the conversion of the New Notes, which when combined with shares of common stock issued by exercised Warrants, exceeds 20% of our issued and outstanding shares of common stock as of the date we
issued the New Notes.
If stockholders approve this share issuance proposal, current stockholders may experience significant dilution of
their current equity ownership in the Company. At the current conversion price of $1.46 for such voluntary conversions under the New Notes, the $118,870,000 in principal amount of New Notes would be convertible into 81,417,807 shares of common
stock. In addition, if PIK Interest is paid on the New Notes through the stated maturity of the New Notes, additional New Notes in the aggregate principal amount of approximately $103,771,281 would be issued, which would represent an additional
71,076,219 shares of common stock. In total, based on the assumptions above, the Company could issue 152,494,026 shares of common stock pursuant to the New Notes, which represents approximately 39.54% dilution to stockholders based on
233,210,797 shares of common stock outstanding on December 14, 2023.
The issuance of shares of common stock pursuant to the New Notes
will not affect the rights of holders of outstanding common stock, but such issuances will have a dilutive effect on the existing stockholders, including on the voting power and economic rights of the existing stockholders, and may result in a
decline in the price of the Companys common stock or in greater price volatility.
Effect on Current Stockholders if this Share Issuance Proposal
is not Approved
The Company is not seeking the approval of its stockholders to authorize its entry into the New Notes, and the related
documents, or to issue the New Notes, as the Company has already done so and such documents already are binding obligations of the Company. The failure of the Companys stockholders to approve this proposal will not negate the existing terms of
the documents, which will remain a binding obligation of the Company.
Repayment of the New Notes in Cash
If the stockholders do not approve this proposal, the Company will be able to settle its conversion obligations under the New Notes solely in
cash and will be unable to settle its conversion obligations by payment or delivery of shares of common stock or a combination of cash and shares of common stock. As a result, the Company may not be able to satisfy all conversions under the New
Notes. In addition, the Company will be required to repay its obligations under the New Notes in cash, rather than by the payment of shares of common stock or a combination. The Companys ability to successfully implement its business plans and
ultimately generate value for its stockholders is dependent upon its ability to raise capital and satisfy its ongoing business needs. If the Company is required to repay its obligations under the New Notes in cash rather than common stock, the
Company may not have the capital necessary to fully satisfy its ongoing business needs, the effect of which would adversely impact future operating results, and result in a delay in or modification or abandonment of its business plans. Additionally,
it may be necessary for the Company to acquire additional financing in order to repay the obligations under the New Notes in cash, which financing may not be permitted under
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