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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934.
Filed by the Registrant [ x ] Filed by Party other than the
Registrant [ ]
[ x ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only [as
permitted by Rule 14a-6(e)(2)]
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
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GRAND CENTRAL SILVER MINES, INC.
(Exact name of Registrant as specified in its charter.)
Commission File number 0-17048
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Payment of Filing Fee (Check the appropriate box):
[ x ] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-
6(i)(1) and O-11.
1. Title of each class of securities to which transaction
applies: ______________________________________________
2. Aggregate number of securities to which transaction
applies: ______________________________________________
3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule O-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined): _________________________
4. Proposed maximum aggregate value of transaction:
5. Total fee paid: _______________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule O-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
1. Amount Previously Paid; _______________________________
2. Form, Schedule or Registration Statement No. __________
3. Filing Party: _________________________________________
4. Date Filed: ___________________________________________
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WRITTEN CONSENT
This written consent is solicited on behalf of the
Board of Directors.
The undersigned hereby consents to the adoption by the
Shareholders of Grand Central Silver Mines, Inc. (the "Company")
of that certain resolution adopted by the Company's Board of
Directors on October 14, 1998, which will have the effect of
reverse splitting the Company's outstanding shares of common
stock on a one-for-seven basis. The authorized capital of the
Company as reflected in its Articles of Incorporation and
amendments thereto will not change.
This proposal would effect a one-for-seven reverse
split of the Company's issued and outstanding Common Shares (the
"Reverse Stock Split"). The Reverse Stock Split would result in
one post-split Common Share being issued in exchange for each
eight Common Shares which are presently issued and outstanding.
The Company would not issue fractional shares pursuant to the
Reverse Stock Split, but instead would issue one whole Common
Share to those shareholders who would otherwise be entitled to
receive fractional shares. The principal effect of the Reverse
Stock Split would be to decrease the number of issued and
outstanding Common Shares as of October 28, 1998, from 12,063,256
to approximately 1,723,323, depending on the number of whole
Common Shares issued in elimination of fractional Common Shares.
The Reverse Stock Split would not have an immediate effect on any
shareholder's proportionate interest in the company, including
the proportionate interest of management, except for (i) the de
minimis effect on those shareholders which receive one whole
share in lieu of fractional shares, and (ii) the increase in
future possible dilution, as described below.
The following table illustrates the principal effects
of the proposed Reverse Stock Split based on the Company's
capitalization as of October 28, 1998:
Common Shares Prior to Split After Split
Authorized 40,000,000 40,000,000
Outstanding 12,063,256 1,723,323 *
Available for
future issuance 27,936,744 38,276,677 *
* Assumes that no post-split Common Shares are issued in lieu
of fractional Common Shares.
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Reasons for the Reverse Stock Split.
The Company's Common Stock is listed on the National
Association of Securities Dealers Automated Quotation System
("NASDAQ"). As of October 28, 1998, the Company's Common Stock
is trading at $0.375 bid and $0.41 ask per share, respectively.
For continued inclusion in the NASDAQ system, a minimum bid price
per share shall be $1.00. Accordingly, in order to maintain its
listing on the NASDAQ system the Company must increase the price
per share from $0.375 bid to a price in excess of $1.00 per
share. The Company believes that by reverse splitting the
outstanding shares of Common Stock on a basis of one-for-seven,
it will increase the price per share in excess of $1.00. In the
event that the shares are reverse split on a one-for-seven basis,
there is no assurance that the price per share will exceed $1.00,
or in the event that the bid price does exceed $1.00 per share
that it will remain at or above $1.00, and accordingly, it is
possible that the Company's shares of Common Stock could be
delisted from the NASDAQ system even though the Reverse Stock
Split is approved by the shareholders and effectuated. In the
event the Company's shares of Common Stock are delisted from the
NASDAQ system, their marketability because of the reluctance of
many leading brokerage firms to recommend low priced securities
to their clients, may be adversely affected. Further, a number
of brokerage firms policies tend to discourage individual brokers
within those firms from dealing in low priced securities. The
Board of Directors is hopeful that by decreasing the number of
Common Shares outstanding as a consequence of the reverse split,
and the resulting increase in price level will generate broader
interest in the Company's Common Shares and promote continued
liquidity for the Company's shareholders.
Future Dilution; Anti-Takeover Effects
There may be certain disadvantages suffered by
shareholders of the Company as a result of approval of the
Reverse Stock Split. These include a significant increase in
possible dilution to present shareholders' percentage ownership
of the Common Shares. As described above, assuming issuance of
all authorized Common Shares, present shareholders, in the
aggregate, would own approximately 30.16% of the then-outstanding
Common Shares under the Company's present capital structure, but
only 4.31% of the outstanding Common Shares under the Capital
structure assuming adoption of the Reverse Stock Split.
The proportionate increase in the number of Common
Shares available for future issuance may also have certain anti-
takeover effects. For example, the availability of a large
number of Common Shares for future issuance might allow the
Company's Board of Directors to dilute the percentage share
ownership of persons who might attempt to obtain control over the
Company. Approval of the Reverse Stock Split therefore might
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attempt to obtain control over the Company. Approval of the
Reverse Stock Split therefore might allow the Board of Directors
to frustrate a takeover attempt which might be favorable to
shareholders as a group, and may have the effect of limiting
shareholder participation in these types of transactions.
While the Reverse Stock Split may have certain anti-
takeover effects, management of the Company is not aware of any
attempts by third persons to accumulate a large number of Common
Shares. Accordingly, the Reverse Stock Split has not been
recommended by the Board of Directors in response to any existing
attempts by third parties at obtaining control of the Company.
No Plans or Agreements to issue Any Additional Common Shares.
The Company has no plans or agreements to issue any
additional Common Shares at this time.
Exchange of Certificates and Liquidation of Fractional Shares.
OTC Stock Transfer, Inc. has been appointed to serve
as the exchange agent (the "Exchange Agent") to act for
shareholders in effecting the exchange of their certificates.
As soon as practicable after the Effective Date,
shareholders will be notified and requested to surrender their
certificates representing Common Shares to the Exchange Agent in
exchange for certificate representing post reverse split Common
Shares. Commencing on the Effective Date, each certificate
representing pre-split Common Share will be deemed for all
purposes to evidence ownership of post reverse split Common
Shares.
Certificates representing fractional Common Shares will
not be issued in connection with the Reverse Stock Split.
Assuming approval of the Reverse Stock Split by shareholders,
shareholders who would otherwise receive fractional shares will
be entitled to receive on whole Common Share in lieu of any
fractional share.
Vote Required.
The affirmative vote of a majority of the outstanding
Common Shares is required to adopt the Reverse Stock Split. The
Company's officers and directors are expected to vote for the
adoption of the Reverse Stock Split.
Federal Income Tax Consequences.
The federal income tax consequences of the proposed
Reverse Stock Split are set for below. The following information
is based upon existing tax laws, which are subject to change by
legislation, administrative action and judicial decision.
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Shareholders are therefore advised to consult with their own tax
advisor for more detailed information relating to their
individual tax circumstances.
The post reverse split Common Shares in the hands of a
shareholder will have an aggregate basis for computing gain or
loss equal to the aggregate basis of the pre-split Common Shares
held by the shareholder immediately prior to the Reverse Stock
Split.
Registration.
The Board of Directors believes the changes to be
effected by the reverse split will not cause the Company to
terminate registration of the Common Shares under the Securities
Exchange Act of 1934 or to cease filing reports under that Act
with the Securities and Exchange Commission. The Company does
not have any present plans to take any action which would further
reduce the number of shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ONE-
FOR-SEVEN REVERSE STOCK SPLIT.
This written consent when properly executed and
combined with other written consents constituting a majority of
the Company's issued and outstanding shares as of October 28,
1998, shall serve in lieu of a meeting of shareholders of the
Company as provided under Section Sec. 16-10a-704 of the Utah
Business Corporation Act, providing that action which might be
taken at a meeting of the stockholders may be taken without a
meeting if a record thereof be made in writing and signed by the
holders of the outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon
were present and voted.
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[ ] The undersigned hereby consents to the foregoing
resolution to reverse split the Company's outstanding
shares of common stock on a one-for-seven basis.
[ ] The undersigned hereby objects to the foregoing
resolution to reverse split the Company's outstanding
shares of common stock on a one-for-seven basis.
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Please sign exactly as name appears below. When shares
are hold by joint tenants, both should sign. When signing as
attorney, as executor, administrator, trustee or guardian, please
give full title as such. If a corporation please sign in full
corporation name by President or other authorized officer. If a
partnership please sign in partnership name by authorized person.
Dated: ____________________, 1998.
Label stating name of stockholder
and number of shares held.
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Signature
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Signature if held jointly
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PLEASE SIGN, DATE AND RETURN THIS WRITTEN CONSENT PROMPTLY USING
THE ENCLOSED ENVELOPE.
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