The reverse stock split will not affect
the Common Stock capital account on our balance sheet. However, because the par value of our Common Stock will remain unchanged
at the effective time of the split, the components that make up the Common Stock capital account will change by offsetting amounts.
Depending on the size of the reverse stock split the Board decides to implement, the stated capital component will be reduced proportionately
based upon the reverse stock split and the additional paid-in capital component will be increased with the amount by which the
stated capital is reduced. Immediately after the reverse stock split, the per share net income or loss and net book value of our
Common Stock will be increased because there will be fewer shares of Common Stock outstanding. All historic share and per share
amounts in our financial statements and related footnotes will be adjusted accordingly for the reverse stock split.
Effect on Par Value
The reverse stock split will not affect
the par value of our Common Stock, which will remain at $0.001 per share.
No Going Private Transaction
Notwithstanding the decrease in the number
of outstanding shares following the proposed reverse stock split, our Board does not intend for this transaction to be the first
step in a “going-private transaction” within the meaning of Rule 13e-3 of the Exchange Act.
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 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 proposed in response to any effort of which we are aware to accumulate shares of our Common Stock or obtain control
of the Company, nor is it part of a plan by management to recommend a series of similar amendments to the Board and the stockholders.
Other than the reverse stock split proposal, the Board does not currently contemplate recommending the adoption of any other actions
that could be construed to affect the ability of third parties to take over or change control of the Company.
No Dissenters’ Appraisal
Under the Delaware General Corporation
Law, our Certificate of Incorporation or our By-Laws, the Company’s stockholders are not entitled to dissenters’ appraisal
rights with respect to the reverse stock split, and we will not independently provide stockholders with any such right.
Material U.S. Federal Income Tax Consequences
of the Reverse Stock Split
The following is not intended as tax or
legal advice. Each holder should seek advice based on his, her or its particular circumstances from an independent tax advisor.
The following is a summary of certain United
States federal income tax consequences of the reverse stock split generally applicable to beneficial holders of shares of our Common
Stock. This summary addresses only such stockholders who hold their pre-split shares as capital assets and will hold the post-split
shares as capital assets. This discussion does not address all U.S. federal income tax considerations that may be relevant to particular
stockholders in light of their individual circumstances or to stockholders that are subject to special rules, such as financial
institutions, trusts, estates, entities treated as partnerships for U.S. federal income tax purposes, tax-exempt organizations,
regulated investment companies, REITs, insurance companies, dealers in securities, and foreign stockholders. The following summary
is based upon the provisions of the Code, applicable Treasury Regulations thereunder, judicial decisions and IRS rulings, as of
the date hereof, all of which are subject to change, possibly on a retroactive basis. Tax consequences under state, local, foreign,
and other laws are not addressed herein. Each stockholder should consult his, her or its tax advisor as to the particular facts
and circumstances which may be unique to such stockholder and also as to any estate, gift, state, local or foreign tax considerations
arising out of the reverse stock split.