You have to think that the 40 to 1 reduction was going to happen in conjunction with another event that wasn't announced. I've seen this before where a company does a share reduction at the same time they list in the USA and the stock is promoted. I suspect that with the proposed financier Director jumping ship the strategy no longer made sense. I have no inside information but I believe the reduction, the Director and the unannouced event was tied together.
There is no point in doing a share reduction unless you have your eggs lined up. Sure you could do a 10 to 1 and get the share price to 40 cents but without an event, promotion and a sound strategy the stock price could easily fall.
I don't buy into all the doom and gloom but think it will be a cold and dark winter.