ACTC: Nasdaq Listing and Russell 2000 Index

Gary Rabin, Chairman and CEO of ACT in ACTC 2011 Year End Conference Call held on March 2, 2012

From CC transcript (made by Cruyff):

“We filed a preliminary proxy in which we are asking shareholders to give management the authority to effect a reverse stock split in a ratio of anywhere from 1: 20 to 1: 80 depending upon market conditions.
We do not undertake this matter lightly. We realize that it could create some near-term volatility but believe that a reverse stock split, which we would only do in conjunction with a listing on the NASDAQ capital market, will allow our stock to become more attractive to a wide range of institutional investors facilitating, we believe, a higher valuation for all. Such a reverse split and NASDAQ listing will also allow us to qualify for membership in the Russell 2000 when the index rebalances in June. Russell inclusion should also contribute to a wider following for the stock.

We intend in the near future to file an application to list on the NASDAQ. The plan would be to secure approval for NASDAQ listing contingent on completing the reverse split. We are optimistic that this progress can be completed over the next few months.
You have my commitment that we will not venture into this reverse split without first ensuring that we take the steps to enhance the marketability of our stock. Nor would we reverse the stock prior to the NASDAQ listing approval.

We have already begun this education process. Over the past few weeks we have met with more than 15 large mutual funds and other healthcare focused institutional investment funds. We are continuing this process. We have received considerable interest in investing in the company once we are listed on a national exchange and no longer a penny stock. This company has not been substantially institutionally investable in the past. The lack of timely filings, availability of investor materials, lack of internal management and control structures, warrant and debenture hang, and other critical due diligence items together created an insurmountable obstacle. With the operational changes that we have made and the solid proof of our clinical concept advancing, we are now in a completely different place. This is the position of strength that I have discussed. We have nearly 45,000 retail holders of our stock. It is nearly impossible to build sustainable and event-drive stock price rises with an investor base of this size investing from the size of investments these investors make. There is also the matter of institutional credibility. Biotech companies with global clinical platforms and proven science, with large pharma partnerships across multiple programs, are not penny stocks listed on the OTC bulletin board.”
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In 1980, the United States enacted the Crude Oil Windfall Profit Tax Act (P.L. 96-223) as part of a compromise between the Carter Administration and the Congress over the decontrol of crude oil prices. The Act was intended to recoup the revenue earned by oil producers as a result of the sharp increase in oil prices brought about by the OPEC oil embargo. According to the Congressional Research Service, the Act’s title was a misnomer. “Despite its name, the crude oil windfall profit tax… was not a tax on profits. It was an excise tax… imposed on the difference between the market price of oil, which was technically referred to as the removal price, and a statutory 1979 base price that was adjusted quarterly for inflation and state severance taxes.”

On August 23, 1988, amid low oil prices, the tax was repealed when President Ronald Reagan signed P.L. 100-418, The Omnibus Trade and Competitiveness Act of 1988.[2] Reagan had objected to the tax during his 1980 presidential campaign and promised to repeal it.[3] As with the enactment, Congress was motivated by several factors:

A principal issue in the debate over the Act’s repeal was that the original forecast of revenues turned out to have been significantly overestimated, reflecting overestimates of crude oil prices. From 1980 to 1990 the tax generated gross revenue of about billion, or 80% less than the projected amount of 3 billion.[1]
Congress was also concerned that the tax had increased the nation’s dependence on imported oil. The tax was an excise tax on oil produced domestically in the United States; it was not imposed on imported oil. Domestic oil producers could not shift the tax forward as a higher oil selling price because the purchaser would merely substitute imported or tax-exempt crude. The tax caused domestic oil production losses in every year until 1986, when crude prices declined below adjusted base prices resulting in zero windfall profit tax. Over the 1980-1986 period, it is estimated that, depending on the assumed supply curve price elasticity, the tax reduced domestic oil production from between 320 million barrels (1.2% of domestic production) and 1,268 million barrels (4.8% of domestic production). The effect of reducing domestic oil production was to increase the level of imported oil. The estimated production losses caused by the tax, as a % of the actual level of imported oil, under three assumed supply curve elasticities range from 3.2% of total imports to 12.7% of imports for this period, depending on price elasticity.[1]
The tax also may have distorted the way resources were allocated within the oil industry. Since the tax was imposed on oil production — i.e., upon its removal and sale — extraction (and other upstream operations) was penalized and other aspects of the business (refining and marketing, the downstream operations) become relatively favored. Thus it created financial incentives to shift resources from exploration and drilling to refining and marketing.[1]
The tax also appeared to be a complicated tax to comply with and to administer. A 1984 General Accounting Office report called it “perhaps the largest and most complex tax ever levied on a U.S. industry.”[4] The windfall profit tax was imposed on oil producers when taxable crude oil was removed from the oil-producing property. Any individual or business with an economic interest in an oil-producing property was considered as a producer and subject to the tax. There were four kinds of producers — independent producers, integrated oil companies, royalty owners (landowners), and tax-exempt parties. There were about one million oil producers (persons, institutions, and businesses) in the United States in 1984.[4] Sometimes there were hundreds of people having a fractional economic interest in a single oil-producing property. Throughout the compliance process, many tax return forms and information forms were required. The process was further complicated due to numerous exceptions to the basic general rules and due to possible interactions between the windfall profit tax rules, the personal and corporate income tax rules, energy regulations, and state and local tax and energy laws. After 1986, the WPT imposed little or no tax liability on oil producers because oil prices were below the threshold base prices that triggered it. Oil producers were obliged to comply with the paperwork requirements of the law, however, and the Internal Revenue Service (IRS) was compelled to administer the system despite the fact that the tax generated no revenue, reportedly spending about million a year to do so.