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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 [ ]
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only [as permitted
by Rule 14a-6(e)(2)]
[ x ] 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 of Grand Central Silver Mines, Inc.
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-eight
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-eight reverse stock
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
December 1, 1998, from 10,888,508 to approximately 1,361,064,
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 December 1, 1998:
Common Shares Prior to Split After Split
Authorized 40,000,000 40,000,000
Outstanding 10,888,508 1,361,064 *
Available for
future issuance 29,111,492 38,638,936 *
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* Assumes that no post-split Common Shares are issued in lieu of
fractional Common Shares.
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 December 1, 1998, the Company's Common Stock is
trading at $0.16 bid and $0.29 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 $0.16 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-eight, 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-eight 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
27.22% of the then-outstanding Common Shares under the Company's
present capital structure, but only 3.41% of the outstanding Common
Shares under the Capital structure assuming adoption of the Reverse
Stock Split.
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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 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.
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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. 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 Stock 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-
EIGHT 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 December 1, 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-eight basis.
[ ] The undersigned hereby objects to the foregoing resolution
to reverse split the Company's outstanding shares of common
stock on a one-for-eight 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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