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August 19, 2014
08:20 EDTFOFNFour Oaks Fincorp announces adoptiono f tax asset protection plan
Four Oaks Fincorp announced that its Board of Directors has adopted a tax asset protection plan intended to preserve the long-term value of the company’s federal net operating loss and other tax carryforwards, which represent a substantial asset to the company and its shareholders. The Plan is similar to tax protection plans adopted by other public companies with significant tax carryforwards. As of June 30, the company had a federal net operating loss carryforward of approximately $36.8M, as well as state net operating loss carryforwards and federal and state tax credits that can be carried forward to future years. The Plan is designed to discourage any person from becoming a 5% shareholder, thereby reducing the risk of such an ownership change. There is no guarantee, however, that the Plan will prevent the company from experiencing an ownership change, and the company may pursue additional means of protecting this substantial asset. Existing holders of 4.9% or more of the company’s outstanding shares of common stock are exempt from triggering provisions of the Plan, but lose that exemption as soon as they make any additional purchases of company common stock. The Board of Directors considered a number of factors in establishing the term of the Plan, including anticipated use of the net operating loss carryforwards, governance matters and efficiency. The company does not anticipate exhausting its net operating loss carryforwards prior to the expiration of the term; nevertheless, the Plan will expire if the value of any unused carryforwards is no longer material. The Plan will also expire upon redemption or exchange of the rights. Otherwise, the Plan will expire no later than the close of business on August 18, 2020, unless extended by the Board of Directors.
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