On December 27 all Legion M shareholders (which includes all Wefunder Investors for Rounds 1-7 along with Round 8 shareholders whose investments were part of our first two disbursements and are listed as "fully invested" on StartEngine as of 12/17/21) will have the opportunity to vote on a proposed stock split. We thought it would be worthwhile to share the information we're providing to them about the upcoming vote.

PROPOSAL

Legion M is proposing a 10-for-1 stock split (the “Stock Split”), which will convert each share of Legion M stock into 10 shares of Legion M stock. The price-per-share of stock after the split will be 1/10th the price-per-share before the split.

Final approval of the Stock Split will be made by stockholders, pursuant to a stockholder vote beginning on 12/27/21 to amend Legion M’s certificate of incorporation. If the vote passes, the Stock Split will occur after we stop selling shares for Round 8.

Below is a list of frequently asked questions and answers. If you have further questions, or would like to join a discussion about the Stock Split, please join us at 5PM PT on Monday December 27th for a livestream discussion with Co-founders Paul Scanlan (CEO) and Jeff Annison (President). 

FAQ

What is a 10-for-1 stock split?

A 10-for-1 stock split means that every share of stock currently issued is converted into 10 shares, with each share having 1/10th the value of the pre-split share. For example, say you own 100 shares of a stock that’s worth $15 per share (total value = $1,500). After a 10-for-1 split, you would own 1,000 shares of stock worth $1.50 each (total value still = $1,500). It’s the equivalent of exchanging a $10 bill for ten $1 bills -- you still have the exact same amount of money, but are holding it in smaller denominations.

For more information, check out this Forbes article. 

Does a stock split cause dilution?

No. The split affects every stockholder at the same time, so nobody is diluted. The percentage of the company you own, the value of your shares (in aggregate), and your voting power will be exactly the same after the split as they were before the split.

Are stock splits good for existing stockholders?

A stock split itself is inherently neutral in that it has no impact on your ownership, value, or voting %. That said, we believe a split may potentially make the stock more attractive for new investors (see "Why are you proposing a Stock Split?" below) and will help us achieve our goals of growing the Legion. We believe this will benefit all stockholders, which is why we’re proposing the split. 

Somebody told me that stock splits were a bad sign. Why is that?

A stock split like Legion M is proposing is typically caused by growth in a stock’s price. “Reverse Splits”, where a company combines shares to increase the price per share are often caused by price declines, and are viewed by some investors as a bad signal. If somebody told you that a split was a bad sign, they were probably talking about a reverse split. 

To be clear, neither a stock split (like Legion M is proposing) or reverse split is inherently good or bad, as they have no impact on your % ownership, voting, or value of your holdings.

Why are you proposing a Stock Split?

We believe Legion M’s future success is tied to our ability to grow the Legion. We believe that lowering the price per share of Legion M stock will make it more attractive to investors, and will provide us with greater flexibility in packaging the stock (i.e. setting up reward tiers and promotions) to help us grow the Legion.

What would you rather have -- 10 shares for $150, or 100 shares for $150? Even though the total value is the same, we believe many investors will prefer owning more shares.

This is particularly true at lower investment levels. Until now our minimum investment has been about $100, but in the future we may be able to lower that threshold, which would make the stock more accessible for smaller investors. With the share price in its current range ($10-$20 per share), we are very limited in what we can offer. If the share price was in the $1-$2 range, we would have far more flexibility.

Finally, in rounds 7 and 8 we’ve found that offering reward tiers and bonus shares have been very popular. When setting up these tiers, our current price-per-share creates a number of logistical challenges (primarily because we can’t issue fractional shares). Again, if the share price was in the $1-$2 range, we would have far more flexibility in setting up reward tiers that are fair and attractive to both large and small investors, which is in the best interest of all Legion M shareholders. 

Who will make the decision?

Our existing stockholders will make the decision by voting their shares (i.e. 1 share = 1 vote). Our founders and employees have agreed to withhold their votes until the community has made a decision, at which time they have agreed to vote their shares consistent with the community-based vote. Thus, the decision will be directed entirely by our investors who purchased their shares via equity crowdfunding.

What does management recommend?

We recommend voting for the split, for the reasons outlined above.

When will the vote/split occur?

The vote was originally planned for November, but due to some delays in the closing process for early round 8 investors, it is now scheduled to begin on December 27th, 2021. If the proposal passes, the split will occur sometime after we stop selling shares for Round 8 and will be effective upon the filing of an amendment to Legion M’s certificate of incorporation.

Will round 8 investors get to vote?

Holders of Round 8 stock that were part of our first 2 disbursements (those listed as “fully invested” on StartEngine as of 12/17/21) will get to vote their shares.

How do I vote?

Shareholders will receive an email with instructions on how to vote. You can also join the webinar at 5PM PT on Monday December 27th for complete instructions. The vote will be open for a full 7 days.