Background
At
the 2020 Annual Meeting, stockholders voted and approved the May Amendment. Consistent with the applicable rules concerning the manner in which broker votes are counted for “routine” matters, certain shares of common stock held by brokers and with respect to which the beneficial owner had not provided the broker with voting instructions were voted by the broker in favor of the approval of the May Amendment.
Our Board of Directors subsequently determined that disclosure contained in the definitive proxy statement disseminated to our stockholders in connection with the 2020 Annual Meeting included an inadvertent drafting error referring to the resolution as non-routine instead of routine. In particular, the proxy statement suggested that brokers would not have discretionary authority with respect to the
approval of the May Amendment, even though, consistent with applicable rules, discretionary voting is permitted.
As announced on a Current Report on Form 8-K filed with the SEC on
May 28, 2020, stockholders approved the May Amendment, and
the Company filed the Certificate of Amendment. No shares of common stock have been issued since the filing of the Certificate of Amendment, except for shares issued in settlement of
the Company’s restricted stock units. None of the additional authorized shares of common stock added pursuant to the Certificate of Amendment have been issued or are outstanding
as of the date of this proxy statement.
While our Board of Directors believes it was and is appropriate to include the votes brokers cast pursuant to their discretionary authority and that the May Amendment has been properly approved and is effective, out of an abundance of caution, our Board of Directors has unanimously resolved to resubmit Proposal 1 for approval of the stockholders. The increase in our authorized shares is for general corporate purposes and is not being implemented in connection with any proposed corporate transaction. Our Board of Directors recommends that you vote “FOR” Proposal 1.
General
We
are asking stockholders to confirm and approve an amendment to our
certificate of incorporation to increase the number of total authorized shares from 60,000,000 shares to 210,000,000 shares and the number of authorized shares of common stock from 50,000,000 shares to 200,000,000 shares.
The additional common stock will have rights and privileges identical to our currently outstanding common stock. The number of authorized shares of our preferred stock will not be affected by this amendment; it will be maintained at 10,000,000 shares. No shares of preferred stock have been issued, and we currently have no plans, arrangements, commitments or understandings with respect to the issuance of any shares of preferred stock.
The
reason for the proposed amendment is to increase our financial flexibility and to facilitate our ability to continue implementing our non-employee and employee equity programs at competitive levels. Our cash flow from operations has been, and continues to be, negative. We have reported in our recent quarterly and annual reports on Forms 10-Q and 10-K that we need to raise additional capital, although we have no present commitment to do so. The Board may determine that the optimal manner for doing so in the future is the sale of equity securities or options or rights to acquire equity securities. As of
June 2, 2020, approximately 97.0% of our currently authorized common stock was either issued and outstanding, underlay outstanding awards, or was issuable upon exercise of outstanding warrants. The Board of Directors does not believe that we currently have enough shares authorized to provide for sufficient flexibility to
pursue appropriate equity financing opportunities if they arise or to take certain other actions that the Board may determine is in the best interests of
the Company and the best interests of our stockholders. However, as stated above, at this time we have no plans, arrangements or understandings for any transactions that would involve the issuance of such additional authorized shares.
The Board believes it is desirable for us to have the flexibility to issue, without further stockholder action, additional shares of common stock in excess of the amount that is currently authorized. The additional shares of common stock authorized by this proposed amendment could be issued upon approval by the Board without further vote of our
stockholders except as may be required in particular cases by applicable law, regulatory agencies or the rules of NASDAQ. Such shares would be available for issuance from time to time as determined by the Board for any proper corporate purpose. Such purposes might include, without limitation, issuance in public or private sales for cash as a means of obtaining additional capital for use in our business and operations, issuance in repayment of indebtedness and/or issuance pursuant to stock plans relating to options, stock appreciation rights, restricted stock, restricted stock units and other equity grants.