Preliminary Revised Proxy Statement – Form PRER14A
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. 1)
| Filed by the Registrant | ☒ | |
| Filed by a Party other than the Registrant | ☐ |
Check the appropriate box:
| ☒ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☐ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant to Section 240.14a-12 |
LUXURBAN HOTELS INC.
(
(
Payment of Filing Fee (Check the appropriate box):
| ☒ | No fee required. |
| ☐ | Fee paid previously with preliminary materials. |
| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
LUXURBAN HOTELS INC.
NOTICE OF SPECIAL MEETING
TO BE HELD ON _____________, 2024
TO THE STOCKHOLDERS OF LUXURBAN HOTELS INC.:
You are cordially invited to attend the Special Meeting (the "Special Meeting") of
| ● | a proposal ("Reverse Stock Split Proposal") to amend our Amended and Restated Certificate of Incorporation (the "Charter") to effect a reverse stock split (the "Reverse Stock Split") of our outstanding common stock by a ratio of not less than one-for-thirty and not more than one-for-seventy, with the exact number to be set at a whole number within this range to be determined by our board of directors, in consultation with the Company's investment banking advisors, in its sole discretion and to authorize our board of directors to implement the reverse stock split by filing an amendment to our Charter; |
| ● | a proposal ("Nasdaq Compliance Proposal") to approve, for purposes of complying with Nasdaq Stock Market LLC Listing Rule 5635, the issuance of shares of our common stock upon (a) conversion of our 2024 Notes (as defined herein) and (b) exercise of our 2024 Note Warrants (as defined herein), in excess of the 19.99% share limitation contained in such securities; and |
| ● | a proposal to adjouthe Special Meeting to a later date or dates, if the Company determines that additional time is necessary to seek stockholder approval of the Reverse Stock Split Proposal or Nasdaq Compliance Proposal (the "Adjournment Proposal"). |
The Reverse Stock Split Proposal, the Nasdaq Compliance Proposal, and the Adjournment Proposal are more fully described in the accompanying proxy statement.
The Special Meeting will be a virtual meeting. You will be able to attend and participate in the Special Meeting online by visiting https://www.cstproxy.com/luxurbanhotels/sm2024. Please see "Questions and Answers about the Special Meeting - How do I attend the Special Meeting?" for more information.
The Company's Board has fixed the close of business on
After careful consideration of all relevant factors, the Company's Board has determined that the proposals to be presented at the Special Meeting are fair to and in the best interests of the Company and its stockholders, and has declared it advisable and recommends that you vote or give instruction to vote "FOR" the Reverse Stock Split Proposal, "FOR" the Nasdaq Compliance Proposal, and "FOR" the Adjournment Proposal, if presented.
Enclosed is the proxy statement containing detailed information concerning the proposals. Whether or not you plan to attend the Special Meeting, the Company urges you to read this material carefully and vote your shares.
Thank you for your attention to this matter.
| _______________, 2024 | By Order of the Board of Directors |
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Non-Executive Chairman of the Board |
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Your vote is important. Please sign, date and retuyour proxy card as soon as possible to make sure that your shares are represented at the Special Meeting. If you are a stockholder of record, you may also cast your vote virtually at the Special Meeting by submitting a ballot via the live webcast. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank how to vote your shares, or you may cast your vote virtually at the Special Meeting by obtaining a proxy from your brokerage firm or bank. Your failure to vote or instruct your broker or bank how to vote will have the same effect as voting against the Reverse Stock Split Proposal and the Nasdaq Compliance Proposal.
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting to be held on ______________, 2024: This notice of meeting and the accompany proxy statement are available athttps://www.cstproxy.com/luxurbanhotels/sm2024.
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LUXURBAN HOTELS INC.
TO THE STOCKHOLDERS OF LUXURBAN HOTELS INC.
SPECIAL MEETING
TO BE HELD ON _____________, 2024
PROXY STATEMENT
This proxy statement and the accompanying form of proxy is furnished to stockholders of
| ● | a proposal ("Reverse Stock Split Proposal") to amend our Amended and Restated Certificate of Incorporation (the "Charter") to effect a reverse stock split (the "Reverse Stock Split") of our outstanding common stock by a ratio of not less than one-for-thirty and not more than one-for-seventy, with the exact number to be set at a whole number within this range to be determined by our board of directors in its sole discretion and to authorize our board of directors to implement the reverse stock split by filing an amendment to our Charter (the "Reverse Stock Split"); |
| ● | a proposal ("Nasdaq Compliance Proposal") to approve, for purposes of complying with |
| ● | a proposal to adjouthe Special Meeting to a later date or dates, if the Company determines that additional time is necessary to seek stockholder approval of the Reverse Stock Split Proposal or Nasdaq Compliance Proposal (the "Adjournment Proposal"). |
The Reverse Stock Split Proposal, the Nasdaq Compliance Proposal, and the Adjournment Proposal are more fully described in this proxy statement.
The Special Meeting will be a virtual meeting. You will be able to attend and participate in the Special Meeting online by visiting https://www.cstproxy.com/luxurbanhotels/sm2024. Please see "Questions and Answers about the Special Meeting - How do I attend the Special Meeting?" for more information.
The Board has fixed the close of business on
After careful consideration of all relevant factors, the Company's Board has determined that the proposals to be presented at the Special Meeting are fair to and in the best interests of the Company and its stockholders, and has declared it advisable and recommends that you vote or give instruction to vote "FOR" the Reverse Stock Split Proposal, "FOR" the Nasdaq Compliance Proposal, and "FOR" the Adjournment Proposal, if presented.
This proxy statement contains important information about the Special Meeting and the proposals described herein. Please read it carefully and vote your shares.
This proxy statement is dated __________, 2024, and is first being mailed to stockholders on or about that date.
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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING
These Questions and Answers are only summaries of the matters they discuss. They do not contain all of the information that may be important to you. You should read carefully the entire document, including the annexes to this proxy statement.
| Q. | Why am I receiving this proxy statement? | A. The Company seeks stockholder approval of the Reverse Stock Split Proposal and the Nasdaq Compliance Proposal and will be holding the Special Meeting to vote on such proposals. The Board is soliciting proxies of stockholders to be voted at such meeting on these two proposals and, if necessary, the Adjournment Proposal. | |
| Q. | What is being voted on? |
A. You are being asked to vote on three proposals: |
| ● | a proposal to amend our Amended and Restated Certificate of Incorporation (the "Charter") to effect a reverse stock split (the "Reverse Stock Split") of our outstanding common stock by a ratio of not less than one-for-thirty and not more than one-for-seventy, with the exact number to be set at a whole number within this range to be determined by our Board, in consultation with the Company's investment banking advisors, in its sole discretion and to authorize our management to implement the reverse stock split by filing an amendment to our Charter - the Company refers to this proposal as the "Reverse Stock Split Proposal"; |
| ● | a proposal to approve, for purposes of complying with Nasdaq Listing Rule 5635, the issuance of shares of common stock upon (a) conversion of our 2024 Notes and (c) exercise of our 2024 Note Warrants, in excess of the 19.99% outstanding share limitation contained in such securities - the Company refers to this proposal as the "Nasdaq Compliance Proposal"; and |
| ● | a proposal to adjouthe Special Meeting to a later date or dates, if the Company determines that additional time is necessary to seek and obtain stockholder approval of the Reverse Stock Split Proposal or the Nasdaq Compliance Proposal - the Company refers to this proposal as the "Adjournment Proposal". |
| Q. | Why is the Company proposing the Reverse Stock Split Proposal? | A. As of the record date, the Company had outstanding 151,854,265 shares of common stock. The Company believes it needs to materially increase the number of shares available for use in connection with equity-based financing transactions, potential strategic acquisitions and general operating initiatives. In addition, in order to comply with Nasdaq continued listing requirements, it is imperative that the Company maintain a minimum bid price for each share of its outstanding common stock of at least |
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| Q. | Why is the Company proposing the Nasdaq Compliance Proposal? | A. In connection with recent sales of the 2024 Notes and 2024 Note Warrants in a private placement as extended ("2024 Debt Placement") as further described herein, the Company is required to seek stockholder approval to allow full conversion and exercise of the securities sold or which may be sold in the 2024 Debt Placement into common stock as prescribed under the terms of such securities, which if fully sold, converted and exercised would result in the aggregate issuance of that number of shares of common stock that currently exceeds 19.99% of the outstanding common stock of the Company. The full conversion and exercise of such securities, if same should occur, would reduce the outstanding indebtedness of the Company (upon conversion of the some or all of the 2024 Notes) and generate additional capital for the Company (upon exercise of some of all of the 2024 Warrants). The board determined it to be in the best interests of the Company and its stockholders to approve the Nasdaq Compliance Proposal as described herein. |
| Q. | Why is the Company proposing the Adjournment Proposal? | A. The Company is proposing the Adjournment Proposal to provide flexibility to adjouthe Special Meeting to give the Company more time to seek stockholder approval of the Reverse Stock Split Proposal or Nasdaq Compliance Proposal if necessary. If the Adjournment Proposal is not approved, the Company will not have the ability to adjouthe Special Meeting to a later date for the purpose of soliciting additional proxies. |
| Q. | How do the Company's executive officers, directors and affiliates intend to vote their shares? | A. All of the Company's directors, executive officers, and their respective affiliates are expected to vote any shares of common stock over which they have voting control in favor of the Reverse Stock Split Proposal, Nasdaq Compliance Proposal, and Adjournment Proposal, if presented. On the record date, shares held by our directors, officers and founding stockholder represented approximately 14% of the Company's issued and outstanding shares of common stock. The holdings of common stock of the Company's directors, executive officers and their respective affiliates and certain holders of more than 5% of our outstanding common stock are described in the section of this proxy statement entitled "Beneficial Ownership of Securities". Any transactions by such persons in the Company's securities between the date stated in such section will be publicly disclosed by the appropriate filing(s) with the |
| Q. | What vote is required to adopt each proposal? |
A.Reverse Stock Split Proposal. Approval of the Reverse Stock Split Proposal will require the affirmative vote of at least a majority of the outstanding common stock of the Company. Nasdaq Compliance Proposal. Approval of the Nasdaq Compliance Proposal will require the affirmative vote of at least a majority of the outstanding common stock of the Company. Adjournment Proposal. Approval of the Adjournment Proposal, if presented, will require the affirmative vote of the holders of a majority of the Company's shares of common stock represented in person (including virtually) or by proxy at the meeting and entitled to vote on such proposal. |
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| Q. | How do I change my vote? | A. If you have submitted a proxy to vote your shares and wish to change your vote, you may do so by delivering a later-dated, signed proxy card to the Company's secretary prior to the date of the Special Meeting or by voting virtually by submitting a ballot at the Special Meeting live webcast. Attendance at the Special Meeting alone will not change your vote. You also may revoke your proxy by sending a notice of revocation to the Company's counsel, Graubard Miller, at |
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| Q. | How are votes counted? |
A. Votes will be counted by the inspector of election appointed for the meeting, who will separately count "FOR" and "AGAINST" votes, abstentions and broker non-votes. If a stockholder fails to vote shares by proxy or to vote virtually by submitting a ballot at the Special Meeting live webcast, such shares will not be counted towards the number of shares of common stock required to validly establish a quorum. Because the approval of the Reverse Stock Split Proposal and Nasdaq Compliance Proposal requires the affirmative vote of at least a majority of our outstanding common stock, abstentions and broker non-votes will have the effect of a vote "AGAINST" the Reverse Stock Split Proposal and Nasdaq Compliance Proposal. |
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| Q. | If my shares are held in "street name," will my broker automatically vote them for me? |
A. If your shares are held by your broker as your nominee (that is, in "street name"), you may need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker to vote your shares. If you do not give instructions to your broker, your broker can vote your shares with respect to "discretionary" items, but not with respect to "non-discretionary" items. Discretionary items are proposals considered routine under the rules of the Your broker, bank, or nominee can vote your shares without receiving your instructions on "routine" proposals only. Your broker, bank, or nominee cannot vote your shares with respect to "non-routine" proposals unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. The Reverse Stock Split Proposal and the Nasdaq Compliance Proposal are each considered a non-routine proposal. Accordingly, your broker, bank, or nominee may not vote your shares with respect to these proposals unless you provide voting instructions. The Adjournment Proposal is considered a routine proposal. Accordingly, your broker, bank, or nominee may vote your shares with respect to such proposal without receiving your instructions. |
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| Q. | What is a quorum requirement? | A. A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least a majority of the outstanding shares of common stock on the record date are represented by stockholders present at the Special Meeting (including virtually) or by proxy. | |
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Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote virtually by submitting a ballot at the Special Meeting live webcast. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, a majority of the votes present at the Special Meeting may adjouthe Special Meeting to another date. |
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| Q. | Who can vote at the Special Meeting? | A. Only holders of record of the Company's shares of common stock at the close of business on |
| Stockholder of Record: Shares Registered in Your Name. If on the record date your shares were registered directly in your name with the Company's transfer agent, |
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| Beneficial Owner: Shares Registered in the |
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| Q. | How do I attend the Special Meeting? |
A. The Special Meeting will be a virtual meeting. Any stockholder wishing to attend the Special Meeting must register in advance. To register for and attend the Special Meeting, please follow these instructions as applicable to the nature of your ownership of the Company's shares of common stock: Record Owners. If you are a record holder and you wish to attend the Special Meeting, go to https://www.cstproxy.com/luxurbanhotels/sm2024, enter the control number you received on your proxy card or notice of the meeting, and click on the "Click here to preregister for the online meeting" link at the top of the page. You will need to log back into the meeting site using your control number immediately prior to the start of the Special Meeting. You must register before the meeting starts. |
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Beneficial Owners. Beneficial owners who wish to attend the Special Meeting must obtain a legal proxy from the stockholder of record and e-mail a copy of their legal proxy to [email protected]. Beneficial owners should contact their bank, broker, or other nominee for instructions regarding obtaining a legal proxy. Beneficial owners who e-mail a valid legal proxy will be issued a meeting control number that will allow them to register to attend and participate in the Special Meeting. You will receive an e-mail prior to the meeting with a link and instructions for entering the Special Meeting. Beneficial owners should contact |
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| Q. | Does the board recommend voting for the approval of the proposals? | A. Yes. After careful consideration of the terms and conditions of the proposals, the Board of the Company has determined that the Reverse Stock Split Proposal, Nasdaq Compliance Proposal, and Adjournment Proposal are fair to and in the best interests of the Company and its stockholders. The Board recommends that the Company's stockholders vote "FOR" the Reverse Stock Split Proposal, "FOR" the Nasdaq Compliance Proposal, and "FOR" the Adjournment Proposal, if presented. |
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| Q. | What interests do the Company's directors and officers have in the approval of proposals? | A. The Company's directors, officers and their affiliates have interests in the Reverse Stock Split Proposal and Nasdaq Compliance Proposal that may be different from, or in addition to, your interests as a stockholder. See the section entitled "The Special Meeting - Interests of the Company's Directors and Officers." | |
| Q. | What if I object to the proposals? Do I have appraisal rights? | A. Company stockholders do not have appraisal rights in connection with the proposals. | |
| Q. | What do I need to do now? | A. The Company urges you to read carefully and consider the information contained in this proxy statement and to consider how the proposals will affect you as a Company stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card. | |
| Q. | How do I vote? |
A. If you are a holder of record of Company shares of common stock, you may vote virtually at the Special Meeting by submitting a ballot during the live webcast or by submitting a proxy for the Special Meeting. Whether or not you plan to attend the Special Meeting, the Company urges you to vote by proxy to ensure your vote is counted. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. You may still attend the Special Meeting and vote virtually if you have already voted by proxy. |
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| If your shares of common stock are held in "street name" by a broker or other agent, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the Special Meeting. However, since you are not the stockholder of record, you may not vote your shares virtually at the Special Meeting unless you request and obtain a valid proxy from your broker or other agent. | |||
| Q. | What should I do if I receive more than one set of voting materials? | A. You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards, if your shares are registered in more than one name or are registered in different accounts. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. Please complete, sign, date and retueach proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your Company shares. | |
| Q. | Who is paying for this proxy solicitation? | A. The Company will pay for the entire cost of soliciting proxies. In addition to these mailed proxy materials, the Company's directors and officers may also solicit proxies in person, by telephone or by other means of communication. These parties will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners. | |
| Q. | Who can help answer my questions? | A. If you have questions about the proposals or if you need additional copies of the proxy statement or the enclosed proxy card you should contact: | |
Attn: Michael James, CFO Telephone: (833) 723-7368 |
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| You may also obtain additional information about the Company from documents filed with the |
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FORWARD-LOOKING STATEMENTS
We believe that some of the information in this proxy statement constitutes forward-looking statements. You can identify these statements by forward-looking words such as "may," "expect," "anticipate," "contemplate," "believe," "estimate," "intends," and "continue" or similar words. You should read statements that contain these words carefully because they:
| ● | discuss future expectations; |
| ● | contain projections of future results of operations or financial condition; or |
| ● | state other "forward-looking" information. |
We believe it is important to communicate the Company's expectations to the Company's stockholders. However, there may be events in the future that the Company is not able to predict accurately or over which the Company has no control. The cautionary language discussed in this proxy statement provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described by us in such forward-looking statements, including, among other things, claims by third parties against the trust account, unanticipated delays in the distribution of the funds from the trust account and the Company's ability to finance and consummate a business combination following the distribution of funds from the trust account, and the Company's ability to enter into a definitive agreement with any prospective target and consummate a business combination. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement.
All forward-looking statements included herein attributable to the Company or any person acting on the Company's behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, the Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement or to reflect the occurrence of unanticipated events.
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DESCRIPTION OF 2024 DEBT PLACEMENT
On
Through the date of this proxy statement, the 2024 Debt Placement has generated aggregate gross cash proceeds of
The 2024 Notes bear interest at 18%, are secured by substantially all of the assets of the Company under the terms of a guarantee and security agreement dated as of
The 2024 Note Warrants have a five-year term from the date of the initial closing of the 2024 Debt Placement and shall become exercisable commencing on the date of the earliest to occur of (a) stockholder approval of the Reverse Stock Split (and implementation thereof) and the Nasdaq Compliance Proposal. both of which are to be considered and voted upon at the Special Meeting to which this proxy statement relates and (b) the 91st day after the initial closing of the 2024 Debt Placement. As modified by the Modification, the 2024 Note Warrants shall entitle the purchaser to purchase up to that number of shares of common stock determined by dividing the principal amount of the 2024 Note purchased by the purchaser by
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From time to time, on and after the earlier of (a) both the completion of the Reverse Stock Split and stockholder approval of the Nasdaq Compliance Proposal and (b) the 91st day after the initial Closing of the 2024 Debt Placement, the holders of the 2024 Notes have the right to convert, in whole or in part, principal and interest thereunder into shares of common stock. Under the Modification, the per-share conversion price sis initially
Under the terms of the 2024 SPA, the Company is obligated to file a preliminary proxy statement for purposes of calling the Special Meeting to consider the Reverse Stock Split Proposal and Nasdaq Compliance Proposal. The Company is obligated to use commercially reasonable efforts to respond to any
Under the Modification, the Company is obligated to file with the
From the date hereof until the date that is the later of (a) the date on which no 2024 Notes are outstanding and (b) the 18-month anniversary of the initial closing of the 2024 Debt Placement, upon any issuance by the Company or any of its subsidiaries of (1) common stock or common stock equivalents, (2) indebtedness or (3) a combination of units thereof, in each case for cash and not as part of any ordinary course of business operations or as part of any underwritten public offering or other exempt issuance (a "Subsequent Private Financing"), each purchaser in the 2024 Debt Placement shall have the right to participate in such Subsequent Private Financing in an amount up to an amount equal to the principal of the 2024 Notes purchased by such purchaser in the 2024 Debt Placement or if the amount of the Subsequent Private Financing is less than the aggregate principal amounts of all 2024 Notes purchased in the 2024 Debt Placement by all purchasers, such purchaser's pro rata portion based on such purchaser's principal amount of the 2024 Notes originally purchased in the 2024 Debt Placement as compared to the principal amount of all 2024 Notes purchased in the 2024 Debt Placement by all purchasers, on the same terms, conditions and price provided for in the Subsequent Private Financing.
The issuance of the 2024 Notes and 2024 Note Warrants were not registered under the Securities Act and may not be offered or sold absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
The foregoing summary description of the terms of the 2024 Debt Placement, the 2024 Notes, the 2024 Note Warrants, the 2024 Security Agreement, the Modification, and other agreements is qualified in its entirety by reference to the definitive transaction documents, which were filed as exhibits to the Company's Current Report on Form 8-K filed with the
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THE REVERSE STOCK SPLIT PROPOSAL
On
The form of the certificate of amendment to the Charter for the reverse stock split (the "Reverse Stock Split Charter Amendment") is attached as Annex A to this Proxy Statement. If approved and adopted by the stockholders, the amendment to the Charter will become effective upon the filing of the Reverse Stock Split Charter Amendment with the
General
By approving this proposal, stockholders will be deemed to have adopted and approved an amendment to our Charter pursuant to which a whole number of issued and outstanding shares of our common stock between 30 and 70, inclusive, would be combined into one share of common stock. Upon receiving stockholder approval, the Board will have the authority, but not the obligation, in its sole discretion, to elect, without further action on the part of the stockholders, whether to effect the Reverse Stock Split and, if so, to determine the Reverse Stock Split ratio from within the approved range described above. The Reverse Stock Split Charter Amendment setting forth the ratio approved by the Board will be filed with the Secretary of State of the
The Board's decision as to whether and when to effect the Reverse Stock Split and the ratio thereof will be based on a number of factors, including market conditions, the historical, then-existing, and expected trading price of our common stock, the anticipated impact of the Reverse Stock Split on the trading price of our common stock and on the number of holders of our common stock, and the continued listing requirements of Nasdaq, as well as on the advice of the Company's investment banking advisors. Although our stockholders may approve the Reverse Stock Split, we will not effect the Reverse Stock Split if the Board does not deem it to be in the best interests of the Company and its stockholders.
The Reverse Stock Split will be realized simultaneously for all issued shares of our common stock. The Reverse Stock Split will affect all holders of common stock uniformly and no stockholder's interest in the Company will be diluted as each stockholder will hold the same percentage of common stock outstanding immediately following the Reverse Stock Split as that stockholder held immediately prior to the Reverse Stock Split, except for immaterial adjustments that may result from the treatment of fractional shares of common stock as described below.
The Reverse Stock Split Charter Amendment will not reduce the number of authorized shares of our common stock (which will remain at 200,000,000 immediately following the Reverse Stock Split) or preferred stock (which will remain at 20,000,000 immediately following the Reverse Stock Split) and will not change the par value of the common stock (which will remain at
Because the Reverse Stock Split will decrease the number of issued shares of common stock by a ratio in the range of 1-for-30 to 1-for-70 but will not decrease to the number of shares of common stock that the Company will be authorized to issue, the Reverse Stock Split Charter Amendment would result in a proportionate increase in the number of authorized and unissued shares of common stock available for future issuance by the Company. For more information on the proportionate increase in the number of authorized shares of common stock, see "Principal Effects of the Reverse Stock Split-Proportionate Increase in Number of Authorized Shares of Common Stock for Issuance" below.
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Purpose and Background of the Reverse Stock Split
The Board believes the Reverse Stock Split is in our stockholders' best interests for the following reasons:
| ● | The Board believes that effecting the Reverse Stock Split would be the most effective means of regaining compliance with the Minimum Bid Price Requirement (as defined below) for continued listing of our common stock on the Nasdaq Capital Market; |
| ● | The Board believes that continued listing on the Nasdaq Capital Market provides overall credibility to an investment in our stock, given the stringent listing and disclosure requirements of Nasdaq listing exchanges; |
| ● | The Board believes that effecting the Reverse Stock Split could support the Company's present capital needs, including by providing sufficient shares to cover the shares underlying the 2024 Notes (as described below) and the 2024 Note Warrants, and providing required authorized capital for future financing activities; |
| ● | The Board believes that a higher stock price, which may be achieved through a Reverse Stock Split, could help generate investor interest in the Company and help attract, retain, and motivate employees; and |
| ● | The Board believes that some potential employees are less likely to work for the Company if we have a low stock price or are no longer listed on the Nasdaq Capital Market, irrespective of the size of our overall market capitalization. |
Nasdaq Requirements for Continued Listing
On
On
On
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On
As of ____________, 2024, the sale price of our common stock on Nasdaq was $_________ per share. A decrease in the number of issued shares of common stock resulting from the Reverse Stock Split should, absent other factors, cause the per share market price of our common stock to trade above the required price. However, we cannot provide any assurance that (i) we will regain compliance with the Minimum Bid Price Requirement, or other listing requirements, of the Nasdaq Capital Market or (ii) even if we do, that our minimum bid price would remain over the Minimum Bid Price Requirement of the Nasdaq Capital Market following the Reverse Stock Split. The Reverse Stock Split we believe would also allow our company to more readily raise additional equity capital, which would assist in the Company maintaining compliance with the Listed Securities Value Minimum requirements described above.
Increased Credibility as a result of continued listing on Nasdaq
The Board believes that continued listing on The Nasdaq Capital Market provides overall credibility to an investment in our stock, given the stringent listing and disclosure requirements of Nasdaq listing exchanges. If our common stock is delisted from the Nasdaq Capital Market, we cannot assure that our common stock would be listed on another national securities exchange, a national quotation service or the over-the-counter markets. Delisting from the Nasdaq Capital Market, or even the issuance of a notice of potential delisting, would also result in negative publicity, make it more difficult for us to raise additional capital, adversely affect the market liquidity of our securities, decrease securities analysts' coverage of us or diminish investor, supplier and employee confidence.
Ability to Meet Present Capital Needs and Future Anticipated Growth
As discussed below under the caption "Principal Effects of the Reverse Stock Split-Proportionate Increase in Number of Authorized Shares of Common Stock for Issuance" the Reverse Stock Split will have the effect of increasing the number of shares of common stock that we are authorized to issue. The availability of additional shares of common stock may provide us with the flexibility to consider and respond to future business opportunities and needs as they arise, including public or private financings, subscription rights offerings, mergers, acquisitions, stock dividends, stock splits and the granting of equity incentive awards. The Reverse Stock Split may permit us to undertake certain of the foregoing actions without the delay and expense associated with holding a meeting of stockholders to obtain stockholder approval each time such an opportunity arises that would require the issuance of shares of common stock.
Regarding present capital needs, in
We do not intend to use the Reverse Stock Split as a part of or a first step in a "going private" transaction within the meaning of Rule 13e-3 of the Exchange Act. There is no plan or contemplated plan by us to take ourselves private at the date of this Proxy Statement.
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Potential Increase in Investor Interest
Our Board also believes that the Reverse Stock Split and any resulting increase in the per share price of our common stock may enhance the acceptability and marketability of our common stock to the financial community and investing public, and thus could encourage increased investor interest and promote greater liquidity for our stockholders.
In the event that our common stock were to be delisted from The Nasdaq Capital Market, our common stock would likely trade in the over-the-counter ("OTC") market. If our common stock were to trade on the OTC market, selling our common stock could be more difficult because smaller quantities of shares would likely be bought and sold, and transactions could be delayed. In addition, many brokerage houses and institutional investors have internal policies and practices that prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers, further limiting the liquidity of our common stock. These factors could result in lower prices and larger spreads in the bid and ask prices for our common stock. Additionally, investors may 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. A greater price per share of common stock could allow a broader range of institutions to invest in our common stock. For all of these reasons, the Board believes that the Reverse Stock Split may increase the marketability, trading volume, and liquidity of our common stock.
Reducing the number of issued shares of common stock through the Reverse Stock Split is intended, absent other factors, to increase the per share trading price of our common stock. However, other factors, such as our financial results and financial outlook and investor perception of our future prospects, as well as general market and economic conditions, among many factors, may positively or negatively affect the trading price of our common stock. Therefore, even if the Reverse Stock Split is effected, the trading price of our common stock may not increase to a level we may have expected following the Reverse Stock Split or, if it does, the trading price of our common stock may decrease in the future. Additionally, the trading price per share of common stock after the Reverse Stock Split may not increase in proportion to the reduction in the number of shares of common stock issued before the Reverse Stock Split. Accordingly, the total market capitalization of our common stock after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split.
Employee Retention
The Board believes that the Company's employees and directors who are compensated in the form of our equity-based securities may be less incentivized and invested in the Company if we are no longer listed on the Nasdaq Capital Market. Accordingly, the Board believes that maintaining Nasdaq listing qualifications for our common stock, can help attract, retain, and motivate employees and members of our Board.
Board Discretion to Implement the Reverse Stock Split
The precise ratio of the proposed Reverse Stock Split shall be a whole number within the range of 1-for-30 and 1-for-70, determined in the sole discretion of our Board. By approving this proposal, stockholders will give our Board authority, but not the obligation, to effect the Reverse Stock Split and full discretion to approve the ratio at which shares of common stock will be automatically combined up to and including a ratio between 1-for-30 and 1-for-70.
Our Board believes that providing our Board with this grant of authority with respect to setting the reverse split ratio, rather than approval of a pre-determined reverse stock split ratio, will give our board of directors the flexibility to set the ratio in accordance with current market conditions and, therefore, allow our Board to act in the best interests of the Company and our stockholders.
15
In determining the ratio following the receipt of stockholder approval, our Board may consider, among other things, factors such as:
| ● | the historical trading price and trading volume of our common stock; |
| ● | the then-prevailing trading price and trading volume of our common stock and the anticipated impact of the Reverse Stock Split on the trading market for our common stock; |
| ● | the number of shares of common stock then outstanding, and the number of shares of our common stock issuable upon exercise of options and warrants then outstanding; |
| ● | the anticipated impact of a particular ratio on our ability to reduce administrative and transactional costs; |
| ● | prevailing general market and economic conditions; |
| ● | any threshold prices of brokerage houses or institutional investors that could impact their ability to invest or recommend investments in our common stock; and |
| ● | compliance with the Minimum Bid Price Requirement. |
If the proposed Reverse Stock Split is effected, then the number of issued shares of our common stock would be reduced. Our Board has reserved the right to abandon the amendment at any time before the effectiveness of the filing of the Reverse Stock Split Charter Amendment with the
Prior to filing the amendment to the Reverse Stock Split Charter Amendment, we must first notify Nasdaq of the anticipated record date of the Reverse Stock Split. We will also announce publicly the reverse split ratio selected by the Board.
Consequences of Not Obtaining Stockholder Approval of the Reverse Stock Split
If we do not obtain stockholder approval of the Reverse Stock Split and we are unable to satisfy the listing requirements for the Nasdaq Capital Market, we may be delisted from the exchange. In addition, if we need additional capital to fund operations and at such time do not have a sufficient number of authorized and unissued shares of common stock to raise such additional capital, our business would be materially and adversely affected. Finally, if we do not have a sufficient number of authorized and unissued shares of common stock to facilitate the conversion features of the 2024 Notes and exercise of the 2024 Note Warrants, such 2024 Notes may be declared in default, accelerating our payment obligations thereunder, and our business will be materially and adversely affected.
If stockholder approval for the Reverse Stock Split is not obtained, the number of shares of common stock that are issued will not change and the anticipated benefits of the Reverse Stock Split described above will not be achieved.
16
Principal Effects of the Reverse Stock Split
Issued Shares of Common Stock
If the Reverse Stock Split is approved and effected, each holder of our common stock outstanding immediately prior to the effectiveness of the Reverse Stock Split will own a reduced number of shares of common stock upon effectiveness of the Reverse Stock Split. For example, a stockholder holding 700,000 shares of common stock before the reverse stock split would instead hold 10,000 shares of common stock immediately after the reverse stock split if the ratio at which the Board determines the ratio to be 1-for-70. The Reverse Stock Split will be effected simultaneously for all issued shares of common stock and the Reverse Stock Split ratio will be the same for all issued shares of common stock. The Reverse Stock Split will affect all of our stockholders uniformly and will not affect any stockholder's percentage ownership interests in the Company, except to the extent that the Reverse Stock Split results in any of our stockholders receiving fair value in cash of any fractional shares they would otherwise be entitled to as a result of the Reverse Stock Split. No fractional shares of common stock will be issued as a result of the Reverse Stock Split. Instead, in lieu of any fractional shares to which a stockholder of record would otherwise be entitled as a result of the Reverse Stock Split, we will pay round up to the nearest whole share. After the Reverse Stock Split, the shares of common stock will have the same voting rights and rights to dividends and distributions and will be identical in all other respects to our common stock now authorized. Common stock issued pursuant to the Reverse Stock Split will remain fully paid and non-assessable. The Reverse Stock Split will not affect the Company continuing to be subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Proportionate Increase in Number of Authorized Shares of Common Stock for Issuance
The Reverse Stock Split will not reduce the number of authorized shares or the par value of our capital stock, which will remain at 200,000,000 shares of common stock, par value
Although the number of authorized shares of Capital Stock will not change as a result of the Reverse Stock Split, the number of shares of our common stock issued and outstanding will be reduced in proportion to the ratio selected by the Board. Thus, the Reverse Stock Split will effectively increase the number of authorized and unissued shares of common stock available for future issuance by the amount of the reduction effected by the Reverse Stock Split.
If the proposed Reverse Stock Split amendments are approved, all or any of the authorized and unissued shares of common stock may be issued in the future for such corporate purposes and such consideration as the Board deems advisable from time to time, without further action by the stockholders of our Company and without first offering such shares to our stockholders. When and if additional shares of common stock are issued, these new shares would have the same voting and other rights and privileges as the currently issued and outstanding shares of common stock, including the right to cast one vote per share.
The Company regularly considers its capital requirements and may conduct equity offerings in the future. Because our stockholders have no preemptive rights to purchase or subscribe for any of our unissued shares of common stock, the future issuance of additional shares of common stock will reduce our current stockholders' percentage ownership interest in the total outstanding shares of common stock. In the absence of a proportionate increase in our future earnings and book value, an increase in the number of our outstanding shares of common stock would dilute our projected future earnings per share, if any, and book value per share of all our outstanding shares of common stock. If these factors were reflected in the price per share of common stock, the potential realizable value of a stockholder's investment could be adversely affected. An issuance of additional shares could therefore have an adverse effect on the potential realizable value of a stockholder's investment.
17
Certain Risks
After the effective time of the amendment to our Charter, each stockholder will own fewer shares of outstanding common stock as a result of the Reverse Stock Split.
A reverse stock split could result in a significant devaluation of our market capitalization and the trading price of our common stock.
We cannot assure you that the Reverse Stock Split, if implemented, will increase the market price of our common stock in proportion to the reduction in the number of issued shares of common stock or result in a permanent increase in the market price. Accordingly, the total market capitalization of our common stock after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split and, in the future, the market price of our common stock following the Reverse Stock Split may not exceed or remain higher than the market price prior to the Reverse Stock Split.
The effect the Reverse Stock Split may have upon the market price of our common stock cannot be predicted with any certainty, and the history of similar reverse stock splits for companies in similar circumstances to ours is varied. The market price of our common stock is dependent on many factors, including our business and financial performance, general market conditions, prospects for future success and other factors detailed from time to time in the reports we file with the
The Reverse Stock Split may result in some stockholders owning "odd lots" that may be more difficult to sell or require greater transaction costs per share to sell.
The Reverse Stock Split may result in some stockholders owning "odd lots" of less than 100 shares of common stock on a post-split basis. These odd lots may be more difficult to sell, or require greater transaction costs per share to sell, than shares in "round lots" of even multiples of 100 shares of common stock.
The reduced number of shares of common stock resulting from a reverse stock split could adversely affect the liquidity of our common stock.
Although the Board believes that the decrease in the number of shares of common stock issued as a consequence of the Reverse Stock Split and the anticipated increase in the market price of common stock could encourage interest in our common stock and possibly promote greater liquidity for our stockholders, such liquidity could also be adversely affected by the reduced number of shares issued after the reverse stock split.
Anti-Takeover and Dilutive Effects
The purpose of maintaining our authorized but unissued common stock at 200,000,000 after the Reverse Stock Split is to facilitate our ability to issue additional shares of common stock to execute our business plan, not to establish any barriers to a change of control or acquisition of the Company. Shares of common stock that are authorized but unissued provide the Board with flexibility to effect, among other transactions, public or private financings, subscription rights offerings, mergers, acquisitions, stock dividends, stock splits and the granting of equity incentive awards. However, the increase in the number of shares of common stock available for issuance could, under certain circumstances, be construed as having an anti-takeover effect.
Our Board did not propose this Reverse Stock Split in response to any effort known to the Board to accumulate common stock or to obtain control of our Company by means of a merger, tender offer or solicitation in opposition to management. In addition, this proposal is not part of any plan by management to recommend a series of similar amendments to our stockholders. Finally, except as described in this Proxy Statement, our Board does not currently contemplate recommending the adoption of any other amendments to our Charter that could be construed as affecting the ability of third parties to take over or change the control of our Company.
In addition, the issuance of additional shares of common stock for any of the corporate purposes listed above could have a dilutive effect on earnings per share of common stock and the book or market value of our outstanding common stock, depending on the circumstances, and would likely dilute a stockholder's percentage voting power in the Company. Holders of common stock are not entitled to preemptive rights or other protections against dilution.
18
Effect on Beneficial Stockholders
If you hold shares of common stock in "street name" through an intermediary, we will treat your common stock in the same manner as stockholders whose shares of common stock are registered in their own names. Intermediaries will be instructed to effect the Reverse Stock Split for their customers holding common stock in street name; however, these intermediaries may have different procedures for processing a reverse stock split. If you hold shares of common stock in street name, we encourage you to contact your intermediaries.
Registered "Book-Entry" Holders of Common Stock
If you hold shares of common stock electronically in book-entry form with our transfer agent, you do not currently have and will not be issued stock certificates evidencing your ownership after the reverse stock split, and you do not need to take action to receive post-reverse stock split shares. If you are entitled to post-reverse stock split shares, a transaction statement will automatically be sent to you indicating the number of shares of common stock held following the reverse stock split.
Effect on Registered Stockholders Holding Certificates
As soon as practicable after the Reverse Stock Split, our transfer agent will mail transmittal letters to each stockholder holding shares of common stock in certificated form. The letter of transmittal will contain instructions on how a stockholder should surrender his or her certificate(s) representing shares of common stock (the "Old Certificates") to the transfer agent in exchange for certificates representing the appropriate number of whole shares of post-reverse stock split common stock (the "New Certificates"). No New Certificates will be issued to a stockholder until such stockholder has surrendered all Old Certificates, together with a properly completed and executed letter of transmittal, to the transfer agent. No stockholder will be required to pay a transfer or other fee to exchange his or her Old Certificates. Stockholders will then receive a New Certificate(s) representing the number of whole shares of common stock that they are entitled as a result of the reverse stock split. Until surrendered, we will deem outstanding Old Certificates held by stockholders to be cancelled and to represent only the number of whole shares of post-reverse stock split common stock to which these stockholders are entitled plus the right to receive in cash the fair value the holder may be entitled to for fractional shares. Any Old Certificates submitted for exchange, whether because of a sale, transfer or other disposition of stock, will automatically be exchanged for New Certificates.
Procedure for Effecting the Reverse Stock Split
If our stockholders adopt and approve this proposal, and the Board elects to effect the Reverse Stock Split, we plan to effect the Reverse Stock Split by filing the Reverse Stock Split Charter Amendment with the
The Board reserves the right, notwithstanding stockholder approval and without further action by the stockholders, to elect not to proceed with the Reverse Stock Split if, at any time prior to filing the Reverse Stock Split Charter Amendment, the Board, in its sole discretion, determines that it is no longer in the best interests of the Company and its stockholders to proceed with the Reverse Stock Split. By voting in favor of the Reverse Stock Split, you are also expressly authorizing the Board to delay or abandon the Reverse Stock split.
Stockholders should not destroy any stock certificate(s) and should not submit any certificate(s) until they receive a letter of transmittal from our transfer agent.
19
Certain Material
The following is a summary of certain material
The tax treatment of a stockholder may vary depending upon the particular facts and circumstances of such stockholder. You should consult with your own tax advisor with respect to the tax consequences of the Reverse Stock Split. As used herein, the term
The following discussion is based on the Internal Revenue Code, applicable Treasury Regulations, judicial authority and administrative rulings and practice, all as of the date hereof. The
For
THE PRECEDING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN
20
Accounting Matters
The par value of the common stock will remain unchanged at
Board Recommendation
The Board recommends that stockholders vote "FOR" the approval of the Reverse Stock Split Proposal.
21
THE NASDAQ COMPLIANCE PROPOSAL
At the Special Meeting, our stockholders will be asked to approve the issuance from time to time of up to (a) an aggregate of up to 247,031,433 (on a pre-Reverse Stock Split basis) shares of our common stock upon full conversion of up to
Reasons We Undertook the 2024 Debt Placement
We believe that the 2024 Debt Placement was necessary in light of the Company's cash requirements at the time. The proceeds that we received from such financing allowed the Company to pay immediately due obligations and continue operations. The Company continues to have material legacy obligations that will need to be serviced over time. We believe that the terms of the 2024 Debt Placement were reasonable in light of market conditions and other available financing alternatives.
Reasons for the Stockholder Approval
Our common stock is currently listed on the Nasdaq Capital Market, and as a result, we are subject to the Nasdaq Listing Rules. In order to comply with the Nasdaq Listing Rules and to satisfy conditions under the 2024 SPA, we are seeking stockholder approval of the Nasdaq Compliance Proposal.
Nasdaq Listing Rule 5635(b) requires stockholder approval for any issuance of securities that will result in a change of control, which Nasdaq generally defines as when one investor or group of investors owns, or has the right to acquire, 20% of more of a company's outstanding common stock or voting power when a company does not have a 20% or greater stockholder before such offering. As a result of the coverability and exercisability into shares of our common stock of the 2024 Notes and the 2024 Warrants, it is possible one or more of the purchasers in the 2024 Debt Placement could come to own in excess of 20% of our outstanding common stock. As of the date of this proxy statement, our founder and former chairman of the board and chief executive officer,
Nasdaq Listing Rule 5635(d) requires stockholder approval prior to the issuance of securities in connection with a transaction other than a public offering involving the sale, issuance or potential issuance of common stock (or securities convertible into or exercisable for common stock) in an amount equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance at a price less than the "Minimum Price." The Minimum Price is defined as the lower of (i) the closing price of the common stock immediately preceding the signing of the binding agreement or (ii) the average closing price of the common stock for the five trading days immediately preceding the signing of the binding agreement.
22
The 2024 Debt Placement did not constitute a public offering under the Nasdaq Listing Rules. On
Accordingly, we are seeking stockholder approval under Nasdaq Listing Rules 5635(b) and 5635(d) for the sale, issuance or potential issuance by us in excess of 20% of the shares of our Common Stock outstanding immediately prior to the execution of the 2024 SPA as a result of future conversion and exercises of the 2024 Notes and the 2024 Note Warrants.
Consequences of Not Approving this Proposal
The Board is not seeking the approval of our stockholders to authorize our entry into the 2024 SPA or the issuance of the 2024 Notes or the 2024 Note Warrants or the transactions prescribed thereby. The failure of our stockholders to approve this proposal will mean that we will not be able to issue shares of common stock in accordance with the terms of such securities, and, under the terms of the 2024 Notes, our inability to issue and deliver such shares would constitute an event of default under the 2024 Notes, which in tuwould provide the holders thereof with the right to accelerate the payment obligations under such notes, and, in any event of our inability or failure to pay same, to proceed against the assets of our company. Pursuant to the terms of the 2024 SPA, we agreed to hold a meeting of stockholders and take such action as necessary in order to obtain stockholder approval in accordance with Nasdaq Listing Rule 5635 to seek approval from our stockholders to issue an aggregate number of shares of common stock in excess of the Nasdaq 19.99% limit. Additionally, failure to obtain such approval may discourage future investors from engaging in future financings with us. If these consequences occur, we may have difficulty finding alternative sources of capital to fund our operations in the future on terms favorable to us or at all. We can provide no assurance that we would be successful in raising funds or that such funds could be raised at prices that would not create substantial dilution for our existing stockholders.
Potential Adverse Effects of Approving this Proposal
If approved, this proposal will provide for the issuance of up to an aggregate of up to 296,437,720 shares of common stock upon conversion of the 2024 Notes and an aggregate of up to 296,437,720 shares of common stock up on exercise of the 2024 Note Warrants. In the aggregate, upon full conversion of the 2024 Notes and exercise of the 2024 Warrants, we would issue in the aggregate up to approximately 592,875,440 shares. For illustration purposes, if we implement a 1-for-70 Reverse Stock Split, the aggregate number of shares issuable upon full conversion of the 2024 Notes and exercise of the 2024 Warrants in accordance with the foregoing would be 8,469,649 shares of common stock. The issuances of shares would dilute the percentage ownership interest of all stockholders, dilute the book value per share of the common stock, and increase the number of the Company's outstanding shares, which could depress the market price of the common stock.
Board Recommendation
The Board recommends that stockholders vote "FOR" the approval of the Nasdaq Compliance Proposal.
23
THE ADJOURNMENT PROPOSAL
The Company is proposing the Adjournment Proposal to allow the Company to adjouthe Special Meeting to a later date or dates to give the Company more time to seek and obtain stockholder approval of Reverse Stock Split Proposal or Nasdaq Compliance Proposal for whatever reason.
If the Adjournment Proposal is presented to the Special Meeting and is not approved by the stockholders, the Company may not be able to adjouthe Special Meeting to a later date or dates if necessary. In such event, the Extension may not be effectuated.
Board Recommendation
The Board recommends that stockholders vote "FOR" the approval of the Adjournment Proposal.
24
BENEFICIAL OWNERSHIP OF SECURITIES
The following table presents the number of shares and percentage of the Company's shares of common stock owned as of the record date by:
| ● | each person known by us to be the beneficial owner of more than 5% of the Company's issued and outstanding shares of common stock; | |
| ● | each of the Company's officers and directors; and | |
| ● | all the Company's officers and directors as a group. |
The following table is based on 151,854,265 shares of common stock outstanding as of the record date,
| Shares of Common Stock Owned(2) |
Percentage Ownership |
|||||||
| 593,137 | * | % | ||||||
| Michael James, Chief Financial Officer(4) | 405,774 | * | % | |||||
| 176,130 | * | % | ||||||
| 3,343,340 | 2.44 | % | ||||||
| 1,518,269 | 1.11 | % | ||||||
| 380,594 | * | % | ||||||
| 380,634 | * | % | ||||||
| 1,893,627 | 1.38 | % | ||||||
| 341,793 | * | % | ||||||
| 322,266 | * | % | ||||||
| 12,558,372 | 9.18 | % | ||||||
| Greenle Partners LLC Series Alpha P.S. and affiliate(8) | 14,200,000 | 9.78 | % | |||||
| 12,487,386 | 9.12 | % | ||||||
| All executive officers and directors (and nominees) as a group(10) | 9,554,230 | 6.98 | % |
| * | Represents less than 1.0% of class. |
| (1) | Unless otherwise stated below, the business address of each holder is c/o |
| (2) | Beneficial ownership is determined in accordance with Section 13(d) of the Exchange Act and generally includes shares over which such stockholder has voting or dispositive power, including any shares that such stockholder has the right to acquire within 60 days of the date hereof. |
| (3) | Does not include (i) 250,000 shares of restricted common stock issued to him under his employment agreement with our company, which vest in four equal annual installments commencing |
25
| (4) | Does not include (i) 100,000 shares of restricted common stock issued to him pursuant to the terms of his original employment agreement with our company, dated |
| (5) | Includes (i) 51,666 shares underlying currently vested options and (ii) 94,399 shares owned by him. Does not include (a) 100,000 restricted shares issued to him under his employment agreement with our company, which vest in four equal annual installments commencing |
| (6) | Includes 23,611 shares of common stock issuable upon exercise of warrants granted to |
| (7) | Includes (i) 2,354,917 shares of common stock owned by |
| (8) | Information based on the Form 13G/A filed jointly with the |
| (9) | Information based on the Form 13-D filed jointly with the |
| (10) | Represents all shares indicated as included in the beneficial ownership table above. Excludes all shares indicated as not included in footnotes (3) through (10) above. |
26
STOCKHOLDER PROPOSALS
In order for a stockholder proposal to be properly submitted pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the "Exchange Act") ("Rule 14a-8") for presentation at our annual meeting in 2025 and included in the proxy material for next year's annual meeting, we must receive written notice of the proposal at our executive offices by
The Company's Bylaws provide that, in addition to any other applicable requirements, for business to be properly brought before the 2025 annual meeting by a stockholder, but not included in the Company's proxy statement, the stockholder must give timely notice in writing not earlier than
The Company's Bylaws provide that a stockholder of record, both at the time of the giving of the required notice set forth in this sentence and at the time of the 2025 annual meeting, entitled to vote at the annual meeting may nominate persons for election to the Board of Directors by mailing written notice to the Secretary of the Company not earlier than
In addition to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company's nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than
In addition to our Bylaws, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act, and the rules and regulations thereunder. Our Bylaws do not affect any right of a stockholder to request inclusion of a proposal in, or our right to omit a proposal from, our Proxy Statement pursuant to Rule 14a-8 or Rule 14a-19 (or any successor provision).
27
DELIVERY OF DOCUMENTS TO STOCKHOLDERS
Pursuant to the rules of the
28
WHERE YOU CAN FIND MORE INFORMATION
The Company files reports, proxy statements and other information electronically with the
Tel: (833) 723-7368
29
ANNEX A
PROPOSED FORM OF REVERSE STOCK SPLIT CHARTER AMENDMENT
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
LUXURBAN HOTELS INC.
FIRST: The name of the Corporation is
SECOND: The Board of Directors of the Corporation (the "Board"), acting in accordance with the provisions of Section 242 of the DGCL, duly adopted and approved resolutions to amend the Existing Certificate.
THIRD: The Existing Certificate is hereby amended by restating in its entirety Article Fourth as follows
"FOURTH. The total number of shares of all classes of stock which the Corporation shall have authority to issue is 220,000,000 shares, consisting of (i) 200,000,000 shares of Common Stock,
FOURTH: This Certificate of Amendment to the Existing Certificate was duly approved and adopted, pursuant to the provisions of Section 242 of the DGCL, by unanimous written consent of the Board, and was duly approved and adopted by written consent of the holders of the requisite majority of the outstanding Common Stock of the Corporation in accordance with Section 228 of the DGCL.
IN WITNESS WHEREOF, this Certificate of Amendment to the Certificate of Incorporation of
| Chief Executive Officer |
A-1
PROXY
LUXURBAN HOTELS INC.
SPECIAL MEETING
___________, 2024
YOUR VOTE IS IMPORTANT
FOLD AND DETACH HERE
LUXURBAN HOTELS INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING TO BE HELD ON
___________, 2024
The undersigned, revoking any previous proxies relating to these shares, hereby acknowledges receipt of the Notice and Proxy Statement, dated ____________, 2024, in connection with the Special Meeting to be held at
THIS PROXY, WHEN EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE REVERSE STOCK SPLIT PROPOSAL (PROPOSAL 1), "FOR" THE NASDAQ COMPLIANCE PROPOSAL (PROPOSAL 2) AND "FOR" THE ADJOURNMENT PROPOSAL (PROPOSAL 3), IF PRESENTED.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL PROPOSALS.
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting to be held on ______________, 2024: This notice of meeting and the accompany proxy statement are available at https://www.cstproxy.com/luxurbanhotels/sm2024.
|
Proposal 1 - Reverse Stock Split Proposal |
FOR | AGAINST | ABSTAIN | |||
| Amend our Amended and Restated Certificate of Incorporation (the "Charter") to effect a reverse stock split of our outstanding common stock by a ratio of not less than one-for-thirty and not more than one-for-seventy, with the exact number to be set at a whole number within this range to be determined by our board of directors in its sole discretion and to authorize our board of directors to implement the reverse stock split by filing an amendment to our Charter | ☐ | ☐ | ☐ | |||
| Proposal 2 - Nasdaq Compliance Proposal | FOR | WITHHOLD | ABSTAIN | |||
| Approve, for purposes of complying with Nasdaq Listing Rule 5635, the issuance of shares of our common stock upon (a) conversion of our 2024 Notes (as defined in the proxy statement and (b) exercise of our outstanding 2024 Note Warrants (as defined in the proxy statement), in excess of the 19.99% share limitation contained in such securities | ☐ | ☐ | ☐ |
| Proposal 3 - Adjournment Proposal | FOR | AGAINST | ABSTAIN | |||
| Approve the adjournment of the Special Meeting to a later date or dates, if the Company determines that additional time is necessary to obtain approval of the Reverse Stock Split Proposal or Nasdaq Compliance Proposal. | ☐ | ☐ | ☐ |
| Dated: | 2024 | ||
| Stockholder's Signature | |||
| Stockholder's Signature |
Signature should agree with name printed hereon. If stock is held in the name of more than one person, EACH joint owner should sign. Executors, administrators, trustees, guardians, and attorneys should indicate the capacity in which they sign. Attorneys should submit powers of attorney.
PLEASE SIGN, DATE AND RETURN THE PROXY IN THE ENVELOPE ENCLOSED TO CONTINENTAL STOCK TRANSFER &
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