DEF 14C: Resonate Blends Seeks to Increase Authorized Common Stock to 2 Billion Shares

Resonate Blends is increasing its authorized common stock from 200 million to 2 billion shares to enhance its financing and capital-raising capabilities.

Summary

• Resonate Blends, Inc. is seeking shareholder approval to amend its Articles of Incorporation.
• The amendment will increase the authorized number of common stock shares from 200,000,000 to 2,000,000,000.
• This action was approved by the Board of Directors and a shareholder holding 94.79% of the voting power on March 29, 2024.
• The company intends to file the amendment no sooner than 20 days after distributing the information statement to shareholders who have not previously consented.
• The primary reason for the increase is to maintain the company's ability to raise capital and fund operations.
• The increase in authorized shares could have a dilutive effect on existing shareholders.
• The company states that the increase could also be used in connection with potential acquisition transactions, warrant or option exercises and other transactions.
• The company does not anticipate seeking further authorization from stockholders for additional shares unless required by law.
• The changes are expected to become effective on or about May 13, 2024.
• The company will bear the costs of furnishing the information statement.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the company frames the increase in authorized shares as beneficial for future growth and financing, it also acknowledges the potential for dilution, which could be viewed negatively by existing shareholders.

Positives

• The company believes the increase in authorized shares is necessary to maintain its financing and capital-raising ability.
• The company states that the increase could also be used in connection with potential acquisition transactions, warrant or option exercises and other transactions.
• A significant majority (94.79%) of the voting power has already approved the action, suggesting strong support.

Negatives

• The increase in authorized shares will have a dilutive effect on existing stockholders when the additional shares are issued.
• The increase in authorized common stock could have the effect of delaying or preventing a change in control of the Company.

Risks

• The increase in authorized shares could dilute the earnings per share and book value per share of outstanding shares.
• The additional shares could be used to dilute the stock ownership or voting rights of a person seeking to obtain control of the Company.
• The company's ability to effectively utilize the increased authorized shares to secure funding and execute its business strategy is uncertain.

Future Outlook

The company intends to use the increased authorized shares for financing, capital raising, potential acquisitions, warrant or option exercises, and other corporate purposes deemed in the best interest of the company.

Management Comments

• The Companys Board of Directors believes that it is in the best interest of the shareholders to adopt the increase in authorized common stock.
• The Companys Board of Directors believes the authorized share increase is necessary and advisable in order to maintain the Companys financing and capital-raising ability.

Industry Context

Companies often increase their authorized share capital to provide flexibility for future financing activities, acquisitions, or stock-based compensation plans. This move is common in growth-oriented companies that may require additional capital to fund expansion or strategic initiatives.

Comparison to Industry Standards

• Comparing Resonate Blends' move to similar companies in the cannabis-infused beverage sector is difficult without knowing their specific capital structures and growth plans.
• Generally, companies like Canopy Growth or Tilray, which operate in the broader cannabis industry, have also undertaken similar increases in authorized share capital to facilitate growth and acquisitions.
• However, the specific ratio of authorized to outstanding shares and the stated purpose for the increase should be considered in the context of Resonate Blends' specific situation.

Stakeholder Impact

• Existing shareholders may experience dilution of their ownership stake.
• The company's ability to raise capital could be enhanced, potentially benefiting the company's long-term prospects.
• The potential for acquisitions could impact employees and customers of acquired companies.

Next Steps

• The company will file the amendment to the Articles of Incorporation with the Nevada Secretary of State.
• The company will include information about the filing in a Current Report on Form 8-K to be filed with the SEC.

Key Dates

Keywords

authorized shares, common stock, Resonate Blends, capital raising, dilution, amendment, shareholders