As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

10/12/16  Yummy Flies, Inc.                 DEF 14C     9/22/16    1:119K                                   Edgar.Tech Fili… Svcs/FA

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14C     Definitive Proxy Information Statement              HTML     70K 

To the Holders of Common Stock of Yummy Flies, Inc.:

      

This Information Statement has been filed with the Securities and Exchange Commission and is being furnished, pursuant to Section 14C of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to the holders (the "Stockholders") of common stock, par value $0.01 per share (the "Common Stock"), of Yummy Flies, Inc., a Colorado corporation (the "Company"), to notify the Stockholders that on September 19, 2016, the Company received the written consent in lieu of a meeting of the holders of a majority of the total voting power of all issued and outstanding voting capital of the Company (the "Majority Stockholders").  The Majority Stockholders authorized the following:

On September 19, 2016, the Board of Directors of the Company (the "Board")  approved, and recommended to the Majority Stockholders that they approve the Name Change, Authorized Shares Increase and Forward Stock Split (collectively, the "Actions").  On September 19, 2016, the Majority Stockholders approved the Actions by written consent in lieu of a meeting, in accordance with Colorado law.  Accordingly, your consent is not required and is not being solicited in connection with the approval of the Actions.

 

Colorado law provides that the written consent of the holders of outstanding shares of voting capital stock having not less than the minimum number of votes which would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted can approve an action in lieu of conducting a special stockholders' meeting convened for the specific purpose of such action.  Colorado law, however, requires that in the event an action is approved by written consent, a company must provide prompt notice of the taking of any corporate action without a meeting to the stockholders of record who have not consented in writing to such action and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to a company.

In accordance with the foregoing, we will mail the Notice of Stockholder Action by Written Consent on or about October 16, 2016.

This Information Statement contains a brief summary of the material aspects of the Actions approved by the Board of Yummy Flies, Inc., (the "Company," "we," "our," or "us") and the Majority Stockholders.

We currently expect to file the Amendment on or about November 3, 2016.

Our Board approved by unanimous written consent a 3.7-for-1 Forward Stock Split (the "Forward Stock Split") in accordance with Colorado Revised Statutes under Chapter 7.  Pursuant to the Forward Stock Split, each share of our Common Stock will be automatically converted, without any further action by the Stockholders, into 3.7 shares of Common Stock. Simultaneously with any change to our Common Stock. No fractional shares of Common Stock will be issued as the result of the Forward Stock Split.  Instead, the Company will issue to the Stockholders one additional share of Common Stock for each fractional share.  The Company anticipates that the effective date of the Forward Stock Split will be on or about November 3, 2016.

PLEASE NOTE THAT THE FORWARD STOCK SPLIT WILL NOT CHANGE YOUR PROPORTIONATE EQUITY INTERESTS IN THE COMPANY, EXCEPT AS MAY RESULT FROM THE ISSUANCE OF SHARES PURSUANT TO THE FRACTIONAL SHARES.

 

 

The Board of Directors believed that it was in the best interests of the Company to implement the Forward Stock Split on the basis that the low number of issued and outstanding shares of common stock of the Company would likely not appeal to brokerage firms and that when trading, the current projected per share price level of our common stock will reduce the effective marketability of our common stock because of the reluctance of many brokerage firms to recommend stock to their clients or to act as market-makers for issuers which do not have a sufficient number of shares of common stock issued and outstanding.

We have no present understandings or agreements that will involve the issuance of capital stock, apart from understandings and agreement disclosed in our filings with the Securities and Exchange Commission. However, we are engaged in negotiations with respect to transactions, including financings and acquisitions, which could involve the issuance of capital stock.

As of the date herein, there are no definitive agreements, letters of intent of memorandums of understanding with respect to any transactions, financings or acquisitions for the newly authorized but unissued shares that will become available following our 3.7-for-1 Forward Stock Split.

The effect of the Forward Stock Split, if any, upon the stock price for our Common Stock cannot be predicted, and the history of similar Forward Stock Split combinations for companies like us is varied. Further, we cannot assure you that the stock price of our Common Stock after the Forward Stock Split will fall in proportion to the increase in the number of shares of Common Stock outstanding as a result of the Forward Stock Split because, among other things, the stock price of our Common Stock may be based on our performance and other factors as well.

The principal effect of the Forward Stock Split will be the increase in the number of shares of Common Stock issued and outstanding from approximately 8,906,000 shares as of September 19, 2016, to approximately 32,952,000 shares. The Forward Stock Split will affect all of our Stockholders uniformly and will not affect any Stockholder's percentage ownership interest in the Company or proportionate voting power, except to the extent that the Forward Stock Split results in any of our Stockholders holding a fractional share of our Common Stock. The Common Stock issued pursuant to the Forward Stock Split will remain fully paid and non-assessable. The Forward Stock Split shall not affect any rights, privileges or obligations with respect to the shares of Common Stock existing prior to the Forward Stock Split, nor does it increase or decrease the market capitalization of the Company. The Forward Stock Split is not intended as, and will not have the effect of, a "going private transaction" under Rule 13e-3 of the Exchange Act. We will continue to be subject to the periodic reporting requirements of the Exchange Act.

The following chart depicts the capitalization structure of the Company both pre-Forward Stock Split/pre-Authorized Share Increase and post-Forward Stock Split/post-Authorized Share Increase (the post-Split shares of Common Stock may differ slightly based on the number of fractional shares):

You should recognize that while you will own a greater number of shares of Common Stock than you presently own, the Forward Stock Split may result in a decline in the potential stock price of our Common Stock.  We cannot assure you that the Forward Stock Split will effect the potential stock price of our Common Stock by a multiple equal to the Forward Stock Split ratio or result in the permanent decline in any potential stock price (which is dependent upon many factors, including our performance and prospects). Should the stock price of our Common Stock decline, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of a Forward Stock Split. Furthermore, the possibility exists that potential liquidity in the stock price of our Common Stock could be adversely affected by the greater number of shares of Common Stock that would be outstanding after the Forward Stock Split. In addition, the Forward Stock Split may decrease the number of Stockholders of the Company who own odd lots (less than 100 shares). Stockholders who hold odd lots typically will experience an increase in the cost of selling their shares, as well as possible greater difficulty in effecting such sales. As a result, we cannot assure you that the Forward Stock Split will achieve the desired results that have been outlined above.

THE OVERALL EFFECT OF THE FORWARD STOCK SPLIT MAY BE TO RENDER MORE DIFFICULT THE CONSUMMATION OF MERGERS WITH THE COMPANY OR THE ASSUMPTION OF CONTROL BY A PRINCIPAL STOCKHOLDER, AND THUS MAKE IT DIFFICULT TO REMOVE MANAGEMENT.

A possible effect of the Forward Stock Split is to discourage a merger, tender offer or proxy contest, or the assumption of control by a holder of a large block of the Company's voting securities and the removal of incumbent management.  Our management could use the additional shares of Common Stock available for issuance to resist or frustrate a third-party take-over effort favored by a majority of the independent Stockholders that would provide an above market premium by issuing additional shares of Common Stock.

The Forward Stock Split is not the result of management's knowledge of an effort to accumulate the Company's securities or to obtain control of the Company by means of a merger, tender offer, solicitation or otherwise. Nor is the Forward Stock Split a plan by management to adopt a series of amendments to the Company's charter or by-laws to institute an anti-takeover provision.  The Company does not have any plans or proposals to adopt other provisions or enter into other arrangements that may have material anti-takeover consequences.  As discussed above, the reason for the Forward Stock Split is to increase the amount of shares of Common Stock that the Company is able to issue in order to attract potential investors and conduct equity financings.  

We anticipate that the Forward Stock Split will become effective on or about November 3, 2016, or as soon thereafter as is reasonably practicable (the "Effective Date").  Beginning on the Effective Date, each stock certificate representing pre-Forward Stock Split shares of Common Stock will be deemed for all corporate purposes to evidence ownership of post-Forward Stock Split shares of Common Stock.

 

Our transfer agent, VStock Transfer, LLC, will act as exchange agent (the "Exchange Agent") for purposes of implementing the exchange of stock certificates. Holders of pre-Forward Stock Split shares of Common Stock may surrender to the Exchange Agent stock certificates representing pre-Forward Stock Split shares of Common Stock in exchange for stock certificates representing post- Forward Stock Split shares of Common Stock. No new stock certificates will be issued to a Stockholder until such Stockholder has surrendered the outstanding stock certificate(s) held by such Stockholder, together with a properly completed and executed letter of transmittal. 

 

 

 

 

Further, prior to filing the amendment to the Certificate of Incorporation reflecting the Forward Stock Split, we must first notify the Financial Industry Regulatory Authority ("FINRA") by filing the Issuer Company Related Action Notification Form no later than ten (10) days prior to our anticipated record date such action.  Our failure to provide such notice may constitute fraud under Section 10 of the Exchange Act.

No fractional shares of Common Stock will be issued as the result of the Forward Stock Split.  Instead, the Company will issue to the Stockholders one additional share of Common Stock for each fractional share.  

Under Colorado law, our Stockholders are not entitled to appraisal rights in connection with the Forward Stock Split.

We will not recognize any gain or loss as a result of the Forward Stock Split.

 

The following description of the material federal income tax consequences of the Forward Stock Split to our stockholders is based on the Internal Revenue Code of 1986, as amended, applicable Treasury Regulations promulgated thereunder, judicial authority and current administrative rulings and practices as in effect on the date of this information statement. Changes to the laws could alter the tax consequences described below, possibly with retroactive effect. We have not sought and will not seek an opinion of counsel or a ruling from the Internal Revenue Service regarding the federal income tax consequences of the Forward Stock Split. This discussion is for general information only and does not discuss the tax consequences that may apply to special classes of taxpayers (e.g., non-residents of the United States, broker/dealers, banks, regulated investment companies, foreign entities or insurance companies). This discussion assumes the shares of Common Stock are held as capital assets, and were not acquired by the stockholder as compensation. The state and local tax consequences of the Forward Stock Split may vary significantly as to each stockholder, depending upon the jurisdiction in which such stockholder resides. You are urged to consult your own tax advisors to determine the particular consequences to you.

 

We believe that the federal income tax effects of the Forward Stock Split will be that a stockholder who receives an increased number of shares of our Common Stock will not recognize gain or loss. With respect to a Forward Stock Split, such a stockholder's basis in the increased number of shares of our Common Stock will equal the stockholder's basis in its old shares of our Common Stock. The holding period of the post-effective Forward Stock Split shares received will include the holding period of the pre-effective Forward Stock Split shares exchanged. The Company's views regarding the tax consequences of the Forward Stock Split are not binding upon the Internal Revenue Service or the courts, and there is no assurance that the Internal Revenue Service or the courts would accept the positions expressed above.

 

The Board of Directors of the Company has adopted a resolution to amend the articles of incorporation so as to increase the number of shares of common stock authorized for issuance by the Board of Directors from 100,000,000 to 500,000,000. The Majority Shareholders have given their written consent to the resolution.

Under Colorado corporation law, the consent of the holders of a majority of the voting power is effective as shareholders' approval. We will file the Amendment with the Secretary of State of Colorado on or after November 3, 2016, and it will become effective on the date of such filing. The Amendment to the Certificate of Incorporation will provide that the authorized shares of capital stock of the Company will consist of 500,000,000 shares of common stock with a par value of $0.001 per share.

The Board of Directors and the Majority Shareholders have approved the amendment to the articles of incorporation in order to provide the Company with flexibility in pursuing its long-term business objectives.  The primary reasons for the amendment are:

Management has not entered into any commitment to issue any shares, and is not engaged in any negotiations with respect to any transaction of the sort listed above. There are no outstanding options or warrants to purchase shares of the Company's common stock, nor is there any derivative security outstanding that may be converted by the holder into shares of the Company's common stock either with or without the payment of additional consideration.

As a result of the increase in authorized common stock, there will be 500,000,000 common shares available for issuance. The Board of Directors will be authorized to issue the additional common shares without having to obtain the approval of the Company's shareholders. Colorado law requires that the Board use its reasonable business judgment to assure that the Company obtains "fair value" when it issues shares.  Nevertheless, the issuance of the additional shares would dilute the proportionate interest of current shareholders in the Company. The issuance of the additional shares could also result in the dilution of the value of shares now outstanding, if the terms on which the shares were issued were less favorable than the contemporaneous market value of the Company's common stock.

The increase in the number of common shares available for issuance is not being done for the purpose of impeding any takeover attempt.  Nevertheless, the power of the Board of Directors to provide for the issuance of shares of common stock without shareholder approval has potential utility as a device to discourage or impede a takeover of the Company.  In the event that a non-negotiated takeover were attempted, the private placement of stock into "friendly" hands, for example, could make the Company unattractive to the party seeking control of the Company.  This would have a detrimental effect on the interests of any stockholder who wanted to tender his or her shares to the party seeking control or who would favor a change in control.

 

 

 

Under Colorado law, our Stockholders are not entitled to appraisal rights in connection with the Authorized Shares Increase.

Prior to filing the amendment to the Articles of Incorporation reflecting the Authorized Shares Increase, we must first notify FINRA by filing the Issuer Company Related Action Notification Form no later than ten (10) days prior to the anticipated record date of the increase.  Our failure to provide such notice may constitute fraud under Section 10 of the Exchange Act.

We believe that changing the name of the Company to Pura Naturals, Inc. will more accurately reflect and represent to the public the business of the Company.  In connection with the name change, we intend to file with FINRA a request to obtain a new ticker symbol.  Our request for a new ticker symbol, however, will not be processed until sixty (60) days after FINRA has announced our Name Change to the market.

Prior to filing the amendment to the Articles of Incorporation reflecting the Name Change, we must first notify FINRA by filing the Issuer Company Related Action Notification Form no later than ten (10) days prior to the anticipated record date of the Name Change.  Our failure to provide such notice may constitute fraud under Section 10 of the Exchange Act.

The voting power of the Company is vested in its common stock, with one vote per share.  At the Record Date, 8,942,073 shares of common stock were outstanding.

The following tables set forth certain information regarding the beneficial ownership of our Common Stock as of September 19, 2016, of (i) each person known to us to beneficially own more than 5% of Common Stock, (ii) our directors, (iii) each named executive officer and (iv) all directors and named executive officers as a group.  As of September 19, 2016, there were a total of 8,942,073 shares of Common Stock issued and outstanding. Each share of Common Stock is entitled to one vote on matters on which holders of voting stock of the Company are eligible to vote.  The column entitled "Percentage of Outstanding Common Stock" shows the percentage of voting common stock beneficially owned by each listed party.

The number of shares beneficially owned is determined under the rules promulgated by the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose.  Under those rules, beneficial ownership includes any shares as to which a person or entity has sole or shared voting power or investment power plus any shares which such person or entity has the right to acquire within sixty (60) days of September 19, 2016, through the exercise or conversion of any stock option, convertible security, warrant or other right.  Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares such power with that person's spouse) with respect to all shares of capital stock listed as owned by that person or entity.

If hard copies of the materials are requested, we will send only one Information Statement and other corporate mailings to stockholders who share a single address unless we received contrary instructions from any stockholder at that address. This practice, known as "householding," is designed to reduce our printing and postage costs. However, the Company will deliver promptly upon written or oral request a separate copy of the Information Statement to a stockholder at a shared address to which a single copy of the Information Statement was delivered. You may make such a written or oral request by (a) sending a written notification stating (i) your name, (ii) your shared address and (iii) the address to which the Company should direct the additional copy of the Information Statement, to the Company at 23101 Lake Center Drive, Lake Forest CA 92630 Attn: Robert Switzer, Secretary; telephone (949) 273-949-273-8100.

If multiple Stockholders sharing an address have received one copy of this Information Statement or any other corporate mailing and would prefer the Company to mail each stockholder a separate copy of future mailings, you may mail notification to, or call the Company at, its principal executive offices. Additionally, if current stockholders with a shared address received multiple copies of this Information Statement or other corporate mailings and would prefer the Company to mail one copy of future mailings to stockholders at the shared address, notification of such request may also be made by mail or telephone to the Company's principal executive offices.