1,355,886,090 shares-outstanding, 5.3 Billion required to be reserved. Much more than 200%.
“Under the Notes, we are currently required to reserve approximately 5.3 billion shares of the Company’s common stock for issuance. As a result, unless we reach an agreement with the holders of the Notes to reduce our reserve requirements under the Notes, we do not have enough authorized, unissued and unreserved shares to fulfill the current reserve requirements under the Notes or to meet the Company’s needs for future equity financing or acquisitions. Moreover, the number of shares issuable upon conversion of the Notes may increase significantly if there are further conversion price reductions resulting from the full ratchet conversion price adjustment provisions of the Notes, which provide that if we issue securities in certain transactions, such as our at-the-market offering, at a price lower than the applicable conversion price of the Notes, then the applicable conversion price of the Notes will be reduced to equal such lower price, resulting in additional shares issuable upon conversion of the Notes. As of September 14, 2018, there is no unrestricted principal outstanding under the Notes. As such, all of the approximate 5.3 billion shares that we are required to reserve under the Notes as stated above represent shares issuable upon conversion of restricted principal under the Notes for which an equivalent amount owed to us under the corresponding investor notes has not yet been paid. Such restricted principal may not, as of the date of this proxy statement, be converted into any shares of our common stock. However, to the extent holders of the Notes provide additional payments to us under the corresponding investor notes, an amount equal to such payment will become unrestricted principal under the Notes that may be converted to our common stock at the election of the holders of the Notes. The lack of adequate authorized shares of common stock available to satisfy our reserve requirements under the Notes and for future equity financings could materially limit or delay the Company’s ability to obtain capital as and when needed or consummate future acquisitions involving the payment of consideration in shares of our common stock. Effecting the Reverse Split Amendment would enable the Company to satisfy its reserve requirements under the Notes and create additional unreserved shares available for future equity financings and acquisitions.”
