Authorized but Unissued Shares; Potential Anti-Takeover Effects. Our Certificate
of Incorporation presently authorizes 120,000,000 shares of common stock and 3,000,000 shares of blank check preferred stock. The Reverse Stock Split would not change the number of authorized shares of the common stock or blank check preferred stock
as designated. Therefore, because the number of issued and outstanding shares of common stock would decrease, the number of shares of common stock remaining available for issuance by us in the future would increase.
Such additional shares would be available for issuance from time to time for corporate purposes such as issuances of common stock in
connection with capital-raising transactions and acquisitions of companies or other assets, as well as for issuance upon conversion or exercise of securities such as convertible preferred stock, convertible debt, warrants or options convertible into
or exercisable for common stock. We believe that the availability of the additional shares of common stock will provide us with the flexibility to meet business needs as they arise, to take advantage of favorable opportunities and to respond
effectively in a changing corporate environment. For example, we may elect to issue shares of common stock to raise equity capital, to make acquisitions through the use of stock, to establish strategic relationships with other companies, to adopt
additional employee benefit plans or reserve additional shares of common stock for issuance under such plans, where the Board determines it advisable to do so, without the necessity of soliciting further stockholder approval, subject to applicable
stockholder vote requirements under Delaware law and Nasdaq rules. If we issue additional shares of common stock for any of these purposes, the aggregate ownership interest of our current stockholders, and the interest of each such existing
stockholder, would be diluted, possibly substantially.
The additional shares of our common stock that would become available
for issuance upon an effective Reverse Stock Split could also be used by us to oppose a hostile takeover attempt or delay or prevent a change of control or changes in or removal of our management, including any transaction that may be favored by a
majority of our stockholders or in which our stockholders might otherwise receive a premium for their shares of common stock over then-current market prices or benefit in some other manner. Although the increased proportion of authorized but
unissued shares of common stock to issued shares of common stock could, under certain circumstances, have an anti-takeover effect, the Reverse Stock Split is not being proposed in order to respond to a hostile takeover attempt or to an attempt to
obtain control of the Company.
Fractional Shares
We will not issue fractional certificates for post-Reverse Stock Split shares of common stock in connection with the Reverse Stock Split. To the extent any holders of
pre-Reverse Stock Split shares of common stock are entitled to fractional shares of common stock as a result of the Reverse Stock Split, the Company will issue an additional share to all holders of fractional
shares of common stock.
No Dissenters Rights
Under Delaware law, our stockholders would not be entitled to dissenters rights or rights of appraisal in connection with the implementation of the Reverse Stock Split, and we will not independently
provide our stockholders with any such rights.
Certain United States Federal Income Tax Consequences
The following is a summary of certain U.S. federal income tax consequences of the Reverse Stock Split that are applicable to United States
holders (as defined below). It does not address any state, local or non-U.S. income or other tax consequences, or any U.S. federal estate, gift, or other non-income tax
consequences. The discussion is based on the Internal Revenue Code of 1986, as amended (the Internal Revenue Code), Treasury Regulations promulgated under the Internal Revenue Code, published rulings and procedures of the
Internal Revenue Service, and court decisions, all as of the date hereof. These authorities are subject to change or differing interpretation, possibly on a retroactive basis. We have not sought and will not seek an opinion of counsel or a ruling
from the Internal Revenue Service regarding the U.S. federal income tax consequences of the Reverse Stock Split.
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