DEF 14C: Phoenix Plus Corp. Announces 1-for-50 Reverse Stock Split to Boost Marketability and Share Price

Phoenix Plus Corp. has announced a 1-for-50 reverse stock split of its common stock, approved by majority shareholders, aiming to increase its trading price and appeal to a broader investor base.

Summary

• Phoenix Plus Corp. is implementing a reverse stock split at a ratio of one for 50 shares of its common stock.
• The action was approved by written consent of holders representing 86.45% of the outstanding voting power (Majority Stockholders) on May 15, 2025.
• The Board of Directors also approved the action on May 15, 2025, subject to stockholder approval.
• The reverse stock split is anticipated to become effective during the second calendar quarter of 2025, but no earlier than 20 days after the Information Statement is mailed (mailed on or about June 3, 2025).
• No fractional shares will be issued; instead, stockholders holding a fractional share will receive one additional full share.
• The number of outstanding shares of common stock will be reduced from 332,699,500 as of May 15, 2025, to approximately 6,653,990 post-split.
• The split will not change proportionate equity interests or voting power for stockholders, except for minimal changes resulting from fractional share adjustments.
• The par value of the common stock will remain $0.0001 per share.
• All outstanding options and warrants will be adjusted proportionally to reflect the reverse stock split.

Sentiment

Score: 4

Explanation: The necessity of a 1-for-50 reverse stock split indicates significant underlying issues with the company's stock price and market perception. While it's a proactive step to address these problems and potentially improve marketability and access to capital, the document explicitly outlines numerous risks, including no assurance of proportional price increase, potential for further decline, and no guarantee of improved liquidity or successful capital raises. The anti-takeover effect is also a potential negative for some investors.

Positives

• Aims to increase the per-share trading price of common stock on the OTCPINK market, which was $0.0287 per share as of May 26, 2025.
• Intended to make the common stock more attractive to a broader range of investors, including institutional and professional investors who often avoid low-priced stocks.
• May alleviate issues with brokerage firms that are reluctant to recommend or monitor low-priced stocks.
• Aims to reduce the number of outstanding shares to a level more consistent with other public companies of similar anticipated market capitalization.
• The Board believes it may make it easier for the Company to attract new investors and conduct equity financings on attractive terms.

Negatives

• There is no assurance that the stock price of the common stock after the reverse stock split will rise in proportion to the reduction in shares or maintain an increased price.
• The total market capitalization of the common stock after the reverse stock split may be lower than before the split.
• The reverse stock split may result in some stockholders owning 'odd lots' (less than 100 shares), which generally incur higher brokerage commissions and transaction costs.
• There is a negative perception of reverse stock splits among investors, analysts, and other stock market participants.
• The stock prices of some companies that have effected reverse stock splits have subsequently declined, sometimes significantly.
• A reduced number of outstanding shares could potentially have an adverse effect on trading liquidity.
• The company cannot assure that it will be able to raise additional equity capital on attractive terms or at all, despite the split's intention to facilitate this.

Risks

• If the reverse stock split is effected and the market price of the common stock declines, the percentage decline may be greater than would occur without the split.
• There is no assurance that the reverse stock split will result in any particular price for the common stock, and trading liquidity may not necessarily improve.
• The market price per share after the reverse stock split may not increase proportionally to the reduction in shares, and the total market capitalization may be lower.
• The market price of the common stock following the reverse stock split may not exceed or remain higher than the market price prior to the split.
• The reverse stock split may increase the number of stockholders who own odd lots, leading to higher transaction costs.
• The overall effect of the reverse stock split may be to render more difficult the consummation of mergers with the company or the assumption of control by a principal stockholder, potentially making it difficult to remove management (anti-takeover effect).
• Future issuances of authorized but not outstanding or reserved shares of common stock could dilute the percentage of stock ownership and voting rights of present holders.

Future Outlook

The company anticipates the reverse stock split will become effective during the second calendar quarter of 2025. While the action is intended to increase the stock price and marketability, and potentially facilitate future equity financings, the company explicitly states there is no assurance that these desired results will be achieved, or that the stock price will rise proportionally or maintain an increased value. The company will continue to be subject to periodic reporting requirements of the Exchange Act.

Management Comments

• "The Board believes that it is necessary and prudent for the Company to amend our Articles of Incorporation to affect the reverse stock split because it would reduce the number of outstanding shares of our Common Stock to a level more consistent with other public companies with a similar anticipated market capitalization."
• "The Board also believes that the current market price of our Common Stock has a negative effect on the marketability of the existing shares, and that the Reverse Stock Split may make the Common Stock more attractive to a broader range of investors."
• "The Board intends to affect the Reverse Stock Split only if it believes that the implementation of the Reverse Stock Split is in the best interests of the Company and its stockholders."

Industry Context

This reverse stock split addresses common challenges faced by companies with very low stock prices, such as difficulty attracting institutional investors, reluctance from brokerage firms to deal in low-priced stocks, and challenges in raising equity capital on attractive terms. A reverse stock split is a frequently used strategy by companies to improve stock perception, potentially meet minimum bid price requirements for exchange listings (though not explicitly stated as a goal here for OTCPINK), and broaden investor appeal.

Comparison to Industry Standards

• The document generally refers to the goal of reducing outstanding shares to a level "more consistent with other public companies with a similar anticipated market capitalization" but does not name specific comparable companies or projects.
• It notes that "many institutional investors look on stocks that are trading at low prices as unduly speculative" and that "a variety of policies and practices of brokerage firms discourage individual brokers... from dealing in low-priced stocks," indicating a general alignment with industry perceptions of low-priced securities.

Corporate Governance

Related Party Transactions

• Radiance Holdings Corp., a 5% shareholder, holds 287,634,100 shares of Common Stock, representing 86.45% of the outstanding voting power.
• Mr. Lee Chong Chow, the company's President, Director, Secretary, and Treasurer, beneficially owns 41.65% of the issued and outstanding shares of Radiance Holdings Corp.

Stakeholder Impact

• **Shareholders**: Will own fewer shares but maintain proportionate ownership (except for minor adjustments for fractional shares). May face higher brokerage costs for transactions involving 'odd lots'. Potential for increased stock price and marketability, but also risk of further price decline or no improvement. Future share issuances could dilute their percentage ownership and voting rights.
• **Management**: The reverse stock split could have an anti-takeover effect, potentially making it more difficult for outside parties to gain control or remove incumbent management.

Next Steps

• The Articles of Amendment will not be filed, and the reverse stock split will not become effective, until at least 20 days after the Information Statement is first mailed (on or about June 3, 2025).
• The company plans to file the Articles of Amendment with the Secretary of State of the State of Nevada after the 20-day period.
• The company must notify the Financial Industry Regulatory Authority (FINRA) by filing the Issuer Company Related Action Notification Form no later than ten days prior to the anticipated date of the Reverse Stock Split.
• The Board reserves the right, in its sole discretion, to elect not to proceed with the action if it determines it is no longer in the company's best interests.

Key Dates

Recommendation

Keywords

Reverse Stock Split, Phoenix Plus Corp, Common Stock, Share Price, OTCPINK, Corporate Action, SEC Filing, DEF 14C, Investor Relations, Corporate Governance, Stock Market, Capital Raise