STOCK PRICE REACTION TO THE ANNOUNCEMENT OF A REVERSE STOCK SPLIT: AN INVESTIGATION AS A FUNCTION OF THE RATIONALE PROVIDED by Mark R Williams A Dissertation Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy Capella University August 2006 UMI Number: 3223886 Copyright 2006 by Williams, Mark R All rights reserved UMI Microform 3223886 Copyright 2006 by ProQuest Information and Learning Company All rights reserved This microform edition is protected against unauthorized copying under Title 17, United States Code ProQuest Information and Learning Company 300 North Zeeb Road P.O Box 1346 Ann Arbor, MI 48106-1346 © Mark R Williams, 2006 Abstract This study investigates reverse stock splits announced in the Wall Street Journal between July 1, 2002 and June 30, 2005 The study focuses on whether management furnishes investors with a rationale or rationales for implementing a reverse split Additionally, the study investigates whether or not providing a rationale impacts the abnormal return surrounding the announcement of a reverse split The study also examines whether the type of rationale provided impacts the returns around the announcement date Various factors impacting security returns in other research are also investigated as to whether they impact price behavior differently around the announcement of the reverse split Finally, the study takes a brief look at the longer-term performance after a stock split Although companies are now providing rationales for using a reverse split, the results suggest that investors still perceive the announcement of reverse splits negatively as negative abnormal returns were generally detected during the window ending two days after the announcement date Although differences in the price behavior were generally not statistically different whether or not a rationale was provided, or regardless of the type of rationale provided, or for other economic factors, abnormal returns associated with the refinancing/merger rationale and for stocks with a post-split price of less than $1.00 were significantly lower (at a 05 level of significance) which could influence investors The data indicate that over half of the companies rebounded nicely and reported positive returns six-months, one-year and two-years after the announcement ii Unfortunately, the factors utilized in this study were not sufficient to enable one to distinguish between the winners and losers at the time of the reverse split announcement iii Dedication Dedicated to my family—past, present, and future iv Acknowledgements There is insufficient space available to express my appreciation to all who have been an encouragement and sounding board during this project Nevertheless, special thanks go to Dr Zhenhu Jin, my Faculty Mentor and Committee Chair, for his insight, wisdom and encouragement throughout my doctoral studies He has truly been a blessing in accomplishing this study and the entire doctoral program Special thanks also go to Dr R D O’Connor for his counsel not only during the dissertation but also during the comprehensives Additionally, a special thanks goes to Dr Ray Bower for his patience and perseverance in guiding me through some of the statistical concepts included in this study Working with this group has been an incredible experience for which I am grateful I am also appreciative of the support and encouragement of my wife, Renita, and my children, Christopher and Ashley, who have also made incredible sacrifices during this process Finally, I want to express my thanks to Jesus for apart from Him I can nothing and through Him all things are possible (Phil 4:13) v TABLE OF CONTENTS Acknowledgements v List of Tables ix List of Figures xi CHAPTER INTRODUCTION Background Statement of the Problem Research Questions Listing of Research Hypotheses Significance of the Study Definitions, Limitations and Assumptions Conclusion 15 CHAPTER LITERATURE REVIEW 16 Introduction 16 Management’s Expression of Rationale for Using a Reverse Stock Split 20 Reverse Split Theories from Previous Research 21 SEC and Stock Exchange Notice Requirements 27 Using Reverse Stock Splits to Avoid Delisting 30 Shareholder Approval of Reverse Stock Splits 34 Empirical Evidence Regarding Abnormal Returns With Reverse Splits 35 Apparent Inconsistency Between Theorized Motivations and Stock Price Reactions 41 vi Measurement of Security Price Performance 44 Explanation of Other Economic Factors Included in Study 51 Longer-Term Performance After Reverse Split 57 Conclusion 58 CHAPTER METHODOLOGY 59 Introduction 59 Phase One of Study 59 Phase Two of Study 62 Research Hypotheses 70 Longer-Term Performance 76 Conclusion 77 CHAPTER DATA COLLECTION AND ANALYSIS 78 Introduction 78 Phase One of Study 78 Phase Two of Study 82 Results of Hypothesis Testing 109 Brief Look at Longer Term Performance 138 Conclusion 141 CHAPTER RESULTS, CONCLUSIONS AND RECOMMENDATIONS 143 Introduction 143 Overview of Study 143 Rationales for Declaring Reverse Split 145 vii Reverse Stock Splits Table A15 ARE and CAR Means and Standard Deviations by Stock Exchange Listing NYSE Standard Mean Deviation AMEX Standard Mean Deviation ARE Day -2 Day -1 Announcement Day Day +1 Day +2 0.0146969 -0.0079392 0.0110447 -0.0004804 0.0000325 0.0470371 0.0156888 0.0282710 0.0202758 0.0434715 0.0053862 -0.0305879 -0.0491514 -0.0244483 0.0020559 0.0758595 0.0450945 0.0721704 0.0537904 0.1044865 CAR Day -2 Day -1 Announcement Day Day +1 Day +2 0.0146969 0.0067577 0.0178024 0.0173220 0.0173545 0.0470371 0.0627259 0.0344550 0.0141792 0.0576506 0.0053862 -0.0252017 -0.0743531 -0.098801 -0.0967454 0.0758595 0.0840607 0.1086642 0.1221746 0.1353348 NASDAQ-Nat'l Mkt Standard Mean Deviation NASDAQ-Small Cap Standard Mean Deviation ARE Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0104429 -0.0107779 0.0022730 -0.0311255 -0.0282678 0.0630343 0.0881880 0.0751354 0.1228765 0.0688383 -0.0016051 -0.0219599 0.0024008 -0.0288742 -0.0051233 0.0955271 0.1251931 0.0943448 0.1401271 0.1338374 CAR Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0104429 -0.0212207 -0.0189477 -0.0500732 -0.0783410 0.0630343 0.1103038 0.1377220 0.1665026 0.1944961 -0.0016051 -0.0235650 -0.0211642 -0.0500384 -0.0551617 0.0955271 0.1437207 0.1301461 0.1764272 0.1421242 188 Reverse Stock Splits 189 Table A16 Listing of Companes in Final Sample in Reverse Split Size Category 0.00% 15% Vignette Corp Applied Imaging ADC Telecommunications PPT Vision, Inc AirNet Comm Z-Tel Technology (now Trinsic) Stamps.com Inc 24/7 Real Media microHelix, Inc Rigel Pharmaceutical Collectors Univer Palm, Inc Stratos Lightwave (now Stratos Int'l) Net Manage Inc ebix.com Inc (Now Ebix Inc) MicroStrategy Inc 1-800-Attorney > 15% 50% > 50% Biopure Corp OneTravel Holdings (fmrly RCG) Fibernet Telecom Terremark Worldwide WebFinancial Corp TurboChef Techs Cogent Communications Catuity, Inc V.I Technologies (now Panacos Pharmac) Corvis Corp Diomed Hldgs Amer Spectrum Realty Amcon Distributing Universal Access Boots & Coots International Juniper Group, Inc Bull Run Corp Saba Software Inc Synergy Brands Inc Fibernet Telecom MKTG Services Inc (Now MSGI Security LightPath Sol) Tech Brite Smile Inc CorAutus Genetics Navisite Inc Make Music Inc Mace Security Int'l Avici Systems Sento Corp Novatel Wireless Blue Coat Systems Click Commerce Infospace Inc Broadvision, Inc Vertical Net, Inc Guardian Techs Reverse Stock Splits 192 Table A19 ARE and CAR Means and Standard Deviations for Various Two-Year Average Growth Rates in Revenues < -20% Standard Mean Deviation -20% < 0.00% Standard Mean Deviation No Revenues Standard Mean Deviation ARE Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0250975 -0.0238877 -0.0116077 -0.0356985 -0.0051421 0.0556728 0.0946006 0.0802579 0.0761083 0.0822644 -0.0003139 -0.0279527 -0.0187859 -0.0188607 0.0062016 0.0782815 0.0957148 0.0733164 0.1221173 0.0829544 -0.0157029 -0.0490544 0.0079718 -0.0977040 -0.0153679 0.0482925 0.1117582 0.0082654 0.1202170 0.0992645 CAR Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0250975 -0.0489852 -0.0605929 -0.0962914 -0.1014335 0.0556728 0.1154035 0.0997637 0.1111517 0.0904396 -0.0003139 -0.0282666 -0.0470525 -0.065913 -0.0597116 0.0782815 0.0901282 0.1141607 0.1686729 0.1697715 -0.0157029 -0.0647573 -0.0567855 -0.1544895 -0.1698574 0.0482925 0.0643123 0.0599917 0.1018177 0.1848593 > 0.00% 15% Standard Mean Deviation > 15% 50% Standard Mean Deviation > 50% Standard Mean Deviation ARE Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0114847 0.0272461 -0.0233281 0.0021794 -0.0026548 0.0891750 0.1073479 0.1092395 0.1394460 0.0989045 -0.0013038 0.0070996 0.0052093 -0.0406754 -0.0403615 0.0659405 0.1004032 0.0711665 0.0725512 0.0884880 0.0183545 -0.0523244 0.0208064 -0.0361652 -0.0313917 0.1030065 0.0961714 0.0930082 0.1642108 0.1565302 CAR Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0114847 0.0157614 -0.0075667 -0.0053873 -0.0080421 0.0891750 0.1477800 0.1322731 0.1646233 0.1854838 -0.0013038 0.0057958 0.0110051 -0.0296703 -0.0700318 0.0659405 0.1247168 0.1096706 0.1291121 0.1233857 0.0183545 -0.0339699 -0.0131635 -0.0493287 -0.0807204 0.1030065 0.1377989 0.1809083 0.2164637 0.2020562 Reverse Stock Splits 193 Table A20 Listing of Companies in Final Sample by Two-Year Direction in Revenues No Revenues GlycoGenesys, Inc EarthShell Corp Ista Pharmaceutical Neo Therapeutic (now Spectrum Pharm) Down Both Years Before Track Data Corp Velocity Express Equitex Inc Prosoft Training (Prosoft Learning Corp) North Cntry Financial (now Mackinac) SMTC Corp Hanover Direct Genetronics Biomed GoAmerica, Inc Lodgian Applied Digital Sol Intrusion, Inc WRP Corp (Now AHPC Holdings) Milestone Scient A Consulting Team Nematron Corp (now sandston corp) Openwave Systems Astea International Hyperfeed Technology ONYX Software First Virtual Common Priceline.com Amen Props Inc Valentis Inc Omtool Ltd Schmitt industries JB Oxford Holdings Analytical Surveys Up Year Before, Down 2nd Prior Year Up Both Years Before Penn Treaty America OneTravel Holdings (fmrly RCG) Applied Imaging Vignette Corp ADC Telecommunications Fibernet Telecom V.I Technologies (now Panacos Pharmac)Terremark Worldwide Z-Tel Technology (now Trinsic) Cogent Communications Corvis Corp Catuity, Inc Diomed Hldgs Rigel Pharmaceutical Stamps.com Inc Saba Software Inc 24/7 Real Media CorAutus Genetics NetSol Technology Synergy Brands Inc Juniper Group, Inc Make Music Inc ASA, International Ltd Mace Security Int'l ebix.com Inc (Now Ebix Inc) Avici Systems 1-800-Attorney Click Commerce Guardian Techs Vertical Net, Inc Omni Energy Services Down Year Before, Up 2nd Prior Year Biopure Corp WebFinancial Corp PPT Vision, Inc AirNet Comm TurboChef Techs Viragen, Inc Amcon Distributing Amer Spectrum Realty Nuvelo, Inc Frontline Comm (Now Provo Int'l) microHelix, Inc Boots & Coots International Universal Access Vitria Technol Bull Run Corp Fibernet Telecom LightPath Tech Titanium Metals Corp Precision Optics MKTG Services Inc (Now MSGI Security Sol) Brite Smile Inc Pacific Net, Inc Navisite Inc Conolog Corp Collectors Univer RTW Inc Sento Corp Novatel Wireless Palm, Inc Stratos Lightwave (now Stratos Int'l) Blue Coat Systems Net Manage Inc Talk America Holdings Juniper Group, Inc MicroStrategy Inc Infospace Inc Broadvision, Inc Reverse Stock Splits 194 Table A21 ARE and CAR Means and Standard Deviations for Various Two-Year Revenue Direction Changes No Revenues Standard Mean Deviation Down Both Years Before Standard Mean Deviation Down Yr Before, Up 2nd Prior Yr Standard Mean Deviation ARE Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0157029 -0.0490544 0.0079718 -0.0977040 -0.0153679 0.0482925 0.1117582 0.0082654 0.1202170 0.0992645 -0.0121340 -0.0247071 -0.0133412 -0.0200660 -0.0091103 0.0635700 0.0943068 0.0721538 0.0857825 0.0762666 -0.0043399 -0.0212934 -0.0125781 -0.0314574 0.0063350 0.0916975 0.0913288 0.0914440 0.1307205 0.0994905 CAR Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0157029 -0.0647573 -0.0567855 -0.1544895 -0.1698574 0.0482925 0.0643123 0.0599917 0.1018177 0.1848593 -0.0121340 -0.0368411 -0.0501823 -0.070248 -0.0793587 0.0635700 0.0975953 0.0933626 0.1111069 0.1292221 -0.0043399 -0.0256332 -0.0382114 -0.0696688 -0.0633338 0.0916975 0.1301123 0.1578287 0.1992495 0.1923661 Up Yr Before, Down 2nd Prior Yr Standard Mean Deviation Up Both Years Before Standard Mean Deviation ARE Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0026528 0.0156604 -0.0172867 -0.0212288 -0.0505250 0.0919896 0.1566296 0.1029494 0.1707252 0.1674849 0.0152690 -0.0283188 0.0375079 -0.0265363 -0.0286363 0.0713079 0.0418580 0.0691299 0.0999193 0.0809855 CAR Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0026528 0.0130076 -0.0042790 -0.0255079 -0.0760328 0.0919896 0.1771011 0.1417025 0.1952343 0.1673580 0.0152690 -0.0130498 0.0244581 -0.0020781 -0.0307145 0.0713079 0.0668501 0.1014209 0.1081006 0.1331709 Reverse Stock Splits 195 Table A22 Listing of Companies in Final Sample by Direction Change in Net Income for Year Preceding Announcement Larger Loss OneTravel Holdings (fmrly RCG) Vignette Corp Applied Imaging Velocity Express Equitex Inc AirNet Comm TurboChef Techs Hanover Direct Diomed Hldgs Viragen, Inc Stamps.com Inc Amer Spectrum Realty Nuvelo, Inc WRP Corp (Now AHPC Holdings) microHelix, Inc Hyperfeed Technology Rigel Pharmaceutical Priceline.com Juniper Group, Inc Vitria Technol Bull Run Corp CorAutus Genetics Titanium Metals Corp Precision Optics Omtool Ltd Make Music Inc Conolog Corp Collectors Univer RTW Inc Ista Pharmaceutical Novatel Wireless Click Commerce Talk America Holdings Juniper Group, Inc Infospace Inc Broadvision, Inc Vertical Net, Inc Smaller Loss Smaller/Larger Net Income Biopure Corp Amcon Distributing Fibernet Telecom Track Data Corp Terremark Worldwide Mace Security Int'l PPT Vision, Inc V.I Technologies (now Panacos Pharmac) Prosoft Training (Prosoft Learning Corp) GlycoGenesys, Inc North Cntry Financial (now Mackinac) Z-Tel Technology (now Trinsic) Catuity, Inc Corvis Corp SMTC Corp Genetronics Biomed GoAmerica, Inc Intrusion, Inc 24/7 Real Media Milestone Scient Nematron Corp (now sandston corp) Frontline Comm (Now Provo Int'l) EarthShell Corp Openwave Systems Astea International NetSol Technology Universal Access ONYX Software First Virtual Common Saba Software Inc Fibernet Telecom LightPath Tech Synergy Brands Inc Amen Props Inc Valentis Inc MKTG Services Inc (Now MSGI Security Sol) Brite Smile Inc Pacific Net, Inc Schmitt industries Navisite Inc Avici Systems Palm, Inc Blue Coat Systems Neo Therapeutic (now Spectrum Pharm) Net Manage Inc Analytical Surveys MicroStrategy Inc 1-800-Attorney Guardian Techs Loss to Income Penn Treaty America ADC Telecommunications Applied Digital Sol ASA, International Ltd Sento Corp ebix.com Inc (Now Ebix Inc) Omni Energy Services Income to Loss WebFinancial Corp Cogent Communications Lodgian A Consulting Team Boots & Coots International Stratos Lightwave (now Stratos Int'l) JB Oxford Holdings Reverse Stock Splits 196 Table A23 ARE and CAR Means and Standard Deviations for Various Directional Changes in Net Income Larger Loss Standard Mean Deviation Smaller Loss Standard Mean Deviation Smaller/Larger Income Standard Mean Deviation ARE Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0229903 -0.0250310 -0.0047041 -0.0308472 0.0177449 0.0908866 0.0865231 0.0844063 0.1082538 0.0997832 0.0072758 -0.0318271 -0.0013371 -0.0264031 -0.0410416 0.0778321 0.1039666 0.0908866 0.1476053 0.1117792 0.0215178 0.0196784 -0.0117792 0.0297444 -0.0047794 0.0211812 0.0172961 0.0033263 0.0340978 0.0745750 CAR Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0229903 -0.0480213 -0.0527254 -0.0835725 -0.0658277 0.0908866 0.1131451 0.1328774 0.1713510 0.1783601 0.0072758 -0.0245513 -0.0258884 -0.0522916 -0.0933332 0.0778321 0.1231234 0.1386837 0.1756500 0.1629795 0.0215178 0.0411962 0.0241699 0.0591614 0.0543821 0.0211812 0.0326050 0.0354754 0.0545380 0.0691462 Loss to Income Standard Mean Deviation Income to Loss Standard Mean Deviation ARE Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0023883 0.0761516 -0.0356362 -0.0538103 0.0225727 0.0134392 0.1589853 0.0849805 0.0731014 0.0684572 0.0130811 -0.0074262 -0.0000968 -0.0301382 -0.0332037 0.0704391 0.0403249 0.0617893 0.0282106 0.0939963 CAR Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0023883 0.0737632 0.0381271 -0.0156833 0.0068894 0.0134392 0.1617527 0.0896140 0.1002377 0.1492771 0.0130811 0.0056549 0.0055581 -0.0245801 -0.0577838 0.0704391 0.0793913 0.0777830 0.0820583 0.0623572 Reverse Stock Splits 197 Table A24 Listing of Companies in Final Sample by Categories of Book-to-Market Ratios < 0.00 Cogent Communications Velocity Express Equitex Inc GlycoGenesys, Inc TurboChef Techs Z-Tel Technology (now Trinsic) Hanover Direct Milestone Scient Nematron Corp (now sandston corp) Frontline Comm (Now Provo Int'l) EarthShell Corp Boots & Coots International Bull Run Corp CorAutus Genetics Valentis Inc Talk America Holdings MicroStrategy Inc Vertical Net, Inc 0.00 25 > 25 50 OneTravel Holdings (fmrly RCG) Applied Imaging Terremark Worldwide ADC Telecommunications V.I Technologies (now Panacos Pharmac)Prosoft Training (Prosoft Learning Corp) AirNet Comm Catuity, Inc Genetronics Biomed Corvis Corp Diomed Hldgs GoAmerica, Inc Viragen, Inc Hyperfeed Technology Applied Digital Sol Universal Access Intrusion, Inc Priceline.com 24/7 Real Media Synergy Brands Inc Nuvelo, Inc MKTG Services Inc (Now MSGI Security Sol) ONYX Software Brite Smile Inc Saba Software Inc Pacific Net, Inc Ista Pharmaceutical Novatel Wireless Neo Therapeutic (now Spectrum Pharm) Click Commerce ebix.com Inc (Now Ebix Inc) Analytical Surveys Juniper Group, Inc Broadvision, Inc Guardian Techs > 50 1.0 > 1.0 Vignette Corp Penn Treaty America PPT Vision, Inc Biopure Corp Track Data Corp Fibernet Telecom North Cntry Financial (now Mackinac) WebFinancial Corp SMTC Corp Amcon Distributing Stamps.com Inc Lodgian Amer Spectrum Realty WRP Corp (Now AHPC Holdings) A Consulting Team microHelix, Inc Openwave Systems NetSol Technology Astea International Juniper Group, Inc First Virtual Common ASA, International Ltd Rigel Pharmaceutical Vitria Technol Fibernet Telecom LightPath Tech Amen Props Inc Titanium Metals Corp Navisite Inc Precision Optics Conolog Corp Omtool Ltd Sento Corp Make Music Inc Palm, Inc Schmitt industries Net Manage Inc Collectors Univer 1-800-Attorney Mace Security Int'l Omni Energy Services RTW Inc Avici Systems Stratos Lightwave (now Stratos Int'l) JB Oxford Holdings Blue Coat Systems Infospace Inc Reverse Stock Splits 198 Table A25 ARE and CAR Means and Standard Deviations for Different Book-to-Market Ratio Categories 25 50 Standard Mean Deviation Mean Standard Deviation ARE Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0079878 -0.0425280 -0.0037639 -0.0479212 0.0135372 0.0733871 0.0724175 0.0810518 0.1479679 0.1172562 -0.0266141 0.0056299 -0.0378836 -0.0378938 -0.0035648 0.0564599 0.1279339 0.0713312 0.0880194 0.0932871 -0.0007052 -0.0460906 -0.0171554 -0.0073337 -0.0621169 0.0924466 0.1353544 0.1079719 0.1772033 0.1603097 CAR Day -2 Day -1 Announcement Day Day +1 Day +2 -0.0079878 -0.0505158 -0.0542797 -0.1022008 -0.0886637 0.0733871 0.0842288 0.1061427 0.1624058 0.2072568 -0.0266141 -0.0209843 -0.0588678 -0.0967617 -0.1003265 0.0564599 0.1376420 0.0902070 0.1203405 0.1716936 0.0007052 -0.0453854 -0.0625408 -0.0698745 -0.1319914 0.0924466 0.1398991 0.1408449 0.2264187 0.1559297 > 50 1.0 Standard Mean Deviation > 1.0 Standard Mean Deviation ARE Day -2 Day -1 Announcement Day Day +1 Day +2 0.0115137 0.0026000 -0.0007808 -0.0446198 -0.0047860 0.0885846 0.0763187 0.0862686 0.0824869 0.0762940 -0.0023896 -0.0135975 0.0190466 -0.0118868 -0.0086929 0.0801924 0.0825944 0.0692007 0.0974669 0.0603010 CAR Day -2 Day -1 Announcement Day Day +1 Day +2 0.0115137 0.0141137 0.0133329 -0.0312869 -0.0360729 0.0885846 0.1219200 0.1316381 0.1262154 0.1170888 -0.0023896 -0.0159871 0.0030594 -0.0088274 -0.0175203 0.0801924 0.1164656 0.1457121 0.1539497 0.1480029 Table A26a Longer-Term Stock Price Information Percentage Change From Post-Split Price mo yr yr 5.131% N\A N\A -66.949% N\A N\A 58.802% N\A N\A -41.935% N\A N\A -12.381% N\A N\A -35.333% N\A N\A 10.247% N\A N\A 50.000% 48.923% N\A -26.500% 37.500% N\A -47.458% -71.610% N\A -62.548% -30.270% N\A 65.000% 22.833% N\A 4.528% 9.434% N\A 126.000% 37.333% N\A 73.455% 71.636% N\A -53.125% -95.000% N\A -9.211% -82.018% N\A -13.500% -34.500% N\A -57.778% -64.815% N\A -36.320% -39.080% N\A -83.529% -61.765% N\A -0.930% 94.186% N\A -54.756% -41.463% N\A -41.500% 20.500% N\A -32.308% -15.385% N\A 47.910% -6.752% N\A 4.615% -15.692% N\A -18.852% -43.443% N\A -26.731% -12.115% N\A 980.734% 444.037% N\A -39.053% -49.408% N\A 42.216% 93.713% N\A -23.158% 21.053% 1.754% -40.678% -8.814% -53.898% -60.380% -35.420% 36.688% 192.381% 242.857% 734.286% -26.587% -41.032% 44.841% 199 Subsequent Stock Price mo yr yr 10.04 N/A N/A 1.95 N/A N/A 17.50 N/A N/A 0.90 N/A N/A 1.84 N/A N/A 0.97 N/A N/A 17.86 N/A N/A 12.54 12.45 N/A 4.41 8.25 N/A 1.24 0.67 N/A 4.85 9.03 N/A 9.90 7.37 N/A 2.77 2.90 N/A 3.39 2.06 N/A 4.77 4.72 N/A 0.75 0.08 N/A 2.07 0.41 N/A 12.11 9.17 N/A 1.14 0.95 N/A 15.92 15.23 N/A 0.28 0.65 N/A 4.26 8.35 N/A 3.71 4.80 N/A 1.17 2.41 N/A 0.88 1.10 N/A 4.60 2.90 N/A 3.40 2.74 N/A 0.99 0.69 N/A 19.05 22.85 N/A 11.78 5.93 N/A 10.30 8.55 N/A 14.25 19.41 N/A 2.19 3.45 2.90 1.75 2.69 1.36 5.00 8.15 17.25 3.07 3.60 8.76 9.25 7.43 18.25 Reverse Stock Splits Company Penn Treaty America OneTravel Holdings (fmrly RCG) Vignette Corp Biopure Corp Fibernet Telecom Applied Imaging ADC Telecommunications WebFinancial Corp Terremark Worldwide PPT Vision, Inc Cogent Communications V.I Technologies (now Panacos Pharm) Track Data Corp Velocity Express Equitex Inc Prosoft Training (Prosoft Learning Corp) GlycoGenesys, Inc North Cntry Financial (now Mackinac) AirNet Comm TurboChef Techs Z-Tel Technology (now Trinsic) Catuity, Inc Corvis Corp SMTC Corp Hanover Direct Genetronics Biomed Diomed Hldgs Viragen, Inc Amcon Distributing GoAmerica, Inc Lodgian Stamps.com Inc Applied Digital Sol Intrusion, Inc Amer Spectrum Realty 24/7 Real Media Nuvelo, Inc Stk Price Reported Effective Stock Price Date Date Pre-Split Post-Split 6/30/2005 7/11/2005 2.27 9.55 6/29/2005 7/7/2005 0.58 5.90 6/10/2005 6/13/2005 1.11 11.02 5/27/2005 5/31/2005 0.28 1.55 5/24/2005 5/25/2005 0.24 2.10 5/19/2005 5/20/2005 0.47 1.50 5/5/2005 5/10/2005 2.25 16.20 4/5/2005 4/6/2005 2.30 8.36 4/4/2005 5/18/2005 0.61 6.00 3/31/2005 4/1/2005 0.63 2.36 3/22/2005 3/24/2005 0.63 12.95 3/14/2005 3/16/2005 0.73 6.00 2/15/2005 3/1/2005 0.59 2.65 2/15/2005 2/16/2005 0.17 1.50 1/24/2005 1/25/2005 0.48 2.75 1/19/2005 1/20/2005 0.32 1.60 12/20/2004 12/21/2004 0.37 2.28 12/15/2004 12/16/2004 0.84 14.00 12/8/2004 12/9/2004 0.29 2.70 12/7/2004 12/27/2004 6.48 25.00 12/1/2004 12/2/2004 0.37 1.70 11/11/2004 11/12/2004 0.25 4.30 10/7/2004 10/8/2004 0.81 8.20 10/1/2004 10/4/2004 0.36 2.00 9/22/2004 9/23/2004 0.16 1.30 9/13/2004 9/13/2004 0.90 3.11 6/16/2004 6/17/2004 0.13 3.25 6/14/2004 6/15/2004 0.17 1.22 5/14/2004 5/17/2004 4.40 26.00 5/14/2004 5/17/2004 0.13 1.09 4/29/2004 4/30/2004 5.95 16.90 4/28/2004 5/12/2004 7.14 10.02 4/2/2004 4/5/2004 0.29 2.85 3/26/2004 3/29/2004 0.77 2.95 2/27/2004 3/2/2004 3.22 12.62 2/26/2004 2/27/2004 1.99 1.05 2/20/2004 2/23/2004 4.58 12.60 Table A26b Longer-Term Stock Price Information Subsequent Stock Price mo yr yr 3.99 3.10 2.90 2.33 2.05 1.20 7.24 7.15 4.93 0.22 0.08 0.06 0.18 0.15 0.01 0.58 0.28 0.25 0.66 2.25 2.25 11.47 10.01 16.37 1.37 0.79 1.27 3.10 5.70 6.89 2.45 1.16 1.94 7.00 3.99 1.75 3.67 0.20 0.03 4.12 3.82 3.65 1.90 1.32 0.02 17.02 15.64 20.12 23.86 27.07 17.33 0.51 0.40 0.13 2.33 4.54 3.00 5.78 2.88 3.16 1.25 0.50 0.77 3.69 4.00 4.45 1.27 1.11 0.38 3.11 6.25 3.36 5.88 6.85 5.40 5.79 4.70 2.61 33.45 60.00 141.00 A 2.45 2.41 4.51 2.52 3.04 1.07 2.75 4.35 2.42 1.35 4.58 16.75 34.80 32.83 31.05 A 2.98 9.46 15.50 B 2.30 3.00 4.91 2.40 5.90 10.07 1.27 2.42 7.09 2.81 6.53 2.59 Percentage Change From Post-Split Price mo yr yr 166.000% 106.667% 93.333% -37.867% -45.333% -68.000% 110.465% 107.849% 43.314% -45.000% -80.000% -85.000% -64.706% -70.588% -98.039% -42.000% -72.000% -75.000% -78.710% -27.419% -27.419% -18.825% -29.158% 15.853% 23.423% -28.829% 14.414% -3.125% 78.125% 115.313% 22.500% -42.000% -3.000% 15.702% -34.050% -71.074% 76.442% -90.385% -98.558% 3.000% -4.500% -8.750% -55.189% -68.868% -99.528% 89.111% 73.778% 123.556% -6.431% 6.157% -32.039% -85.217% -88.406% -96.232% 55.333% 202.667% 100.000% 32.874% -33.793% -27.356% -68.750% -87.500% -80.750% -10.000% -2.439% 8.537% 6.723% -6.723% -68.067% 55.500% 212.500% 68.000% 194.000% 242.500% 170.000% 157.333% 108.889% 16.000% 76.517% 216.623% 644.063% 102.479% 99.174% 272.727% 83.942% 121.898% -21.898% -31.250% 8.750% -39.500% 10.656% 275.410% 1272.951% 494.872% 461.197% 430.769% 70.286% 440.571% 785.714% 4.545% 36.364% 123.182% 79.104% 340.299% 651.493% -9.286% 72.857% 406.429% 5.639% 145.489% -2.632% 200 Stk Price Effective Stock Price Date Pre-Split Post-Split 1/26/2004 0.42 1.50 1/14/2004 1.24 3.75 1/7/2004 0.94 3.44 4/6/2004 0.30 0.40 1/30/2004 0.41 0.51 12/9/2004 0.42 1.00 10/31/2004 0.29 3.10 10/22/2003 4.56 14.13 10/2/2003 0.29 1.11 9/2/2003 0.66 3.20 8/18/2003 0.45 2.00 8/13/2003 0.48 6.05 8/11/2003 0.28 2.08 7/25/2003 1.08 4.00 6/30/2003 0.90 4.24 6/25/2003 0.96 9.00 6/16/2003 4.42 25.50 6/5/2003 0.42 3.45 6/2/2003 1.20 1.50 * 5/28/2003 0.96 4.35 5/16/2003 0.33 4.00 5/12/2003 1.00 4.10 5/12/2003 0.05 1.19 3/4/2003 0.24 2.00 3/11/2003 0.29 2.00 2/20/2003 0.61 2.25 2/18/2003 1.95 18.95 2/3/2003 0.42 1.21 1/29/2003 0.28 1.37 1/27/2003 0.18 4.00 1/27/2003 0.18 1.22 1/27/2003 0.55 5.85 1/15/2003 0.28 1.75 1/16/2003 0.22 2.20 1/6/2003 0.30 1.34 12/31/2002 0.44 1.40 1/8/2003 0.16 2.66 Reverse Stock Splits Reported Company Date WRP Corp (Now AHPC Holdings) 1/23/2004 Milestone Scient 1/14/2004 A Consulting Team 1/6/2004 Nematron Corp (now sandston corp) 12/19/2003 Frontline Comm (Now Provo Int'l) 12/17/2003 microHelix, Inc 12/8/2003 EarthShell Corp 10/30/2003 Openwave Systems 10/21/2003 Boots & Coots International 9/30/2003 Astea International 8/29/2003 NetSol Technology 8/15/2003 Hyperfeed Technology 8/12/2003 Universal Access 8/8/2003 ONYX Software 7/24/2003 First Virtual Common 6/27/2003 Rigel Pharmaceutical 6/24/2003 Priceline.com 6/13/2003 Juniper Group, Inc 6/4/2003 ASA, International Ltd 5/20/2003 Vitria Technol 5/27/2003 Bull Run Corp 5/14/2003 Saba Software Inc 5/9/2003 Fibernet Telecom 5/7/2003 LightPath Tech 3/3/2003 CorAutus Genetics 2/27/2003 Synergy Brands Inc 2/19/2003 Titanium Metals Corp 2/10/2003 Amen Props Inc 1/31/2003 Precision Optics 1/27/2003 Valentis Inc 1/24/2003 MKTG Services Inc (Now MSGI Security S 1/22/2003 Brite Smile Inc 1/21/2003 Omtool Ltd 1/14/2003 Make Music Inc 1/13/2003 Pacific Net, Inc 1/3/2003 Schmitt industries 12/31/2002 Navisite Inc 12/23/2002 Table A26c Longer-Term Stock Price Information Stk Price Effective Stock Price Date Pre-Split Post-Split 1/10/2003 0.15 1.01 12/9/2002 0.88 3.04 12/17/2002 0.94 2.90 * 11/25/2002 0.90 2.04 11/14/2002 0.33 3.25 11/12/2002 0.84 3.40 11/25/2002 0.56 2.19 10/29/2002 0.19 3.10 10/15/2002 0.69 12.55 10/22/2002 0.30 2.28 10/15/2002 0.38 1.61 9/16/2002 0.67 3.08 9/6/2002 0.13 2.60 9/4/2002 0.23 1.45 9/4/2002 0.60 2.99 10/16/2002 2.39 5.45 10/1/2002 0.57 3.42 10/2/2002 0.24 1.30 8/19/2002 0.16 0.82 7/31/2002 0.48 5.75 7/30/2003 0.16 1.25 9/13/2002 0.50 4.36 7/30/2002 0.37 2.75 7/15/2002 0.14 1.00 7/5/2002 0.06 0.51 7/3/2002 0.64 1.62 Subsequent Stock Price mo yr yr 1.12 0.89 4.17 3.31 6.80 19.60 1.31 2.00 5.64 3.25 6.41 8.48 4.16 8.99 10.67 4.71 7.40 6.12 1.55 3.61 5.04 0.89 6.29 25.02 9.36 26.70 28.30 3.60 5.82 4.68 2.10 3.39 2.12 5.27 9.20 15.00 1.92 5.18 6.14 1.93 4.04 5.46 1.50 1.86 7.30 C 5.60 12.86 5.67 3.11 5.55 13.19 0.74 1.47 2.00 0.50 1.02 0.33 16.14 42.30 40.18 2.00 1.51 0.46 9.63 15.36 29.31 4.07 5.07 2.68 1.10 1.51 1.40 0.36 2.20 5.05 0.75 1.60 5.17 A Adjusted for impact of 5-for-1 forward split B Adjusted for impact of 2-for-1 forward split C Adjusted for impact of special $2.50 dividend paid to shareholders Percentage Change From Post-Split Price mo yr yr 10.891% -11.881% 312.871% 8.882% 123.684% 544.737% -54.828% -31.034% 94.483% 59.314% 214.216% 315.686% 28.000% 176.615% 228.308% 38.529% 117.647% 80.000% -29.224% 64.840% 130.137% -71.290% 102.903% 707.097% -25.418% 112.749% 125.498% 57.895% 155.263% 105.263% 30.435% 110.559% 31.677% 71.104% 198.701% 387.013% -26.154% 99.231% 136.154% 33.103% 178.621% 276.552% -49.833% -37.793% 144.147% 2.752% 135.963% 4.037% -9.064% 62.281% 285.673% -43.077% 13.077% 53.846% -39.024% 24.390% -59.756% 180.696% 635.652% 598.783% 60.000% 20.800% -63.200% 120.872% 252.294% 572.248% 48.000% 84.364% -2.545% 10.000% 51.000% 40.000% -29.412% 331.373% 890.196% -53.704% -1.235% 219.136% Reverse Stock Splits Company Conolog Corp Collectors Univer Mace Security Int'l RTW Inc Ista Pharmaceutical Avici Systems Sento Corp Novatel Wireless Palm, Inc Stratos Lightwave (now Stratos Int'l) JB Oxford Holdings Blue Coat Systems Neo Therapeutic (now Spectrum Pharm) Net Manage Inc Click Commerce Talk America Holdings ebix.com Inc (Now Ebix Inc) Analytical Surveys Juniper Group, Inc MicroStrategy Inc 1-800-Attorney Infospace Inc Broadvision, Inc Vertical Net, Inc Guardian Techs Omni Energy Services Reported Date 12/20/2002 12/6/2002 11/29/2002 11/22/2002 11/13/2002 11/11/2002 10/31/2002 10/21/2002 10/14/2002 10/10/2002 9/17/2002 9/13/2002 9/5/2002 9/4/2002 9/3/2002 8/30/2002 9/30/2002 8/26/2002 8/16/2002 7/30/2002 7/29/2002 7/26/2002 7/26/2002 7/12/2002 7/3/2002 6/28/2002 201 Reverse Stock Splits Table A27 Worst and Best Performers Six Months After Annoucement Date Worst 15 Performers OneTravel Holdings (fmrly RCG) Cogent Communications Prosoft Training (Prosoft Learning Corp) AirNet Comm Z-Tel Technology (now Trinsic) Corvis Corp Amer Spectrum Realty Frontline Comm (Now Provo Int'l) EarthShell Corp First Virtual Common Juniper Group, Inc Bull Run Corp Mace Security Int'l Novatel Wireless Omni Energy Services Best 15 Performers Velocity Express GoAmerica, Inc 24/7 Real Media WRP Corp (Now AHPC Holdings) A Consulting Team Rigel Pharmaceutical CorAutus Genetics Synergy Brands Inc Titanium Metals Corp Amen Props Inc Precision Optics Brite Smile Inc Pacific Net, Inc MicroStrategy Inc Infospace Inc 202