PROPOSAL TWO: APPROVAL OF AN INCREASE IN THE NUMBER OF SHARES OF AUTHORIZED COMMON STOCK FROM SIXTY-SIX MILLION SIX HUNDRED SIXTY-SIX THOUSAND SIXTY HUNDRED SIXTY-SEVEN (66,666,667) TO [TWO HUNDRED FIFTY MILLION] ([250,000,000])
General
Under our Restated Articles of Incorporation (as amended, “Articles of Incorporation”), the total number of shares of all classes of capital stock that we are authorized to issue is seventy-six million, six hundred sixty-six thousand six hundred sixty-seven (76,666,667), consisting of (i) sixty-six million, six hundred sixty-six thousand six hundred sixty-seven (66,666,667) designated as common stock, $0.00001 par value per share, and (ii) ten million (10,000,000) designated as preferred stock, $0.00001 par value per share. Our Board of Directors has determined that it is advisable to increase (i) the authorized number of authorized shares from seventy-six million, six hundred sixty-six thousand six hundred sixty-seven (76,666,667) to [two hundred and sixty million] ([260,000,000]) and (2) the authorized number of shares of common stock from sixty-six million, six hundred sixty-six thousand sixty hundred sixty-seven (66,666,667) to [two hundred fifty million] ([250,000,000] and recommends that our stockholders approve an amendment to our Articles of Incorporation to effect the proposed increases. The authorized number of shares of preferred stock will not change. The amendment to the Articles of Incorporation that you are being asked to approve pursuant to this Proposal 2 will be substantially in the form of Appendix B attached to this Proxy Statement.
Purpose of the Increase in Authorized Shares
As of December [ ], 2023, we had sixty-six million, six hundred sixty-six thousand six hundred sixty-seven (66,666,667) shares of common stock authorized, of which [ ] shares were issued and outstanding. Of the remaining [ ] authorized shares, [ ] shares are reserved for issuance upon the exercise of issued and outstanding warrants, [ ] shares are reserved for issuance upon the exercise of issued and outstanding equity option awards, [ ] shares are reserved for unvested restricted stock units and [ ] shares are reserved for future issuance under our stock incentive plan. Accordingly, based on the foregoing, we do not have enough shares of common stock available for future issuance.
Our Board believes it is in the best interest of our Company to increase the number of authorized shares of our common stock to give us greater flexibility in considering and planning for future potential business needs, including to raise additional capital in connection with future equity financings, future opportunities for expanding the business through investments or acquisitions, management incentive and employee benefit plans and for other general corporate purposes.
Furthermore, as a material condition to the warrant inducement offering described in Proposal 3, we agreed to submit and recommend this proposal to our stockholders. If we do not obtain stockholder approval for this Proposal 2 (unless Proposal 1 is approved and the Reverse Split is implemented) and Proposal 3 at the Special Meeting, or any adjournment of the Special Meeting, we have agreed to call a meeting of stockholders every 90 days thereafter to seek stockholder approval until the necessary stockholder approval is obtained, which will result in additional management resources and expenses to us.
We have not proposed the increase in the number of authorized shares of common stock with the purpose or intention of using the additional authorized shares for anti-takeover purposes, such as to oppose a hostile takeover attempt or to delay or prevent a change in control of the Company that our Board does not support, but we could use the additional shares for such purpose.
Rights of Additional Authorized Shares
The proposed amendment to our Articles of Incorporation would not have any effect on the par value per share of our common stock. Our common stock is a single class, with equal voting, distribution, liquidation and other rights. The additional common stock to be authorized by the proposed amendment would have rights identical to our currently outstanding common stock. Should our Board issue additional shares of common stock, existing stockholders would not have any preferential rights to purchase any newly authorized shares of common stock solely by virtue of their ownership of shares of our common stock, and