Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Amendments to Articles of Incorporation
On June 1, 2022, New Momentum Corporation, a Nevada corporation (the “Company”), filed with the Secretary of State of the State of Nevada a Certificate of Amendment to its Articles of Incorporation to increase its authorized capital from 500,000,000 shares of common stock to 1,000,000,000 shares of common stock.
Under Rule 14c-2, promulgated pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the increase in the authorized shares of common stock is effective twenty (20) days after a definitive Information Statement on Schedule 14C is mailed to stockholders of the Company. The Company completed such mailing of a definitive Information Statement on Schedule 14C on June 16, 2022, thereby making such increase in authorized shares of common stock effective on July 6, 2022, under Exchange Act Rule 14c-2.
Certain Risks Associated With the Increase in Authorized Capital
The increase in authorized shares of common stock could have the effect of delaying or preventing a change in control of the Company.
Any additional issuance of common stock could, under certain circumstances, have the effect of delaying or preventing a change in control of the Company by increasing the number of outstanding shares entitled to vote and by increasing the number of votes required to approve a change in control of the Company. Shares of common stock could be issued, or rights to purchase such shares could be issued, to render more difficult or discourage an attempt to obtain control of the Company by means of a tender offer, proxy contest, merger or otherwise. The ability of the Board of the Directors to issue such additional shares of common stock could discourage an attempt by a party to acquire control of the Company by tender offer or other means. Such issuances could therefore deprive stockholders of benefits that could result from such an attempt, such as the realization of a premium over the market price that such an attempt could cause. Moreover, the issuance of such additional shares of common stock to certain persons’ interests aligned with that of the Board of Directors could make it more difficult to remove incumbent managers and directors from office even if such change were to be favorable to stockholders generally.
While the increase in the number of shares of common stock authorized may have anti-takeover ramifications, the Board of Directors believes that the financial flexibility offered by the amendment outweighs any disadvantages. To the extent that the increase in the number of shares of common stock authorized may have anti-takeover effects, the amendment may encourage persons seeking to acquire the Company to negotiate directly with the Board of Directors, enabling the Board of Directors to consider a proposed transaction in a manner that best serves the stockholders’ interests.
If we issue additional shares of common stock in the future, whether in connection with a financing or in exchange for services or rights, it will result in the dilution of our existing stockholders.
Our articles of incorporation authorize the issuance of up to 1,000,000,000 shares of common stock with a par value of $0.001 per share, and 175,000,000 shares have been designated as “blank check” preferred stock. As of the date of this Form 8-K, the Company had 176,168,548 shares of common stock issued and outstanding. Accordingly, we may issue up to an additional 823,831,452 shares of common stock. Our Board of Directors may choose to issue some or all of such shares to acquire one or more companies or properties, to fund our overhead and general operating requirements and in exchange for services rendered to the Company. Such issuances may not require the approval of our stockholders. We have previously issued shares of our common stock in exchange for services provided to the Company and for certain rights, including as consideration for intellectual property rights and consulting services. Any future issuances may reduce the book value per share and may contribute to a reduction in the market price of the outstanding shares of our common stock. If we issue any such additional shares in the future, such issuance will reduce the proportionate ownership and voting power of all current stockholders.