DEF 14C: The Crypto Company to Increase Authorized Shares and Create New Preferred Stock Class

The Crypto Company's majority stockholders have approved an amendment to increase authorized common shares to 19 billion and create a new Series A Preferred Stock class.

Summary

• The Crypto Company is providing notice to its stockholders regarding actions approved by written consent of majority stockholders holding approximately 50.14% of the company's outstanding common stock.
• The approved actions include amending the Articles of Incorporation to increase the number of authorized common shares from 2 billion to 19 billion and creating a new class of Series A Preferred Stock consisting of 10 authorized shares.
• The Board of Directors unanimously approved these actions on July 16, 2024, and recommended them for stockholder approval.
• The company's existing common stockholders will retain their existing common stock.
• The actions will not become effective until at least 20 calendar days after the information statement is sent to stockholders of record as of July 18, 2024.
• The Board retains the discretion to implement or abandon the actions.
• As of July 18, 2024, the company had 1,981,881,172 shares of common stock outstanding.

Sentiment

Score: 6

Explanation: The document is primarily informational, detailing a corporate action. The sentiment is neutral, with a slight positive leaning due to the increased flexibility the company anticipates gaining.

Positives

• The company believes having sufficient authorized, but unissued and uncommitted shares of common stock will afford the company greater flexibility.
• The Board believes that the availability of additional authorized shares of common stock will provide the company with the necessary flexibility to issue common stock for a variety of general corporate purposes.
• The company also believes that creation of a new class of stock designated as Series A Preferred Stock will afford the company greater flexibility in voting on the items requiring stockholder approval.

Negatives

• The issuance of additional shares of common stock authorized by the Charter Amendment or the shares of Series A Preferred Stock authorized by the Charter Amendment may occur at times or under circumstances so as to have a dilutive effect on earnings per share, book value per share or the percentage voting or ownership interest of our current stockholders.

Risks

• The company expects to continue to explore and seek to identify future transactions and funding options that likely would, if effected, require the company to additional equity securities or other securities that may be exercised for or converted into shares of company common stock.
• The additional shares could be issued to dilute the stock ownership or voting rights of persons seeking to obtain control of the company or could be issued to persons allied with the Board or management and, thereby, have the effect of making it more difficult to remove directors or members of management by diluting the stock ownership or voting rights of persons seeking to effect such a removal.
• The company now anticipates that certain of the loans will not be repaid in cash and that certain of its lenders will ultimately convert all or a portion of the principal and interest due under the terms of their respective loans into shares of company common stock.

Future Outlook

The company expects to continue to explore and seek to identify future transactions and funding options that likely would, if effected, require the company to additional equity securities or other securities that may be exercised for or converted into shares of company common stock.

Management Comments

• The Board believes it is in the best interests of the Company and its stockholders to effect the Charter Amendment.
• The Board believes that the availability of additional authorized shares of common stock will provide the Company with the necessary flexibility to issue common stock for a variety of general corporate purposes as the Board may determine to be in the best interest of the Company and its stockholders.
• The Board believes that the availability of authorized shares of Series A Preferred Stock will provide the Company with the necessary flexibility to issue Series A Preferred for a variety of corporate purposes as the Board may determine to be in the best interest of the Company and its stockholders in line with the Company's strategic objectives.

Industry Context

Many companies in various sectors periodically increase their authorized share capital to provide flexibility for future financing, acquisitions, or other corporate purposes; the creation of preferred stock is also a common practice to attract specific types of investors or to provide certain voting or dividend rights.

Comparison to Industry Standards

• Increasing authorized shares is a common practice among publicly traded companies to provide flexibility for future capital raising activities, acquisitions, or stock option plans.
• The creation of a new class of preferred stock is also a standard corporate action that can be tailored to specific financing needs or strategic objectives.
• Similar actions have been undertaken by companies like Tesla and Apple to facilitate stock splits, acquisitions, or employee compensation plans.

Stakeholder Impact

• Existing stockholders will retain their existing common stock.
• The issuance of additional shares of common stock authorized by the Charter Amendment or the shares of Series A Preferred Stock authorized by the Charter Amendment may occur at times or under circumstances so as to have a dilutive effect on earnings per share, book value per share or the percentage voting or ownership interest of our current stockholders.

Next Steps

• The Charter Amendment will become effective upon filing with the Nevada Secretary of State, no earlier than 20 calendar days after the Information Statement is sent to stockholders.
• The company anticipates filing the Charter Amendment with the Secretary of State of Nevada promptly after all requisite notice periods have elapsed.

Key Dates

Keywords

authorized shares, common stock, preferred stock, articles of incorporation, majority stockholders, the crypto company