PROPOSAL 2
TO APPROVE, AN AMENDMENT TO THE COMPANY’S ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF CLASS A COMMON STOCK FROM 150,000,000 TO 250,000,000
(Item No. 2 on Proxy Card)
Our board of directors has adopted resolutions approving, declaring advisable and recommending that our shareholders approve an amendment to the Company’s articles of incorporation, as amended (“Articles of Incorporation”), to increase the authorized number of shares of Class A common stock from 150,000,000 to 250,000,000, subject to shareholder approval at the 2019 annual meeting.
Overview of Proposal
Our Articles of Incorporation currently provides that the total number of shares of capital stock which we have authority to issue is 250,000,000 shares, consisting of (i) 150,000,000 shares of Class A common stock, (ii) 50,000,000 shares of Class B common stock and, (iii) 50,000,000 shares of preferred stock.
We propose to increase the authorized number of shares of Class A common stock from 150,000,000 shares to 250,000,000. In addition, to effect this change, the total number of shares of capital stock authorized in the Articles of Incorporation would increase from 250,000,000 to 350,000,000.
On April 25, 2019, our board of directors approved by unanimous written consent to recommend to the shareholders that the Articles of Incorporation be amended to increase the number of shares of Class A common stock authorized for issuance by 100,000,000 and accordingly increase the total number of shares of capital stock authorized for issuance by 100,000,000 (the “Amendment”). Under Colorado corporate law, we are required to obtain approval from shareholders to amend the Articles of Incorporation to increase the number of shares of Class A common stock authorized for issuance. If the Amendment is approved by the shareholders at the annual meeting, the Amendment will be effective upon the filing of articles of amendment setting forth such amendment with the Secretary of State of the State of Colorado (or at such later time as may be specified therein), which filing is expected to occur promptly after the annual meeting. The full text of the form of the Amendment, which would replace Section A of Article IV of the Articles of Incorporation in its entirety, is attached as Appendix A to this proxy statement.
Text of the Amendment
We propose to amend Section A of Article IV of the Articles of Incorporation so that it would read in its entirety as follows:
“A.
Authorized Capital Stock
. The aggregate number of shares that the Corporation shall have authority to issue is three hundred fifty million (350,000,000), consisting of two hundred fifty million (250,000,000) shares of Class A Common Stock, par value $0.0001 per share, fifty million (50,000,000) shares of Class B Common Stock, par value $0.0001 per share, and fifty million (50,000,000) shares of Preferred Stock, par value $0.0001 per share (the “Preferred Stock”). The Class A Common Stock and Class B Common Stock are sometimes referred to in these Articles as the “Common Stock”. References to these “Articles” shall be understood to mean these Articles of Incorporation as set forth herein and as amended from time to time hereafter in accordance with the provisions of these Articles and of applicable law.”
Why we are seeking shareholder approval
Our Articles of Incorporation currently authorize us to issue up to 250,000,000 shares of capital stock, consisting of (i) 150,000,000 shares of Class A common stock, (ii) 50,000,000 shares of Class B common stock and, (iii) 50,000,000 shares of preferred stock. As of May 3, 2019, we had a total of approximately 110,129,125 shares of Class A common stock outstanding, approximately 27,463,719 additional shares of Class A common stock reserved for issuance pursuant to our outstanding warrants and approximately 1,300,000 additional shares of Class A common stock reserved for issuance pursuant to our 2018 Long-Term Incentive Plan. As a result, as of May 3, 2019, we had approximately 11,107,156 shares of Class A common stock available for future issuance in excess of the outstanding Class A common stock, our future obligations to issue Class A common stock, and other shares of Class A common stock that we have reserved for our 2018 Long-Term Incentive Plan.