<SEC-DOCUMENT>0001171843-19-003744.txt : 20190531
<SEC-HEADER>0001171843-19-003744.hdr.sgml : 20190531
<ACCEPTANCE-DATETIME>20190531164640
ACCESSION NUMBER:		0001171843-19-003744
CONFORMED SUBMISSION TYPE:	SC 13E3
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20190531
DATE AS OF CHANGE:		20190531

SUBJECT COMPANY:	

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Capstone Therapeutics Corp.
		CENTRAL INDEX KEY:			0000887151
		STANDARD INDUSTRIAL CLASSIFICATION:	PHARMACEUTICAL PREPARATIONS [2834]
		IRS NUMBER:				860585310
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		SC 13E3
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	005-42745
		FILM NUMBER:		19871071

	BUSINESS ADDRESS:	
		STREET 1:		1275 WEST WASHINGTON STREET
		STREET 2:		SUITE 101
		CITY:			TEMPE
		STATE:			AZ
		ZIP:			85281
		BUSINESS PHONE:		6022865520

	MAIL ADDRESS:	
		STREET 1:		1275 WEST WASHINGTON STREET
		STREET 2:		SUITE 101
		CITY:			TEMPE
		STATE:			AZ
		ZIP:			85281

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ORTHOLOGIC CORP
		DATE OF NAME CHANGE:	19940211

FILED BY:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Capstone Therapeutics Corp.
		CENTRAL INDEX KEY:			0000887151
		STANDARD INDUSTRIAL CLASSIFICATION:	PHARMACEUTICAL PREPARATIONS [2834]
		IRS NUMBER:				860585310
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		SC 13E3

	BUSINESS ADDRESS:	
		STREET 1:		1275 WEST WASHINGTON STREET
		STREET 2:		SUITE 101
		CITY:			TEMPE
		STATE:			AZ
		ZIP:			85281
		BUSINESS PHONE:		6022865520

	MAIL ADDRESS:	
		STREET 1:		1275 WEST WASHINGTON STREET
		STREET 2:		SUITE 101
		CITY:			TEMPE
		STATE:			AZ
		ZIP:			85281

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ORTHOLOGIC CORP
		DATE OF NAME CHANGE:	19940211
</SEC-HEADER>
<DOCUMENT>
<TYPE>SC 13E3
<SEQUENCE>1
<FILENAME>sc13e3_053119.htm
<DESCRIPTION>SC 13E3
<TEXT>
<HTML>
<HEAD>
     <TITLE></TITLE>
</HEAD>
<BODY STYLE="font: 10pt Times New Roman, Times, Serif">

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>UNITED STATES</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>Washington, D.C. 20549</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>______________________________________________<BR>
<BR>
</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>SCHEDULE 13E-3</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>RULE 13e-3 TRANSACTION STATEMENT UNDER SECTION 13(e)</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>OF THE SECURITIES EXCHANGE ACT OF 1934</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>______________________________________________<BR>
<BR>
</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>CAPSTONE THERAPEUTICS CORP.</B><BR>
(Name of the Issuer and Name of Person Filing Statement)<BR>
<B>______________________________________________</B><BR>
<BR>
</P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>Common Stock, par value $0.0005 per share</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0">(Title of Class of Securities)</P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>14068E109</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0">(CUSIP Number of Class of Securities)</P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>Les M. Taeger</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>Senior Vice President, Chief Financial Officer</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>Capstone Therapeutics Corp.</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>1275 W. Washington Street, Suite 104</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>Tempe, Arizona 85281<BR>
(602) 286-5520</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0">(Name, Address and Telephone Number of Person Authorized to</P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0">Receive Notices and Communications on Behalf of the Person Filing
Statement)</P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><BR>
With copies to:</P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>Daniel M. Mahoney</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>Joshua Schneiderman</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>Snell &amp; Wilmer L.L.P.</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>One Arizona Center</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>400 East Van Buren</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>Phoenix, Arizona 85004</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>(602) 382-6000</B><BR>
<B>______________________________________________</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; margin: 0pt 0">This statement is filed in connection with (check the appropriate box):</P>

<P STYLE="font-size: 10pt; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top; text-align: left">
    <TD STYLE="width: 4%">a.</TD>
    <TD STYLE="width: 3%">&#9746;</TD>
    <TD STYLE="width: 93%">The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934.</TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD>b.</TD>
    <TD>&#9744;</TD>
    <TD>The filing of a registration statement under the Securities Act of 1933.</TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD>c.</TD>
    <TD>&#9744;</TD>
    <TD>A tender offer.</TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD>d.</TD>
    <TD>&#9744;</TD>
    <TD>None of the above.</TD></TR>
</TABLE>

<P STYLE="font-size: 10pt; margin: 0pt 0"></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;<BR>
<FONT STYLE="font-size: 10pt">Check the following box if the soliciting materials or information statement referred to in checking
box (a) are preliminary copies. </FONT>&#9746;</P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;<BR></P>

<P STYLE="font-size: 10pt; margin: 0pt 0"><FONT STYLE="font-size: 10pt">Check the following box if the filing is a final amendment
reporting the results of the transaction. </FONT>&#9744;</P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B><BR>
Calculation of Filing Fee</B></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-size: 10pt; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top; background-color: white">
    <TD STYLE="width: 50%; border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><FONT STYLE="font-size: 10pt">TRANSACTION VALUATION*</FONT></TD>
    <TD STYLE="width: 50%; border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><FONT STYLE="font-size: 10pt">AMOUNT OF FILING FEE**</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: #EEEEEE">
    <TD STYLE="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><FONT STYLE="font-size: 10pt">$10,000</FONT></TD>
    <TD STYLE="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><FONT STYLE="font-size: 10pt">$2</FONT></TD></TR>
</TABLE>
<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">* Calculated solely for the purposes of determining the filing fee.
The transaction valuation assumes the payment for 379,000 shares of common stock of the Company at $.025 per share in cash (or
the closing price of the Company&rsquo;s common stock on the OTCQB on May 29, 2019), in lieu of issuing fractional shares to holders
of less than 1,000 shares of common stock. Actual amounts paid for fractional shares will equal the Cash-Out-Payment (as defined
herein).</P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">** The filing fee is calculated in accordance with Rule 0-11(b)
by multiplying the Transaction Valuation by 0.0001212<FONT STYLE="color: black">.</FONT></P>



<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"> &#9744; <FONT STYLE="font-size: 10pt">Check the box if any
part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing with which the offsetting fee
was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of
its filing.</FONT></P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><FONT STYLE="font-size: 10pt"></FONT></P>

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<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>Introduction</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">This Rule 13e-3 Transaction Statement on Schedule
13E-3 (the &ldquo;Schedule 13E-3&rdquo;), is being filed by Capstone Therapeutics Corp., a Delaware corporation (the &ldquo;Company&rdquo;),
in connection with a proposed going private transaction. At the Company&rsquo;s 2019 Annual Meeting of Stockholders, the Company&rsquo;s
stockholders of record will vote on approval of an amendment to the Company&rsquo;s Second Amended and Restated Certificate of
Incorporation to effect a 1-for-1,000 reverse stock split of the Company&rsquo;s common stock, par value $0.0005 per share (the
&ldquo;Common Stock&rdquo;), which would result in (i) holdings prior to such split of fewer than 1,000 shares of Common Stock
being converted into a fractional share, which will then be immediately cancelled and converted into a right to receive the &ldquo;Cash-Out-Payment&rdquo;
as described in the Proxy Statement (defined below), and (ii) the Company having fewer than 300 stockholders of record, allowing
the Company to deregister its Common Stock under the Securities Exchange Act of 1934 (the &ldquo;Exchange Act&rdquo;), and avoid
the costs associated with being a public reporting company.</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">This Schedule 13E-3 is being filed with the
Securities and Exchange Commission (the &ldquo;SEC&rdquo;) concurrently with the filing of the Company&rsquo;s preliminary proxy
statement on Schedule 14A (the &ldquo;Proxy Statement&rdquo;), pursuant to Regulation 14A under the Exchange Act. The information
contained in the Proxy Statement, including all annexes thereto, is expressly incorporated herein by reference and the responses
to each item of this Schedule 13E-3 are qualified in their entirety by reference to the information contained in the Proxy Statement.
Capitalized terms used and not otherwise defined herein have the meanings ascribed to such terms in the Proxy Statement.</P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B>ITEM 1. SUMMARY TERM SHEET.</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 24.5pt; margin: 0pt 0">The information set forth in the Proxy Statement
under the following caption is incorporated herein by reference: &ldquo;Summary of Terms of Reverse Stock Split&rdquo;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B>ITEM 2. SUBJECT COMPANY INFORMATION.</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(a) <U>Name and Address</U>. The name of the
subject Company is Capstone Therapeutics Corp., a Delaware corporation. The Company&rsquo;s principal executive offices are located
at <FONT STYLE="background-color: white">1275 West Washington Street, Suite 104, Tempe, AZ 85281.</FONT> The Company&rsquo;s telephone
number is <FONT STYLE="background-color: white">(602) 286-5520.</FONT></P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(b) <U>Securities</U>. The subject class of
equity securities to which this Schedule 13E-3 relates is the Company&rsquo;s Common Stock, par value $0.0005 per share, of which
54,385,411 shares were outstanding as of May 31, 2019.</P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(c) <U>Trading Market and Price</U>. The information
set forth in the Proxy Statement under the following caption is incorporated herein by reference: &ldquo;Special Factors &ndash;
Proposal No. 2 Reverse Stock Split - Trading Market and Price&rdquo;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(d) <U>Dividends</U>. The information set forth
in the Proxy Statement under the following caption is incorporated herein by reference: &ldquo;Special Factors &ndash; Proposal
No. 2 Reverse Stock Split - Dividends&rdquo;</P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(e) <U>Prior Public Offerings</U>.&nbsp; The
information set forth in the Proxy Statement under the following caption is incorporated herein by reference: &ldquo;Special Factors
&ndash; Proposal No. 2 Reverse Stock Split &ndash; Prior Public Offerings&rdquo;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(f) <U>Prior Stock Purchases</U>.&nbsp; The
information set forth in the Proxy Statement under the following caption is incorporated herein by reference: &ldquo;Special Factors
&ndash; Proposal No. 2 Reverse Stock Split &ndash; Prior Stock Purchases&rdquo;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B>ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(a) <U>Name and Address</U>. The filing person,
the Company, is also the subject company, with its address and telephone number provided in Item 2(a) above.</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"><I><U>Board of Directors of the Company</U></I></P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">Fredric J. Feldman, PhD.</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">John M. Holliman, III</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">Matthew E. Lipman</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">Elwood D. Howse, Jr.</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">Michael M. Toporek</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"></P>

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<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"><I><U>Executive Officers of the Company </U></I></P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">John M. Holliman, III</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">Les M. Taeger</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">The address of each director and executive officer
of the Company is c/o Capstone Therapeutics Corp., <FONT STYLE="background-color: white">1275 West Washington Street, Suite 104,
Tempe, AZ 85281</FONT>.</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">(b) <U>Business and Background of Entities</U>. Not applicable.</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">(c) <U>Business and Background of Natural Persons</U>. The information
set forth in the Proxy Statement under the following captions is incorporated herein by reference:</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">
</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Proposal No. 1: Election of Directors &ndash; Information Concerning Director Nominees&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Executive Officers&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">None of the Company&rsquo;s directors or officers have been convicted
in a criminal proceeding during the past five years (excluding traffic violations or similar misdemeanors).</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">None of the Company&rsquo;s directors or officers was a party to
any judicial or administrative proceeding during the past five years (except for matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">Each of the Company&rsquo;s directors and executive officers is
a citizen of the United States.</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B><BR>
ITEM 4. TERMS OF THE TRANSACTION.</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(a) <U>Material Terms</U>. The information set
forth in the Proxy Statement under the following captions is incorporated herein by reference:</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Summary of Terms of Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Proposal No. 2: To Approve an Amendment to Our Second Amended and Restated Certificate of Incorporation to Effect a
1-For-1,000 Reverse Stock Split&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(c) <U>Different Terms</U>. The information
set forth in the Proxy Statement under the following captions is incorporated herein by reference:</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Principal Effects of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Treatment of Fractional Shares&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Fairness of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">&quot;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Disadvantages of the Reverse
Stock Split&quot;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Material U.S. Federal Income Tax Consequences of the Reverse
Stock Split&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(d) <U>Appraisal Rights</U>. The information
set forth in the Proxy Statement under the following caption is incorporated herein by reference: &ldquo;Special Factors &ndash;
Proposal No. 2 Reverse Stock Split - No Appraisal Rights&rdquo;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"></P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"></P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(e) <U>Provisions for Unaffiliated Security
Holders</U>. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Fairness of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Annual Report&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(f) <U>Eligibility for Listing or Trading</U>.
Not applicable.</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B><BR>
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(a) <U>Transactions</U>. The information set
forth in the Proxy Statement under the following caption is incorporated herein by reference: &ldquo;Certain Relationships And
Related Transactions&rdquo;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">(b) <U>Significant Corporate Events</U>.&nbsp; The information set
forth in the Proxy Statement under the following caption is incorporated herein by reference: &ldquo;Certain Relationships And
Related Transactions&rdquo;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">(c) <U>Negotiations or Contacts</U>. The information set forth in
the Proxy Statement under the following caption is incorporated herein by reference: &ldquo;Certain Relationships And Related Transactions&rdquo;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(e) <U>Agreements involving the Company&rsquo;s
Securities</U>. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Principal Effects of the Reverse Stock Split - Effects
of the Reverse Stock Split on our Tax Benefit Preservation Plan&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Certain Relationships And Related Transactions&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B>ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 24.5pt; margin: 0pt 0">(b) <U>Use of Securities Acquired</U>. The information set forth
in the Proxy Statement under the following captions is incorporated herein by reference:</P>

<P STYLE="font-size: 10pt; text-indent: 24.5pt; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Purpose of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Principal Effects of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Treatment of Fractional Shares&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 24.5pt; margin: 0pt 0">(c)(1)-(8) <U>Plans</U>. The information set forth in the Proxy
Statement under the following captions is incorporated herein by reference:</P>

<P STYLE="font-size: 10pt; text-indent: 24.5pt; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Board Deliberations&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Purpose of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Principal Effects of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Treatment of Fractional Shares&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Advantages of the Reverse Stock
Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Disadvantages of the Reverse
Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Fairness of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Accounting Consequences&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Conduct of Our Business after the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; margin: 0pt 0 0pt 1in">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B>ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS.</B></P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0 0pt 21.1pt"><B><I>Regulation M-A Item 1013</I></B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 24.5pt; margin: 0pt 0">(a) <U>Purposes</U>. The information set forth in the Proxy Statement
under the following captions is incorporated herein by reference:</P>

<P STYLE="font-size: 10pt; text-indent: 24.5pt; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Board Deliberations&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Purpose of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Principal Effects of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Advantages of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Fairness of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"></P>

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<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 24.5pt; margin: 0pt 0">(b) <U>Alternatives</U>. The information set forth in the Proxy
Statement under the following captions is incorporated herein by reference:</P>

<P STYLE="font-size: 10pt; text-indent: 24.5pt; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Board Deliberations&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Alternatives Considered&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Fairness of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 24.5pt; margin: 0pt 0">(c) <U>Reasons</U>. The information set forth in the Proxy Statement
under the following captions is incorporated herein by reference:</P>

<P STYLE="font-size: 10pt; text-indent: 24.5pt; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Board Deliberations&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Purpose of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Principal Effects of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Treatment of Fractional Shares&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Advantages of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Disadvantages of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Alternatives Considered&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Fairness of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Conduct of Our Business after the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 24.5pt; margin: 0pt 0">(d) <U>Effects</U>. The information set forth in the Proxy Statement
under the following captions is incorporated herein by reference:</P>

<P STYLE="font-size: 10pt; text-indent: 24.5pt; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Board Deliberations&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Principal Effects of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Treatment of Fractional Shares&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Advantages of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Disadvantages of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Exchange of Stock Certificate&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Effect on Beneficial Owners&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Effect on Registered Book-Entry Holders&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Accounting Consequences&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Sources of Funds and Expenses&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Conduct of Our Business after the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Material U.S. Federal Income Tax Consequences of the Reverse
Stock Split&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B>ITEM 8. FAIRNESS OF THE TRANSACTION.</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(a) <U>Fairness</U>. The information set forth
in the Proxy Statement under the following captions is incorporated herein by reference:</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Board Deliberations&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Fairness of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; margin: 0pt 0"></P>

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<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(b) <U>Factors Considered in Determining Fairness</U>.
The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Board Deliberations&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Purpose of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Principal Effects of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Treatment of Fractional Shares&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Advantages of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Disadvantages of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Alternatives Considered&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Fairness of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(c) <U>Approval of Security Holders</U>. The
information set forth in the Proxy Statement under the following captions is incorporated herein by reference:</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Fairness of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Proposal No. 2: To Approve an Amendment to Our Second Amended and Restated Certificate of Incorporation to Effect a
1-For-1,000 Reverse Stock Split &ndash; Required Vote&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(d) <U>Unaffiliated Representative</U>. The
information set forth in the Proxy Statement under the following caption is incorporated herein by reference: &ldquo;Special Factors
&ndash; Proposal No. 2 Reverse Stock Split - Fairness of the Reverse Stock Split&rdquo;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(e) <U>Approval of Directors</U>. The information
set forth in the Proxy Statement under the following captions is incorporated herein by reference:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Overview&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Board Deliberations&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Fairness of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">(f) <U>Other Offers</U>. None</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B>ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS.</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">(a) <U>Report, Opinion or Appraisal</U>. The information set forth
in the Proxy Statement under the following caption is incorporated herein by reference: &ldquo;Special Factors &ndash; Proposal
No. 2 Reverse Stock Split - Fairness of the Reverse Stock Split&rdquo;</P>

<P STYLE="font-size: 10pt; text-indent: 58.5pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(b) <U>Preparer and Summary of the Report, Opinion
or Appraisal</U>.&nbsp; Not applicable.</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">(c) <U>Availability of Documents</U>.&nbsp; Not applicable.</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B>ITEM 10. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">(a) <U>Source of Funds</U>. The information set forth in the Proxy
Statement under the following caption is incorporated herein by reference: &ldquo;Special Factors &ndash; Proposal No. 2 Reverse
Stock Split - Sources of Funds and Expenses&rdquo;</P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">(b) <U>Conditions</U>. Not applicable.</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">(c) <U>Expenses</U>. The information set forth in the Proxy Statement
under the following caption is incorporated herein by reference: &ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split
- Sources of Funds and Expenses&rdquo;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">(d) <U>Borrowed Funds</U>. Not applicable.</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"></P>

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<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B>ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(a) <U>Security Ownership</U>. The information
set forth in the Proxy Statement under the following caption is incorporated herein by reference: &ldquo;Security Ownership of
Certain Beneficial Owners and Management&rdquo;</P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(b) <U>Securities Transactions</U>.&nbsp; None.</P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B>ITEM 12. THE SOLICITATION OR RECOMMENDATION.</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(d) <U>Intent to tender or vote in a going-private
transaction</U>. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Principal Effects of the Reverse Stock Split - Effects of the
Reverse Stock Split on Our Affiliates&rdquo;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(e) <U>Recommendations of Others</U>.&nbsp;
The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Board Deliberations&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Purpose of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Principal Effects of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Fairness of the Reverse Stock Split&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Special Factors &ndash; Proposal No. 2 Reverse Stock Split - Recommendation of the Board&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>&ldquo;Proposal No. 2: To Approve an Amendment to Our Second Amended and Restated Certificate of Incorporation to Effect a
1-For-1,000 Reverse Stock Split &ndash; Recommendation of the Board&rdquo;</TD></TR></TABLE>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B>ITEM 13. FINANCIAL STATEMENTS.</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(a) <U>Financial Information</U>. The (i) audited
consolidated financial statements set forth in the Company&rsquo;s Annual Report on Form 10-K for the year ended December 31, 2018
and (ii) unaudited consolidated financial statements set forth in the Company&rsquo;s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2019 are incorporated herein by reference.&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">(b) <U>Pro Forma Information</U>. Not applicable.</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(c) <U>Summary Information</U>. The information
set forth in the Proxy Statement under the following captions is incorporated herein by reference: &ldquo;Annex I: Summary Financial
Information&rdquo;</P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B>ITEM 14. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED
OR USED.</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">(a) <U>Solicitations or Recommendations</U>. The information set
forth in the Proxy Statement under the following caption is incorporated herein by reference: &ldquo;Proxy Statement - Solicitation&rdquo;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">(b) <U>Employees and Corporate Assets</U>. The information set forth
in the Proxy Statement under the following caption is incorporated herein by reference: &ldquo;Proxy Statement - Solicitation&rdquo;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><B>ITEM 15. ADDITIONAL INFORMATION.</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">(b) Not applicable.</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(c) <U>Other Material Information</U>. The information
contained in the Proxy Statement, including all annexes and appendices thereto, is incorporated herein by reference.</P>

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<P STYLE="font-size: 10pt; margin: 0pt 0"><B>ITEM 16. EXHIBITS.</B></P>

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<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(a)&nbsp;Notice of Annual Meeting of Stockholders
and Preliminary Proxy Statement of the Company, including all annexes and appendices thereto (incorporated herein by reference
to the Company&rsquo;s Schedule 14A filed with the SEC on May 31, 2019).</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(b)&nbsp;None.</P>

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<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(c)&nbsp;None.</P>

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<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(d)&nbsp;None.</P>

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<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(f)&nbsp;Not applicable.</P>

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<P STYLE="font-size: 10pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">(g)&nbsp;None.</P>

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<P STYLE="font-size: 10pt; text-align: center; margin: 0pt 0"><B>SIGNATURE</B></P>

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<P STYLE="font-size: 10pt; text-indent: 0.5in; margin: 0pt 0">After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true, complete and correct.</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top; text-align: left">
    <TD><B>&nbsp;</B></TD>
    <TD COLSPAN="2"><B>CAPSTONE THERAPEUTICS CORP.</B></TD>
    <TD><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD STYLE="width: 50%">&nbsp;</TD>
    <TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 31%">&nbsp;</TD>
    <TD STYLE="width: 11%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD>&nbsp;</TD>
    <TD>By:</TD>
    <TD STYLE="border-bottom: Black 1pt solid">/s/ John M. Holliman, III</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD>&nbsp;</TD>
    <TD>Name: </TD>
    <TD>John M. Holliman, III</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD>&nbsp;</TD>
    <TD>Title:</TD>
    <TD>Executive Chairman</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>

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<P STYLE="font-size: 10pt; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font-size: 10pt; margin: 0pt 0">Dated: May 31, 2019</P>

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