Board of Directors deems
necessary and advisable to effect the reverse stock split.
CERTAIN RISK FACTORS ASSOCIATED WITH THE REVERSE STOCK SPLIT
Implementation of the reverse stock split entails various risks and
uncertainties, including but not limited to the following:
o There can be no assurance that the market price per share of
the Common Stock after the
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reverse stock split will remain unchanged or increase in
proportion to the reduction in the number of shares of the
Common Stock outstanding before the reverse stock split.
Accordingly, the total market capitalization of the Company
after the reverse stock split may be lower than the total
market capitalization before the reverse stock split.
o After the reverse stock split is effected, if the market price
of the Common Stock declines, the percentage decline may be
greater than would occur in the absence of a reverse stock
split.
o There can be no assurance that the reverse stock split will
result in a per share price that will attract institutional
investors or investment funds or that such share price will
satisfy the investing guidelines of institutional investors or
investment funds. As a result, the trading liquidity of the
Common Stock may not necessarily improve.
o The reduced number of shares that would be outstanding after
the reverse stock split could adversely affect the liquidity
of the Common Stock.
AUTHORIZED SHARES
The reverse stock split will affect all issued and outstanding shares
of the Common Stock and outstanding rights to acquire the Common Stock. Upon the
effectiveness of the reverse stock split, the number of authorized shares of the
Common Stock that are not issued or outstanding would increase due to the
reduction in the number of shares of the Common Stock issued and outstanding.
The Company currently has 300,000,000 shares of authorized Common Stock and
286,895,972 shares of Common Stock issued and outstanding as of January 31,
2006. Authorized but unissued shares of Common Stock will be available for
issuance. The Company is considering issuing shares in the future, but at this
time the Company has no definite plans in this regard. If the Company issues
additional shares of Common Stock, the ownership interest of holders of the
Common Stock will be diluted.
The following table sets forth information regarding the Company's
current and anticipated number of authorized shares and issued and outstanding
shares of the Common Stock following implementation of the reverse stock split.
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SHARES OF SHARES OF
SHARES OF COMMON STOCK COMMON STOCK SHARES OF COMMON
COMMON STOCK ISSUED AND RESERVED FOR STOCK AVAILABLE
AUTHORIZED OUTSTANDING ISSUANCE FOR ISSUANCE
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As of January 31, 2006 300,000,000 286,895,972 -0- 13,104,028
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After Reverse Stock Split at the Ratio of
1-for-35 300,000,000 8,197,028* -0- 291,802,972*
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* This number is approximate.
ACCOUNTING MATTERS
The reverse stock split will not affect the par value of the Common
Stock. As a result, as of the effective time of the reverse stock split, the
stated capital attributable to the Common Stock on the Company's balance sheet
will be reduced proportionately based on the reverse stock split ratio of
one-for-thirty-five, and the additional paid-in capital account will be credited
with the amount by which the stated
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capital is reduced. The per share net income or loss and net book value of the
Common Stock will be restated because there will be fewer shares of the Common
Stock outstanding.
POTENTIAL ANTI-TAKEOVER EFFECT
Although the increased proportion of unissued authorized shares to
issued shares could, under certain circumstances, have an anti-takeover effect
(for example, by permitting issuances that would dilute the stock ownership of a
person seeking to effect a change in the composition of the Board of Directors
or contemplating a tender offer or other transaction for the combination of the
Company with another company), the reverse stock split proposal is not being
undertaken in response to any effort of which the Board of Directors is aware to
accumulate shares of the Common Stock or obtain control of Company. Other than
the reverse stock split, the Board of Directors does not currently contemplate
the adoption of any other amendments to the Articles of Incorporation that could
be construed to affect the ability of third parties to take over or change the
control of the Company.
NO APPRAISAL RIGHTS
Under the General Corporation Law of the State of Nevada, the Company's
stockholders are not entitled to appraisal rights with respect to the reverse
stock split, and the Company will not independently provide stockholders with
any such right.
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT
The following is a summary of the material federal income tax
consequences of the proposed reverse stock split. This discussion is based on
the Internal Revenue Code, the Treasury Regulations promulgated thereunder,
judicial opinions, published positions of the Internal Revenue Service, and all
other applicable authorities as of the date of this document, all of which are
subject to change (possibly with retroactive effect). This discussion does not
describe all of the tax consequences that may be relevant to a holder in light
of his particular circumstances or to holders subject to special rules (such as
dealers in securities, financial institutions, insurance companies, tax-exempt
organizations, foreign individuals and entities, and persons who acquired their
Common Stock as compensation). In addition, this summary is limited to
stockholders that hold their Common Stock as capital assets. This discussion
also does not address any tax consequences arising under the laws of any state,
local or foreign jurisdiction.
ACCORDINGLY, EACH STOCKHOLDER IS STRONGLY URGED TO CONSULT WITH A TAX
ADVISER TO DETERMINE THE PARTICULAR FEDERAL, STATE, LOCAL OR FOREIGN INCOME OR
OTHER TAX CONSEQUENCES TO SUCH STOCKHOLDER OF THE REVERSE STOCK SPLIT.
Other than the cash payments for fractional shares discussed below, no
gain or loss should be recognized by a stockholder upon such stockholder's
exchange of pre-reverse stock split shares for post-reverse stock split shares
pursuant to the reverse stock split. The aggregate tax basis of the post-reverse
stock split shares received in the reverse stock split (including any fraction
of a post-reverse stock split share deemed to have been received) will be the
same as the stockholder's aggregate tax basis in the pre-reverse stock split
shares exchanged therefore. In general, stockholders who receive cash in
exchange for their fractional share interests in the post-reverse stock split
shares as a result of the reverse stock split will recognize gain or loss based
on their adjusted basis in the fractional share interests redeemed. The
stockholder's holding period for the post-reverse stock split shares will
include the period during which the stockholder held the pre-reverse stock split
shares surrendered in the reverse stock split.
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The receipt of cash instead of a fractional share of the Common Stock
by a United States holder of the Common Stock will result in a taxable gain or
loss to such holder for federal income tax purposes based upon the difference
between the amount of cash received by such holder and the adjusted tax basis in
the fractional shares as set forth above. The gain or loss will constitute a
capital gain or loss and will constitute long-term capital gain or loss if the
holder's holding period is greater than one year as of the effective date.
The tax treatment of each stockholder may vary depending upon the
particular facts and circumstances of such stockholder. Each stockholder is
urged to consult with such stockholder's own tax advisor with respect to the tax
consequences of the reverse stock split. Each stockholder should consult with
his or her own tax advisor with respect to all of the potential tax consequences
to him or her of the reverse stock split.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information, as of January 31,
2006, concerning shares of common stock of the Company, the only class of its
securities that are issued and outstanding, held by (1) each stockholder known
by the Company to own beneficially more than five percent of the common stock,
(2) each director of the Company, (3) each executive officer of the Company, and
(4) all directors and executive officers of the Company as a group:
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AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1)<F1> BENEFICIAL OWNERSHIP PERCENT OF CLASS (2) <F2>
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Kevin T. Ryan 139,189,131 48.5%
3950 E. Patrick Lane, Suite 101
Las Vegas, NV 89120
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Urban Casavant 47,000,000 (3)<F3> 16.4%
136 Arbor Way
Henderson, NV 89074
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John S. Woodward 42,658,869 14.9%
1181 Grier Drive, Suite B-116
Las Vegas, NV 89119
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Doug E. Lee 15,300,000 5.3%
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Patty Hill 2,500,000 0.9%
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Robert McDermott 2,000,000 0.7%
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Officers and directors as a group (5 persons) 201,648,000 (3)<F3> 70.3%
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<FN>
(1)<F1> To our knowledge, except as set forth in the footnotes to this table
and subject to applicable community property laws, each person named in
the table has sole voting and investment power with respect to the
shares set forth opposite such person's name.
(2)<F2> This table is based on 286,895,972 shares of Common Stock outstanding
as of January 31, 2006. If a person listed on this table has the right
to obtain additional shares of Common Stock within sixty (60) days from
January 31, 2006, the additional shares are deemed to be outstanding
for the purpose of computing the percentage of class owned by such
person, but are not deemed to be outstanding for the purpose of
computing the percentage of any other person.
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(3)<F3> Includes shares held of record by CMKEXTREME, Inc. and UAJC 2005
Irrevocable Trust.
</FN>
CHANGE IN CONTROL ARRANGEMENTS
As of December 29, 2005, the Company entered into an Asset Purchase
Agreement with U.C. Laser Ltd., in which the Company agreed to purchase all of
the assets of U.C. Laser used in connection with the manufacturing, distribution
and marketing of its decorative images and products. The assets to be acquired
include U.C. Laser's subsidiaries, U.C. Laser, Inc. and CIC Laser Technologies
Ltd., as well as U.C. Laser's worldwide, exclusive license to use the colored
glass technology owned by Laser Glass Ltd.
In consideration for the purchased assets, the Company will assume the
liabilities arising from or related to the purchased assets and issue a number
of its shares of Class B Preferred Stock as will collectively have voting rights
equal to 45% of all voting rights of all Crystalix capital stock outstanding
immediately after the closing, determined on a fully diluted basis. The shares
to be issued to U.C. Laser will be convertible into a total number of shares of
common stock as would, immediately after such conversion, represent 45% of all
shares of capital stock of Crystalix then outstanding on a fully diluted basis.
Twenty percent of the shares to be issued to U.C. Laser will be placed into
escrow to satisfy any obligations of U.C. Laser to indemnify the Company for
losses arising from (1) a material breach by U.C. Laser of any representation,
warranty, covenant, restriction, or agreement made in the Asset Purchase
Agreement or (2) fraud or an intentional misstatement by U.C. Laser. The escrow
period shall terminate 90 days after the closing of the transaction.
The Company has agreed that its board of directors, upon the completion
of this transaction, shall consist of five members, two of whom shall be
Marshall D. Butler and Zvi Dinstein.
ADDITIONAL INFORMATION
The Company will provide, by first class mail or other equally prompt
means, a copy of the information that is incorporated by reference in this
Information Statement statement, without charge, to each person to whom an
Information Statement is delivered upon written or oral request within one day
of receipt of such request. Requests for such information may be directed to
Crystalix Group International, Inc., Attention: Corporate Secretary, 1181 Grier
Drive, Suite B, Las Vegas, Nevada 89119, telephone (702) 740-4616. You are
encouraged to review the information filed by the Company with the Securities
and Exchange Commission and other publicly available information.
By Order of the Board of Directors,
/s/ Kevin T. Ryan
Kevin T. Ryan
CHIEF EXECUTIVE OFFICER
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APPENDIX A
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
DEAN HELLER
Secretary of State
204 North Carson Street, Suite 1
Carson City, Nevada 89701-4299
(775) 684 5708 Website: secretaryofstate.biz
CERTIFICATE OF AMENDMENT
PURSUANT TO NRS 78.385 and 78.390
Above space is for office use only
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
FOR NEVADA PROFIT CORPORATIONS
(PURSUANT TO NRS 78.385 AND 78.390 - AFTER ISSUANCE OF STOCK)
1. Name of corporation:
Crystalix Group International, Inc.
2. The articles have been amended as follows (provide article numbers, if
available):
A. Article First of the corporation's Articles of Incorporation has been amended
to read as follows:
"First: Name
The name of the Corporation is Seaena, Inc. (the "Corporation")."
B. Article Forth (sic) of the corporation's Articles of Incorporation has been
amended to read in its entirety:
"Fourth: Capital Stock
1. Classes and Number of Shares. The maximum number of shares that this
Corporation is authorized to have outstanding at any time is THREE HUNDRED
MILLION (300,000,000) shares of common stock, having a par value of $0.001 per
share, 10,000,000 shares of class A preferred stock with a par value of $0.001
per share and 5,000,000 shares of class B preferred stock with a par value of
$0.001 per share. Effective upon the filing of this Certificate of Amendment
with the Nevada Secretary of State, each group of thirty-five (35) outstanding
shares of common stock (having a par value of $0.001 per share) shall be
automatically combined, converted into and reconstituted as one (1) share of
common stock having a par value of $0.001 per share.
(see attachment)
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a vote
by classes or series, or as may be required by the provisions of the * articles
of incorporation have voted in favor of the amendment is: _____ shares of common
stock
4. Effective date of filing (optional):
(must not be more than 90 days after the certificate is filed)
5. Officer Signature (required): /s/ Douglas E. Lee
------------------------------------------------
*If any proposed amendment would alter or change any preference or any relative
or other right given to any class or series of outstanding shares, then the
amendment must be approved by the vote. In addition to the affirmative vote
otherwise required, of the holders of shares representing a majority of the
voting power of each class or series affected by the amendment regardless of
limitations or restrictions on the voting power thereof.
IMPORTANT: Failure to include any of the above information and submit the proper
fees may cause this filing to be rejected.
THIS FORM MUST BE ACCOMPANIED BY APPROPRIATE FEES.
Nevada Secretary of State AM 78.385 2003
Revised on: 09/29/05
ATTACHMENT TO THE
CERTIFICATION OF AMENDMENT TO THE ARTICLES OF INCORPORATION FOR
CRYSTALIX GROUP INTERNATIONAL, INC.
2. The articles have been amended as follows:
Article Fourth:
The Corporation shall deliver to each holder of shares of the Corporation's
common stock (as constituted immediately prior to the reverse split referenced
above) a certificate or certificates representing the whole number of shares
held by such holder after giving effect to the reverse stock split, and will pay
to each holder the value (as set forth below) of the fraction of a share
resulting from this reverse split (after aggregating all shares held by such
holder), upon and against surrender to the Corporation of the certificates
representing the pre-split shares held by such holder. Payment shall be made for
fractions of a share at a rate of $0.035 per pre-split share.
C. The reverse stock split referenced above will not change the total
number of shares of common stock the Corporation is authorized to issue.
D. As a result of the reverse stock split, and as provided in the
Certificate of Designation of the rights and preferences of the Corporation's
class B preferred stock (the "Designation"), each outstanding share of class B
preferred stock will be convertible into 2.857143 post-split shares of common
stock.
E. As a result of the reverse stock split, the Corporation will have
sufficient shares of common stock available for issuance on conversion of all
outstanding shares of class B preferred stock so that all outstanding shares of
class B preferred stock shall be callable for conversion upon written notice by
the Corporation, as provided in Section 5(i) of the Designation.