Kid Castle KDCE .13 1-5000 Reverse split. Cash out fractional share @ .18.
QUESTIONS AND ANSWERS ABOUT THE TRANSACTION
The following questions and answers briefly address some commonly asked questions about the Transaction that are not addressed in the Summary. They may not include all the information that is important to you. We urge you to read this entire Information Statement carefully, including our financial statements included with it.
What does it mean to “deregister” our common stock?
Following the Transaction, we expect to have fewer than 300 shareholders of record, as calculated under the applicable SEC rule, which will enable us to take action to cease registration of our common stock under the Exchange Act. Effective on and following the termination of the registration of our common stock under the Exchange Act, we will no longer be required to file annual, quarterly and other reports with the SEC, and our executive officers, directors and 10% shareholders will no longer be required to file reports relating to their transactions in our common stock. As a result of the deregistration our common stock, we will no longer be eligible for quotation on the OTCBB. Any trading in our common stock will continue only in privately negotiated sales or over-the-counter on the Pink Sheets.
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What are the Pink Sheets?
The Pink Sheets is a listing service that offers financial and other information about issuers of securities, like our common stock, and collects and publishes quotes of market makers for over-the-counter securities through its website at www.pinksheets.com.
What will I receive in the Transaction?
If you own fewer than 5,000 shares of our common stock at the effective time of the Transaction, you will receive $0.18 in cash, without interest, from us for each pre-split share that you own. There will be an option in the Letter of Transmittal for shareholders to elect to receive their payment in New Taiwan Dollars rather than U.S. dollars. The amount paid will be based on the exchange rate prevailing at the effective time of the Transaction. If you own 5,000 shares or more of our common stock at the effective time of the Transaction, you will not receive any cash payment for your shares in connection with the Transaction and will continue to hold the same number of shares of our common stock as you did before the Transaction. If you own 5,000 shares or more of our common stock at the effective time of the Transaction, upon completion of the Transaction, you will not receive a new share certificate.
Why wasn’t it necessary to hold a shareholders meeting to approve the Transaction?
Under the Florida Business Corporations Act and our articles of incorporation, shareholders holding at least a majority in interest of our outstanding common stock may approve the amendments to our articles of incorporation by written consent in lieu of a special shareholders meeting. Under applicable Florida laws and federal securities laws, this action will not be effective until disclosed to shareholders in a document such as this Information Statement, which is intended to meet the requirements of Section 14 of the Securities and Exchange Act.
What if I hold fewer than 5,000 shares of common stock and hold all of my shares in “street name”?
If you hold fewer than 5,000 shares of our common stock in street name, your broker, bank or other nominee is considered to be the shareholder of record with respect to those shares and not you. It is possible that your bank, broker or other nominee also holds shares for other beneficial owners of our common stock and that it may hold 5,000 or more total shares. Therefore, depending upon their procedures, they may not be obligated to treat the Transaction as affecting beneficial holders’ shares. It is our desire to treat shareholders holding fewer than 5,000 shares of our common stock in street name through a nominee (such as a bank or broker) in the same manner as shareholders whose shares are registered in their name. However, we or our transfer agent, Securities Transfer Corporation, may not have the necessary information to compare your record holdings with any shares that you may hold in street name in a brokerage account and these banks, brokers and other nominees may have different procedures for processing the Transaction. Accordingly, if you hold your shares of our common stock in “street name,” we encourage you to contact your bank, broker or other nominee.
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What happens if I own a total of 5,000 or more shares of common stock beneficially, but I hold fewer than 5,000 shares of record in my name and fewer than 5,000 shares with my broker in street name?
We may not have the information to compare your holdings in two or more different brokerage firms. As a result, if you hold more than the minimum number of shares, you may nevertheless have your shares cashed out if you hold them in a combination of accounts in several brokerage firms. If you are in this situation and desire to remain a shareholder of the Company after the Transaction, we recommend that you combine your holdings in one brokerage account or become a record holder prior to the effective time of the Transaction. The effective time is expected to be approximately 25 days after this Information Statement (definitive version) has been filed with the SEC. You should be able to determine whether your shares will be cashed out by examining your brokerage account statements to see if you hold more than the minimum number of shares in any one account. To determine the Transaction’s effect on any shares you hold in street name (and possible payment of the cash consideration), you should contact your broker, bank or other nominee.
If I own fewer than 5,000 shares of common stock, is there any way I can continue to be a shareholder of the Company after the Transaction?
If you own fewer than 5,000 shares of our common stock before the Transaction, the only way you can continue to be a shareholder of the Company after the Transaction is to purchase, prior to the effective time of the Transaction, sufficient additional shares to cause you to own a minimum of 5,000 shares at the effective time of the Transaction. However, given the historically limited liquidity in our stock, we cannot assure you that any shares will be available for purchase and thus there is a risk that you may not be able to purchase sufficient shares to exceed the required 5,000 shares. In that instance, you would no longer remain a shareholder after the effective time of the Transaction.
Is there anything I can do if I own 5,000 or more shares of common stock, but would like to take advantage of the opportunity to receive cash for my shares as a result of the Transaction?
If you own 5,000 or more shares of our common stock before the Transaction, you can only receive cash for all of your shares if, prior to the effective time of the Transaction, you reduce your stock ownership to fewer than 5,000 shares by selling or otherwise transferring shares. However, we cannot assure you that any purchaser for your shares will be available.
Should I send in my certificates now?
No. If you own less than 5,000 shares of our common stock before the Transaction, you will be receiving further instructions from us. We will send the instructions after the reverse split is effective, which will be when the amendment to our articles of incorporation to effect the reverse split has been filed with the Florida Secretary of State. We expect to file the amendment approximately 25 days after this Information Statement (definitive version) has been filed with the SEC.
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What is the total cost of the Transaction to the Company?
Since we do not know how many record and beneficial holders of our common stock will be cashed out, we do not know the exact cost of the Transaction. However, based on information that we have received as of May 8, 2009 from Broadridge Corporate Issuer Services and from our transfer agent, Securities Transfer Corporation, with regard to the size of holdings of those who may hold our shares in “street name,” as well our estimates of other Transaction expenses, we believe that the total cash requirement of the Transaction to the Company will be approximately $578,050. This amount includes approximately $303,000 needed to cash out fractional shares, and approximately $275,050 of legal, accounting, and financial advisory fees and other costs to effect the Transaction. This total amount could be larger or smaller depending on, among other things, the number of fractional shares that will be outstanding after the Transaction as a result of purchases, sales and other transfers of our shares of common stock by our shareholders. |
