Xmax Inc

This management proposal requests shareholder approval under Nasdaq Listing Rule 5635(d) to permit the Company to issue up to 100,000,000 shares of common stock (representing more than 20% of currently outstanding shares) in a private placement at a price below Nasdaq’s defined “Minimum Price.” Management frames the need as raising capital quickly to fund a strategic pivot into high-growth AI segments (software/hardware, cloud and GPU infrastructure, model orchestration and enterprise AI agents) and to preserve the Company’s Nasdaq listing. The proposed terms leave significant discretion to the Board and specify a maximum discount of up to 50% off the prior trading-day closing price, creating material potential dilution for existing shareholders and the risk of concentrated ownership if large investors buy blocks of the offering. The Company disclaims sales to officers, directors, or employees but has not fixed final economic or anti-dilution protections, and the final price and investor identities remain unspecified. Nasdaq Rule 5635(d) requires this shareholder vote because the issuance exceeds the 20% threshold and would be priced below the Minimum Price; absent approval the Company could be constrained in executing the planned private placement. The Board’s recommendation in favor is tied to the need for immediate capital and speed of execution, weighing these benefits against dilution and governance risks. For a sophisticated evaluation, the key considerations include the scale of dilution relative to current capitalization, the 50% maximum discount which may signal distress or urgency, potential vote-concentrating effects if a few purchasers acquire large blocks, and the absence of limiting covenant-language around control changes or investor rights in the disclosure. Investors should assess the Company’s financing alternatives, the likely use of proceeds and milestones tied to the capital raise, and whether the Board should condition approval on specific investor protections or caps to mitigate governance and economic dilution risks.

This management proposal requests shareholder approval under Nasdaq Listing Rule 5635(d) to permit a registered direct offering under an effective Form S-3 to issue up to 100,000,000 shares of common stock (exceeding 20% of current outstanding shares) at a price below the Nasdaq “Minimum Price.” Management states the proceeds would fund strategic expansion into AI-related businesses and help preserve the Company’s Nasdaq listing, and it plans a maximum discount of up to 50% off the prior trading-day closing price. Because the offering would be registered under Form S-3, transferrability and resale mechanics differ from a private placement, but the economic dilution to existing holders is similar and could be substantial. The Company again leaves significant discretion to the Board on final terms, does not disclose investor identities, and notes potential vote concentration if large blocks are purchased. The Board’s recommendation in favor reflects the need for capital and the benefits of a registered shelf approach (speed and registration advantages) weighed against dilution and governance risk. Analysts should evaluate whether the company has exhausted less dilutive financing options, the planned use of proceeds, and whether the 50% maximum discount and unlimited purchaser rights could materially harm minority holders. The lack of specific investor protections, anti-takeover provisions, or pre-emptive measures in the disclosed terms increases execution and control risk that shareholders should consider before granting blanket approval.

This management proposal asks shareholders to authorize the Chairman to adjourn the Special Meeting for the limited purpose of soliciting additional proxies to obtain approval for Proposals 1 and 2. The adjournment authority is a routine procedural measure that allows management to postpone final votes if insufficient shares are present or voted in favor at the scheduled meeting, providing time to solicit additional support. The Board frames the measure as necessary to ensure the Company can complete the capital-raising transactions if they lack immediate approval, and the recommendation in favor reflects that pragmatic need. Governance considerations include that adjournment authority centralizes procedural discretion in the Chairman and can delay shareholder decision-making; however, the adjournment is limited in purpose to seeking additional proxies for the financing proposals. Shareholders should weigh the benefit of avoiding repeated special meetings or rushed votes against the potential for management to extend timelines to pursue favorable outcomes. The provision is not itself dilutive but is consequential insofar as it can affect whether the dilutive financings are approved. For a sophisticated assessment, consider whether the Company has a credible solicitation plan, the likelihood of securing the needed votes without material concessions, and whether the adjournment period should be limited by time or conditions to protect shareholder interests.