APPROVAL TO AMEND THE ARTICLES OF RIOT BLOCKCHAIN, INC.
Background
On September 21, 2022, our Board of Directors unanimously approved that, subject to shareholder approval, the current Articles of Association of the Company, as amended to date, be amended in the attached form in Schedule B. The proposed amendment is to increase the number of shares of common stock authorized to be issued from 170,000,000 shares to 340,000,000 shares. The additional common shares authorized to be issued by this proposal would form part of the existing class of common shares and, if and when issued, would have the same rights and privileges as the common shares now issued and outstanding. Amending the current articles would not change the total number of preferred shares authorized. 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 extent of the stock increase under the amended plan, our board worked with management and independent advisors to assess a number of factors, including our business strategy, the potential need to raise additional capital to fund future expansions of our business, including potential business transactions, our compensation philosophy of general employee eligibility for equity incentive awards, our recent and projected use of equity, and potential total dilution. The board believes that the amendment to the articles of association to authorize an additional 170,000,000 common shares is appropriate and in the best interests of shareholders and the company, given the capital-intensive nature of our business operations, proposed future business expansion, the highly competitive environment in which we compete for talent, recent financial market volatility and its impact on our share price, and our projected use of shares. However, estimating our future equity requirements is difficult, particularly under current market conditions, as our estimates are based on our current internal modeling and are dependent 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 pending award forfeitures and the future price of our common stock.
Why We Offer Modified Items
Our board of directors has determined that it would be in the best interests of the company to increase the number of common shares authorized in order to provide our company with the flexibility to pursue all corporate opportunities involving our shares, which which may include, among other business objectives, strategic acquisitions, public or private offerings of our equity securities and financing opportunities for future expansions of our business. Additionally, we operate in a highly competitive talent market and our success depends in part on our continued ability to attract, retain and motivate highly skilled and skilled employees, particularly management, which is of particular concern in the relatively small development bitcoin mining and data centers. communities. If the amendment to the articles of association is not approved by our shareholders, the lack of authorized unissued and unreserved common stock to provide future financing and equity incentive opportunities could adversely impact our ability to achieve these strategic business objectives and to retain employees. In short, if our shareholders do not approve of this proposal, we may not be able to access capital markets, make strategic acquisitions, attract, retain and motivate employees and continue to other business opportunities critical to our growth and success. Each additional authorized common share would have the same rights and privileges as each share of our currently authorized common stock.
As of the record date, 167,136,619 common shares, without par value, were outstanding, leaving 2,863,381 common shares, without par value, available for issuance.
At this time, except for our offering to the market 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 as we are continually evaluating potential business opportunities, our Board of Directors has no immediate plans, arrangements or agreements to issue the additional common shares. However, the Company wants shares to be available to provide additional future flexibility to use our common stock for business or financial purposes in the future, as well as to have enough shares to provide appropriate incentives to attract and retain best talent. The issuance of additional common shares in the future will have the effect of diluting earnings per share, voting power and common stock to shareholders. It could also have the effect of making it more difficult for a third party to acquire control of our company. 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 that the increase in
