Form DEF 14A Riot Blockchain, Inc. Due: November 17
AUTHORIZATION OF CHANGE BY RIOT BLOCKCHAIN, INC. BY-LAWS
Background
On 21 September 2022, our board unanimously approved that the company’s current articles of association, which have been amended to date, be amended in the form attached hereto as Appendix B, subject to shareholder approval. The proposed amendment is to increase the number of shares of common stock authorized for issuance hereunder from 170,000,000 shares to 340,000,000 shares. The additional ordinary shares authorized for issuance by this proposal will be part of the existing class of ordinary shares and, if and when issued, will have the same rights and privileges as the ordinary shares now issued and outstanding. The amendment to the current articles of association will not change the total number of authorized shares in preference shares. The text of the proposed amendment is set out in Appendix B. We encourage you to read Appendix B in its entirety.
In determining the size of the stock increase under the Amended Plan, the Board worked with management and independent advisors to evaluate a number of factors, including our corporate strategy, the potential need to raise additional capital to finance future expansions of our business, including potential business transactions , our compensation philosophy of broad-based employee eligibility for stock incentive awards, our recent and projected stock use and the total potential dilution. The board of directors believes that amending the bylaws to authorize an additional 170,000,000 shares is appropriate and in the best interests of our shareholders and the company given the capital intensive nature of our business operations, future business expansion projects, the highly competitive environment in which we compete for talent, the recent volatility in the capital markets and its impact on our share price, and our projected share exercise. However, it is challenging to estimate our future equity requirements, particularly under current market conditions, as our estimates are based on our current internal modeling and depend on a number of factors that are difficult to predict or beyond our control, including market conditions, competition for talent, our future financial and operating performance, our hiring needs, the amount of loss of outstanding awards and the future price of our common stock.
Why we are proposing the amended articles
Our board of directors has determined that it would be in the company’s best interest to increase the number of authorized shares to provide the company with the flexibility to pursue any corporate opportunity involving our shares, which may include, among other things, strategic acquisitions. , public or private offerings of our shares, and financing opportunities for future expansions of our business. In addition, we operate in a highly competitive talent market and our success depends in part on our continued ability to attract, retain and motivate highly qualified and skilled employees, particularly management, which is of particular concern in the relatively small Bitcoin mining and data center development communities . If the amendment to the bylaws is not approved by our stockholders, the lack of unissued and unreserved authorized shares of common stock to provide future financing and stock incentive opportunities could adversely affect our ability to achieve these strategic corporate objectives and to retain employees. In short, if our stockholders do not approve this proposal, we may not be able to access the capital markets, make strategic acquisitions, attract, retain and motivate employees and pursue other business opportunities that are integral to our growth and success. Each additional authorized share will have the same rights and privileges as each share of our currently authorized common stock.
As of our record date, 167,136,619 shares of common stock, with no par value, were outstanding, leaving 2,863,381 shares of common stock with no par value available for issuance.
Currently, except for our on-the-market offering disclosed on Form 8-K dated March 31, 2022 (SEC File Number 001-33675) and prospectus dated March 31, 2022 (SEC File Number 333-259212), and that we are Ongoing to assess potential business opportunities, the board has no immediate plans, arrangements or understandings to issue additional shares. However, the Company wishes to have the shares available to provide additional future flexibility to use our common stock for business or financial purposes in the future, as well as to have sufficient shares to provide appropriate equity incentives to attract and retain top talent. Issuance of additional shares of common stock in the future will have the effect of diluting earnings per share, voting power and common shareholders. It may also have the effect of making it more difficult for a third party to gain control of our company. The shares will be available for issuance by our board of directors for corporate purposes, including, but not limited to, acquisitions, financings and equity compensation plans. Our management believes the increase in
