Item 3.03
Material Modification to Rights of Security Holders
The Board of Directors of Apricus Biosciences, Inc., a Nevada corporation (the “Company”), has approved a reverse stock split of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a ratio of 1-for-10 (the “Reverse Stock Split”).
Effective Date; CUSIP Number
The Reverse Stock Split became effective at 5:00 p.m. Pacific Time on October 21, 2016 (the “Effective Date”). As of the opening of The NASDAQ Capital Market on October 24, 2016, the Common Stock began to trade on a Reverse Stock Split-adjusted basis. In connection with the Reverse Stock Split, the CUSIP number for the Common Stock changed to 03832V307.
Split Adjustment; Treatment of Fractional Shares
On the Effective Date, the total number of shares of Common Stock held by each stockholder of the Company was automatically converted into the number of shares of Common Stock equal to (i) the number of issued and outstanding shares of Common Stock held by each such stockholder immediately prior to the Effective Date, divided by (ii) ten (10), with such resulting number of shares rounded up to the nearest whole share. As a result, no fractional shares will be issued in connection with the Reverse Stock Split and no cash or other consideration will be paid in connection with any fractional shares that would otherwise have resulted from the Reverse Stock Split. Further, on the Effective Date, all outstanding options, warrants or other rights convertible into or exercisable for shares of Common Stock will be adjusted in accordance with their terms and pursuant to the exchange ratio of the Reverse Stock Split.
Capitalization
Simultaneously to the Reverse Stock Split, the number of shares of the Company’s authorized Common Stock was correspondingly reduced from 150,000,000 shares to 15,000,000 shares. Immediately prior to the Reverse Stock Split, there were 77.3 million shares of Common Stock issued and outstanding. After the Reverse Stock Split, there were approximately 7.7 million shares of Common Stock issued and outstanding. The Reverse Stock Split has no effect on the par value of the Common Stock or authorized shares of preferred stock. Immediately after the Reverse Stock Split, each stockholder’s percentage ownership interest in the Company and proportional voting power will remain unchanged, other than as a result of the rounding to eliminate fractional shares. The rights and privileges of the holders of shares of Common Stock will be unaffected by the Reverse Stock Split.
State Filing
The Reverse Stock Split was effected by the filing of a Certificate of Change (the “Certificate”) with the Secretary of State of the State of Nevada pursuant to Nevada Revised Statutes (“NRS”) Section 78.209 on October 21, 2016, effective as of the Effective Date. A copy of the Certificate is attached hereto as Exhibit 3.1 and incorporate herein by reference.
No Stockholder Approval Required
Under Nevada law, because the Reverse Stock Split was approved by the Board of Directors of the Company in accordance with NRS Section 78.207, no stockholder approval is required. NRS Section 78.207 provides that the Company may effect the Reverse Stock Split without stockholder approval if (x) both the number of authorized shares of Common Stock and the number of outstanding shares of Common Stock are proportionally reduced as a result of the Reverse Stock Split (y) the Reverse Stock Split does not adversely affect any other class of stock of the Company and (z) the Company does not pay money or issue scrip to stockholders who would otherwise be entitled to receive a fractional share as a result of the Reverse Stock Split. As described herein, the Company has complied with these requirements.
NASDAQ Compliance
The Reverse Stock Split is being effected by the Company in an effort to regain compliance with NASDAQ Listing Rule 5555(a)(2), which requires the Company to maintain a minimum closing bid price of $1.00 per share (the “Minimum Bid Price Requirement”). To regain compliance with the Minimum Bid Price Requirement, the bid price of the Company’s Common Stock has to close at or above $1.00 per share for a minimum of ten consecutive business days prior to the Company’s compliance deadline of November 7, 2016. The Company expects that the Reverse Stock Split will allow the Company to regain compliance with the Minimum Bid Price Requirements.
The Company is also out of compliance with NASDAQ Listing Rule 5550(b)(2), which requires the Company to maintain a minimum market value of $35 million (the “Market Value Requirement”). To regain compliance with the Market Value Requirement, the Company must evidence a market value of listed securities of at least $35 million for a minimum of ten consecutive business days. The Company intends to monitor the market value of its Common Stock and consider available options if its Common Stock does not trade at a level likely to result in the Company regaining compliance with NASDAQ’s minimum market value rule prior to the Company’s compliance deadline of November 29, 2016.
The Company issued a press release on October 20, 2016 announcing the Reverse Stock Split. The Company’s press release is filed herewith as Exhibit 99.1.