| Item 1.01. | Entry into a Material Definitive Agreement. |
The information set forth in Item 3.03 of this Current Report is incorporated into this Item 1.01 by reference.
| Item 3.03. | Material Modification to Rights of Security Holders. |
On April 29, 2022, Quotient Technology Inc. (the “Company”) and American Stock Transfer & Trust Company, LLC (together with the Company, the “Parties”) entered into the First Amendment to Tax Benefits Preservation Plan (the “Amendment ”), amending the Tax Benefits Preservation Plan, dated as of November 11, 2021, between the Parties (as amended, the “Tax Benefits Preservation Plan”). The Amendment changed the final expiration time of the Tax Benefits Preservation Plan from 5:00 p.m. New York City time on November 11, 2024 to 5:00 p.m. New York City time on January 2, 2023.
The Company entered into the Tax Benefits Preservation Plan to protect against a possible limitation on the Company’s ability to use its net operating losses (the “NOLs”) and certain other tax attributes to reduce potential future U.S. federal income tax obligations. If the Company experiences an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), its ability to fully utilize the NOLs and certain other tax attributes will be substantially limited and the timing of the usage of the NOLs and other tax attributes could be substantially delayed, which could significantly impair the value of those assets. Generally, an “ownership change” occurs if the percentage of the Company’s stock owned by one or more of its “5-percent shareholders” (as such term is defined in Section 382 of the Code) increases by more than 50 percentage points over the lowest percentage of stock owned by such stockholder or stockholders at any time over a three-year period.
As of December 31, 2021, the Company had federal NOL carryforwards of approximately $287.8 million which begin to expire in 2022. Based on information available to the Company and analysis under Section 382 of the Code, the Company estimates that its current ownership shift by 5-percent shareholders is approximately 40 percentage points and, holding all other factors constant, such percentage will decrease substantially after December 31, 2022.
The Tax Benefits Preservation Plan must be ratified by stockholders of the Company by November 11, 2022 in order for it to continue in force beyond that date and until January 2, 2023, unless it is terminated earlier than either of such dates in accordance with its terms. The Company plans to ask stockholders to ratify the Tax Benefits Preservation Plan at its 2022 Annual Meeting of Stockholders.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, which is filed as Exhibit 4.2 hereto and is incorporated herein by reference. The Tax Benefits Preservation Plan and a description of its material terms were filed with the Securities and Exchange Commission in a Registration Statement on Form 8-A on November 12, 2021.
