UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒
Filed by a party other than the Registrant ☐
Check the appropriate box:
| ☒ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2)) |
| ☐ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material under § 240.14a-12 |
Aditxt, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
| ☐ | Fee paid previously with preliminary materials. |
| ☐ | Fee computed on table in exhibit required by Item 25(b) per
Exchange Act Rules 14a- 6(i)(1) and 0-11 |
737 N. Fifth Street, Suite 200
Richmond, VA 23219
July 20, 2022
NOTICE OF 2022 SPECIAL MEETING OF STOCKHOLDERS
To Be Held on August 12, 2022
Dear Stockholder:
We are pleased to invite you
to attend the special meeting of stockholders (the “Special Meeting”) of Aditxt, Inc. (the “Company”), which will
be held on August 12, 2022 at 12:00 p.m. Eastern Time.
Due to the continuing public
health impact of the coronavirus outbreak (COVID-19) and to support the health and well-being of our employees and stockholders, the Special
Meeting will be held in a virtual-only meeting format at www.virtualshareholdermeeting.com/ADTX2022SM.
In addition to voting by submitting
your proxy prior to the Special Meeting, you also will be able to vote your shares electronically during the Special Meeting. Further
details regarding the virtual meeting are included in the accompanying proxy statement. At the Special Meeting, the holders of our outstanding
common stock will act on the following matters:
| 1. | To amend our amended and restated
certificate of incorporation to increase the number of shares of authorized common stock from 100,000,000 to 150,000,000; |
| 2. | To grant discretionary authority
to our board of directors to (i) amend our certificate of incorporation to combine outstanding shares of our common stock into a lesser
number of outstanding shares, or a “reverse stock split,” at a specific ratio within a range of one-for-five (1-for-5) to a maximum
of a one-for-fifty (1-for-50) split, with the exact ratio to be determined by our board of directors in its sole discretion; and (ii)
effect the reverse stock split, if at all, within one year of the date the proposal is approved by stockholders; and |
| 3. | To transact such other matters
as may properly come before the Special Meeting and any adjournment or postponement thereof. |
Our board of directors has
fixed July 28, 2022 as the record date (the “Record Date”) for the determination of stockholders entitled to notice of, and
to vote at, the Special Meeting and at any adjournment or postponement of the meeting.
IF YOU PLAN TO ATTEND:
To be admitted to the Special
Meeting at you must have your control number available and follow the instructions found on your proxy card or voting instruction form.
You may vote during the Special Meeting by following the instructions available on the meeting website during the meeting. Please allow
sufficient time before the Special Meeting to complete the online check-in process. Your vote is very important.
If you have any questions
or need assistance voting your shares, please call Kingsdale Advisors at:
Strategic Stockholder Advisor and Proxy Solicitation
Agent
745 Fifth Avenue, 5th Floor, New York,
NY 10151
North American Toll Free Phone:
+1 (866) 581-1489
Email: contactus@kingsdaleadvisors.com
Call Collect Outside North America: +1 (416) 867-2272
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BY ORDER OF THE BOARD OF DIRECTORS |
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, 2022 |
/s/ Amro Albanna |
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Amro Albanna
Chief Executive Officer and
Chairman of the Board of Directors |
Whether or not you expect to attend the Special
Meeting virtually, we urge you to vote your shares via proxy at your earliest convenience. This will ensure the presence of a quorum at
the Special Meeting. Promptly voting your shares will save the Company the expenses and extra work of additional solicitation. Submitting
your proxy now will not prevent you from voting your shares electronically at the Special Meeting if you desire to do so, as your proxy
is revocable at your option. Your vote is important, so please act today!
737 N. Fifth Street, Suite 200
Richmond, VA 23219
PROXY STATEMENT FOR THE
2022 SPECIAL MEETING OF STOCKHOLDERS
To be held on August 12, 2022
The board of directors of
Aditxt, Inc. (“Aditxt” or the “Company”) is soliciting your proxy to vote at the Special Meeting of Stockholders
(the “Special Meeting”) to be held on August 12, 2022, at 12:00 p.m. Eastern Time, in a virtual-only format online by accessing
and at any adjournment thereof.
This proxy statement contains
information relating to the Special Meeting. This year’s Special Meeting of stockholders will be held as a virtual meeting. Stockholders
attending the virtual meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting.
You will be able to attend
and participate in the Special Meeting online via a live webcast by visiting www.virtualshareholdermeeting.com/ADTX2022SM. In addition
to voting by submitting your proxy prior to the Special Meeting, you also will be able to vote your shares electronically during the Special
Meeting.
INTERNET AVAILABILITY OF PROXY MATERIALS
As permitted by Securities
and Exchange Commission (“SEC”) rules, we are making this proxy statement, our annual report for the year ended December 31,
2021 and our quarterly report on Form 10-Q for the period ended March 31, 2022, available to our stockholders primarily via the Internet,
rather than mailing printed copies of these materials to each stockholder. We believe that this process will expedite stockholders’
receipt of the proxy materials, lower the costs of the Special Meeting and help to conserve natural resources. On or about August 2, 2022,
we intend to begin mailing to each stockholder a Notice of Internet Availability of Proxy Materials (the “Notice”) containing
instructions on how to access and review the proxy materials, including our proxy statement, our annual report on Form 10-K for the year
ended December 31, 2021, and our quarterly report on Form 10-Q for the period ended March 31, 2022, on the Internet and how to access
an electronic proxy card to vote on the Internet or by telephone. The Notice also contains instructions on how to receive a paper copy
of the proxy materials. If you receive the Notice by mail, you will not receive a printed copy of the proxy materials unless you request
one. If you receive the Notice by mail and would like to receive a printed copy of our proxy materials, please follow the instructions
included in the Notice. Only stockholders who owned our common stock on July 28, 2022 are entitled to vote at the Special Meeting.
Important Notice Regarding the Availability
of Proxy Materials
for the Special Meeting of Stockholders to be
Held on August 12, 2022:
The Notice of Meeting, Proxy Statement, Annual
Report on Form 10-K for the year ended December 31, 2021, and Quarterly Report on Form 10-Q for the period ended March 31, 2022 are available
at:
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ADITXT, INC.
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT
AND VOTING
What is a proxy?
A proxy is the legal designation
of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written
document, that document is also called a proxy or a proxy card. By completing, signing and returning the accompanying proxy card, you
are designating Amro Albanna, Chief Executive Officer, and Corinne Pankovcin, President, as your proxies for the Special Meeting and you
are authorizing Mr. Albanna and Ms. Pankovcin to vote your shares at the Special Meeting as you have instructed on the proxy card. This
way, your shares will be voted whether or not you attend the Special Meeting. Even if you plan to attend the Special Meeting, we urge
you to vote in one of the ways described below so that your vote will be counted even if you are unable or decide not to attend the Special
Meeting.
What is a proxy statement?
A proxy statement is a document
that we are required by regulations of the U.S. Securities and Exchange Commission, or “SEC,” to give you when we ask you
to sign a proxy card designating Amro Albanna and Ms. Pankovcin as proxies to vote on your behalf.
Why did you send me this proxy statement?
We sent you this proxy statement
and proxy card because our board of directors is soliciting your proxy to vote at the Special Meeting and any adjournment and postponement
thereof. This proxy statement summarizes information related to your vote at the Special Meeting. All stockholders who find it convenient
to do so are cordially invited to attend the Special Meeting virtually. However, you do not need to attend the meeting to vote your shares.
Instead, you may simply complete, sign and return the proxy card or vote over the Internet, by phone, or by fax.
On or about August 2, 2022,
we intend to begin mailing to each stockholder a Notice of Internet Availability of Proxy Materials containing instructions on how to
access and review the proxy materials, including our proxy statement, our annual report on Form 10-K for the year ended December 31, 2021
and our quarterly report on Form 10-Q for the period ended March 31, 2022, on the Internet and how to access an electronic proxy card
to vote on the Internet. Only stockholders who owned our common stock on July 28, 2022 are entitled to vote at the Special Meeting.
What Does it Mean if I Receive More than one
set of proxy materials?
If you receive more than one
set of proxy materials, your shares may be registered in more than one name or in different accounts. Please complete, sign, and return
each proxy card to ensure that all of your shares are voted.
How do I attend the Special Meeting?
The Special Meeting will be
held on August 12, 2022, at 12:00 p.m. Eastern Time in a virtual format online by accessing www.virtualshareholdermeeting.com/ADTX2022SM.
Information on how to vote in person at the Special Meeting is discussed below.
Who is Entitled to Vote?
The board of directors has
fixed the close of business on July 28, 2022 as the record date (the “Record Date”) for the determination of stockholders
entitled to notice of, and to vote at, the Special Meeting or any adjournment or postponement thereof. On the Record Date, there were
[*] shares of common stock outstanding. Each share of common stock represents one vote that may be voted on each proposal
that may come before the Special Meeting.
What is the Difference Between Holding Shares
as a Record Holder and as a Beneficial Owner (Holding Shares in Street Name)?
If your shares are registered
in your name with our transfer agent, VStock Transfer, LLC, you are the “record holder” of those shares. If you are a record
holder, these proxy materials have been provided directly to you by the Company.
If your shares are held in
a stock brokerage account, a bank or other holder of record, you are considered the “beneficial owner” of those shares held
in “street name.” If your shares are held in street name, the Notice has been forwarded to you by that organization. The organization
holding your account is considered to be the stockholder of record for purposes of voting at the Special Meeting. As the beneficial owner,
you have the right to instruct this organization on how to vote your shares. See “How Will my Shares be Voted if I Give No Specific
Instruction?” below for information on how shares held in street name will be voted without instructions provided.
Who May Attend the Special Meeting?
Only record holders and beneficial
owners of our common stock, or their duly authorized proxies, may attend the Special Meeting. If your shares of common stock are held
in street name, you will need to provide a copy of a brokerage statement or other documentation reflecting your stock ownership as of
the Record Date.
What am I Voting on?
There are two (2) matters scheduled for
a vote:
| 1. | To amend our amended and restated
certificate of incorporation to increase the number of shares of authorized common stock from 100,000,000 to 150,000,000; and |
| 2. | To grant discretionary authority
to our board of directors to (i) amend our certificate of incorporation to combine outstanding shares of our common stock into a lesser
number of outstanding shares, or a “reverse stock split,” at a specific ratio within a range of one-for-five (1-for-5) to a maximum
of a one-for-fifty (1-for-50) split, with the exact ratio to be determined by our board of directors in its sole discretion; and (ii)
effect the reverse stock split, if at all, within one year of the date the proposal is approved by stockholders. |
What if another matter is properly brought
before the Special Meeting?
The board of directors knows
of no other matters that will be presented for consideration at the Special Meeting. The proxies also have discretionary authority to
vote to adjourn the Special Meeting, including for the purpose of soliciting votes in accordance with our Board’s recommendations.
If any other matters are properly brought before the Special Meeting, it is the intention of the person named in the accompanying proxy
to vote on those matters in accordance with their best judgment.
How Do I Vote?
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MAIL |
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INTERNET |
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PHONE |
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ONLINE AT THE MEETING |
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Mailing your signed
proxy card or voter
instruction card. |
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Using the Internet at:www.proxyvote.com |
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1-800-690-6903 |
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You can vote at the meeting at: www.virtualshareholdermeeting.com/ADTX2022SM |
Stockholders of Record
If you are a registered stockholder,
you may vote by mail, Internet, phone, or online at the Special Meeting by following the instructions in the Notice. You also may submit
your proxy by mail by following the instructions included with your proxy card. The deadline for submitting your proxy by Internet is
11:59 p.m. Eastern Time on August 11, 2022. Our Board’s designated proxies, Mr. Albanna and Ms. Pankovcin, will vote your shares
according to your instructions. If you attend the live webcast of the Special Meeting you also will be able to vote your shares electronically
at the meeting up until the time the polls are closed.
Beneficial Owners of Shares Held in Street
Name
If you are a street name holder,
your broker or nominee firm is the legal, registered owner of the shares, and it may provide you with the Notice. Follow the instructions
on the Notice to access our proxy materials and vote or to request a paper or email copy of our proxy materials. The materials include
a voting instruction card so that you can instruct your broker or nominee how to vote your shares. Please check the Notice or voting instruction
card or contact your broker or other nominee to determine whether you will be able to deliver your voting instructions by Internet in
advance of the meeting and whether, if you attend the live webcast of the Special Meeting, you will be able to vote your shares electronically
at the meeting up until the time the polls are closed.
All shares entitled to vote
and represented by a properly completed and executed proxy received before the Special Meeting and not revoked will be voted at the Special
Meeting as instructed in a proxy delivered before the Special Meeting. We provide Internet proxy voting to allow you to vote your shares
online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware
that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone
companies.
How Many Votes do I Have?
Holders of record of shares
of the Company’s Common Stock will be entitled to one vote for each share of Common Stock held by them on the Record Date and have
the right to vote on all matters brought before the Special Meeting. The holder of record of the one outstanding share of the Company’s
Series B Preferred Stock will be entitled to 250,000,000 votes for each share of the Company’s Series B Preferred Stock held on
the Record Date, and has the right to vote only on the Reverse Stock Split proposal (“Proposal 2”), provided that such votes
must be counted in the same proportion as the shares of Common Stock voted on Proposal 2. As an example, if 50.5% of the shares of Common
Stock are voted FOR Proposal 2, 50.5% of the votes cast by the holder of the Series B Preferred Stock will be cast as votes FOR Proposal
2. Holders of Common Stock and Series B Preferred Stock will vote on Proposal 2 as a single class.
Is My Vote Confidential?
Yes, your vote is confidential.
Only the inspector of elections, individuals who help with processing and counting your votes and persons who need access for legal reasons
will have access to your vote. This information will not be disclosed, except as required by law.
What Constitutes a Quorum?
To carry on business at the
Special Meeting, we must have a quorum. A quorum is present when one-third of the shares entitled to vote, as of the Record Date, are
represented in person or by proxy. Thus, shares must be represented in person or by proxy
to have a quorum at the Special Meeting. Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted
on your behalf by your broker, bank or other nominee) or if you vote in person at the Special Meeting. Abstentions and broker non-votes
will be counted towards the quorum requirement. Shares owned by the Company are not considered outstanding or considered to be present
at the Special Meeting. If there is not a quorum at the Special Meeting, either the chairperson of the Special Meeting or our stockholders
entitled to vote at the Special Meeting may adjourn the Special Meeting.
How Will my Shares be Voted if I Give No Specific
Instruction?
We must vote your shares as
you have instructed. If there is a matter on which a stockholder of record has given no specific instruction but has authorized us generally
to vote the shares, they will be voted as follows:
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“For” the amendment to our amended and restated certificate of incorporation to increase the number of shares of authorized common stock from 100,000,000 to 150,000,000; and |
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2. |
“For” the grant of discretionary authority to our board of directors to (i) amend our certificate of incorporation to combine outstanding shares of our common stock into a lesser number of outstanding shares, or a “reverse stock split,” at a specific ratio within a range of one-for-five (1-for-5) to a maximum of a one-for-fifty (1-for-50) split, with the exact ratio to be determined by our board of directors in its sole discretion; and (ii) effect the reverse stock split, if at all, within one year of the date the proposal is approved by stockholders. |
This authorization would exist,
for example, if a stockholder of record merely signs, dates and returns the proxy card but does not indicate how its shares are to be
voted on one or more proposals. If other matters properly come before the Special Meeting and you do not provide specific voting instructions,
your shares will be voted at the discretion of Amro Albanna and Corinne Pankovcin, the board of directors’ designated proxies.
If your shares are held in
street name, see “What is a Broker Non-Vote?” below regarding the ability of banks, brokers and other such holders of record
to vote the uninstructed shares of their customers or other beneficial owners in their discretion.
How are Votes Counted?
Votes will be counted by the
inspector of election appointed for the Special Meeting, who will separately count, for the election of directors, “For,”
“Withhold” and broker non-votes; and, with respect to the other proposals, votes “For” and “Against,”
abstentions and broker non-votes. Broker non-votes will not be included in the tabulation of the voting results of any of the proposals
and, therefore, will have no effect on such proposals.
What is a Broker Non-Vote?
A “broker non-vote”
occurs when shares held by a broker in “street name” for a beneficial owner are not voted with respect to a proposal because
(1) the broker has not received voting instructions from the stockholder who beneficially owns the shares and (2) the broker lacks the
authority to vote the shares at their discretion.
Our common stock is listed
on the Nasdaq Capital Market. However, under current New York Stock Exchange (“NYSE”) rules and interpretations that govern
broker non-votes: (i) Proposal No. 1 for an increase in the number of authorized common stock is considered a routine matter, and a broker
will be permitted to exercise its discretion to vote uninstructed shares on the proposal; and (ii) Proposal No. 2 for the approval of
the reverse stock split is considered a discretionary matter, and a broker will be permitted to exercise its discretion to vote uninstructed
shares on the proposal. Because NYSE rules apply to all brokers that are members of the NYSE, this prohibition applies to the Special
Meeting even though our common stock is listed on the Nasdaq Capital Market.
What is an Abstention?
An abstention is a stockholder’s
affirmative choice to decline to vote on a proposal. Under Delaware law, abstentions are counted as shares present and entitled to vote
at the Special Meeting. Generally, unless provided otherwise by applicable law, our amended and restated bylaws (the “Bylaws”)
provide that an action of our stockholders (other than the election of directors) is approved if a majority of the number of shares of
stock entitled to vote thereon and present (either in person or by proxy) vote in favor of such action. Therefore, abstentions will have
the effect of a vote “against” Proposals 1 and 2.
How many votes are required to approve each
proposal?
The table below summarizes
the proposals that will be voted on, the vote required to approve each item and how votes are counted:
Proposal |
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Votes Required |
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Voting
Options |
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Impact
of
“Withhold”
or
“Abstain”
Votes |
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Broker
Discretionary
Voting
Allowed |
Proposal No. 1: Increase in the number of shares of authorized common stock |
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The affirmative vote of the holders of a majority of the outstanding shares of our common stock. |
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“FOR”
“AGAINST”
“ABSTAIN” |
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(2) |
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No(1) |
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Proposal No. 2: Authorization of the reverse stock split. |
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The affirmative vote of the holders of a majority of the outstanding shares of our common stock. |
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“FOR”
“AGAINST”
“ABSTAIN” |
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(2) |
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No(1) |
| (1) | As this proposal is not considered
a discretionary matter, brokers lack authority to exercise their discretion to vote uninstructed shares on this proposal. |
| (2) | Abstentions will have the effect
of a vote against this proposal. |
What Are the Voting Procedures?
In voting by proxy with regard
to the proposals, you may vote in favor of or against the proposal, or you may abstain from voting on the proposal. You should specify
your respective choices on the accompanying proxy card or your vote instruction form.
Is My Proxy Revocable?
You may revoke your proxy
and reclaim your right to vote at any time before your proxy is voted by giving written notice to the Corporate Secretary of the Company
by delivering a properly completed, later-dated proxy card or vote instruction form or by voting in person at the Special Meeting. All
written notices of revocation and other communications with respect to revocations of proxies should be addressed to: Aditxt, Inc., 737
N. Fifth Street, Suite 200, Richmond, VA 23219. Attention: Corporate Secretary. Your most current proxy card or Internet proxy is the
one that will be counted.
Who is Paying for the Expenses Involved in
Preparing and Mailing this Proxy Statement?
All of the expenses involved
in preparing, assembling and mailing these proxy materials and all costs of soliciting proxies will be paid by us. In addition to the
solicitation by mail, proxies may be solicited by our officers and other employees by telephone or in person. Such persons will receive
no compensation for their services other than their regular salaries. Arrangements will also be made with brokerage houses and other custodians,
nominees and fiduciaries to forward solicitation materials to the beneficial owners of the shares held of record by such persons, and
we may reimburse such persons for reasonable out of pocket expenses incurred by them in forwarding solicitation materials. We have retained
Kingsdale Advisors as our strategic stockholder advisor and proxy solicitation agent in connection with the solicitation of proxies for
the Special Meeting. If you have any questions or require any assistance with completing your proxy, please contact Kingsdale Advisors
by telephone (toll-free within North America) at +1 (866) 581-1489 or (call collect outside North America) at +1 (416) 867-2272 or by
email at contactus@kingsdaleadvisors.com.
Do I Have Dissenters’ Rights of Appraisal?
Stockholders do not have appraisal
rights under Delaware law or under the Company’s governing documents with respect to the matters to be voted upon at the Special
Meeting.
How can I Find out the Results of the Voting
at the Special Meeting?
Preliminary voting results
will be announced at the Special Meeting. In addition, final voting results will be disclosed in a Current Report on Form 8-K that we
expect to file with the SEC within four business days after the Special Meeting. If final voting results are not available to us in time
to file a Form 8-K with the SEC within four business days after the Special Meeting, we intend to file a Form 8-K to publish preliminary
results and, within four business days after the final results are known to us, file an amended Form 8-K to publish the final results.
PROPOSAL 1:
INCREASE IN THE NUMBER OF SHARES OF AUTHORIZED
COMMON STOCK
Introduction
Our Certificate of Incorporation, currently authorizes the issuance
of up to 100,000,000 shares of common shares, 3,000,000 shares of “blank check” preferred stock, of which 1 share has been
designated as Series B Preferred Stock. Our board of directors has approved an amendment to increase the number of authorized common stock
from 100,000,000 to 150,000,000 shares (the “Increase in Authorized Common Shares Amendment”).
The proposed form of amendment
to our Certificate of Incorporation to effect the Increase in Authorized Common Shares Amendment is attached as Appendix A to this
Proxy Statement.
Reasons for the Increase in Authorized Common
Shares Amendment
The board of directors determined
that the Increase in Authorized Common Shares Amendment is in the best interests of the Company and unanimously recommends approval by
stockholders. The board of directors believes that the availability of additional authorized shares of common stock is required for several
reasons including, but not limited to, the additional flexibility to issue common stock for a variety of general corporate purposes as
the board of directors may determine to be desirable including, without limitation, future financings, investment opportunities, acquisitions,
or other distributions and stock splits (including splits effected through the declaration of stock dividends).
As of the Record Date shares
of our common stock were outstanding out of the 100,000,000 shares that we are authorized to issue. In addition, as of the Record Date,
an aggregate of approximately shares of common stock have been reserved for future issuance, including: (i) shares reserved for issuance
under our 2021 Equity Incentive Plan; (ii) shares of common stock reserved for issuance upon the exercise of outstanding warrants; and
(iii) shares of common stock reserved for issuance upon the exercise of outstanding options.
Thus, we have approximately
shares of common shares available for future issuance at this time. On December 28, 2021, we entered into a Shares Exchange Agreement
with AiPharma Group Ltd. (“AiPharma”), pursuant to which, among other things, we agreed
that we would: (i) acquire 9.5% of the issued and outstanding equity interests in AiPharma in exchange for the issuance of 4,816,193 shares
of our common stock and a cash payment of $250,000, at an initial closing (the “Initial Closing”)
upon the satisfaction or waiver of certain conditions to closing (the “Initial Closing Conditions”);
and (ii) acquire the remaining 90.5% of the issued and outstanding equity interests in AiPharma in exchange for the issuance of 39,927,974
shares of the Company’s common stock and a cash payment of $250,000 at a secondary closing (the “Secondary Closing”)
upon the satisfaction or waiver of certain conditions to closing. We presently have sufficient authorized shares to proceed with
the Initial Closing upon satisfaction of the Initial Closing Conditions. We will not proceed with the Secondary Closing without obtaining
the approval of our stockholders.
On December 1, 2021, the Company
completed a registered offering (the “Offering”) of 16,575,000 units (the “Units”), with each unit comprised of
one share of the Company’s common stock (the “Shares”) and one Series C warrant to purchase one Share at an exercise
price of $1.15 per share (the “Series C Warrants”). In connection with the Offering, the Company entered into the Series C
Warrant Agent Agreement (the “Series C Warrant Agent Agreement”) pursuant to which VStock Transfer, LLC (the “Warrant
Agent”) agreed to act as warrant agent with respect to the Series C Warrants.
On June 15, 2022, the Company
and the Warrant Agent entered into Amendment No. 1 to the Warrant Agent Agreement, pursuant to which the Series C Warrant Agent Agreement
was amended such that the terms of the Series C Warrant may be modified or amended with the consent of the Company and the holder of such
Series C Warrant being modified or amended.
On June 15, 2022, the Company
entered into a letter agreement (the “Letter Agreement”) with a holder of certain of the Series C Warrants (the “Holder”).
Pursuant to the Letter Agreement, the Holder has agreed to exercise in cash 8,970,947 of its Series C Warrants at a reduced exercise price
of $0.15 per Share (reduced from $1.15 per Share), for gross proceeds to the Company of approximately $1.35 million. As an inducement
to such exercise, the Company has agreed to reduce the exercise price of the Holder’s remaining Series C Warrants to purchase up
to 2,457,623 Shares from $1.15 to $0.2479 per share (the “Amended Series C Warrant”). The Amended Series C Warrant will be
non-exercisable for a period of six months following the closing date. In addition, the Company shall issue to the Holder a new warrant
(the “New Warrant”) to purchase up to 20,399,517 shares of the Company’s common stock at an exercise price of $0.2479
per share. The New Warrant will be non-exercisable for a period of six months following issuance date and have a term of five and one-half
years.
Our working capital requirements
are significant and may require us to raise additional capital through additional equity financings in the future. If we issue additional
shares of common stock or other securities convertible into shares of our common stock in the future, it could dilute the voting rights
of existing stockholders and could also dilute earnings per share and book value per share of existing stockholders. The increase in authorized
number of common stock could also discourage or hinder efforts by other parties to obtain control of the Company, thereby having an anti-takeover
effect. The increase in authorized number of common stock is not being proposed in response to any known threat to acquire control of
the Company.
The number of shares of our
common stock to be issued upon the Initial Closing, the Secondary Closing, exercise of the New Warrants, which are not exercisable for
a period of six months from the issuance date, together with the shares currently outstanding, exceeds the number of shares currently
authorized under the Certificate of Incorporation, as amended, of the Company (the “Certificate of Incorporation”). Accordingly,
we will file the Amended Certificate to increase the authorized number of shares of our common stock from 100,000,000 shares to 150,000,000
shares.
Current Plans, Proposals or Arrangements to
Issue Shares of Common Stock
As of the Record Date, the Company had:
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[ ] shares of our common stock issuable upon exercise of warrants, subject to vesting having a weighted average exercise price of [ ] per share; |
|
● |
[__________] shares of our common stock issuable upon exercise of outstanding options under our 2017 Equity Incentive Plan or the 2017 Plan, subject to vesting; and |
|
● |
[ ] shares of our common stock issuable upon exercise of outstanding options under our 2021 Omnibus Equity Incentive Plan or the 2021 Plan, subject to vesting; and |
|
● |
[ ] shares of our common stock subject to outstanding Restricted Stock Units under our 2021 Plan, or the 2021 Plan, are subject to vesting. |
Other than as set forth above,
the Company has no current plans, proposals or arrangements, written or oral, to issue any of the additional authorized shares of common
stock that would become available as a result of the amended Articles of Incorporation (the “Amended Articles”).
In addition, following the
effectiveness of the Amended Articles, the Company may explore additional financing opportunities or strategic transactions that would
require the issuance of additional shares of common stock, but no such plans are currently in existence and the Company has not begun
any negotiations with any party related thereto.
AUTHORIZED SHARES
As of the Record Date, our authorized capitalization consisted of 100,000,000
shares of Common Stock, of which shares of Common Stock were issued and outstanding,
3,000,000 shares of “blank check” preferred stock (“Preferred Stock”), par value $0.001 per share, of which 1
share has been designated as Series B Preferred Stock, and 1 share of Series B Preferred Stock, of which 1 share is issued and outstanding.
Following the increase in authorized shares as contemplated in the
Amended Certificate of Incorporation, 150,000,000 shares of common stock will be authorized, 3,000,000 shares of Preferred Stock will
be authorized of which 1 share has been designated as Series B Preferred Stock. There will be no changes to the issued and outstanding
shares common stock or preferred stock. If we issue additional shares, the ownership interest of holders of our capital stock will be
diluted.
Effects of the Increase in Authorized Common
Shares Amendment
Following the filing of the
Increase in Authorized Common Shares Amendment with the Secretary of State of the State of Delaware, we will have the authority to issue
up to 150,000,000 shares of common stock. These shares may be issued without stockholder approval at any time, in the sole discretion
of our board of directors. The authorized and unissued shares may be issued for cash or for any other purpose that is deemed in the best
interests of the Company.
In addition, the Increase
in Authorized Common Shares Amendment could have a number of effects on the Company’s stockholders depending upon the exact nature
and circumstances of any actual issuances of authorized but unissued shares. If we issue additional shares of common stock or other securities
convertible into shares of our common stock in the future, it could dilute the voting rights of existing stockholders and could also dilute
earnings per share and book value per share of existing stockholders. The increase in authorized number of common stock could also discourage
or hinder efforts by other parties to obtain control of the Company, thereby having an anti-takeover effect. The increase in authorized
number of common stock is not being proposed in response to any known threat to acquire control of the Company.
The Increase in Authorized
Common Shares Amendment will not change the number of shares of common stock issued and outstanding, nor will it have any immediate dilutive
effect or change the rights of current holders of our common stock.
Advantages and Disadvantages of Increasing
Authorized Common Stock
There are certain advantages and disadvantages
of increasing the Company’s authorized common stock.
The advantages include:
| ● | The ability to issue shares of the Company’s common
stock upon conversion of the Company’s outstanding convertible promissory notes and upon exercise of the Company’s outstanding
warrants. |
| ● | The ability to raise capital by issuing capital stock under
future financing transactions, if any. |
| ● | To have shares of common stock available to pursue business
expansion opportunities, if any. |
The disadvantages include:
| ● | In the event that additional shares of common stock are issued,
dilution to the existing stockholders, including a decrease in our net income per share in future periods. This could cause the market
price of our stock to decline. |
| ● | The issuance of authorized but unissued stock could be used
to deter a potential takeover of the Company that may otherwise be beneficial to stockholders by diluting the shares held by a potential
suitor or issuing shares to a stockholder that will vote in accordance with the desires of the Company’s Board, at that time. A
takeover may be beneficial to independent stockholders because, among other reasons, a potential suitor may offer such stockholders a
premium for their shares of stock compared to the then-existing market price. The Company does not have any plans or proposals to adopt
provisions or enter into agreements that may have material anti-takeover consequences. |
Procedure for Implementing the Amendment
The Increase in Authorized
Common Shares Amendment will become effective upon the filing or such later time as specified in the filing with the Secretary of State
of the State of Delaware. The form of the Increase in Authorized Common Shares Amendment is attached hereto as Appendix A. The
exact timing of the filing of the Increased in Authorized Amendment will be determined by our board of directors based on its evaluation
as to when such action will be the most advantageous to the Company and our stockholders.
Interests of Officers and Directors in this
Proposal
Our officers and directors
do not have any substantial interest, direct or indirect, in in this proposal.
Required Vote of Stockholders
The affirmative vote of the
holders of a majority of the outstanding shares of our common stock is required to approve this proposal.
Board Recommendation
The board of directors unanimously
recommends a vote “FOR” Proposal 1.
PROPOSAL 2:
THE REVERSE STOCK SPLIT PROPOSAL
Our board of directors has
approved an amendment to our Certificate of Incorporation, as amended, to combine the outstanding shares of our common stock into a lesser
number of outstanding shares (a “Reverse Stock Split”). If approved by the stockholders as proposed, the board of directors
would have the sole discretion to effect the Reverse Stock Split, if at all, within one (1) year of the date the proposal is approved
by stockholders and to fix the specific ratio for the combination within a range of one-for-five (1-for-5) to a maximum of a one-for-fifty
(1-for-50) split. The board of directors has the discretion to abandon the amendment and not implement the Reverse Stock Split.
If approved by our stockholders,
this proposal would permit (but not require) the board of directors to effect a Reverse Stock Split of the outstanding shares of our common
stock within one (1) year of the date the proposal is approved by stockholders, at a specific ratio within a range of one-for-five (1-for-5)
to a maximum of a one-for-fifty (1-for-50) split, with the specific ratio to be fixed within this range by the board of directors in its
sole discretion without further stockholder approval. We believe that enabling the board of directors to fix the specific ratio of the
Reverse Stock Split within the stated range will provide us with the flexibility to implement it in a manner designed to maximize the
anticipated benefits for our stockholders.
In fixing the ratio, the board
of directors may consider, among other things, factors such as: the initial and continued listing requirements of the Nasdaq Capital Market;
the number of shares of our common stock outstanding; potential financing opportunities; and prevailing general market and economic conditions.
The Reverse Stock Split, if
approved by our stockholders, would become effective upon the filing of the amendment to our Certificate of Incorporation with the Secretary
of State of the State of Delaware, or at the later time set forth in the amendment. The exact timing of the amendment will be determined
by the board of directors based on its evaluation as to when such action will be the most advantageous to our Company and our stockholders.
In addition, the board of directors reserves the right, notwithstanding stockholder approval and without further action by the stockholders,
to abandon the amendment and the Reverse Stock Split if, at any time prior to the effectiveness of the filing of the amendment with the
Secretary of State of the State of Delaware, the board of directors, in its sole discretion, determines that it is no longer in our best
interest and the best interests of our stockholders to proceed.
The proposed form of amendment
to our certificate of incorporation to effect the Reverse Stock Split is attached as Appendix B to this Proxy Statement. Any amendment
to our certificate of incorporation to effect the Reverse Stock Split will include the Reverse Stock Split ratio fixed by the board of
directors, within the range approved by our stockholders.
Reasons for the Reverse Stock Split
The Company’s primary
reasons for approving and recommending the Reverse Stock Split are (i) to make our common stock more attractive to certain institutional
investors, which would provide for a stronger investor base and to increase the per share price and bid price of our common stock to regain
compliance with the continued listing requirements of Nasdaq, and (ii) to provide additional shares available for issuance as described
in the Authorized Common Shares Amendment proposal described above.
On January 18, 2022, we received
a written notice from the Nasdaq Stock Market LLC (“Nasdaq”) that we were not in compliance with Nasdaq Listing Rule 5550(a)(2),
as the minimum bid price of our common stock had been below $1.00 per share for 30 consecutive business days. In accordance with Nasdaq
Listing Rule 5810(c)(3)(A), we had until July 18, 2022, to regain compliance with the minimum bid price requirement. We will monitor
the closing bid price of our common stock and will consider all of our options to regain compliance with Nasdaq’s minimum bid price
requirement. On July 11, 2022, we requested an additional 180 days to regain compliance. There can be no assurance that Nasdaq will grant
us such additional 180 days to regain compliance of that the Company will regain compliance with the Minimum Bid Price Requirement or
maintain compliance with any of the other Nasdaq continued listing requirements. On July 19, 2022, we received a notice from Nasdaq that
we had not regained compliance with the minimum bid price requirement. The notice also stated that, unless we request an appeal, that
our common stock will be delisted from The Nasdaq Capital Market and will be suspended at the opening of business on July 28, 2022. The
Company intends to request an appeal of the determination. The hearing request will stay the suspension of the Company’s common
stock pending Nasdaq’s decision. At the hearing, which is expected to occur 30-45 days after the Company’s request for appeal,
the Company intends to present its views and its plans to regain compliance with the minimum bid price rule to the panel. There can be
no assurance that the Company will obtain an extension period from the panel within which to regain compliance with the minimum bid price
rule, or, if the panel grants such an extension period, that the Company will be able to evidence compliance with the minimum bid price
rule before the extension period expires. It is the Company’s understanding that the Panel typically issues its decision within
30 days after the hearing.
Reducing the number of outstanding
shares of common stock should, absent other factors, generally increase the per share market price of the common stock. Although the intent
of the Reverse Stock Split is to increase the price of the common stock, there can be no assurance, however, that even if the Reverse
Stock Split is effected, that the Company’s bid price of the Company’s common stock will be sufficient, over time, for the
Company to regain or maintain compliance with the Nasdaq minimum bid price requirement.
In addition, the Company believes
the Reverse Stock Split will make its common stock more attractive to a broader range of investors, as it believes that the current market
price of the common stock may prevent certain institutional investors, professional investors and other members of the investing public
from purchasing stock. Many brokerage houses and institutional investors have internal policies and practices that either prohibit them
from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Furthermore,
some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers.
Moreover, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions
on higher-priced stocks, the current average price per share of common stock can result in individual stockholders paying transaction
costs representing a higher percentage of their total share value than would be the case if the share price were higher. The Company believes
that the Reverse Stock Split will make our common stock a more attractive and cost effective investment for many investors, which in turn
would enhance the liquidity of the holders of our common stock.
Reducing the number of outstanding
shares of our common stock through the Reverse Stock Split is intended, absent other factors, to increase the per share market price of
our common stock. However, other factors, such as our financial results, market conditions and the market perception of our business may
adversely affect the market price of our common stock. As a result, there can be no assurance that the Reverse Stock Split, if completed,
will result in the intended benefits described above, that the market price of our common stock will increase following the Reverse Stock
Split, that as a result of the Reverse Stock Split we will be able to meet or maintain a bid price over the minimum bid price requirement
of Nasdaq or that the market price of our common stock will not decrease in the future. Additionally, we cannot assure you that the market
price per share of our common stock after the Reverse Stock Split will increase in proportion to the reduction in the number of shares
of our common stock outstanding before the Reverse Stock Split. Accordingly, the total market capitalization of our common stock after
the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split.
In the event that Proposal
No. 1, the increase in the authorized number of shares of common stock, is not approved by our stockholders at the Special Meeting, the
Reverse Stock Split will be a necessary tool in order to satisfy its contractual obligations with regard to the issuance of common stock
upon proper exercise of its outstanding warrants, convertible note, restricted stock units and options.
We attempted to obtain stockholder
approval for a reverse stock split at our 2022 Annual Meeting of stockholders, originally scheduled for June 24, 2022, and further adjourned
to and reconvened on July 8, 2022 and July 15, 2022. At such reconvened meeting, although we received the affirmative vote of more than
a majority of the shares present in person or by proxy, there were not sufficient votes to approve the reverse stock split proposal because
of the voting standard of approval by a majority of outstanding shares. In order to attempt to procure the vote necessary to effect the
Reverse Stock Split, on July 19, 2022, we issued one share of our Series B Preferred Stock to our Chief Executive Officer, Amro Albanna.
The terms of the Series B Preferred Stock are set forth in a Certificate of Designation of Series B Preferred Stock (the “Certificate
of Designation”), filed with the Secretary of State of the State of Delaware, and effective on July 19, 2022. The Series B Preferred
Stock does not have any voting rights except with respect to a reverse stock split proposal, including the Reverse Stock Split proposal
presented at the Special Meeting, or otherwise as required by law. With respect to the Reverse Stock Split proposal, the outstanding share
of Series B Preferred Stock is entitled to 250,000,000 votes on such proposal, which is referred to as supermajority voting; however the
votes by the holder of Series B Preferred Stock will be counted in the same “mirrored” proportion as the aggregate votes cast
by the holders of Common Stock who vote on this proposal. For example, if 50.5% of the shares of Common Stock voted in person or by proxy
at the Special Meeting are voted FOR Proposal 2, then the Company will count 50.5% of the votes cast (or votes) by the holder of the Series
B Preferred Stock as votes FOR Proposal 2. Holders of Common Stock and Series B Preferred Stock will vote on the Reverse Stock Split proposal
as a single class.
The Board of Directors determined
that it was in the best interests of the Company to provide for supermajority voting of the Series B Preferred Stock in order to obtain
sufficient votes for the Reverse Stock Split proposal and thereby to attempt to avoid delisting by Nasdaq of the Common Stock. Due to
the required proportional voting structure of the Series B Preferred Stock that mirrors the actual voting by holders of the Common Stock,
the supermajority voting will serve to reflect the voting preference of the holders of Common Stock that actually vote on the matter,
whether for or against the proposal, and therefore will not override the stated preference of the holders of Common Stock.
If the Reverse Stock Split
proposal is approved, the outstanding share of Series B Preferred Stock will be automatically redeemed upon the effectiveness of the amendment
to the Restated Certificate of Incorporation implementing the Reverse Stock Split.
In evaluating whether to seek
stockholder approval for the Reverse Stock Split, our Board took into consideration negative factors associated with reverse stock splits.
These factors include: the negative perception of reverse stock splits that investors, analysts and other stock market participants may
hold; the fact that the stock prices of some companies that have effected reverse stock splits have subsequently declined, sometimes significantly,
following their reverse stock splits; the possible adverse effect on liquidity that a reduced number of outstanding shares could cause;
and the costs associated with implementing a reverse stock split.
Even if our stockholders approve
the Reverse Stock Split, our Board reserves the right not to effect the Reverse Stock Split if in our Board’s opinion it would not
be in the best interests of the Company or our stockholders to effect such Reverse Stock Split.
Potential Effects of the Proposed Amendment
If our stockholders approve
the Reverse Stock Split and the board of directors effects it, the number of shares of common stock issued and outstanding will be reduced,
depending upon the ratio determined by the board of directors. The Reverse Stock Split will affect all holders of our common stock uniformly
and will not affect any stockholder’s percentage ownership interest in the Company, except that as described below in “Fractional
Shares,” record holders of common stock otherwise entitled to a fractional share as a result of the Reverse Stock Split because
they hold a number of shares not evenly divisible by the Reverse Stock Split ratio will automatically be entitled to receive an additional
fraction of a share of common stock to round up to the next whole share. In addition, the Reverse Stock Split will not affect any stockholder’s
proportionate voting power (subject to the treatment of fractional shares).
The Reverse Stock Split will
not change the terms of the common stock. Additionally, the Reverse Stock Split will have no effect on the number of common stock that
we are authorized to issue. After the Reverse Stock Split, the shares of common stock will have the same voting rights and rights to dividends
and distributions and will be identical in all other respects to the common stock now authorized. The common stock will remain fully paid
and non-assessable.
After the effective time of
the Reverse Stock Split, we will continue to be subject to the periodic reporting and other requirements of the Exchange Act.
Registered “Book-Entry” Holders
of Common Stock
Our registered holders of
common stock hold some or all of their shares electronically in book-entry form with the transfer agent. These stockholders do not have
stock certificates evidencing their ownership of the common stock. They are, however, provided with statements reflecting the number of
shares registered in their accounts.
Stockholders who hold shares
electronically in book-entry form with the transfer agent will not need to take action to receive evidence of their shares of post-Reverse
Stock Split common stock.
Holders of Certificated Shares of Common Stock
Stockholders holding shares
of our common stock in certificated form will be sent a transmittal letter by the transfer agent after the effective time of the Reverse
Stock Split. The letter of transmittal will contain instructions on how a stockholder should surrender his, her or its certificate(s)
representing shares of our common stock (the “Old Certificates”) to the transfer agent. Unless a stockholder specifically
requests a new paper certificate or holds restricted shares, upon the stockholder’s surrender of all of the stockholder’s
Old Certificates to the transfer agent, together with a properly completed and executed letter of transmittal, the transfer agent will
register the appropriate number of shares of post-Reverse Stock Split common stock electronically in book-entry form and provide the stockholder
with a statement reflecting the number of shares registered in the stockholder’s account. No stockholder will be required to pay
a transfer or other fee to exchange his, her or its Old Certificates. Until surrendered, we will deem outstanding Old Certificates held
by stockholders to be cancelled and only to represent the number of shares of post-Reverse Stock Split common stock to which these stockholders
are entitled. Any Old Certificates submitted for exchange, whether because of a sale, transfer or other disposition of stock, will automatically
be exchanged for appropriate number of shares of post-Reverse Stock Split common stock. If an Old Certificate has a restrictive legend
on its reverse side, a new certificate will be issued with the same restrictive legend on its reverse side.
STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S)
AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Fractional Shares
We will not issue fractional
shares in connection with the Reverse Stock Split. Instead, stockholders who otherwise would be entitled to receive fractional shares
because they hold a number of shares not evenly divisible by the Reverse Stock Split ratio will automatically be entitled to receive an
additional fraction of a share of common stock to round up to the next whole share. In any event, cash will not be paid for fractional
shares.
Effect of the Reverse Stock Split on Outstanding
Stock Options and Warrants
Based upon the Reverse Stock
Split ratio, proportionate adjustments are generally required to be made to the per share exercise price and the number of shares issuable
upon the exercise of all outstanding options and warrants. This would result in approximately the same aggregate price being required
to be paid under such options or warrants upon exercise, and approximately the same value of shares of common stock being delivered upon
such exercise immediately following the Reverse Stock Split as was the case immediately preceding the Reverse Stock Split. The number
of shares reserved for issuance pursuant to these securities will be reduced proportionately based upon the Reverse Stock Split ratio.
Accounting Matters
The proposed amendment to
our Certificate of Incorporation will not affect the par value of our common stock. As a result, at the effective time of the Reverse
Stock Split, the stated capital on our balance sheet attributable to the common stock will be reduced in the same proportion as the Reverse
Stock Split ratio, and the additional paid-in capital account will be credited with the amount by which the stated capital is reduced.
The per share net income or loss will be restated for prior periods to conform to the post-Reverse Stock Split presentation.
Certain Federal Income Tax Consequences of
the Reverse Stock Split
The following summary describes,
as of the date of this proxy statement, certain U.S. federal income tax consequences of the Reverse Stock Split to holders of our common
stock. This summary addresses the tax consequences only to a U.S. holder, which is a beneficial owner of our common stock that is either:
| ● | an individual citizen or resident
of the United States; |
| ● | a corporation, or other entity
taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any
state thereof or the District of Columbia; |
| ● | an estate, the income of which
is subject to U.S. federal income taxation regardless of its source; or |
| ● | a trust, if: (i) a court within
the United States is able to exercise primary jurisdiction over its administration and one or more U.S. persons has the authority to
control all of its substantial decisions or (ii) it was in existence before August 20, 1996 and a valid election is in place under applicable
Treasury regulations to treat such trust as a U.S. person for U.S. federal income tax purposes |
This summary is based on the
provisions of the Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury regulations, administrative rulings
and judicial authority, all as in effect as of the date of this proxy statement. Subsequent developments in U.S. federal income tax law,
including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal
income tax consequences of the Reverse Stock Split.
This summary does not address
all of the tax consequences that may be relevant to any particular investor, including tax considerations that arise from rules of general
application to all taxpayers or to certain classes of taxpayers or that are generally assumed to be known by investors. This summary also
does not address the tax consequences to (i) persons that may be subject to special treatment under U.S. federal income tax law, such
as banks, insurance companies, thrift institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations,
U.S. expatriates, persons subject to the alternative minimum tax, persons whose functional currency is not the U.S. dollar, partnerships
or other pass-through entities, traders in securities that elect to mark to market and dealers in securities or currencies, (ii) persons
that hold our common stock as part of a position in a “straddle” or as part of a “hedging transaction,” “conversion
transaction” or other integrated investment transaction for federal income tax purposes or (iii) persons that do not hold our common
stock as “capital assets” (generally, property held for investment). This summary does not address backup withholding and
information reporting. This summary does not address U.S. holders who beneficially own common stock through a “foreign financial
institution” (as defined in Code Section 1471(d)(4)) or certain other non-U.S. entities specified in Code Section 1472. This summary
does not address tax considerations arising under any state, local or foreign laws, or under federal estate or gift tax laws.
If a partnership (or other
entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our common stock, the U.S. federal
income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership.
Partnerships that hold our common stock, and partners in such partnerships, should consult their own tax advisors regarding the U.S. federal
income tax consequences of the Reverse Stock Split.
Each holder should consult
his, her or its own tax advisors concerning the particular U.S. federal tax consequences of the Reverse Stock Split, as well as the consequences
arising under the laws of any other taxing jurisdiction, including any foreign, state, or local income tax consequences.
General Tax Treatment of the Reverse Stock
Split
The Reverse Stock Split is
intended to qualify as a “reorganization” under Section 368 of the Code that should constitute a “recapitalization”
for U.S. federal income tax purposes. Assuming the Reverse Stock Split qualifies as a reorganization, a U.S. holder generally will not
recognize gain or loss upon the exchange of our ordinary shares for a lesser number of ordinary shares, based upon the Reverse Stock Split
ratio. A U.S. holder’s aggregate tax basis in the lesser number of ordinary shares received in the Reverse Stock Split will be the
same such U.S. holder’s aggregate tax basis in the shares of our common stock that such U.S. holder owned immediately prior to the
Reverse Stock Split. The holding period for the ordinary shares received in the Reverse Stock Split will include the period during which
a U.S. holder held the shares of our common stock that were surrendered in the Reverse Stock Split. The United States Treasury regulations
provide detailed rules for allocating the tax basis and holding period of the shares of our common stock surrendered to the shares of
our common stock received pursuant to the Reverse Stock Split. U.S. holders of shares of our common stock acquired on different dates
and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
THE FOREGOING IS INTENDED
ONLY AS A SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT, AND DOES NOT CONSTITUTE A TAX OPINION. EACH HOLDER
OF OUR COMMON SHARES SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT TO THEM AND FOR REFERENCE
TO APPLICABLE PROVISIONS OF THE CODE.
Interests of Officers and Directors in this
Proposal
Our officers and directors
do not have any substantial interest, direct or indirect, in in this proposal.
Required Vote of Stockholders
The affirmative vote of the
holders of a majority of the outstanding shares of our common stock is required to approve this proposal.
Board Recommendation
The board of directors unanimously
recommends a vote “FOR” Proposal 2.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth
certain information regarding beneficial ownership of shares of our common stock as of Record Date, based on shares
issued and outstanding by (i) each person known to beneficially own more than 5% of our outstanding common stock, (ii) each of our directors,
(iii) our executive officers and (iv) all directors and executive officers as a group. Shares are beneficially owned when an individual
has voting and/or investment power over the shares or could obtain voting and/or investment power over the shares within 60 days of the
Record Date. Except as otherwise indicated, the persons named in the table have sole voting and investment power with respect to all shares
beneficially owned, subject to community property laws, where applicable. Unless otherwise indicated, the address of each beneficial owner
listed below is c/o Aditxt, Inc., 737 N. Fifth Street, Suite 200, Richmond, VA 23219.
| |
Number
of
shares of
Common Stock
Beneficially
Owned | | |
Percentage | |
Directors and Officers: | |
| | |
| |
Shahrokh Shabahang,
D.D.S., MS, Ph.D. (1) | |
| 1,404,534 | | |
| 2.52 | % |
Amro Albanna (2) | |
| 1,393,565 | | |
| 2.47 | % |
Corinne Pankovcin (3) | |
| 425,470 | | |
| * | % |
Rowena Albanna (4) | |
| 462,915 | | |
| * | % |
Brian Brady (5) | |
| 34,000 | | |
| * | % |
Namvar Kiaie (6) | |
| 24,833 | | |
| * | % |
Jeffrey Runge, M.D. (7) | |
| 24,000 | | |
| * | % |
Thomas J. Farley (8) | |
| 155,000 | | |
| * | % |
Matthew
Shatzkes (9) | |
| 273,750 | | |
| * | % |
All
directors and executive officers as a group (9 persons) | |
| 4,198,067 | | |
| 7.51 | % |
* |
less than 1% |
|
|
(1) |
Includes (i) 1,015,006
beneficially owned by Shabahang-Hatami Family Trust, of which Shahrokh Shabahang, D.D.S., MS, Ph.D. is the Trustee; (ii) warrants
to purchase 220,153 shares, including 47,222 Series A Warrants issued as part of the conversion of outstanding accrued compensation
through March 31, 2020, and 172,931 warrants beneficially owned by the Shabahang-Hatami Family Trust; (iii) 96,250 shares issuable
pursuant to options that are fully vested or will vest within 60 days of July 19, 2022; (iv) 41,250 shares directly owned by Mr.
Shabahang; and (v) and 31,875 restricted stock units that will vest within 60 days of July 19, 2022 |
|
|
(2) |
Includes (i) 600,000 shares
issuable pursuant to options that are fully vested or will vest within 60 days of July 19, 2022; (ii) 400,000 shares beneficially
owned by the Albanna Family Trust, of which Mr. Albanna is the Trustee; (iii) 355,510 shares directly owned by Mr. Albanna; and (iv)
38,055 Series A Warrants issued as part of the conversion of outstanding accrued compensation through March 31, 2020. Mr. Albanna
may be deemed to beneficially own the securities held by his wife Rowena Albanna, the Company’s Chief Operating Officer. In
addition, Mr. Albanna purchased 1 share of Series B Preferred Stock on July 19, 2022. Holders of the Series B Preferred Stock are
only permitted to vote with the holders of our common stock on proposals related to the Reverse Stock Split and are required to vote
their shares of Series B Preferred Stock in a manner that “mirrors” the proportions of “For” and
“Against” votes cast by the holders of the Company’s common stock are voted on the Reverse Stock Split proposal
(excluding, for the avoidance of doubt, any shares of common stock that are not voted). |
|
|
(3) |
Includes (i) 169,220 shares
held directly by Ms. Pankovcin; and (ii) 256,250 shares issuable pursuant to options that are fully vested or will vest
within 60 days of July 19, 2022. |
|
|
(4) |
Includes (i) 108,610 shares
held directly by Ms. Albanna; (ii) 31,250 restricted stock units that will vest within 60 days of July 19, 2022; (iii) 287,500 shares
issuable pursuant to options that are fully vested or will vest within 60 days of July 19, 2022; and (iv) 35,555 Series
A Warrants issued as part of the conversion of outstanding accrued compensation through March 31, 2020. Ms. Albanna may be deemed
to beneficially own the securities held by her husband Amro Albanna, the Company’s Chief Executive Officer. |
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(5) |
Includes (i) 24,000 shares
held directly by Mr. Brady; and (ii) 10,000 shares issuable pursuant to options that have vested or will vest within 60 days of July
19, 2022. |
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(6) |
Includes (i) 13,722 shares
held directly by Mr. Kiaie; (ii) 1,111 shares issuable upon exercise of Series A Warrants; and (iii) 10,000 shares
issuable pursuant to options that have vested or will vest within 60 days of July 19, 2022. |
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(7) |
Includes (i) 2,500 shares
held by Biologue, Inc., over which Dr. Runge has voting and dispositive control; (ii) 11,500 shares held directly
by Dr. Runge; and (iii) 10,000 shares issuable pursuant to options and restricted stock units that have vested or
will vest within 60 days of July 19, 2022. |
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(8) |
Includes (i) 47,500 shares
held directly by Mr. Farley; (ii) 55,000 restricted stock units that will vest within 60 days of July 19, 2022; and
(iii) 52,500 shares issuable pursuant to options that have vested or will vest within 60 days of July 19, 2022. |
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(9) |
Includes (i) 232,500 shares
held directly by Mr. Shatzkes; and (ii) 41,250 restricted stock units that will vest within 60 days of July 19, 2022. |
OTHER MATTERS
The board of directors knows
of no other business, which will be presented to the Special Meeting. If any other business is properly brought before the Special Meeting,
proxies will be voted in accordance with the judgment of the persons voting the proxies. The proxies also have discretionary authority
to vote to adjourn the Special Meeting, including for the purpose of soliciting votes in accordance with our board of director’s
recommendations.
We will bear the cost of soliciting
proxies in the accompanying form. In addition to the use of the mails, proxies may also be solicited by our directors, officers or other
employees, personally or by telephone, facsimile or email, none of whom will be compensated separately for these solicitation activities.
We have engaged Kingsdale Advisors to assist in the solicitation of proxies. We will pay a fee of approximately plus reasonable out-of-pocket
charges.
If you do not plan to attend
the Special Meeting, in order that your shares may be represented and in order to assure the required quorum, please sign, date and return
your proxy promptly. In the event you are able to attend the Special Meeting virtually, at your request, we will cancel your previously
submitted proxy.
HOUSEHOLDING
The SEC has adopted rules
that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and other Special Meeting
materials with respect to two or more stockholders sharing the same address by delivering a proxy statement or other Special Meeting materials
addressed to those stockholders. This process, which is commonly referred to as householding, potentially provides extra convenience for
stockholders and cost savings for companies. Stockholders who participate in householding will continue to be able to access and receive
separate proxy cards.
If you share an address with
another stockholder and have received multiple copies of our proxy materials, you may write or call us at the address and phone number
below to request delivery of a single copy of the notice and, if applicable, other proxy materials in the future. We undertake to deliver
promptly upon written or oral request a separate copy of the proxy materials, as requested, to a stockholder at a shared address to which
a single copy of the proxy materials was delivered. If you hold stock as a record stockholder and prefer to receive separate copies of
our proxy materials either now or in the future, please contact us at 737 N. Fifth Street, Suite 200, Richmond, VA 23219, Attn: Corporate
Secretary. If your stock is held through a brokerage firm or bank and you prefer to receive separate copies of our proxy materials either
now or in the future, please contact your brokerage firm or bank.
ANNUAL REPORT AND QUARTERLY REPORT
Copies of our Annual Report
on Form 10-K for the fiscal year ended December 31, 2021 and our Quarterly Report on Form 10-Q for the period ended March 31, 2022, may
be obtained without charge by writing to the Company’s Secretary, Aditxt, Inc., 737 N. Fifth Street, Suite 200, Richmond, VA 23219.
The Notice, our Annual Report on Form 10-K and this proxy statement are also available online at : www.proxyvote.com.
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BY ORDER OF THE BOARD OF DIRECTORS |
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/S/ Amro Albanna |
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Amro Albanna |
, 2022 |
Chief Executive Officer and
Chairman of the Board of Directors |
PROXY CARD
ADITXT, INC.
PROXY FOR SPECIAL MEETING TO BE HELD ON AUGUST
12, 2022
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, Amro Albanna
and Corinne Pankovcin, as proxies with full power of substitution, to represent and to vote all the shares of common stock of Aditxt,
Inc. (the “Company”), which the undersigned would be entitled to vote, at the Company’s Special Meeting of Stockholders
to be held on August 12, 2022 and at any adjournments thereof, subject to the directions indicated on this Proxy Card.
In their discretion, the proxy is authorized to
vote upon any other matter that may properly come before the meeting or any adjournments thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE, BUT IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED BY THE PROXY HOLDERS FOR THE ELECTION OF ALL NOMINEES AND
FOR THE PROPOSALS LISTED ON THE REVERSE SIDE AND IN THEIR DISCRETION ON ANY OTHER MATTERS THAT ARE PROPERLY PRESENTED AT THE MEETING OR
ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
IMPORTANT — This Proxy must be signed and
dated below.
The Special Meeting of Stockholders of Aditxt,
Inc. will be held on August 12, 2022 at 12:00 p.m. Eastern Time at www.virtualshareholdermeeting.com/ADTX2022SM.
THIS IS YOUR PROXY
YOUR VOTE IS IMPORTANT!
Dear Stockholder:
We cordially invite you to attend the Special
Meeting of Stockholders of Aditxt, Inc. to be held virtually, on August 12, 2022 beginning at 12:00 p.m. Eastern Time.
Please read the proxy statement which describes
the proposals and presents other important information, and complete, sign and return your proxy promptly in the enclosed envelope.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSALS 1 AND 2.
1. Proposal to amend the Company’s amended and restated certificate of incorporation to increase the number of shares of authorized common stock from 100,000,000 to 150,000,000. |
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FOR
☐ |
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AGAINST
☐ |
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ABSTAIN
☐ |
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2. Proposal to amend the Company’s amended and restated certificate of incorporation to effect the reverse stock split. |
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FOR
☐ |
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AGAINST
☐ |
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ABSTAIN
☐ |
NOTE: Such other business as may properly
come before the meeting or any adjournment thereof will be voted on by the proxy holders in their discretion.
Please indicate if you plan to attend this meeting:
☐ Yes ☐
No
Important: Please sign exactly as name appears
on this proxy. When signing as attorney, executor, trustee, guardian, corporate officer, etc., please indicate full title.
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Dated:________________, 2022 |
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Signature
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Signature |
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(Joint Owners) |
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Name (printed)
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APPENDIX A
CERTIFICATE OF AMENDMENT
to the
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
of
ADITXT, INC.
ADITXT, INC., a corporation
organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify
as follows:
FIRST: The name of the Corporation
is Aditxt, Inc. The Certificate of Incorporation was filed with the Secretary of State of the State of Delaware (the “Secretary
of State”) on September 28, 2017 and has been amended and restated by the Amended and Restated Certificate of Incorporation filed
with the Secretary of State on February 7, 2018 and further amended by the Certificate of Amendment dated May 24, 2021 (the “Certificate
of Incorporation”).
SECOND: ARTICLE IV, SECTION
4.1 of the Corporation’s Certificate of Incorporation shall be amended and restated in its entirety to read as follows:
4.1 Authorized
Capital Stock. The total number of shares of all classes of capital stock which the Corporation is authorized to issue is 153,000,000
shares, consisting of 150,000,000 shares of common stock, par value $0.001 per share (the “Common Stock”), 3,000,000 shares
of preferred stock, par value $0.001 per share (the “Preferred Stock”).
THIRD: The stockholders of
the Corporation have duly approved the foregoing amendment in accordance with the provisions of Section 242 of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation
has caused this Certificate of Amendment to be duly adopted and executed in its corporate name and on its behalf by its duly authorized
officer as of the day of , 2022.
ADITXT, INC. |
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By: |
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Name: |
Amro Albanna |
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Title: |
Chief Executive Officer |
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APPENDIX B
CERTIFICATE OF AMENDMENT
to the
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
of
ADITXT, INC.
ADITXT, INC., a corporation
organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify
as follows:
FIRST: The name of the Corporation
is Aditxt, Inc. The Certificate of Incorporation was filed with the Secretary of State of the State of Delaware (the “Secretary
of State”) on September 28, 2017, as amended ( the “Certificate of Incorporation”).
SECOND: ARTICLE IV, SECTION
I of the Corporation’s Certificate of Incorporation shall be amended by inserting Subsection “(d)” at the end of such
section which shall read as follows:
C. Reverse Stock Split.
Upon the filing (the “Effective Time”) of this Certificate of Amendment pursuant to the Section 242 of the General Corporation
Law of the State of Delaware, each ( ) shares of the Corporation’s Common Stock, issued and outstanding immediately prior to the
Effective Time (the “Old Common Stock”) shall automatically without further action on the part of the Corporation or any holder
of Old Common Stock, be reclassified, combined, converted and changed into ( ) fully paid and nonassessable shares of common stock, par
value of $0.001 per share (the “New Common Stock”), subject to the treatment of fractional share interests as described
below (the “Reverse Stock Split”). The conversion of the Old Common Stock into New Common Stock will be deemed to occur at
the Effective Time. From and after the Effective Time, certificates representing the Old Common Stock shall represent the number of shares
of New Common Stock into which such Old Common Stock shall have been converted pursuant to this Certificate of Amendment. Holders who
otherwise would be entitled to receive fractional share interests of New Common Stock upon the effectiveness of the reverse stock split
shall be entitled to receive a whole share of New Common Stock in lieu of any fractional share created as a result of such Reverse Stock
Split.
THIRD: The stockholders of
the Corporation have duly approved the foregoing amendment in accordance with the provisions of Section 242 of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation
has caused this Certificate of Amendment to be duly adopted and executed in its corporate name and on its behalf by its duly authorized
officer as of the day of , 2022.
ADITXT, INC. |
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By: |
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Name: |
Amro Albanna |
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Title: |
Chief Executive Officer |
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