Effect of the Reduction in Authorized Common Stock
We currently have a total of 152,857,143 shares of capital stock authorized for issuance under our certificate of incorporation, consisting of 142,857,143 shares of common stock and 10,000,000 shares of preferred stock. Assuming the number of our authorized shares of common stock is reduced proportionally to the reverse stock split ratios of 1-for-4, 1-for-5 and 1-for-6, which represent the low end, middle and high end of the range that our stockholders are being asked to approve in Proposal No. 2, and then subsequent 2x increase, the number of authorized shares of (i) our common stock and (ii) all classes of stock, based on information as of December 31, 2023, would have been as set forth in the table below.
Number of Shares of Common Stock Authorized | | | 142,857,143 | | | 71,428,571 | | | 57,142,857 | | | 47,619,047 |
Number of Shares of Capital Stock Authorized | | | 152,857,143 | | | 81,428,571 | | | 67,142,857 | | | 57,619,047 |
As of December 31, 2023, 18,064,122 shares of common stock, $0.001 par value, were outstanding, leaving 124,793,021 shares of common stock available for issuance. As of December 31, 2023, we had also reserved for issuance a total of 3,339,479 additional shares of our common stock, consisting of:
320,877 shares of common stock issuable upon the exercise of stock options under the 2013 A&R EIP and 2006 EIP outstanding as of December 31, 2023;
1,724,014 shares of common stock issuable upon the settlement of RSUs as of December 31, 2023;
875,534 shares of common stock reserved and available for future issuance under our 2013 A&R EIP; and
419,054 shares of common stock reserved and available for future issuance under our 2013 A&R ESPP.
Each additional authorized share of common stock would have the same rights and privileges as each share of currently authorized common stock. All shares of common stock will have the same voting rights and rights to dividends and distributions and will be identical in all other respects to the common stock now authorized, which is not entitled to preemptive or subscription rights, and is not subject to conversion, redemption or sinking fund provisions.
Interests of Certain Persons
We do not believe that our officers or directors have interests in this Proposal No. 3 that are different from or greater than those of any other of our stockholders. Some of our directors are affiliated with, or were appointed as directors by, entities that own shares of common stock as described above under the Section titled “Security Ownership of Certain Beneficial Owners and Management.”
Certain Risks and Potential Disadvantages Associated with the Reduction in Authorized Common Stock
The issuance of additional shares of our common stock in the future will have the effect of diluting earnings per share, voting power and common holdings of stockholders. It could also have the effect of making it more difficult for a third party to acquire control of our company. The shares will be available for issuance by our Board for proper corporate purposes, including but not limited to, financings, acquisitions, stock dividends and equity compensation plans. Our management believes the increase in authorized share capital is in our best interests and the best interests of our stockholders and recommends that our stockholders approve the increase in authorized share capital.
Vote Required and Board Recommendation
In accordance with Section 242(d)(2) of the Delaware General Corporation Law, the votes of the holders of our common stock cast in favor of this proposal in excess of the votes cast against this proposal will be required to approve this proposal.
The Board recommends that stockholders vote “FOR” the amendment to the certificate of incorporation to decrease the authorized shares of common stock and authorized number of shares of all classes of stock thereunder.