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Note 17 - Capitalization
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Equity [Text Block]

NOTE 17 — CAPITALIZATION

 

The Company’s authorized capital stock at June 30, 2024 consisted of 45,000,000 shares of common stock, par value $0.001 per share and 10,000,000 shares of undesignated stock, par value $0.001 per share. At June 30, 2024, 21,985,559 shares of common stock were outstanding and no shares of preferred stock were issued and outstanding.

 

On March 18, 2024, the Board of Directors of the Company (the “Board”) approved an amendment to the Company’s Certificate of Incorporation to increase the number of shares of our common stock from thirty million (30,000,000) to forty-five million (45,000,000) (the “Share Increase Amendment”), subject to the approval of such amendment by the stockholders. On May 16, 2024, an annual meeting of the stockholders was convened (the “Annual Meeting”). In the definitive proxy statement dated April 2, 2024 filed by the Company with the SEC in respect of the Annual Meeting (the “Proxy Statement”), the Board solicited the vote of the stockholders in favor of the Share Increase Amendment. The Proxy Statement stated that broker non-votes in respect of the Share Increase Amendment would be counted as votes against the amendment. However, under relevant stock exchange rules, brokers, banks and/or other nominees had discretionary authority to vote shares held in their name on behalf of beneficial owners in favor of the Share Increase Amendment if the broker, bank and/or other nominee had not received voting instruction from the beneficial owners. As such, brokers, banks and/or other nominees that had not received voting instructions from the beneficial owners of such shares may have voted in favor of the Share Increase Amendment at the Annual Meeting. Such votes, and others cast by the Company’s stockholders, were tabulated by the Company’s inspector of elections in accordance with the applicable New York Stock Exchange rules (which also applies to Nasdaq-listed companies) and based on the tabulation, the inspector of elections determined that the proposal to approve the Share Increase Amendment was adopted by the requisite vote of stockholders and certified that the proposal had passed. Following this approval, the Company filed the Share Increase Amendment with the Secretary of State on May 16, 2024, and it became effective on the same date.

 

Following the Annual Meeting, the Company received letters from two stockholders claiming that disclosures in the Proxy Statement regarding the authority of brokers, banks and/or other nominees to vote on the Share Increase Amendment in the absence of instructions from the beneficial owners of the applicable shares were inconsistent with how votes were tabulated and counted or that the Company mistabulated uninstructed votes of brokers, banks and/or other nominees as votes in favor of the Share Increase Amendment. The stockholders requested that the Board deem the Share Increase Amendment ineffective and make appropriate disclosure of such determination or seek valid stockholder approval of the Share Increase Amendment.

 

The Company believes it was and is appropriate to include the affirmative votes cast by brokers, banks and/or other nominees pursuant to their discretionary authority in the tabulation of votes in favor of the Share Increase Amendment and, thus, that the Share Increase Amendment was properly approved and is effective. However, to avoid potential future litigation risk, and to eliminate any uncertainty as to the Share Increase Amendment and the validity of shares of Common Stock that in the future may be issued by virtue of the Share Increase Amendment, the Board has determined that it is advisable and in the best interests of the Company to solicit stockholders to ratify the Share Increase Amendment at a stockholder meeting. No specific transaction was contemplated in connection with the Share Increase Amendment, and as of the date of the filing of this Form 10-Q, none of the shares authorized by the Share Increase Amendment have been issued. Further information about such meeting will be provided in a Definitive Proxy Statement to be filed with the Securities and Exchange Commission.