POWERCOMPUTE, INC.

General

Our Board has unanimously determined to seek stockholder approval of an amendment to our certificate of incorporation, as amended, to effect a reverse stock split of all outstanding shares of our common stock at an exchange ratio ranging from one for two (1:2) to one for ten (1:10). You are now being asked to vote upon this amendment to our certificate of incorporation, as amended. Should we receive the required stockholder approval, the Board will have the sole authority to elect, at any time prior to December 31, 2027, (i) whether or not to effect a reverse stock split, and (ii) if so, the number of whole shares of our common stock, between and including two (2) and ten (10), which will be combined into one share of our common stock. The Board believes that providing the flexibility for the Board to choose an exact split ratio based on then-current market conditions is in the best interests of the Company and its stockholders. Even with stockholder approval of this proposal, the Board would not be obligated to pursue the reverse stock split. Rather, directors would have the flexibility to decide whether or not a reverse stock split (and at what ratio) would be in the best interests of the Company and its stockholders.

If approved by the stockholders and following such approval the Board determines that effecting a reverse stock split is in our best interests and those of our stockholders, the reverse stock split will become effective upon filing an amendment to our certificate of incorporation, as amended, with the Secretary of State of the State of Delaware. The amendment filed thereby will contain the number of shares approved by the stockholders and selected by the Board within the limits set forth in this Proposal to be combined into one share of our common stock.

The Board has reserved the right to effect the reverse stock split only if the Board determines in its sole discretion that such reverse stock split would be advisable and in the best interests of the Company and, additionally, notwithstanding the stockholders’ approval of the proposed amendment of our certificate of incorporation, as amended, at the Special Meeting, to abandon it at any time without further action by the stockholders. The Board may consider a variety of factors in determining whether or not to proceed with the proposed amendment of our certificate of incorporation, as amended, and in selecting the exact exchange ratio, including overall trends in the stock market, recent changes and anticipated trends in the per-share market price of our common stock, business developments, our actual and projected financial performance, and the effect of the cumulative reverse stock split ratio limitation under Nasdaq Listing Rule 5810(c)(3)(A)(iv) described below. If the closing bid price of our common stock remains at or above $1.00 per share, or if the Board otherwise determines that a reverse stock split is no longer advisable, the Board may decide to abandon the filing of the proposed amendment to our certificate of incorporation, as amended. If the Board fails to implement a reverse stock split prior to December 31, 2027, stockholder approval again would be required prior to implementing any reverse stock split.