The main purpose of the potential reverse split is apparently to save the company money. There are 858 shareholders with fewer than 100 shares. (They own an average of 20 shares each.) The company will pay cash for those shares and will then avoid having to mail materials to them each year.
Normally I don't like to see a reverse split unless the company is doing well and the stock price is going up. I'd rather they waited until they get the agreement signed - and maybe they will. The shareholder vote doesn't happen until November 24, 2009 and the reverse won't happen immediately. Maybe we'll have a signed agreement by then.
We're also voting on whether to give the company the option of offering current shareholders the right to buy shares at a discount plus get some free warrants. This would give the company an alternative to selling discounted shares to YA Global. If someone's going to get shares at a discount, I'd rather it's shareholders and not YA Global.
I don't agree that the proxy is bad news for shareholders. And I'm sure it's not the company's intention to do anything bad for shareholders. They're just trying to give themselves more flexibility.
