Company: SPRB
Filing Date: 2025-04-18
Form Type: PRE 14A
Source: 0000950170-25-055856
Chunk: 36

Company: SPRUCE BIOSCIENCES, INC.
Filing Date: 2025-04-18
Form: PRE 14A
Chunk 36
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 clients. Many institutional investors have policies prohibiting them from holding lower-priced stocks in their portfolios, which reduces the number of potential purchasers of our common stock. Investment funds may also be reluctant to invest in lower-priced stocks. Investors may also be dissuaded from purchasing lower-priced stocks because the brokerage commissions, as a percentage of the total transaction, tend to be higher for such stocks. Moreover, the analysts at many brokerage firms do not monitor the trading activity or otherwise provide coverage of lower-priced stocks. Giving the Board the ability to effect the Reverse Stock Split, and thereby increase the price of our common stock, would give the Board the ability to address these issues if it is deemed necessary.

Improve the Perception of Our common stock as an Investment Security

The Board believes that effecting the Reverse Stock Split is one potential means of increasing the share price of our common stock to improve the perception of our common stock as a viable investment security.

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Lower-priced stocks have a perception in the investment community as being risky and speculative, which may negatively impact not only the price of our common stock, but also our market liquidity.

Increase the Number of Shares of Common Stock Available for Issuance

The Board believes that the effective increase our available for issuance shares of common stock that would result from a Reverse Stock Split is necessary in order to provide us with the flexibility to issue additional shares in the future on a timely basis in connection with potential financings, strategic relationships, business combinations and strategic transactions, among other purposes, without the potential delay and expense associated with convening a special meeting of the stockholders. We have funded our operations to date primarily from the issuance and sale of our securities, and we currently have a limited number of authorized and unreserved shares that are available for future issuance.

In particular, the report of our independent registered public accounting firm that accompanies our audited consolidated financial statements for the year ended December 31, 2024 contained an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. As discussed in our Annual Report, based on our current operating plan, the Company’s cash and cash equivalents of $38.8 million as of December 31, 2024 will be insufficient to fund its planned operations and debt obligations for at least 12 months following the filing date of the Annual Report. The Company’s ability to continue as a going concern will require the Company to raise additional capital to fund the Company's operations and there can be no assurance that additional financing will be available to the