PROPOSAL THREE: APPROVAL OF AN INCREASE IN THE NUMBER OF SHARES OF AUTHORIZED COMMON STOCK FROM THIRTY-THREE MILLION THREE HUNDRED THIRTY THREE THOUSAND AND THREE HUNDRED THIRTY FOUR (33,333,334) TO SIXTY-SIX MILLION, SIX HUNDRED SIXTY-SIX THOUSAND SIXTY HUNDRED SIXTY-SEVEN (66,666,667)
General
Under our Articles of Incorporation as amended (our “Articles of Incorporation”), the total number of shares of all classes of capital stock that we are authorized to issue is forty-three million three hundred thirty three thousand and three hundred thirty four (43,333,334), consisting of (i) thirty-three million three hundred thirty three thousand and three hundred thirty four (33,333,334) designated as common stock, $0.00001 par value per share, and (ii) ten million (10,000,000) designated as preferred stock, $0.00001 par value per share. Our Board of Directors has determined that it is advisable to increase (i) the authorized number of authorized shares from forty-three million three hundred thirty three thousand and three hundred thirty four (43,333,334) to seventy-six million, six hundred sixty-six thousand sixty hundred sixty-seven (76,666,667) and (2) the authorized number of shares of common stock from thirty-three million three hundred thirty three thousand and three hundred thirty four (33,333,334) to sixty-six million, six hundred sixty-six thousand sixty hundred sixty-seven (66,666,667) and recommends that our stockholders approve an amendment to our Articles of Incorporation to effect the proposed increases. The authorized number of shares of preferred stock will not change. The amendment to the Articles of Incorporation that you are being asked to approve pursuant to this Proposal No. 3 will be substantially in the form of Appendix A attached to this Proxy Statement.
Purpose of the Increase in Authorized Shares
As of August 15, 2023, we had thirty-three million three hundred thirty three thousand and three hundred thirty four (33,333,334) shares of common stock authorized, of which 21,078,656 shares were issued and outstanding. Of the remaining 12,254,678 authorized shares, 12,731,845 shares are reserved for issuance upon the exercise of issued and outstanding warrants, 320,383 shares are reserved for issuance upon the exercise of issued and outstanding equity option awards, 366,507 shares are reserved for unvested restricted stock units and 293,259 shares are reserved for future issuance under our stock incentive plan. In addition, the holders of 1,557,268 Warrants dated July 10, 2023 agreed not to exercise such warrants until after Stockholder Approval #1 is obtained. Accordingly, based on the foregoing, we do not have enough shares of common stock available for future issuance.
Our Board believes it is in the best interest of our Company to increase the number of authorized shares of our common stock to give us greater flexibility in considering and planning for future potential business needs, including to raise additional capital in connection with future equity financings, future opportunities for expanding the business through investments or acquisitions, management incentive and employee benefit plans and for other general corporate purposes.
Furthermore, as a material condition to the Stock Purchase Agreement No. 1 and Stock Purchase Agreement No. 2 described in Proposals 1 and 2, respectively, the Company agreed to submit and recommend this proposal to its stockholders. Pursuant to the terms of the Stock Purchase Agreement No. 1 and Stock Purchase Agreement No. 2, if we do not obtain stockholder approval for this Proposal 3 and/or Proposals 1 and 2 at the Special Meeting, or any adjournment of the Special Meeting, we have agreed to call a meeting of stockholders every six months thereafter to seek stockholder approval until