Authorized Shares” represent the total inventory of shares that are available for issuance by a Corporation as set forth in its principal charter document (i.e., Certificate of Incorporation in Delaware or Articles of Incorporation in California).

Issued and Outstanding Shares, on the other hand, represent the actual shares of the Corporation, which are issued and outstanding at a particular point in time, and therefore the actual Equity Ownership of the Corporation at that time.

The number of Authorized Shares is not set in stone; it can be increased (or decreased) by obtaining the approval of the Board of Directors and Stockholders and then filing an amendment to the corporate charter document.

A Corporation must have sufficient Authorized Shares to cover the future exercise of Stock Options and Warrants and the possible conversion of shares of Preferred Stock into shares of Common Stock.