THIS
IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS, AND NO STOCKHOLDER MEETING WILL BE HELD TO CONSIDER THE CORPORATE ACTIONS.
WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A PROXY. THE ACCOMPANYING MATERIAL IS BEING SENT TO YOU
FOR INFORMATIONAL PURPOSES ONLY.
No
action is required by you. The accompanying Information Statement is furnished only to inform our stockholders of the corporate
actions before they occur, in accordance with the requirements of United States Federal Securities Laws. This Information Statement
is being mailed on or about March 26, 2018 to all of the Company’s stockholders of record as of the close of business on
March 9, 2018.
By
Order of the Board of Directors.
/s/
Wais Asefi
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Name:
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Wais
Asefi
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Title:
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Chief
Executive Officer
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INFORMATION
STATEMENT PURSUANT TO SECTION 14(C) OF THE
SECURITIES
EXCHANGE ACT OF 1934 AND REGULATION 14C PURSUANT THERETO
March
26, 2018
Textmunication
Holdings, Inc.
1940
Contra Costa Blvd. Pleasant Hill, CA 94523
Telephone:
925-777-2111
This
Information Statement is distributed to inform our stockholders of action taken without a meeting by the written consent of the
holders of a majority of the outstanding voting power of the Company.
WE
ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
This
Information Statement has been filed with the Securities and Exchange Commission (the “Commission”) and is being furnished
by the Board of Directors of Textmunication Holdings, Inc., a Nevada corporation (the “Company”) (the “Board”),
to the holders of record at the close of business on March 9, 2018 of the Company’s outstanding capital shares, par value
$0.0001, pursuant to Rule 14c-2 promulgated pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and the Nevada Revised Statutes.
The
cost of preparing and furnishing this Information Statement will be paid by the Company. We will mail this Information Statement
to our registered stockholders and certain beneficial stockholders, when requested by brokerage houses, nominees, custodians,
fiduciaries and other similar parties.
This
Information Statement informs stockholders of the corporate actions approved by written consent by the Board and the stockholders
holding 4,000,000 shares of issued and outstanding Series A Preferred Stock and 2,000,000 shares of Series C Preferred Stock,
which equals approximately 51% of the voting power of the Company’s outstanding capital stock, as of March 9, 2018, 2018
(the “Majority Stockholders”).
Accordingly,
all necessary corporate approvals to effectuate the corporate actions have been obtained. The Company is not seeking approval
from its remaining stockholders. This Information Statement is furnished solely for the purpose of informing our stockholders,
in the manner required pursuant to the Exchange Act and the Nevada Revised Statutes of the corporate actions. Pursuant to Section
14(c) of the Exchange Act and Rule 14c-2 promulgated pursuant thereto, the corporate actions will not be effective until twenty
(20) days after the date a Definitive Information Statement is filed with the Commission and a copy thereof is mailed to each
of our stockholders. The corporate actions are expected to become effective on or after April 16, 2018, or such later date as
all conditions and requirements to effectuate the Reverse Split are satisfied. Therefore, this Information Statement is being
sent to you for informational purposes only. Notwithstanding the foregoing, we must notify the Financial Industry Regulatory Authority
of the Reverse Split by filing the Issuer Company Related Action Notification Form no later than ten (10) days prior to the anticipated
effective date of the Reverse Split.
THIS
IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS, AND NO STOCKHOLDER MEETING WILL BE HELD TO CONSIDER THE CORPORATE ACTIONS.
WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
The
Company’s stockholders as of the record date are being furnished copies of this Information Statement. This Information
Statement is first being mailed or furnished to our stockholders on or about March 26, 2018.
Pursuant
to Rule 14c-2 promulgated pursuant to the Exchange Act, the corporate actions may not be effected until at least twenty (20) calendar
days after the mailing of the Definitive Information Statement to the Company’s shareholders. Notwithstanding the foregoing,
we must notify the Financial Industry Regulatory Authority of the Reverse Split by filing the Issuer Company Related Action Notification
Form no later than ten (10) days prior to the anticipated effective date of the Reverse Split.
NOTICE
OF ACTION TAKEN PURSUANT TO THE WRITTEN CONSENT OF A STOCKHOLDER HOLDING A MAJORITY OF THE VOTING POWER OF THE OUTSTANDING CAPITAL
STOCK OF TEXTMUNICATION HOLDINGS, INC., DATED MARCH 9, 2018, IN LIEU OF A SPECIAL MEETING OF THE STOCKHOLDERS.
TO
OUR STOCKHOLDERS:
NOTICE
IS HEREBY GIVEN that, on March 9, 2018, the Company obtained the written consent of its Board of Directors (the “Board”)
and the written consent of the stockholders holding 4,000,000 shares of issued and outstanding Series A Preferred Stock and 2,000,000
shares of Series C Preferred Stock, which equals to approximately 50.06% of the voting power of the Company’s outstanding
capital stock (the “Majority Stockholders”) to effectuate the corporate actions.
FORWARD-LOOKING
STATEMENTS
This
Information Statement and the documents to which we refer you in this Information Statement may contain forward-looking statements
that involve numerous risks and uncertainties which may be difficult to predict. The statements contained in this Information
Statement that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act
of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act, including, without limitation, the
management of the Company and the Company’s expectations, beliefs, strategies, objectives, plans, intentions and similar
matters. All forward-looking statements included in this Information Statement are based on information available to the Company
on the date hereof. In some cases, you can identify forward-looking statements by terminology such as “may,” “can,”
“will,” “should,” “could,” “expects,” “plans,” “anticipates,”
“intends,” “believes,” “estimates,” “predicts,” “potential,” “targets,”
“goals,” “projects,” “outlook,” “continue,” “preliminary,” “guidance,”
or variations of such words, similar expressions, or the negative of these terms or other comparable terminology.
Forward-looking
statements involve a number of risks and uncertainties, and actual results or events may differ materially from those projected
or implied in those statements.
We
caution against placing undue reliance on forward-looking statements, which contemplate our current beliefs and are based on information
currently available to us as of the date a particular forward-looking statement is made. Any and all such forward-looking statements
are as of the date of this Information Statement. We undertake no obligation to revise such forward-looking statements to accommodate
future events, changes in circumstances, or changes in beliefs, except as required by law. In the event that we do update any
forward-looking statements, no inference should be made that we will make additional updates with respect to that particular forward-looking
statement, related matters, or any other forward-looking statements. Any corrections or revisions and other important assumptions
and factors that could cause actual results to differ materially from forward-looking statements may appear in the Company’s
public filings with the SEC, which are available to the public at the SEC’s website at
www.sec.gov
. For additional
information, please see the section titled “Where You Can Obtain Additional Information” below.
ACTION
BY BOARD OF DIRECTORS AND CONSENTING STOCKHOLDER
In
accordance with the Nevada Revised Statutes, as amended, on March 9, 2018, by written consent, the Board adopted resolutions approving
the following actions:
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To
authorize a reverse split of the Company’s outstanding shares of common stock, par value $0.001 per share, with a split
ratio of between 1 for 200 and 1 for 2,000, which will be determined by the Board of Directors (the “Reverse Split”);
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●
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To
decrease the number of authorized shares of common stock of the Company, par value $0.0001 per share, from 4,000,000,000 shares
to 100,000,000 shares.
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To
obtain the approval of our stockholders for the above corporate actions, we could have convened a special meeting of our stockholders
for the specific purpose of voting on the actions. However, the Nevada Revised Statutes provide that any action that may be taken
at any annual or special meeting of our stockholders may be taken without a meeting and without prior notice if a consent in writing
setting forth the action taken is signed by the holders of outstanding shares of voting capital stock having not less than the
minimum number of votes that would be necessary to take such action. To eliminate the costs and management time involved in holding
a meeting and obtaining proxies and effect the above corporate actions as early as possible in order to accomplish the purposes
hereafter described, we elected to utilize the written consent of the Majority Stockholders.
As
of March 9, 2018, there were issued and outstanding the following: 3,975,519,454 shares of Common Stock; 4,000,000 shares of Series
A Preferred Stock; 66,667 shares of Series B Preferred Stock; and 2,000,000 shares of Series C Preferred Stock.
The
Series A Preferred Stock votes along with Common Stock and each share of Series A Preferred Stock entitles the holder to 300 votes.
The Series B Preferred Stock has no voting rights. The Series C Preferred Stock votes along with Common Stock and each share of
Series C Preferred Stock entitles the holder to 875 votes.
Based
on the foregoing, as of March 9, 2018, the total aggregate amount of votes entitled to vote regarding the approval of the corporate
actions was 6,925,519,454. Pursuant to the Nevada Revised Statutes at least a majority of the voting equity of the Company, or
at least 3,462,759,728 votes are required to approve the corporate actions by written consent. The Majority Stockholders, which
held 3,467,528,430 votes equal to approximately 51% of the voting equity of the Company, have voted in favor of the corporate
actions, thereby satisfying the requirement pursuant to the Nevada Revised Statutes that at least a majority of the voting equity
vote in favor of a corporate action by written consent.
The
following table sets forth the names of the holders of the Common Stock, the number of shares of Common Stock held by such holder,
the total number of votes that such holder voted in favor of the corporate actions and the percentage of the issued and outstanding
voting equity of the Company that voted in favor thereof:
Name of Voting Stockholder
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Class of Stock
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Number of
Shares held
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Number of Votes held by such Stockholder
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Number of Votes that Voted in Favor of the Reverse Split
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Percentage of the Voting Equity that Voted in Favor of the Reverse Split
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Wais Asefi
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Series C Preferred Stock
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2,000,000
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1,750,000,000
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1,750,000,000
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25.27
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%
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Wais Asefi
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Series A Preferred Stock
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4,000,000
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1,200,000,000
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1,200,000,000
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17.33
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%
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Wais Asefi
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Common Stock
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255,028,430
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255,028,430
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255,028,430
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3.68
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%
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Brian Holden
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Common Stock
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132,000,000
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132,000,000
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132,000,000
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1.91
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%
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Marvin Mansour
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Common Stock
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89,000,000
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89,000,000
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89,000,000
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1.28
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%
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Shelly Singhal
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Common Stock
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41,500,000
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41,500,000
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41,500,000
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.59
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%
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Total
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3,467,528,430
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3,467,528,430
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50.06
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%
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CORPORATE
ACTION – REVERSE STOCK SPLIT
The
Board and Majority Stockholder have authorized the Reverse Split. Any fractional shares will be rounded up to the next whole number.
Stockholders have no rights pursuant to the Nevada Revised Statutes, the Company’s Articles of Incorporation, or the Company’s
Bylaws, to exercise dissenters’ rights of appraisal with respect to the Reverse Split.
The
Board believes the Reverse Split is necessary and advisable in order to maintain the Company’s financing and capital raising
ability and generally maintain our flexibility in today’s competitive and rapidly changing environment.
Accordingly,
it is the Board’s opinion that the Reverse Split would better position the Company to attract potential business candidates
and provide our stockholders a greater potential return.
The
Nevada Revised Statutes provide that the written consent of the holders of outstanding shares of voting capital stock having not
less than the minimum number of votes which would be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted can approve an action in lieu of conducting a special stockholders’ meeting
convened for the specific purpose of such action. The Nevada Revised Statutes, however, require that in the event an action is
approved by written consent, a company must provide prompt notice of the taking of any corporate action without a meeting to the
stockholders of record who have not consented in writing to such action and who, if the action had been taken at a meeting, would
have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed
by a sufficient number of holders to take the action were delivered to the company. Accordingly, this Information Statement is
to provide that notice.
This
Information Statement contains a brief summary of the material aspects of the Reverse Split, approved by the Board and the Majority
Stockholder.
Reason
for the Reverse Split
The
Board believes the Reverse Split is necessary and advisable in order to maintain financing and capital raising ability and, generally,
maintain flexibility in today’s competitive and rapidly changing environment.
The
Reverse Split will have the effect of creating newly authorized shares of our common stock. Any issuance of additional shares
of our common stock would probably have the effect of diluting the earnings per share and book value per share of outstanding
shares of common stock. Any additional shares of our common stock, when issued, would have the same rights and preferences as
the shares of common stock presently outstanding. Additional shares of our common stock will be available for issuance by the
Board for stock splits or stock dividends, acquisitions, raising additional capital, conversion of debt to equity, stock options,
or other corporate purposes. The Company does not anticipate that it would seek authorization from its stockholders for issuance
of such shares, unless required by applicable law.
There
is no assurance that any effect on the price of the Company’s common stock will result, or that the market price for the
Company’s common stock, immediately or shortly after the Reverse Split becomes effective, will increase, or that any increase
which may occur will be sustained. The Company cannot control the market’s reaction. Further, there can be no assurance
that an increased market price, if it occurs as a result of the Reverse Split, will encourage more broker-dealers or investors
to become involved in the Company’s common stock.
The
Board believes that the Reverse Split and any resulting increase per share price of our common stock could also enhance the acceptability
and marketability of our common stock to the financial community and investing public. Many institutional investors have policies
prohibiting them from holding lower-priced stocks in their portfolios, which reduces the number of potential buyers of our common
stock. Additionally, analysts at many brokerage firms are reluctant to recommend lower-priced stocks to their clients or monitor
the activity of lower-priced stocks. Brokerage houses also frequently have internal practices and policies that discourage individual
brokers from dealing in lower-priced stocks due to, among other reasons, the trading volatility often associated with lower-priced
stocks. Some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive
to brokers. Further, because brokers’ commissions on lower-priced stock generally represent a higher percentage of the stock
price than commissions on higher priced stock, investors in lower-priced stocks pay transaction costs which are a higher percentage
of their total share value, which may limit the willingness of individual investors and institutions to purchase our common stock.
Potential
investors who might consider making investments in the Company may be unwilling to do so when the Company has a large number of
shares issued and outstanding with little or no stockholders’ equity. In other words, the “dilution” which new
investors could experience could discourage them from investing. A reduction in the total outstanding shares of our common stock
may, without any assurance, make the Company’s capitalization structure more attractive.
For
these reasons, the Board and Majority Stockholders have chosen to adopt and recommend the Reverse Split.
Effect
of the Reverse Split
The
principal effect of the Reverse Split will be the reduction in the number of shares of our common stock issued and outstanding
on the effective date of the Reverse Split, from 3,975,519,454 shares, as of the effective date, to a number of shares within
the range of 19,877,592 shares (if the minimum ratio of 1 for 200 is used) and 1,987,759 shares (if the maximum 1 for 2,000 ratio
is used), depending on what the Board of Directors decides and further on the number of whole shares issuable for fractional shares
resulting from the Reverse Split.
Our
Board of Directors will have full discretion and authority to determine the ratio for the Reverse Split, within the range of 1
for 200 and 1 for 2,000, which we will announce upon receiving a market effective date from FINRA.
The
Reverse Split will affect all of our common stockholders uniformly. Accordingly, the Reverse Split will dilute the equity interests
and earnings per share of the existing holders of our common stock. The shares of our common stock issued pursuant to the Reverse
Split will remain fully paid and non-assessable. The Reverse Split will not increase or decrease the market capitalization of
the Company. The Reverse Split is not intended as, and will not have the effect of, a “going private transaction”
under Rule 13e-3 of the Exchange Act.
The
other primary effect of the Reverse Split will be to provide us with additional shares of common stock that will be available
for various corporate purposes. We may use the shares of our common stock for, among other things:
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Raising
working capital through equity issuances;
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Providing
equity incentives to employees, officers or directors;
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Establishing
strategic relationships with other companies;
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Expanding
our business through acquisitions and other investment opportunities;
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Paying
existing and future obligations and commitments; and,
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For
general corporate purposes.
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We
have no definitive plans to issue any such shares, although we evaluate, from time to time, potential transactions that may result
in the issuance of such shares. The Board believes that it is advisable and in our best interests to have available additional
authorized but unissued shares of common stock adequate to provide for our future needs. The unissued shares of our common stock
will be available for issuance from time to time as may be deemed advisable or required for various purposes, including the issuance
of shares in connection with financing or acquisition transactions.
The
history of similar reverse stock splits for companies in similar circumstances is varied. If the Reverse Split is effected and
the market price of our 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 the Reverse Split.
The
liquidity of our common stock could be affected adversely by the decreased number of shares of our common stock outstanding after
the Reverse Split. Although the Board believes that a higher stock price could help generate investor interest and increased volume
in trading of our common stock, there can be no assurance that the Reverse 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 decreased liquidity that may result from having fewer shares issued and outstanding may
not be offset by increased investor interest in our common stock.
The
Reverse Split will increase the number of shareholders who own odd-lots. An odd-lot is fewer than 4 shares. Such shareholders
may experience an increase in the cost of selling their shares and may have greater difficulty in making sales.
CUSIP
Number
When
the Reverse Split is effectuated, the Company’s common stock will receive a new CUSIP number, which is the number used to
identify the Company’s equity securities, and stock certificates with the older CUSIP number will need to be exchanged for
stock certificates with the new CUSIP number. Our common stock will continue to be quoted on the OTC Markets.
Anti-Takeover
Effects of the Reverse Split
A
possible effect of the Reverse Split may be to discourage a merger, tender offer or proxy contest, or the assumption of control
by a holder of a large block of the Company’s voting securities and the removal of incumbent management. The Board could
use the additional shares of our common stock available for issuance to resist or frustrate a third-party take-over effort favored
by a majority of the independent stockholders that would provide an above market premium by issuing additional shares of our common
stock.
The
Reverse Split is not the result of the Board’s knowledge of an effort to accumulate any of the Company’s securities
or to obtain control of the Company by means of a merger, tender offer, solicitation or otherwise. Nor is the Reverse Split a
plan by the Board to adopt a series of amendments to the Articles of Incorporation or our Bylaws to institute an anti-takeover
provision. We do not have any plans or proposals to adopt other provisions or enter into other arrangements that may have material
anti-takeover consequences. As specified above, the reason for the Reverse Split is to increase the amount of shares of common
stock that we are able to issue in order to attract potential investors and conduct equity financings.
Although
the Reverse Split is not being undertaken by the Board to institute an anti-takeover provision, in the future the Board could,
subject to its fiduciary duties and applicable law, use the unissued shares of our common stock to frustrate persons seeking to
take over or otherwise gain control of the Company by, for example, privately placing shares with purchasers who might side with
the Board in opposing a hostile takeover bid. Shares of our common stock could also be issued to a holder that would thereafter
have sufficient voting power to assure that any proposal to amend or repeal the Company’s Bylaws or certain provisions of
the Articles of Incorporation would not receive the requisite vote. Such uses of our common stock could render more difficult,
or discourage, an attempt to acquire control of the Company, if such transactions were opposed by the Board. However, it is also
possible that an indirect result of the anti-takeover effect of the Reverse Split could be that our shareholders will be denied
the opportunity to obtain any advantages of a hostile takeover, including, but not limited to, receiving a premium to the then
current market price of our common stock, if the same was so offered by a party attempting a hostile takeover of the Company.
We are not aware of any party’s interest in or efforts to engage in a hostile takeover attempt as of the date of this Information
Statement.
Exchange
Act Registration
We
will continue to be subject to the periodic reporting requirements of the Exchange Act. Our common stock is, currently, registered
pursuant to Section 12(g) of the Exchange Act and, as a result, we are subject to periodic reporting and other requirements. The
Reverse Split will not affect the registration of our common stock pursuant to the Exchange Act.
Accounting
Consequences
Upon
the Reverse Split becoming effective, the par value per share of our common stock will remain unchanged at $0.0001 per share.
As a result, on the effective date of the Reverse Split, the stated capital on the Company’s balance sheet attributable
to our common stock will be reduced proportionally, based on the exchange ratio of the Reverse Split, from its present amount,
and the additional paid-in capital account will be credited with the amount by which the stated capital is reduced. The net income
or loss and net book value per share of common stock will be increased, because there will be fewer shares of our common stock
outstanding. It is not anticipated that any other accounting consequences will result from the Reverse Split.
Effect
of the Reverse Split on Convertible Securities
Proportionate
adjustments will be made based on the ratio of the Reverse Split to the number of shares our common stock issuable upon the conversion
of all outstanding convertible securities entitling the holders to convert into shares of our common stock. This will result in
approximately the same aggregate conversion ratio required to assure the same value of shares of our common stock being delivered
upon such conversion immediately following the Reverse Split as was the case immediately preceding the Reverse Split. The number
of shares of our common stock reserved for issuance pursuant to these securities will be proportionately based upon the Reverse
Split ratio, subject to the Company’s treatment of fractional shares.
No
Going Private Transaction
Notwithstanding
the decrease in the number of outstanding shares of our common stock following the Reverse Split, the Board does not intend for
the Reverse Split to be the first step in a series of plans or proposals of a “going private transaction” within the
meaning of Rule 13e-3 promulgated pursuant to the Exchange Act.
Beneficial
Holders of Common Stock (shareholders who hold shares in street name)
Upon
the implementation of the Reverse Split, the Company intends to treat shares of its common stock held by shareholders through
a bank, broker, custodian or other nominee in the same manner as registered shareholders whose shares of common stock are registered
in their names. Banks, brokers, custodians or other nominees will be instructed to effectuate the Reverse Split for their beneficial
holders holding our common stock in street name. However, those banks, brokers, custodians or other nominees may have procedures
different than those for registered shareholders for processing the Reverse Split. Shareholders who hold shares of our common
stock with a bank, broker, custodian or other nominee and have any questions in this regard are encouraged to contact their banks,
brokers, custodians or other nominees.
Registered
“Book-Entry” Holders of Common Stock (shareholders that are registered on our transfer agent’s books and records
but do not hold stock certificates)
Certain
of the Company’s registered shareholders may hold some or all of their shares of our common stock electronically in book-entry
form with our transfer agent. These shareholders do not have stock certificates evidencing their ownership of our common stock.
They are, however, provided with statements identifying the number of shares of our common stock registered in their accounts.
Shareholders
who hold shares of our common stock electronically in book-entry form with our transfer agent will not need to take action to
receive whole shares of post-Reverse Split common stock (the exchange will be automatic), subject to adjustment for treatment
of fraction shares.
Holders
of Certificated Common Shares
Shareholders
holding shares of the Company’s common stock in certificated form will be sent a transmittal letter by the Company’s
transfer agent after the Reverse Split is effective. The letter of transmittal will specify instructions regarding how a shareholder
should surrender his, her or its certificate(s) representing the Company’s common stock to our transfer agent in exchange
for certificates representing the appropriate number of whole shares of post-Reverse Split common stock. No new certificates will
be issued to a shareholder until such shareholder has surrendered all old certificates, together with a properly completed and
executed letter of transmittal, to our transfer agent. No shareholder will be required to pay a transfer or other fee to exchange
his, her or its old certificate(s). Shareholders will then receive new certificates representing the number of whole common shares
that they are entitled to as a result of the Reverse Split, subject to the treatment of fractional shares. Until surrendered,
the Company will deem outstanding old certificates held by shareholders to be cancelled and only represent the number of whole
post-Reverse Split shares of our common stock to which those shareholders are entitled, subject to such treatment of fractional
shares. Any old certificates submitted for exchange, whether because of a sale, transfer or other disposition, will automatically
be exchanged for new certificates. If an old certificate has a restrictive legend, the new certificate will be issued with the
same restrictive legend.
SHAREHOLDERS
SHOULD NOT DESTROY ANY STOCK CERTIFICATES AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATES UNTIL REQUESTED TO DO SO.
CORPORATE
ACTION – DECREASE IN AUTHORIZED SHARES OF COMMON STOCK
The
Company’s Articles of Incorporation, as amended, authorizes the issuance of 4,000,000,000 shares of Common Stock, par value
of $0.0001 per share. On March 9, 2018, the Board approved the decrease in authorized shares to authorize the decrease the Company’s
authorized commons stock from 4,000,000,000 shares to 100,000,000 shares.
The
Company’s leadership, at the Board’s discretion, plans to file the decrease in authorized shares of commons stock
with the Secretary of State of Nevada. The decrease in our authorized capital stock will become effective on the date of filing.
There is no change with respect to the number of authorized preferred shares.
Purposes
of the Decrease in Authorized Shares
The
principal purpose of the decrease in authorized shares is to more closely align our capital structure. While the Reverse Stock
Split’s ratio has yet to be determined, any such action will create a sharp reduction in the number of outstanding shares
of Common Stock and would, with no further action by us, result in a significant disparity in the ratio of our outstanding to
authorized shares of Common Stock. By implementing the decrease in authorized shares following the Reverse Stock Split, we will
still have a sufficient number of authorized shares of both common stock and preferred stock that will afford us maximum flexibility
to issue shares of either class in the future while allowing us to have a proportionate capital structure.
Further,
each year, we are required to make franchise tax payments to the State of Nevada in an amount determined, in part, by the total
number of shares of stock we are authorized to issue. Therefore, the amount of this tax will be decreased if we reduce the number
of authorized shares of our Common Stock (unless before and after such reduction, we are subject to the maximum tax amount).
Effect
of the Decrease in Authorized Shares
Once
we file the amendment for the decrease in authorized shares of Common Stock, it will have the immediate effect of reducing the
total amount of authorized Common Stock. Unlike the Reverse Stock Split, it will have no impact on the number of shares you own.
No
Dissenters’ Rights
Under
the Nevada Revised Statutes, the Company’s Stockholders are not entitled to dissenters’ rights with respect to the
decrease in authorized shares, and the Company will not independently provide Stockholders with any such right.