VOTING SECURITIES
We had shares of our common stock issued and outstanding at the time of the stockholder action. As of July 10, 2013, the Record Date and the date of the stockholder approvals of the Actions by written consents, there were 46,350,000 shares of our common stock issued and outstanding. Of those, we received the written consent of the holders of 24,170,000 of our shares of common stock.
DECREASE IN AUTHORIZED COMMON STOCK
We are currently authorized by our articles of incorporation, as amended, to issue 1,875,000,000 shares of common stock and no shares of preferred stock. As of July 10, 2013, there were 46,350,000 shares of our common stock issued and outstanding.
Our board of directors believes it is in our best interests and the best interests of our stockholders to reduce the number of authorized shares of our common stock while retaining a sufficient number of authorized but unreserved shares to allow for the issuance of shares of our common stock or other securities in connection with employee benefit and incentive plans and arrangements, the financing of the operations of iTalk, operations, the acquisition of other businesses, the establishment of joint ventures, and such other purposes as our board of directors determines.
The reduction in the number of authorized shares of our common stock to a level that continues to provide a meaningful number of authorized but unreserved shares will permit our board of directors to issue additional shares of our common stock without further approval of our stockholders, and our board of directors does not intend to seek stockholder approval prior to any issuance of the authorized capital stock unless stockholder approval is required by applicable law or stock market or exchange requirements. Our issuance of additional shares of our common stock may result in substantial dilution to our existing stockholders, and such issuances may not require stockholder approval.
Although we from time to time review various transactions that could result in the issuance of shares of our common stock, we have not reviewed any specific transaction to date that we presently anticipate will result in a further issuance of shares of our common stock.
The NRS expressly permits our board of directors, when evaluating any proposed tender or exchange offer, any merger, consolidation or sale of substantially all of our assets, or any similar extraordinary transaction, to consider all relevant factors including, without limitation, the social, legal, and economic effects on the employees, customers, suppliers, and other constituencies of our and its subsidiaries, and on the communities and geographical areas in which they operate. Our board of directors may also consider the amount of consideration being offered in relation to the then current market price for our outstanding shares of common stock and our then current value in a freely negotiated transaction. Our board of directors believes such provisions are in our long-term best interests and the long-term best interests of our stockholders.
We do not have in place provisions which may have an anti-takeover effect. The reduction in the number of authorized shares of our common stock while retaining a sufficient number of authorized but unreserved shares to allow for the issuance of shares of our common stock under various scenarios may be construed as having an anti-takeover effect by permitting the issuance of shares of our common stock to purchasers who might oppose a hostile takeover bid or oppose any efforts to amend or repeal certain provisions in our articles of incorporation or bylaws. The reduction in the authorized number of shares of our common stock did not result from our knowledge of any specific effort to accumulate our securities or to obtain control of us by means of a merger, tender
offer, proxy solicitation in opposition to management or otherwise, and we did not take such action to increase the authorized shares of our common stock to enable us to frustrate any efforts by another party to acquire a controlling interest or to seek representation on our board of directors.
The issuance of additional shares of our common stock may have a dilutive effect on earnings per share and on the equity and voting power of existing security holders of our common stock. It may also adversely affect the market price of our common stock. However, if additional shares are issued in transactions whereby favorable business opportunities are provided which allow us to pursue our business plans, the market price of our common stock may increase.
The holders of our common stock are entitled to one vote for each share held of record on all matters to be voted on by our stockholders.
The holders of our common stock are entitled to receive dividends when, as, and if declared by our board of directors out of funds legally available therefor. We have not recently paid dividends on our common stock and do not intend to do so in the near future. In the event of our liquidation, dissolution or winding up, the holders of the shares of our common stock are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision has been made for each class of stock, if any, having preference over our common stock. Holders of shares of our common stock have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to our common stock.
On July 10, 2013, the amendment of our articles of incorporation to authorize the reduction of the number of authorized shares of our common stock to 500,000,000 was approved by the written consents of holders representing approximately 52.14% of the outstanding shares of our common stock. On July 10, 2013, our board of directors approved such amendment. The approval of the amendment of our articles of incorporation to authorize the reduction of the number of authorized shares of our common stock to 500,000,000 required such board approval and (if done by written consents) the affirmative consents of a majority in voting power of the shares of voting securities
outstanding and entitled to vote and a majority of the outstanding shares of our common stock. Such requirements have been met, so no vote or further action of our stockholders is required to approve the amendment of our articles of incorporation to authorize the reduction of the number of authorized shares of our common stock to 500,000,000. You are hereby being provided with notice of the approval of such amendment by less than unanimous written consent of our stockholders.
AUTHORIZATION OF “BLANK CHECK” PREFERRED STOCK
We are not currently authorized by our articles of incorporation, as amended, to issue shares of preferred stock. In connection with our acquisition of the business of iTalk, operations, we may be required to issue shares of preferred stock in connection with future capital raising transactions to fund our operations, acquiring other businesses, and forming strategic partnerships and alliances. No specific issuances are currently anticipated; however, to the extent such issuances occur, they will result in dilution to our current stockholders.
Accordingly, our board of directors believes it is in our best interests and the best interests of our stockholders to amend and restate our articles of incorporation to designate 50,000,000 shares of preferred stock, par value $0.001 per share, that may be issued from time to time in one or more series that our board of directors is authorized to establish, by resolution or resolutions, including the authority to set the number of shares to be included in each series and to fix and alter the rights, preferences, privileges, and restrictions granted to and imposed upon any series thereof, and to fix the designation of any such series of preferred stock (the “Blank Check Preferred”).
The designation of the Blank Check Preferred will permit our board of directors to issue shares of preferred stock and shares of common stock upon the conversion of such shares of preferred stock without further approval of our stockholders, and our board of directors does not intend to seek stockholder approval prior to any issuance of the Blank Check Preferred unless stockholder approval is required by applicable law or stock market or exchange requirements. Our issuance of shares of Blank Check Preferred may result in substantial dilution to our existing stockholders, and such issuances may not require stockholder approval.
Although we from time to time review various transactions that could result in the issuance of shares of Blank Check Preferred, we have not reviewed any specific transaction to date that we presently anticipate will result in an issuance of shares of Blank Check Preferred. However, upon the effectiveness of the designation of the Blank Check Preferred, we may begin to review transactions that may result in an issuance of shares of Blank Check Preferred.