What are the tax consequences of the distribution of new common stock and new warrants to holders of old common stock?
Generally, for most taxpayers, under current federal income tax laws, if the fair market value of the new common stock and new warrants you receive in exchange for your old common stock exceeds your tax basis in the old common stock, you will recognize a taxable gain to the extent of the fair market value of the new warrants you receive, but if the fair market value of such new common stock and new warrants is less than your tax basis in such old common stock, any resulting loss cannot be recognized. You are encouraged to consult your own accountant or tax advisor regarding the tax impact to you of the exchange of old common stock for new common stock and new warrants. The tax impact to you may vary, and the preceding summary of certain federal tax income consequences may not apply, depending on your individual circumstances.
