PROPOSAL 1: APPROVAL OF THE INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK PROPOSAL
The board of directors is seeking the approval of our stockholders of an amendment to the Amended and Restated
Certificate of Incorporation of the Company, or the Amendment, to increase the number of authorized shares of common stock from 100,000,000 to 250,000,000, which was approved by the board of directors on December 12, 2017, subject to
stockholder approval. The Amendment will not change the number of authorized shares of preferred stock, which currently consists of 5,000,000 shares of preferred stock. While the Companys issued and outstanding shares of common stock will
decrease if the Reverse Stock Split contemplated by the Reverse Stock Split Proposal is approved, the Company is seeking stockholder approval to increase its authorized common stock to 250,000,000 even if a reverse stock split is approved and
implemented.
In addition to the 39,460,931 shares of common stock outstanding on December 12, 2017, our board of directors has
authorized the Company to issue and sell an aggregate of up to $35,000,000 in shares of its common stock to Lincoln Park Capital Fund, or Lincoln Park, in accordance with a purchase agreement, or the Purchase Agreement, by and between the Company
and Lincoln Park dated as of October 20, 2017 and has reserved 7,614,596 shares for potential issuance under the Purchase Agreement. The Company has also reserved 3,990,554 shares for issuance upon the exercise of outstanding warrants and
2,370,886 shares for issuance upon the exercise of outstanding stock options.
The full text of the proposed Amendment is attached to
this Proxy Statement as
Appendix A
. However, the text of the proposed Amendment is subject to revision to include such changes as may be required by the Secretary of State of the State of Delaware and as our board of directors deems necessary
and advisable to effect the proposed amendment of the Companys Amended and Restated Certificate of Incorporation.
Provided the
stockholders approve the Amendment, the increased number of shares would be authorized for issuance, but would remain unissued until such time as the board of directors approves a specific issuance of shares. The additional shares of common stock
authorized for issuance by the Amendment would be a part of the existing class of common stock and, if and when issued, would have the same rights and privileges as the common stock presently issued and outstanding. Adoption of the proposed
amendment would not affect the rights of the holders of currently outstanding common stock, except for effects incidental to increasing the number of shares of our common stock outstanding, such as dilution of the earnings per share and voting
rights of current holders of common stock, to the extent that any additional shares of common stock are ultimately issued out of the increase proposed in the Amendment.
If the proposed Amendment is approved by the requisite vote of the stockholders, it will become effective upon the filing and recording of a
Certificate of Amendment with the Secretary of State of the State of Delaware. Our board of directors reserves its right to elect not to proceed and abandon the Amendment if it determines, in its sole discretion, that this proposal is no longer in
the best interests of our stockholders.
Purposes and Effects of the Amendment
The board of directors is recommending the proposed increase in the authorized number of shares of common stock primarily to provide the
Company with appropriate flexibility to issue shares in the future on a timely basis if such need arises in connection with potential financings, business combinations or other corporate purposes. Approval of the proposed Amendment will also enable
the Company to take advantage of market conditions, the availability of more favorable financing, and opportunities for business combinations and other strategic transactions, without the potential delay and expense associated with convening a
special stockholders meeting. The Company is currently seeking funding from third parties that may be structured as equity issuances. Management will need the flexibility to issue common stock, warrants, or preferred stock convertible into
common stock to these potential investors.
In addition, our success depends in part on our continued ability to attract, retain and
motivate highly qualified management and key personnel, and if this proposal is not approved by our stockholders, the lack of
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