Number of Shares increase on the ballot

Increasing the number of shares.

I had a couple of discussions about this, and thought about it before I read this. I came up with a list of reasons why this might be a bad thing, and a list of reasons why this might be a good thing.

First, and most important in my mind is that this company isn't in debt. I like that. Debt is bad. I don't like dilution, but I like it a LOT better than debt. When a company is in debt, it has less control, and can be put in peril by it's creditors.

For a look at what happens to companies that put themselves in debt, look at the story of GT Advanced Technology. (GTAT at Motley Fool) It's also a story of how what seems to be great news can be really bad news.

Just because they have the option to create another 50,000,000 shares, doesn't mean they're going to. They've had the option for 100,000,000 shares for some time now and haven't reached that number yet. 

I am very much in favor of this option in the event there is some effort to take control of the company -- I want it to run, I haven't held this long (and I'm sure most everyone else didn't hold this long to take a lame buyout offer.)

All the positive things that are coming for us are real...

The Board of Directors has authorized an amendment to the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), subject to shareholder approval. The amendment will increase the authorized number of shares of the Company’s common stock by 50,000,000 to a total of 150,000,000 shares.

The Company’s Certificate of Incorporation currently permits the Company to issue up to an aggregate of 125,000,000 shares of capital stock, consisting of 100,000,000 shares of common stock and 25,000,000 shares of preferred stock. On February 6, 2018, the Company’s Board of Directors unanimously approved an amendment to the Company’s Certificate of Incorporation to permit the Company to issue up to an aggregate of 175,000,000 shares of capital stock, consisting of 150,000,000 shares of common stock and 25,000,000 shares of preferred stock. The text of the proposed amendment is set forth below.

As of April 11, 2018, there were approximately [    ] shares of the Company’s common stock issued and outstanding and approximately [    ] shares of common stock reserved for future issuance under the Company’s outstanding options, warrants and convertible securities. Thus, approximately [    ] authorized shares of common stock currently remain available for issuance.

The Board of Directors would like to increase the number of authorized shares of common stock to provide the Company with flexibility to issue shares of common stock for general corporate purposes, which could include, among other uses, financings, strategic partnering arrangements, equity incentive plans, acquisitions of assets or businesses, stock splits or stock dividends. The availability of additional authorized shares of common stock would allow the Company to accomplish these goals, and other business and financial objectives, in the future without stockholder approval, except as may be required in particular cases by the Company’s charter documents, applicable law or the rules of any stock exchange or other system on which the Company’s securities may then be listed. If this proposal is not approved, the Company will be severely limited in its ability to engage in various transactions involving issuances of common stock, such as financings, strategic partnering arrangements, equity incentive plans and acquisitions of assets or businesses. We will require additional capital to fund our operations and to implement our business plan. If we do not obtain additional capital, we may be required to curtail our operations substantially.

In addition to the more traditional uses described above, the Company could issue shares of its stock as a defense against efforts to obtain control of the Company. The Board of Directors does not intend or view the increase in authorized shares of stock as an anti-takeover measure, nor is the Company aware of any proposed or contemplated transaction of this type.

If this proposal is approved, the newly authorized shares of common stock would have the same rights as the presently authorized shares, including the right to cast one vote per share of common stock. Although the authorization of additional shares would not, in itself, have any effect on the rights of any holder of the Company’s common stock, the future issuance of additional shares of common stock (other than a stock split or dividend) would have the effect of diluting the voting rights and could have the effect of diluting earnings per share and book value per share of existing stockholders.