AMENDMENT TO PROXY STATEMENT
The disclosure under the heading Proposal 2 as set forth on pages 18 and 19 of the Proxy Statement is amended and restated in its entirety as follows:
PROPOSAL 2
APPROVAL OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO DECREASE, IMMEDIATELY FOLLOWING AND CONDITIONED UPON THE EFFECTIVENESS OF THE REVERSE STOCK SPLIT, THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 275,000,000 TO 22,000,000
The Board of Directors has approved and is requesting stockholder approval to amend the Certificate of Incorporation to decrease, immediately following and conditioned upon the effectiveness of the Reverse Stock Split, the number of authorized shares of Common Stock from 275,000,000 to 22,000,000.
This amendment is contingent upon, and will be implemented only if, the Reverse Stock Split Proposal is approved by the stockholders and the Reverse Stock Split is effected by the Board.
In the event that the Authorized Share Decrease Proposal is approved but the Reverse Stock Split Proposal is not approved, the Board will abandon Proposal 2 and the proposed Authorized Share Decrease will not be implemented. If our stockholders approve the Reverse Stock Split Proposal and the Board chooses to effect it and the Authorized Share Decrease Proposal is approved, the Board would decrease the number of authorized shares of Common Stock by filing the amendment to the Certificate of Incorporation, which is set forth in Appendix B to this Proxy Statement.
Only holders of shares of our Common Stock are entitled to vote on the Authorized Share Decrease Proposal. Holders of shares of Preferred Stock do not have any voting rights with regard to the Authorized Share Decrease Proposal.
Reason for the Authorized Share Decrease
As a matter of Delaware law, implementation of the Reverse Stock Split does not require a change in the total number of shares of Common Stock authorized under the Certificate of Incorporation. If the Reverse Stock Split Proposal is approved by the stockholders and the Reverse Stock Split is implemented by the Board of Directors, the Board of Directors believes, based on current information, that we will need fewer authorized shares of Common Stock to meet our projected capital stock needs for capital-raising transactions, issuance of equity-based compensation and, to the extent opportunities may arise in the future, strategic transactions that may involve our issuance of stock-based consideration.
The proposed Authorized Share Decrease is also intended to conform to the requirements of certain entities that make recommendations to stockholders regarding proposals submitted by iBio and to ensure that iBio does not have, following implementation of the Reverse Stock Split, what some stockholders might view as an unreasonably high number of authorized but unissued shares of Common Stock. In the event that we need to increase our authorized shares of Common Stock in the future, we may, subject to stockholder approval, seek to amend the Certificate of Incorporation to increase the number of authorized shares of Common Stock. In addition, the Board of Directors believes that the reduction in the number of authorized shares of Common Stock may also reduce certain of our costs, such as annual franchise taxes paid to the State of Delaware.
The net effect of Proposals 1 and 2 will be that the number of shares of Common Stock available for issuance will be less than the number of shares of Common Stock available for issuance today. However, the Board of Directors believes that the Authorized Share Decrease will appropriately balance the needs for available shares for capital raising, strategic transactions, and equity incentive awards with the desire to avoid having an unreasonably high number of authorized shares. The Board of Directors believes that the number of available shares is appropriate to provide for our long-term needs and is in line with most similarly situated companies.
Effects of the Amendment
The Authorized Share Decrease (if it is approved by our stockholders at the Special Meeting) will not change any rights of any holder of Common Stock. Voting rights of the holders of the issued shares of Common Stock will remain the same.
The proposed amendment to the Certificate of Incorporation would decrease the total number of authorized shares of the Common Stock from 275,000,000 authorized shares of Common Stock to 22,000,000 authorized shares of Common Stock.
In implementing the Reverse Stock Split and the Authorized Share Decrease, the Board of Directors intends to provide for an appropriate number of authorized shares of Common Stock available for future issuance. However, the proposed Authorized Share Decrease could have adverse effects. As compared to if we undertook the Reverse Stock Split alone, we will have less flexibility to issue shares of Common Stock, including in connection with a potential merger or acquisition, other strategic transaction or follow-on offering if the