Good morning, everyone, and welcome to this investor webinar for EBR Systems, Inc. My name's Gabby. I'm from The Capital Network, and I'm here with EBR's executive team this morning. Just before I pass over to John McCutcheon, a reminder that this webinar is being recorded. There will also be the opportunity to ask questions at the end of the presentation. If you'd like to ask a question, please do so via the Q&A function at the bottom of your screen. Okay, over to you, John. Thank you.
All right, thank you, Gabby, and hi, everyone. Thanks for joining. I think you all know what this is about. We put out a release yesterday about a special meeting that we're going to hold on Thursday, March 12th. And this meeting will be posted online. The notice of meeting will be posted online, and you'll see that on or around the 28th of January. And I want to talk about several terms here, and it's based on some of the questions that we got in advance and some of the chats that we've seen and some emails that we've received. There's a lot of confusion that we want to make sure that we address during this meeting. And I hope towards the end of it, if I haven't sufficiently covered that, we'll keep going until we make sure that everybody is comfortable with that.
There are certain terms that may not be commonly used, and I'll try to define these and make sure it's really clear what instrument we're talking about in each stage of the process. But you're going to hear me talking about CDIs, which is on the slide here, CHESS Depositary Interests. You'll hear me talking about common stock or EBR common stock. We'll talk about total authorized shares, which is not a concept that is common in Australia, but is common in the U.S., and so I need to explain what that instrument is or why that's important here and what it is we're trying to accomplish, so the first, just a summary here is that the share consolidation is on the common stock of EBR. So our shares that are traded on the ASX are CDIs, these CHESS Depositary Interests.
Okay, and they're convertible to common stock on a one-to-one basis. So for every CDI that's traded on ASX, we hold in reserve a common share. But there are also common shares outstanding that are not tied to CDIs. For example, there were some early investors in EBR that came in as private investors before we went public. Some of them may not have converted those to CDIs on the ASX. They might still hold common. So there's a distinction here that I'll repeat several times to make sure that these terms are not conflated in any way. So under this proposal, we will not be consolidating your EBR, ASX shares, or the CDIs. Okay, so that's one point of confusion. It seems that some people have interpreted that we're going to be consolidating EBR, ASX shares, which again are equivalent to CDIs. We're not going to be doing that.
What we're proposing is a consolidation of our common share, and that's within that range of five- to- one reverse consolidation or 20- to- one, somewhere in that range. And we leave it open because the proxy vote is to approve this range, and then at some point in the future, the board will determine where in that range we'd like to be. So we want to have some room there rather than coming out with a specific ratio. Now, the way we protect the CDIs from having any financial impact from that is that we then change the ratio at the same time of CDIs to common share conversion, and it'll be proportionate.
So I've got an example on a subsequent slide that goes through the math, and you can see how the share price of the CDIs traded on the ASX are not affected and how the value of your shares are not affected by this consolidation. So the total number of CDIs or EBR shares traded are not going to change, and the price will remain the same. It'll trade as normal, so it might change up or down, but not as a direct result of this share consolidation. Okay, so for those of you that aren't familiar with this term, CDIs are, again, CHESS Depositary Interest. These are for any US company that's trading on the ASX. There's an instrument called CDIs that are issued, and they're convertible to our common stock.
Again, we hold in reserve a common stock, one share of common stock for every share of CDIs, and that's that one-to-one ratio that I'll bring up again. So the CDIs function and trade just like a share of any other Australian company that you might purchase or trade on the ASX, and you get the economic benefits of the ownership, although the ownership is held by the CHESS Depositary Nominees or CDN, which is a subsidiary of the ASX. Okay, so you're trading the CDIs. We hold common stock in reserve to back that up, and common shareholders can convert into CDIs, and CDI holders can convert to common. There's no reason why anybody on the ASX would convert to common because the common shares are not liquid. They're not tradable. They're held more like a private stock, whereas the CDIs, as you know, are publicly traded.
Okay, so if you're buying or selling any EBR shares again or any U.S. corporation, it's not unique to EBR. They're in the form of a CDI. That current ratio of CDI to common is one-to-one. And then again, you can leave it on ASX, which again, I assume everybody on this call is where they would hold their investment in EBR, or you always have the opportunity to transfer it into common, but then it would no longer be liquid or you wouldn't be able to trade it. So the other concept that we need to really make sure everybody on this call understands is total authorized shares. And you don't have this concept in most of your, well, it's certainly not in Australia. If you're dealing with other U.S. companies, you may be familiar with it.
Total authorized shares are the maximum number of shares that we can legally issue, and it's defined in our articles of incorporation. We're a Delaware corporation, so the state of Delaware has a corporate licensing operation. We file our articles of incorporation with them. When we did that initially, the charter or the articles of incorporation allow us to issue up to 600 million shares of common stock. Remember, every CDI has to be backed by common stock. If we issue more CDIs and have a placement or an ANREO or do more financing on the ASX, we need to have enough common stock available to allocate or to associate with that. At the moment, we've issued about 524 million common shares. Issued is not quite the right term. We have 524 million that are accounted for.
And that means they have either been issued, they're held as common stock by a shareholder, as I mentioned earlier, probably a legacy U.S. investor in EBR, or they're allocated to a CDI. So that would be all of you on the call for each of your shares that you have. We've got. That's one of those 524 million that we have in reserve. And the others are for warrants or options that are commitments to provide common. And so we need to hold those in reserve for those commitments, even though they're not issued.
Okay, so a share consolidation of our common stock, not of the CDIs, but of the common stock, that allows us to shrink the number of common shares that are encumbered or are accounted for and frees up some of that 600 million shares for future financings or for strategic opportunities, acquisitions, IP purchases, things that we need to have our stock available for. Okay, so it's the common shares that are consolidated to free up more authorized shares. And I hope it's more clear on the next slide because I've taken a few people through this before, and until you see the math, it gets a little confusing. So I will go to the next slide. And I hope it's a lot of numbers. I hope this is clear. So currently, on the first column, you see we have 600 million shares authorized.
Again, that's based on our Articles of Incorporation. We can't change that by ourselves. That requires a shareholder vote. Then we break it out into the commitment of those. At the moment, when we add it up, like I said, we've got about 524 million committed, and you see in red are available common shares. Without this consolidation, we only have 76 million free shares to work with. Any future raise, any future acquisition, any future activity that we need would be limited to 76 million. Our board and management don't believe that that's enough for us to thrive and to really drive the value of EBR. We want to solve for that number. We want that number to be bigger and under the umbrella of 600 million.
So you can see before we go to the lower rows. Let's just keep going across the columns to the right. You can see at the various share consolidations what the effect is on that 76 million. It goes from at a five-to-one reverse or share consolidation. It goes up to 495 million available shares. 10-to-one, it goes up to 547 million. And 21, it goes up, 20-to-one, it goes up to 574 million available. And those are free, free by free, I mean available, not free of charge, but available shares that we can then work with for financings and strategic opportunities. You can also see as you go from the first column over to the right that the number of CDIs issued, which are your ASX shares, does not change. It's 449.5 million. And that does not change as you go across the different common share consolidations.
Okay, and then if you go down below, you can see as we change that, the outstanding common shares and those number of common shares go down. If you go to the second column, five-to-one share consolidation, you have 90 million shares outstanding now. You've gone from 450 million- 90 million. At the same time, we change the ratio, the conversion from common to CDIs from one-to-one to one-to-five. What that does mathematically is your share price doesn't change. The share price of the CDI is still at yesterday's close, which was AUD 1.02. We plug that in here. No matter what the consolidation ratio is, your share price doesn't change as a result of that. There's no change to the number of CDIs outstanding.
And so just mathematical certainty that no matter what we do, it affects the common, but not directly impacts anything traded on the ASX. Okay, so I might come back to this slide depending on questions, but this is the really important concept to grasp here in order to fully understand what we're asking for. And so the notice of the meeting will be posted on around the 28th of January, and this will be on our ASX platform, EBR website. You'll have details on how to vote, but we really encourage you all to vote affirmatively for this. We need a majority of all shares outstanding in order to approve this proposal. And again, it's in all of our interest to do that because, again, we need to free up those authorized shares for future activities that we may undertake.
So I'm going to stop there, and I have some questions that came in in advance that I'll read, and then I'll see if there's any other ones that come in along the way. And this is, I hopefully addressed this already, but one of the questions that came in was, I think, some confusion around whether we were consolidating the CDIs and the ASX traded stock or not. So the consolidating EBR shares by a factor of five to twenty will cause a big erosion in the value of EBR's shares. I don't want the number of shares I hold to decrease. And I hope that this presentation addresses that, that the number of shares that you hold will not decrease. The price of those shares will not change either. Another question is, is share consolidation to support a US listing? No, not directly.
The share consolidation is so that we have the ability to raise funds in the future. And that's most likely an ASX listing, but we never forecast that. We don't have anything currently underway. And it's also we need shares available opportunistically. Again, if there's an acquisition that the board thinks is important, that's additive to our business, those sorts of things, you need stock, free stock available to do that. Let's see. The proxy statement says that the purpose of the share consolidation maintains flexibility in accessing capital markets. Can you explain how this is achieved? So I think that's what I just said again, is that we need this red line here, this 76 million. We need that to go, and we need to free up more shares. And as we do this consolidation, we now have more shares depending on which level of which ratio we choose.
Again, please pay attention to this line. The share price does not change along the way. Okay, let's see. So it looks like I've got some questions coming in. Let's see. Okay, following the consolidation, how does the company intend to prioritize the use of the newly created authorized common share capacity over the next 12-24 months? Again, there's no direct plan to do that. At some point, we will have to raise more funds. We know that, and so this will allow us to do that at the right time. So there's no direct line I could point you to or anything that's currently underway, but we have to do this first. And so we want to clear this and then not be encumbered in the future when the time is right to do a financing. Let's see.
Why do you need to do this as part of an EGM versus your normal AGM, particularly given the proximity to AGM? Because it takes time for us to get this reviewed and approved, and we wanted to do it as soon as possible and not wait for the AGM, which I think is, Gary, that's not until April, right? End of April?
April 22nd, 23rd.
Yeah. Yeah. So it's just important for us to free that up now. Again, we always want to be opportunistic and not be limited by this amount. Okay. Let's see. You said to issue more shares would have to go to shareholder approval, but you're having to get shareholder approval for consolidation. What's the difference? A good question. There is no difference. Either way, we have to get shareholder approval.
So we could have raised that number, but it gets to be too big of a number. It's not normally how companies like ours keep their kind of capitalized to have that many available shares. Also, there's a Delaware fee. So their tax is basically on the number of authorized shares. So we'd rather not just keep increasing that. It makes a lot more sense for us to consolidate it. And we gave it consideration in both directions, and we thought this was a good way to do it because it wouldn't have any impact on our ASX shareholders. It should be kind of invisible. I mean, it's visible here. We're not hiding it, but I mean, there's no visible impact on your CDIs that are trading.
So we thought it should be indifferent to the shareholders, and that's better ultimately for the corporation that we don't keep increasing our Delaware taxes or our fees. Let's see. Post-consolidation, what guardrails would the company apply to ensure the expanded authorized share capacity is used in a disciplined and non-dilutive manner? Well, we always do that. And so that's part of our fiduciary obligation to you is to be a good shepherd of the cash that we have and to raise money at the best valuations at the right time with the right milestones in place. And so that's always the case. Now, if this doesn't get approved, the converse of that is if we're not able to raise money effectively, then that would really impede the progress of the company and your investment. So that's why we encourage you to do this.
It's the right thing for the shareholders and for the long-term health of the business. What time in the future do you plan to undertake the stock consolidation? We don't have a plan. So the plan is to clear this first, and then the board will vote afterward at the right time to do it. So there's no date certain. There's nothing that we've circled or have a target on at this point. Confirming that we'll need to continue to trade on the ASX and don't need to change trading platforms to accommodate the New York Stock Exchange or Nasdaq. Yes, 100%. You do not have to change. This is not a conversion to Nasdaq or the New York Stock Exchange, and we will continue to trade on the ASX.
And again, the whole reason we did it this way was to have the least impact on our ASX shareholders and wanted the math to work out in that way.
Thanks, John. Just a reminder, if anyone else has questions, just to submit them via the Q&A function at the bottom of the screen. Andrew, John, we might just wait a few minutes to see if there's any additional questions coming in.
Yeah, we had one in not on topic here, but I'll read it anyway. This came in advance. And we recently presented at the J.P. Morgan conference in San Francisco. And prior to that, we adjusted our TAM and released that to the ASX. And someone wanted to know the TAM went up considerably, and they wanted to understand where that came from.
About half of the increase in the TAM was we originally built that model on a $45,000 U.S. ASP. Then we've adjusted that, still conservative, but we adjusted that up to $55,000 per system. That's about half of the increase that got us to $5.8 billion U.S. The other half is really due to the continued growth and explosion of the leadless pacemaker upgrade segment. For those of you that follow us, you've seen how we talked a lot about the success of leadless pacemakers, and that's really a funnel market for us. That's really driven more opportunity for EBR. Okay, when you raise money in the future, would you issue common stock or ASX CDIs to raise this capital? If we do an ASX placement or an ANREO or ASX vehicle, it would be both, actually.
So we would have shares, common shares that would be issued, but they'd be held in reserve. And then we would issue CDIs that would be convertible to those common shares. So the CDIs would be tradable on the ASX, but those common would be held in reserve so that there's always that conversion. Now, after the consolidation, the conversion numbers would be different. So if you again go back to this slide and you look at, let's go to the middle, 10-to-one column, your CDIs would still be trading at AUD 2.00, assuming all else is equal, but the common would be valued at $5.10. Okay? However, you would get one-fifth of the common for every CDI so that they're still equivalent. So the value between what we hold in common and what is outstanding in CDIs is always the same. Okay.
All right, Gabby, I think maybe that's it.
Yes, that's correct. There's no further questions at this stage, John. Oh, hang on.
Let's see. With common stock priced at a higher consolidated would this attract greater level of interest? Okay. So let me repeat that. So with the common stock priced higher at the consolidated level, would this attract a greater level of interest from U.S. investors? So it's not really priced higher. There's no price on the common. The common's value is derived from the traded price on the ASX. So think of it in reverse. So we always calculate it based on the trading. But the common themselves aren't exchangeable, or they're not liquid. So the value creation is on the ASX.
I don't know that that would directly. I think the U.S. investors, to answer this a different way, look at the market cap and then say, "Is this a good investment at this level?" By the way, we were able to talk to a number of investors at J.P. Morgan, and it was really actually a lot of fun for us. Gary and Andrew were both there, and we met with a number of investors, and there's just a lot of interest and excitement around what we're doing. There's another question. There seems little advantage in one- to- 10 versus one- to-five . Which would you choose? I have no idea. We do the range so that we can then. The board can get together and discuss where do we want this green line to land, essentially. We're solving for this row primarily.
And it may not matter a whole lot, or we may have some math at the time we do it that says, "Okay, this is a better ratio for us." But again, all of that is, it's kind of academic because it really doesn't affect what's traded on the ASX. Okay. To the previous question, can you raise just using common stock and not CDIs? Let's see. Not in Australia. I guess technically in the U.S., one could, but it would still be under ASX placement capacity, and it wouldn't be liquid. So that would be more like a private investor coming in, in theory. So we have no intention of doing that, but that's just to answer it in theory. Okay. You mentioned that some early investors held common. Don't these people profit from the consolidation? Oh, thank you for asking that. The answer is no.
Because remember that the value is derived from the CDIs that are trading, so at the same time, their common share goes up, the price, their number of shares goes down proportionately, so again, that conversion, so if I have, let's do the five- to-one . If I have today a common share and it's valued at AUD 1.02, Australian. And tomorrow, instead of having, did I do that right, well, let's see. I just got myself confused. Okay, let's do different, so I've got, let's tend to the easier number to use, so I've got 10 shares today. And those 10 shares are worth at CDIs or common. Either one, they're worth AUD 10.20 on ASX. And then tomorrow, we have this 10- to-one consolidation. Instead of 10 shares, I only have one. That one share is worth AUD 10.20.
So I still have $10.20 of value, but I'm holding it in one common share, which I could exchange for 10 CDIs. Sorry for that. I stumbled for a minute. I had the math down, but I got a little confused under the gun there. So hopefully that makes sense, right? And you can always look here. So this is the price per common. I'm sorry. This is price per common, but I've got one-tenth of the number of common compared to this CDI. And the other way to look at this is the value of common on this row never changes. Common doesn't go up. The value of the common doesn't change with these different consolidation ratios. Does this preparation action imply that the board has no intention of courting a takeover?
I can't comment directly on board intention, but I will say that acquisitions are more, they're not something that we initiate. It would be initiated essentially by a large incumbent. And so it's not a strategy to have an exit to be acquired. Somebody has to want to acquire you at the right value at the right time. And we would make, if an offer came in or somebody was courting us, the board would always say, "Okay, at what value is that the best return to the shareholders? Or do we think that if we hold out, negotiate harder, wait, that the value will go up proportionally or disproportionately, I guess, by going to another point in the future?" So the short answer is no, there's no plans to do that. Are there any plans to do a listing on NASDAQ or NYSE?
Again, there's no plans for anything at this point. Once we have a plan and we're moving forward, we would be in a quiet period, and we wouldn't be able to talk about it. Once we initiate an activity, then it becomes public, and we disclose that to all of you. So at this point, we do not have any plans. There's no active financing. And so again, this is merely preparatory, does not signal that something's happening.
Thanks, John. At this stage, there's no further questions. So we might wrap up. Thank you, everyone, for attending this morning. Appreciate your time. Thanks, Andrew, John, Gary, and Spencer for your attendance. Oh, hang on. As soon as I say it's over, there's.
That's okay. So let me just wrap it up, and I'll address this question.
Under this consolidation arrangement, regardless of the consolidation ratio, there'll always be the same number of CDIs, correct? Until a new CR, is that continuing resolution? Capital raise. Capital raise. Oh, thank you. And which is a typo there? At which point the CDIs will increase and potentially above 600 million? Again, it's not the number of CDIs. It's the number of common shares that matter. And so you could have an infinite number of CDIs under Delaware law as long as there's not more than 600 million common shares. So again, I don't think this. I don't think that that's applicable. And Gabby, let me just wrap up. If people are confused by the math, if I didn't do a clear enough job of explaining it, please let us know. You've got the investor email that you can reach out to us.
We'll do our best to make sure that we've addressed these things to your satisfaction. Great. Gabby, I guess we're done. Thank you.
I think we're done. Okay. Thanks, everyone. Have a good day.
Thank you.
Bye.