PROPOSAL 3 – AMENDMENT OF THE COMPANY’S ARTICLES
OF INCORPORATION TO INCREASE THE AMOUNT OF AUTHORIZED SHARES OF
COMMON STOCK FROM 100,000,000 TO 200,000,000 SHARES
The Board is seeking stockholder approval of an amendment to our Articles of Incorporation that would increase the number of authorized shares of Common Stock from 100,000,000 to 200,000,000. The proposed Certificate of Amendment to the Articles of Incorporation (the “Certificate of Amendment”) is attached hereto as Appendix A.
The newly authorized shares of Common Stock would have the same rights as the currently outstanding shares of our Common Stock. As of March 29, 2021, 70,030,620 shares of our Common Stock were issued and outstanding, 11,005,199 shares that were subject to outstanding stock option awards, and 2,003,036 shares of our Common Stock were reserved for future issuance under our equity compensation plans. Accordingly, 83,038,855 of the 100,000,000 authorized shares of our Common Stock are currently issued or reserved while 16,961,145 of the authorized shares of our Common Stock remain available for future issuance.
Reasons for the Increase in Authorized Shares
The Board believes it would be prudent and advisable to have the additional shares available to provide additional flexibility regarding the potential use of shares of Common Stock for business and financial purposes in the future. Having an increased number of authorized but unissued shares of Common Stock would allow us to take prompt action with respect to corporate opportunities that develop, without the delay and expense of convening a special meeting of stockholders for the purpose of approving an increase in our authorized shares. The additional shares could be used for various purposes without further stockholder approval. These purposes may include: (i) raising capital, if we have an appropriate opportunity, through offerings of Common Stock or securities that are convertible into Common Stock; (ii) expanding our business through potential strategic transactions, including mergers, acquisitions, and other business combinations or acquisitions of new technologies or products; (iii) establishing strategic relationships with other companies; (iv) providing equity incentives to attract and retain employees, officers or directors; and (v) other purposes.
Potential Effects of the Proposed Amendment
If the proposed amendment is approved by our stockholders, the additional authorized shares of Common Stock would have rights identical to our currently outstanding Common Stock. Our Articles of Incorporation also currently authorize the issuance of 10,000,000 shares of preferred stock, none of which are issued or outstanding.
The proposed amendment to the Articles of Incorporation would not change the authorized number of shares of preferred stock. Future issuances of shares of Common Stock or securities convertible into shares of Common Stock could have a dilutive effect on our earnings per share, book value per share and the voting interest and power of current stockholders since holders of Common Stock are not entitled to preemptive rights.
SEC rules require disclosure of the possible anti-takeover effects of an increase in authorized capital stock and other charter and bylaw provisions that could have an anti-takeover effect. Although we have not proposed the increase in the number of authorized shares of Common Stock with the intent of using the additional shares to prevent or discourage any actual or threatened takeover of the Company, under certain circumstances, such shares could have an anti-takeover effect. The additional shares could be issued to dilute the stock ownership or voting rights of persons seeking to obtain control of the Company or could be issued to persons allied with the Board or management and thereby have the effect of making it more difficult to remove directors or members of management by diluting the stock ownership or voting rights of persons seeking to effect such a removal. Accordingly, if the proposed amendment is approved, the additional shares of authorized Common Stock may render more difficult or discourage a merger, tender offer or proxy contest, the assumption of control by a holder of a large block of Common Stock, or the replacement or removal of members of the Board or management.
Good luck and GOD bless,
