| UNITED
STATES |
| SECURITIES
AND EXCHANGE COMMISSION |
| Washington,
D.C. 20549 |
| |
| SCHEDULE
14A INFORMATION |
| |
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 |
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| 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 |
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| ☐Definitive
Additional Materials |
| ☐Soliciting
Material under §240. 14a-12 |
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| SOLUNA
HOLDINGS, INC. |
| |
| (Name
of Registrant as Specified in Its Charter) |
| |
| (Name
of Person(s) Filing Proxy Statement, if other than the Registrant) |
| |
| Payment
of Filing Fee (Check the appropriate box): |
| ☒No
fee required |
| ☐Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 |
| (1) | Title of each class of securities to which transaction
applies: |
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| | | |
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| (2) | Aggregate number of securities to which transaction
applies: |
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| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| | | |
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| (4) | Proposed maximum aggregate value of transaction: |
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| | | |
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| ☐Fee
paid previously with preliminary materials. |
☐Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify
the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing. |
| (1) | Amount Previously Paid: |
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| | | |
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| (2) | Form, Schedule or Registration Statement No.: |
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Payment
of Filing Fee (Check all boxes that apply):
☒ No fee required
☐
Fee paid previously with preliminary materials
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Fee computed on table in exhibit required by Item 25(B) per Exchange Act Rules 14(a)-6(i)(1) and 0-11
SOLUNA
HOLDINGS, INC.
325 WASHINGTON AVENUE EXTENSION
ALBANY, NEW YORK 12205
NOTICE
OF SPECIAL MEETING OF STOCKHOLDERS
To
the Stockholders of Soluna Holdings, Inc.:
NOTICE
IS HEREBY GIVEN that a special meeting of stockholders (the “Special Meeting”) of Soluna Holdings, Inc., a Nevada
corporation (the “Company”), will be held on September 29, 2022, at 10:00 a.m., Eastern Time. The Special Meeting
will be held completely virtually. You will be able to participate in the Special Meeting as well as vote and submit your questions
and examine our stockholder list during the live webcast of the Special Meeting by visiting www.virtualshareholdermeeting.com/SLNH2022SM
and entering the 16-digit control number included on your proxy card (the “Proxy Card”). At the Special Meeting, stockholders
will be asked to consider and act upon the following matters:
| 1. | To
approve the issuance of shares of the Company’s common stock issuable upon the
conversion of certain convertible notes and the exercise of certain warrants (“Proposal
No. 1”); |
| 2. | To
approve the issuance of shares of the Company’s common stock issuable upon the
conversion of the Company’s Series B Convertible Preferred Stock and the exercise
of certain warrants (the “Proposal No. 2”); and |
| 3. | To
transact such other business as may properly come before the meeting. |
The
Board of Directors has fixed the close of business on September 7, 2022 as the record date for determining stockholders entitled
to notice of, and entitled to vote at, the Special Meeting and any adjournments or postponements thereof. Only holders of record
of the Company’s common stock at the close of business on that date will be entitled to notice of, and to vote at, the Special
Meeting and any adjournments or postponements thereof.
By
Order of the Board of Directors, |
|
|
| /s/
Philip F. Patman, Jr. |
|
| Philip
F. Patman, Jr. |
|
| Chief
Financial Officer and Secretary |
|
| |
|
| Albany,
New York |
|
| September 19,
2022 |
|
It
is important that your shares are represented and voted at the Special Meeting. Whether or not you intend to be present virtually
at the meeting, please vote your shares according to the instructions on the accompanying Proxy Card. The proxy is revocable and
will not be used if you attend and vote at the Special Meeting and vote “in person” at the meeting or otherwise provide
notice of your revocation.
SOLUNA
HOLDINGS, INC.
325 WASHINGTON AVENUE EXTENSION
ALBANY, NEW YORK 12205
PROXY
STATEMENT
This
proxy statement (this “Proxy Statement”) is furnished in connection with the solicitation of proxies by the Board
of Directors (the “Board”) of Soluna Holdings, Inc., a Nevada corporation (referred to in this Proxy Statement as
the “Company,” “we,” or “us”), to be voted at the special meeting of stockholders of the Company
(the “Special Meeting”) to be held virtually on September 29, 2022 at 10:00 a.m., Eastern Time.
Record
Date and Voting Securities
The
Notice of Special Meeting, this Proxy Statement and accompanying proxy card (the “Proxy Card”) are first being mailed
to stockholders of the Company on or about September 19th, 2022 in connection with the solicitation of proxies for
the Special Meeting. The Board has fixed the close of business on September 7, 2022 as the date of record date for the determination
of stockholders entitled to notice of, and entitled to vote at, the Special Meeting (the “Record Date”). Only holders
of record of our common stock, par value $0.001 per share (“Common Stock”), at the close of business on the Record
Date will be entitled to notice of, and to vote at, the Special Meeting. As of the Record Date, there were 14,781,748 shares of
Common Stock outstanding and entitled to vote at the Special Meeting. Each holder of Common Stock outstanding as of the close
of business on the Record Date will be entitled to one vote for each share held as of the Record Date with respect to each matter
submitted to the stockholders at the Special Meeting.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE
HELD ON SEPTEMBER 26, 2022.
The
Notice of the Special Meeting and Proxy Statement are available at www.proxyvote.com.
Questions
and Answers About the about the Special Meeting and Voting
| |
1. |
Why am I receiving
these materials? |
The
Company sent you this Proxy Statement and enclosed proxy card because the Board is soliciting your proxy to vote at the Special
Meeting.
| |
2. |
What is the purpose
of the Special Meeting? |
At
the Special Meeting, the stockholders will be asked to consider and act upon the following matters:
| ● | to
approve the issuance of shares of the Common Stock issuable upon the conversion of certain
convertible notes and the exercise of certain warrants as described more fully herein; |
| ● | to
approve the issuance of shares of the Common Stock issuable upon the conversion of the
Company’s Series B Convertible Preferred Stock, par value $0.0001 (the “Series
B Preferred Stock”) and the exercise of certain warrants issued in connection with the Series B Preferred Stock; and |
| ● | to
transact such other business as may properly come before the meeting. |
| |
3. |
Who can vote at the
Special Meeting? |
Only
stockholders of record as of the Record Date. Each stockholder will be entitled to cast one vote on each proposal presented at
the Special Meeting for each share of the Common Stock that such holder owned as of the Record Date.
| |
4. |
What are my voting
rights? |
Holders
of Common Stock are entitled to one vote per share. As of the Record Date, a total of 14,781,748 shares of Common Stock were issued
and outstanding. There is no cumulative voting.
| |
5. |
How do I cast my
vote? |
If
you are a stockholder of record as of the Record Date, you may vote virtually at the Special Meeting by submitting a ballot during
the live webcast, online by going to www.proxyvote.com and follow the instructions provided, by phone by calling 1-800-690-6903
and follow the recorded instructions or by mail by completing, signing, dating and timely returning the enclosed Proxy Card in
the accompanying pre-addressed, postage-paid envelope.
If
your shares of Common Stock are held in “street name” by a bank, broker or other nominee, you have the right to direct
your bank, broker or other nominee on how to vote the shares in your account. Please see below for additional information.
| |
6. |
How do I change my
vote? |
You
may revoke your proxy and change your vote at any time before the final vote at the Special Meeting. You can revoke a proxy by:
| ● | by
giving written revocation to the Company’s secretary; |
| ● | signing
and delivering a proxy bearing a later date; |
| ● | voting
again over the Internet or by telephone; or |
| ● | voting
virtually by submitting a ballot at the Special Meeting live webcast. Your attendance
at the Special Meeting will not automatically revoke your proxy unless you vote again
at the meeting or specifically request in writing that your proxy be revoked. |
Please
note, however, that if your shares are held of record by a broker, bank, or other nominee and you wish to revoke a proxy, you
must contact that firm to revoke any prior voting instructions.
| |
7. |
Where and when will
I be able to find the results of the voting? |
The
Company will publish the final results in a Current Report on Form 8-K to be filed with the Securities and Exchange Commission
no later than four business days after the date of the Special Meeting.
| |
8. |
Where
is the Special Meeting being held? |
We
will hold the Special Meeting virtually at www.virtualshareholdermeeting.com/SLNH2022SM on September 29, 2022, at 10:00 a.m.
Eastern Time, unless postponed or adjourned to a later date.
| |
9. |
How do I attend the
Special Meeting? |
The
Special Meeting will be a virtual meeting. You can participate in the Special Meeting by attending the live webcast at www.virtualshareholdermeeting.com/SLNH2022SM.
Proxies;
Voting of Proxies
The
Board is soliciting proxies for use at the Special Meeting, and such proxy will not be voted at any other meeting. Michael Toporek
is the person selected by the Board to serve as proxy with respect to the Special Meeting. Mr. Toporek is the Chief Executive
Officer of the Company.
Your
vote is important. If you are a stockholder of record, whether or not you plan to attend the Special Meeting via the live webcast,
we urge you to submit your proxy to ensure that your vote is counted. You may still view the live webcast of the Special Meeting
and vote in person even if you have already voted by proxy. You may vote in one of the following ways:
| ● | vote
electronically at the Special Meeting by attending the live webcast at www.virtualshareholdermeeting.com/SLNH2022SM
and follow the instructions on how to vote electronically; |
| ● | vote
online by going to www.proxyvote.com and follow the instructions provided; |
| ● | vote
by phone by calling 1-800-690-6903 and follow the recorded instructions; or |
| ● | vote
by mail by voting, signing, and timely mailing your proxy card. |
The
shares represented by each proxy will be voted in accordance with the directions specified thereby. If you return a properly executed
proxy card but do not fill out the voting instructions on the proxy card or if you indicate when voting on the Internet or over
the telephone that you wish to vote as recommended by the Board, the shares represented by your proxy, assuming it is not properly
revoked pursuant to the instructions below, will be voted by the person named as proxy in accordance with the recommendations
of the Board contained in this Proxy Statement.
The
Board knows of no matters to be presented at the Special Meeting other than those described in this Proxy Statement. In the event
that other business properly comes before the meeting, the person named as proxy will have discretionary authority to vote the
shares represented by any properly provided proxy in accordance with his own judgment.
Revocation
of Proxies
Each
stockholder giving a proxy has the power to revoke it at any time before the shares represented by that proxy are voted. A proxy
may be revoked, prior to its exercise, by (i) executing and delivering a later-dated proxy via the Internet, via telephone, or
by mail; (ii) delivering written notice of revocations of the proxy to our Secretary prior to the Special Meeting; or (iii) logging
on to the live webcast of the Special Meeting and voting as directed at the Special Meeting. Please note that a stockholder’s
attendance at the live webcast of the Special Meeting will not, by itself, revoke such stockholder’s proxy.
Subject
to the terms and conditions set forth herein, all proxies received by us will be effective, notwithstanding any transfer of the
shares to which such proxies relate, unless at or prior to the Special Meeting we receive a written notice of revocation signed
by the person who, as of the Record Date, was the registered holder of such shares. The notice of revocation must indicate the
certificate number(s) and number of shares to which such revocation relates and the aggregate number of shares represented by
such certificate(s).
If
your shares are held in “street name,” as discussed below under the heading “Beneficial Owner: Shares Registered
in the Name of Broker, Bank, or other Nominee,” you must contact your broker, bank, or other nominee to revoke any prior
voting instructions.
Beneficial
Owner: Shares Registered in the Name of Broker, Bank, or other Nominee
Many
shares of Common Stock are held in “street name,” meaning that a depository, broker-dealer, or other financial institution
holds the shares in its name, but such shares are beneficially owned by another person. If your shares of Common Stock are held
in street name as of the Record Date, you should receive instructions from the holder of record that you must follow in order
for you to specify how your shares will be voted at the Special Meeting; alternatively, you can use the voting information form
provided by Broadridge to instruct your record owner on how to vote your shares. Generally, a street name holder that is a broker
must receive direction from the beneficial owner of the shares to vote on issues other than certain limited routine, uncontested
matters, such as the ratification of auditors. In the case of non-routine or contested items, the brokerage institution holding
street name shares cannot vote the shares if it has not received voting instructions from the beneficial holder thereof. A broker
“non-vote” occurs when a proxy is received from a broker but the shares represented by such proxy are not voted on
a particular matter because the broker has not received instructions from the beneficial owner or other persons entitled to vote
shares on a particular matter with respect to which the broker does not have discretionary power to vote the shares.
If
your shares are held of record by a person or institution other than a broker, whether such nominee can exercise discretionary
authority to vote your shares on any matter at the Special Meeting in the absence of instructions from you will depend on your
individual arrangement with that nominee record holder, in particular, whether you have granted such record holder discretionary
authority to vote your shares. In the absence of an arrangement with your record holder granting such discretionary authority,
your record holder nominee will not have discretionary authority to vote your shares on any matter at the Special Meeting in the
absence of specific voting instructions from you.
If,
as of the Record Date, your shares of Common Stock were held in an account at a broker, bank, or other nominee, then you are the
beneficial owner of shares held in “street name” and the proxy materials are being forwarded to you by that organization.
The organization holding your account is considered the stockholder of record. As a beneficial owner, you may direct your broker,
bank, or nominee how to vote the shares in your account or “vote” (provide instructions) online at the Special Meeting
using the 16-digit control number included on your voting instruction form or otherwise provided by the organization that is the
record holder of your shares.
Quorum
and Method of Tabulation
The
presence, in person or by proxy, of holders of 33 1/3% of the total number of outstanding shares of Common Stock entitled to vote
is necessary to constitute a quorum for the transaction of business at the Special Meeting. Assuming a quorum is present, Proposal
No. 1 and Proposal No. 2 will be approved by our stockholders if the number of votes cast in favor of the proposal exceeds the
number of votes cast against the proposal.
One
or more inspectors of election appointed for the meeting will tabulate the votes cast in person or by proxy at the Special Meeting,
and will determine whether or not a quorum is present. The inspectors of election will treat abstentions as shares that are present
and entitled to vote for purposes of determining the presence of a quorum, but as not cast for purposes of determining the vote
on any matter submitted to stockholders. As abstentions are not included in calculating votes cast with respect to any proposal,
abstentions will have no effect on the outcome of any proposal submitted to stockholders at the Special Meeting.
If
a broker submits a proxy indicating that it does not have discretionary authority as to certain shares to vote on a particular
matter, those shares will be treated as shares that are present and entitled to vote for purposes of determining quorum, but as
not cast for purposes of determining the vote on such matter submitted to the stockholders for a vote. As a result, broker
non-votes will have no effect on the outcome of Proposal 1 or 2.
Format
of and Admission to the Special Meeting
Primarily
in light of the continued public health impact of the COVID-19 pandemic, we will hold the Special Meeting in a virtual-only format,
which will be conducted over the Internet via live webcast. In addition, we may continue to hold our special meetings using a
virtual-only format in future years, even after the pandemic, as we believe that a virtual format is more environmentally-friendly,
allows greater stockholder participation, and decreases the costs of holding the special meeting. We intend to hold our virtual
special meetings in a manner that affords stockholders
the same general rights and opportunities to participate, to the greatest extent possible,
as they would have at an in-person meeting.
The
Special Meeting will be held live via the Internet on September 29, 2022 at 10:00 a.m., Eastern Time, at www.virtualshareholdermeeting.com/SLNH2022SM.
You will not be able to attend the meeting in person. Participation in and attendance at the Special Meeting is limited to our
stockholders of record as of the close of business on September 7, 2022, and other persons holding valid proxies for the Special
Meeting. Online access will begin at 9:45 a.m., Eastern Time, on September 29, 2022, and we encourage you to access the Special
Meeting prior to the start time. To be admitted to the Special Meeting at www.virtualshareholdermeeting.com/SLNH2022SM, you
must enter the 16-digit control number included on your proxy card or, for beneficial owners of shares held in “street name”
as discussed above the heading “Beneficial Owner: Shares Registered in the Name of Broker, Bank, or other Nominee,”
on your voter information form. If you encounter difficulties accessing the virtual meeting, please call the technical support
number that will be posted at www.virtualshareholdermeeting.com/SLNH2022SM.
Stockholders
will be able to submit questions via the online platform during a portion of the Special
Meeting. You may submit questions by signing into the virtual meeting platform at www.virtualshareholdermeeting.com/SLNH2022SM,
typing a question
into the “Ask a Question” field, and clicking “submit.” Only questions that are pertinent to meeting matters
will be answered during the Special Meeting, subject to time constraints. Questions regarding personal matters or matters not
relevant to the Special Meeting will not be answered. If we receive substantially similar questions, we will group them together
to avoid repetition. If there are questions pertinent to meeting matters that cannot be answered during the meeting due to time
constraints, we will post answers to a representative set of such questions at https://www.solunacomputing.com/investors/.
The questions and answers will be available as soon as practicable after the Special Meeting.
Householding
of Special Meeting Materials
Some
banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements.
This means that only one copy of our Proxy Statement to stockholders may have been sent to multiple stockholders who share an
address unless we have received instructions to the contrary. We will promptly deliver a separate copy of either document to any
stockholder upon written or oral request. Requests may be made by mail to: Soluna Holdings, Inc, ATTN: Investor Relations Department,
325 Washington Avenue Extension, Albany, New York 12205; by e-mail: hello@soluna.io or by telephone: (518) 218-2550. Any stockholder
who would like to receive separate copies of our proxy statement in the future, or any stockholder who is receiving multiple copies
and would like to receive only one copy per household in the future, should contact their bank, broker, or other nominee record
holder, or us directly at the address, e-mail address or phone number listed above.
Proxy
Solicitation Expense
We
do not anticipate engaging a paid proxy solicitor to assist with the solicitation of proxies for the Special Meeting. Our directors,
officers and employees, without receiving any additional compensation, may solicit proxies personally or by telephone, facsimile,
or email. The Company will pay all costs and expenses incurred in the solicitation of proxies for the Special Meeting. We will
also reimburse banks, brokers, and other nominees for reasonable expenses incurred in forwarding proxy materials to their customers
or principals who are the beneficial owners of shares of Common Stock held in street name.
PROPOSAL
NO. 1
TO APPROVE THE ISSUANCE OF SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION OF CERTAIN CONVERTIBLE NOTES AND THE EXERCISE
OF CERTAIN WARRANTS.
Summary
The
purpose of Proposal No. 1 is to obtain the stockholder approval necessary under applicable Nasdaq Stock Market rules to allow
for the full issuance of shares of Common Stock upon the conversion of convertible notes and exercise of warrants of the Company
(as described below) into shares of Common Stock.
Background
On
October 20, 2021, the Company entered into a Securities Purchase Agreement (the “SPA”) for an aggregate
financing of $15 million with certain accredited investors (the “Investors”). At the closing under the SPA, which
occurred on October 25, 2021, the Company issued to the Investors (i) secured convertible notes in the aggregate principal
amount of $16,304,348 for an aggregate purchase price of $15 million (collectively, the “Notes”), which are,
subject to certain conditions, convertible at any time by the Investors, originally into an aggregate of 1,776,073 shares
(the “Conversion Shares”) of the Common Stock, at an original price per share of $9.18; and (ii) Class A, Class B
and Class C common stock purchase warrants (collectively, the “Investor Warrants”) to purchase originally up to
an aggregate of 1,776,073 shares of Common Stock (the “Warrant Shares”), at original exercise prices of $12.50,
$15, and $18 per share, respectively. The Investor Warrants are immediately exercisable for five years upon issuance, subject
to applicable Nasdaq rules.
On
July 19, 2022, the Company entered into an addendum with the collateral agent and the Investors to amend certain terms of the
SPA and the Notes (the “Addendum”). Pursuant to the Addendum, among other things, the exercise prices of the Class
A and B Warrants and 85,000 warrants to purchase Common Stock issued to the Investors on January 13, 2022 were reduced to $9.50
a share. In addition, the Company agreed to exchange the Class C Warrants for 296,013 shares of Common Stock.
On September 13, 2022, the Company entered into an amendment of the Addendum with the Investors to amend
certain terms of the Notes, the SPA and the Addendum (the “Addendum Amendment”). Pursuant to the Addendum Amendment,
among other things, the Company issued to the Investors (i) 430,564 shares of Common Stock and (ii) four (4) new classes of warrants
each to purchase up to 1,000,000 shares of Common Stock:, the Class D, Class E, Class F and Class G Warrants (the “Exchange
Warrants” and together with the Investor Warrants, the “Warrants”) at exercise prices of $3.50, $4.50, $5.50
and $7.50, respectively, in exchange for the outstanding Class B Warrants. The Exchange Warrants are immediately exercisable for
five years upon issuance, subject to applicable Nasdaq rules.
The
Addendum Amendment also extended the maturity date of the Notes by six months to April 25, 2023 (the “Maturity Date”),
and increased the principal
amount of the Notes by an aggregate of $520,241 for a total outstanding principal amount of $13,006,022. Also pursuant to the
Addendum Amendment, at any time on or prior to October 17, 2022, the Investors have the option to convert up to $1,000,000 of
the Notes into shares of the Common Stock at a conversion price of $2.2186 per share. Upon the Maturity Date, the Notes
shall be payable in full. Commencing
on the Maturity Date and also five (5) days after the occurrence of any Event of Default (as defined in the Notes),
interest on the Notes will accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under
applicable law. If any Event of Default or a Fundamental Transaction (as defined in the Notes) or a Change of Control (as
defined in the Notes) occurs, the outstanding principal amount of the Notes, liquidated damages and other amounts owing
in respect thereof through the date of acceleration, will become, at the Investor’s election, immediately due and payable
in cash at the Mandatory Default Amount (as defined in the Notes). The Notes may not be prepaid, redeemed or mandatory converted
without the consent of the Investors. The obligations of the Company pursuant to the Notes are secured by a security agreement
dated as of October 25, 2021 which granted Collateral Services LLC, the collateral agent, a security interest in the assets of
the Company and its subsidiaries.
As of the date hereof, the Notes are convertible into an aggregate of 3,468,272 shares of Common
Stock at a conversion price of $3.75 per share of Common Stock (subject to the Investors’ option at any time on or prior
to October 17, 2022 to convert up to $1,000,000 of the Notes into shares of the Common Stock at a conversion price of $2.2186
per share) and the Warrants are exercisable for an aggregate 4,592,025 shares of Common Stock.
Effect
of Issuance of Additional Securities
As
of September 15, 2022, we had 14,783,748 shares of Common Stock issued and outstanding (such amount not giving effect to the exercise
of any outstanding options, warrants or any other rights to purchase our securities) (the “September 15 Outstanding Share
Amount”). Based on the September 15 Outstanding Share Amount, if the Investors were to convert the Notes into 3,468,272
shares of Conversion Shares and exercise the Warrants in full to purchase (4,592,025 Warrant Shares, the Investors would be issued
an aggregate of 8,060,297 shares of our Common Stock, equal to 34.63% of our issued and outstanding Common Stock on a pre-transaction
basis (using the September 15 Outstanding Share Amount plus the number of shares of Common Stock into which the Notes are convertible
and the Warrants are exercisable as the denominator), of which 14.90% would be Conversion Shares and 19.73% would be Warrant Shares),
assuming the Investors waive the provisions in the Notes and the Warrants limiting their beneficial ownership of shares of Common
Stock to 4.99%.
As
such, for so long as the Investors beneficially own a significant amount of shares of Common Stock, they could significantly
influence future Company decisions. Our stockholders will incur dilution of their percentage ownership to the extent that
the Investors fully convert the Notes or exercise the Warrants. Further, because of the possibility that the conversion price
and exercise price may be further adjusted to a lower amount, stockholders may experience an even greater dilutive effect. If
the Company is required to make additional adjustments to the conversion price of the Notes in order to facilitate their conversion
into Common Stock and avoid a repayment in cash, there will likely be additional dilution beyond the 14.90% currently anticipated
by this proxy statement. In particular, as of the date hereof, the conversion price of the Notes is higher than the closing price
of the Common Stock on the Nasdaq Stock Market. In the event the Company and the Investors agree to decrease the conversion price
of the Notes or the exercise price of the Warrants in the future, the Company could issue more shares of Common Stock to the Investors
than the amounts set forth above. Stockholder
approval of Proposal No. 1 will apply to all issuances of Common Stock pursuant to the Notes and Warrants, including such potential
issuance of additional shares.
Nasdaq
Marketplace Requirements and the Necessity of Stockholder Approval
The
Common Stock is currently listed on the Nasdaq Capital Market and, as such, the Company is subject to the Nasdaq Stock Market
rules. Nasdaq Marketplace Rule 5635(d) requires the Company to obtain stockholder approval prior to the issuance of Common Stock
in connection with certain non-public offerings involving the sale, issuance or potential issuance by the Company of shares of
Common Stock (and/or securities convertible into or exercisable for shares of Common Stock) equal to 20% or more of the shares
of Common Stock outstanding prior to such issuance where the price of the Common Stock to be issued is below the “Minimum
Price.” “Minimum Price” means a price that is the lower of: (i) the Nasdaq Official Closing Price (as reflected
on Nasdaq.com) immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of
the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement.
Shares of Common Stock issuable upon the exercise or conversion of warrants, options, debt instruments, preferred stock or other
equity securities issued or granted in such non-public offerings will be considered shares issued in such a transaction in determining
whether the 20% limit has been reached, except in certain circumstances such as issuing warrants that are not exercisable for
a minimum of six months and have an exercise price that exceeds market value. The Company believes that the full issuance of shares
of Common Stock upon the conversion of convertible notes and exercise of warrants of the Company (as described above) into shares
of Common Stock may require stockholder approval.
If our stockholders
do not approve this Proposal No. 1, the Notes will not be fully convertible and the Warrants will not be exercisable in a manner
that complies with Nasdaq Marketplace Rule 5635(d). In addition, our failure to obtain approval of this Proposal No. 1 when such
failure would prohibit us to satisfying our obligations under the Notes and the Warrants might constitute an Event of Default
under the Notes and Warrants, and result in an obligation to immediately purchase back in cash any outstanding principal amount
of the Notes or unexercised Warrants at the amounts as described in the Notes and Warrants.
Additional
Information
This
summary is intended to provide you with basic information concerning the SPA, Notes, the Warrants, the Addendum, and the Addendum
Amendment. The full text of the SPA, the forms of Notes and Investor Warrants were filed as exhibits to our Current Report
on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on October 25, 2021, the form of the
Addendum was filed as an exhibit to our Current Report on Form 8-K filed with the SEC on July 20, 2022, and the forms
of Addendum Amendment and Exchange Warrants were filed as exhibits to our Current Report
on Form 8-K filed with the SEC on September 14, 2022.
Vote
Required and Recommendation
The
affirmative vote of holders of a majority of the shares of the Common Stock cast in person or by proxy at the meeting is required
to approve the issuance of shares of Common Stock upon the conversion of the Notes and the exercise of the Warrants as set forth
above in accordance with Nasdaq Marketplace Rule 5635(d).
THE
BOARD RECOMMENDS A VOTE “FOR” PROPOSAL NO. 1.
PROPOSAL
NO. 2
TO APPROVE THE ISSUANCE OF SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION OF THE COMPANY’S SERIES B CONVERTIBLE
PREFERRED STOCK AND THE EXERCISE OF CERTAIN WARRANTS
The
purpose of Proposal No. 2 is to obtain the stockholder approval necessary under applicable Nasdaq Stock Market rules to allow for the
full issuance of shares of Common Stock upon the conversion of shares of the Series B Preferred
Stock, and the exercise of certain warrants (as described below) into shares of Common Stock.
Background
On
July 20, 2022, Company issued $6,250,000 stated value of Series B Preferred
Stock, for a purchase price of $5,000,000 via a direct private placement to a current investor (the “Series B Investor”).
The Company issued to the Series B Investor (i) 62,500 shares of Series B Preferred Stock
which are initially convertible into 1,155,268 shares of Common Stock at a price
per share of $5.41, a 20% premium to the close of the Common Stock on July 18, 2022, subject to adjustment as set forth in the
Certificate of Designation governing the terms of the Preferred Stock, and (ii) common stock purchase warrants to purchase up
to an aggregate of 1,000,000 shares of Common Stock at an initial exercise price of $10.00 per share of Common Stock (the “Purchase
Warrants”). In addition, the Series B Investor delivered a warrant to acquire 1,000,000 shares of Common Stock at an exercise
price of $11.50 per share for cancellation.
Series
B Preferred Stock
The
Company filed the Certificate of Designation (the “Certificate of Designation”) of the Series B Preferred
Stock with the Secretary of State of the State of Nevada on July 20, 2022.
Initially 187,500 shares of its authorized and unissued preferred stock are designated as
Series Preferred B Stock. Each share of Series Preferred B Stock has a par value
of $0.0001 per share and a stated value equal to $100.00 (the “Stated Value”).The subscription price for each share
of Series Preferred B Stock is $80.00 per share.
The shares of Series Preferred B Stock can vote with the shares of Common Stock,
on an as-converted to Common Stock basis, with respect to all matters on which the holders of Common Stock are entitled to vote,
subject to any applicable Beneficial Ownership Limitations (as defined in the Certificate of Designation).
Ranking
The
Series B Preferred Stock will rank with respect to dividend rights and/or rights upon distributions, liquidation, dissolution
or winding up of the Company senior to all of our Common Stock and other classes of capital stock, other than the Series A Preferred
Stock, which it will rank pari passu with.
Liquidation
Preference of Series B Preferred Stock
Upon
the voluntary or involuntary liquidation, dissolution or winding up of the Company, before the payment of any amount to the holder
of shares of junior stock, the holders of Series B Preferred Stock are entitled to receive in cash an amount equal to the greater
of (i) the Stated Value of the Series B Preferred Stock or (ii) the amount the holder of Series B Preferred Stock would receive
if such holder converted the Series B Preferred Stock into common stock immediately prior to the date of the liquidation event,
including accrued and unpaid dividends.
Dividends
on Series B Preferred Stock
Holders
of Series B Preferred Stock shall be entitled to receive and the Company shall pay, by issuing shares of Common Stock or cash
at the Company’s options to holders, dividends on shares of Series B Preferred Stock, based on the Stated Value, at a rate
of ten percent (10%) per annum, commencing on the issuance date until the earlier of (i) the date that the Series B Preferred
Stock is converted to Common Stock or (ii) twelve (12) months after the issuance date (the “Dividend Termination Date”).
Such dividends shall accrue and be compounded daily on the basis of a 360-day day year and twelve (12) 30-day months and shall
be paid either promptly after conversion of the Series B Preferred Stock or on the Dividend Termination Date, if the Preferred
Stock has not been converted prior to the Dividend Termination Date. No other dividends shall be paid on shares of Series B Preferred
Stock.
Redemption
of Series B Preferred Stock
The
Series B Preferred Stock is perpetual and has no maturity date. Provided that no shares of the Company’s Series A Preferred
Stock are outstanding, either the Company or the holder may, at its option, at any time on or after the later of (i) the third
anniversary of the issue date of such Series B preferred Stock and (ii) the date on which the Notes have been fully redeemed,
defeased, or converted (the “Redemption Date”), if all of the shares of Series B Preferred Stock have not been converted
to shares of Common Stock prior to the Redemption Date, redeem the outstanding shares of Series B Preferred Stock, in whole or
in part, at any time after the Redemption Date, at a cash redemption price per share of Series B Preferred Stock equal to the
Stated Value (the “Redemption Price”). In the event that the Common Stock ceases to trade on a national exchange for
twenty consecutive trading days, if at least a majority of the holders so elect, they may present the Company with a notice of
Redemption. The Redemption Price for any shares of Series B Preferred Stock shall be payable to the holder of such shares of Series
B Preferred Stock against surrender of the certificate(s) evidencing such shares, if any, to the Company or its agent, if the
shares of the Preferred are issued in certificated form.
Notice
of every redemption of shares of Series B Preferred Stock shall be given to the holders. Each notice of redemption given to a
holder or the Company shall state: (1) the redemption date; (2) the number of shares of Series
B Preferred Stock to be redeemed and, if less than all the shares held by such holder are
to be redeemed, the number of such shares of Series B Preferred Stock to be redeemed from such holder; (3) the Redemption Price;
and (4) the place or places where certificates for such shares are to be surrendered for payment of the Redemption Price. Any
Notice of Redemption provided by the holders shall provide the Company with no less than thirty (30) days’ notice of their
Redemption request.
The
Company, upon ten (10) days prior notice to the holder, may demand that the holder convert the Series B Preferred Stock and warrants
issued pursuant to that certain Securities Purchase
Agreement between the Company and the initial holders of the Series B Preferred Stock, in
whole or in part, if the closing bid price of the Common Stock equals or exceeds $12.98, less any “Profit”, as defined
in the such Securities Purchase Agreement, divided by the number of shares of Common Stock into which the Series B Preferred Stock
is convertible on the date of such notice, for twenty (20) consecutive trading days. Should the holder fail to convert the remaining
Stated Value of the Series B Preferred Stock in its entirety within thirty (30) trading days after receiving the Company’s
notice, the Company may redeem such remaining balance and the warrants at the remaining Stated Value plus accrued dividends.
Conversion
Rights of Series B Preferred Stock
A
holder of Series B Preferred Stock shall have the right to convert the Series B Preferred Stock, in whole or in part, upon providing
a notice of conversion to the Company to that number of shares of Common Stock determined by dividing the Stated Value of such
share of Series B Preferred Stock by the conversion price of $5.41, which shall be subject to adjustment for any share dividend,
share split, share combination, reclassification or similar transaction (the “Series B Preferred Stock Conversion Shares”).
Fundamental
Transactions
In
the event of a Fundamental Transaction, as defined in the Certificate of Designation, then, upon any subsequent conversion of
this Series B Preferred Stock, the holders shall have the right to receive, for each Series B Preferred Stock Conversion Share
that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction the number
of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and
any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction
by a holder of the number of shares of Common Stock for which this Series B Preferred Stock is convertible immediately prior to
such Fundamental Transaction. If holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the holder shall be given the same choice as to the Alternate Consideration it receives upon
any conversion of this Preferred Stock following such Fundamental Transaction. To the extent necessary to effectuate the foregoing
provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall file a new Certificate of Designation
with the same terms and conditions and issue to the holders new preferred stock consistent with the foregoing provisions and evidencing
the holders’ right to convert such preferred stock into Alternate Consideration. The Company shall cause any successor entity
in a Fundamental Transaction in which the Company is not the survivor to assume in writing all of the obligations of the Company
under the Certificate of Designation.
Common
Stock Purchase Warrant
The
Purchase Warrants have an issue date of July 19, 2022. The Purchase Warrants have an initial exercise price of $10.00 per share
of Common Stock, subject to adjustment as set forth in the Warrants. The holder is entitled to exercise the Purchase Warrants
at any time on or after the date that is 180 days following the issue date and on or prior to January 19, 2028. On the closing
date of the next public offering of Common Stock or other securities, the exercise price of the Warrants adjusts to a price equal
to the lower of (a) the exercise price then in effect, or (b) the price of the warrants issued in the Company’s next public
offering, or if no warrants are issued in the Company’s next public offering, 110% of the price per share of Common Stock
issued in the Company’s next public offering.
On
September 13, 2022, the Company entered into an agreement (the “Consent”) with the Series B Investor. Pursuant to
the Consent, the Series B Investor consented to the Company entering into and performing its obligations under the Addendum Amendment
and the issuance of any and all Common Stock and Warrants pursuant thereto, and acknowledged and agreed that the Company’s
entry into and performance of its obligations under the Addendum Amendment and any and all documents related thereto will not
constitute a default or event of default under the terms of the Series B Preferred Stock Securities Purchase Agreement (the “Series
B Preferred SPA”). In consideration of the consent provided by the Series B Investor, the Company issued to the Series B
Investor Class D, Class E, Class F and Glass G Warrants in substantially the same form as the Exchange Warrants (the “Consent
Warrants” and together with the Purchase Warrants, the “Series B Investor Warrants”) each to purchase up to
100,000 shares of Common Stock at an exercise price $3.50, $4.50, $5.50 and $7.50, respectively. The Consent Warrants are immediately
exercisable for five years upon issuance, subject to applicable Nasdaq rules.
Effect
of Issuance of
Additional Securities
Based
on the September 15 Outstanding Share Amount, if the Series B Investor were to convert the Series B Preferred Stock into an aggregate
of 1,155,268 shares of Common Stock and exercise the Series B Investor Warrants in full to purchase an aggregate of 1,400,000 shares
of Common Stock, the Series B Investor would hold an aggregate of 2,555,268 shares of our Common Stock, equal to 14.38% of our
issued and outstanding Common Stock on a pre-transaction basis (using the September 15 Outstanding Share Amount plus the number
of shares of Common Stock into which the Series B Preferred Stock are convertible and the Purchase Warrants are exercisable as
the denominator), assuming the Series B Investor waives the provisions in the Certificate of Designation limiting its beneficial
ownership of shares of Common Stock to 4.99% Please note that this calculation does not consider the possibility of approving
the Proposal No. 1 above.
As
such, for so long as the Series B Investor beneficially own a significant amount of shares of Common Stock, it could
significantly influence future Company decisions. Our stockholders will incur dilution of their percentage ownership
to the extent that the Series B Investor converts the Series B Preferred Stock or exercises the Series B Investor Warrants. Further,
because of the possibility that the conversion price and exercise price may be further adjusted to a lower amount, stockholders
may experience an even greater dilutive effect.
Nasdaq
Marketplace Requirements and the Necessity of Stockholder Approval
The
Common Stock is currently listed on the Nasdaq Capital Market and, as such, the Company is subject to the Nasdaq Stock Market
rules. Nasdaq Marketplace Rule 5635(d) requires the Company to obtain stockholder approval prior to the issuance of Common Stock
in connection with certain non-public offerings involving the sale, issuance or potential issuance by the Company of shares of
Common Stock (and/or securities convertible into or exercisable for shares of Common Stock) equal to 20% or more of the shares
of Common Stock outstanding prior to such issuance where the price of the Common Stock to be issued is below the “Minimum
Price.” “Minimum Price” means a price that is the lower of: (i) the Nasdaq Official Closing Price (as reflected
on Nasdaq.com) immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of
the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement.
Shares of Common Stock issuable upon the exercise or conversion of warrants, options, debt instruments, preferred stock or other
equity securities issued or granted in such non-public offerings will be considered shares issued in such a transaction in determining
whether the 20% limit has been reached, except in certain circumstances such as issuing warrants that are not exercisable for
a minimum of six months and have an exercise price that exceeds market value. The Company believes that the full issuance of shares
of Common Stock upon the conversion of Series B Preferred Stock
and exercise of Purchase Warrants of the Company (as described above) into shares of Common Stock may require stockholder approval.
If
our stockholders do not approve this Proposal No. 2, the Series B Preferred Stock will not be fully convertible and the Series
B Investor Warrants will not be exercisable in a manner that complies with Nasdaq Marketplace Rule 5635(d). In addition, our failure
to obtain approval of this Proposal No. 2 when such failure would prohibit us to satisfying our obligations under the terms of
the Certificate of Designation and the Series B Investor Warrants might constitute a default under the Certificate
of Designation and the Series B Investor Warrants. Failure to deliver to the Series B Investor such Series B Preferred Stock Conversion
Shares would result in additional and potentially substantial cash payment obligations, including an obligation to pay to the
Series B Investor, in cash, for each $5,000 of Stated Value of Series B Preferred Stock being converted, from $50 to $200 per
trading day, and pay compensation for any Buy-In as specified in the Certificate of Designation and the Series B Investor
Warrants.
Additional
Information
This
summary is intended to provide you with basic information concerning the Series B Preferred Stock and the Series B Investor Warrants.
The Certificate of Designation, the Series B Preferred SPA and the form of Purchase Warrant were filed as exhibits
to our Current Report on Form 8-K filed with the SEC on July 20, 2022, and the form of the Consent and Consent Warrants
were filed as exhibits to our Current Report on Form 8-K filed with the SEC on September 14, 2022.
Vote
Required and Recommendation
The
affirmative vote of holders of a majority of the shares of the Common Stock cast in person or by proxy at the meeting is required
to approve the issuance of shares of Common Stock upon the conversion of Company’s Series B Preferred Stock and the exercise
of the Series B Investor Warrants in accordance with Nasdaq Marketplace Rule 5635(d).
THE
BOARD RECOMMENDS A VOTE “FOR” PROPOSAL NO. 2.
ADDITIONAL
INFORMATION
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth certain information regarding shares of Common Stock beneficially owned as of September 15, 2022, for (i) each
stockholder known to be the beneficial owner of more than 5% of our outstanding shares of Common Stock, (ii) each named executive
officer and director, and (iii) all executive officers and directors as a group. A person is considered to beneficially own any
shares over which such person, directly or indirectly, exercises sole or shared voting or investment power.
| |
|
Shares
of Beneficially Owned |
|
| Name
and Address of Beneficial Owner(2) |
|
Number(2) |
|
|
Percent
of
Class(1) |
|
| Executive Officers |
|
|
|
|
|
|
|
|
| Michael Toporek(5) (10) |
|
|
3,942,759 |
|
|
|
26.7 |
% |
| John Belizaire(15) |
|
|
90,322 |
|
|
|
* |
|
| Jessica L. Thomas(3)(18) |
|
|
13,031 |
|
|
|
* |
|
| Moshe Binyamin(4)(19) |
|
|
32,400 |
|
|
|
* |
|
| Mary Jennifer O’Reilly(16) |
|
|
5,336 |
|
|
|
* |
|
| Philip
F. Patman, Jr.(14)(20) |
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
| Non-Employee Directors |
|
|
|
|
|
|
|
|
| Matthew E. Lipman(7) (10) |
|
|
3,796,325 |
|
|
|
25.7 |
% |
| William P. Phelan(13) |
|
|
282,132 |
|
|
|
1.9 |
% |
| David C. Michaels(9) |
|
|
181,327 |
|
|
|
1.2 |
% |
| Thomas J. Marusak(8) |
|
|
248,000 |
|
|
|
1.7 |
% |
| Edward R. Hirshfield(6) |
|
|
39,725 |
|
|
|
* |
|
| William Hazelip(12) |
|
|
37,600 |
|
|
|
* |
|
| John Bottomley(11) |
|
|
8,000 |
|
|
|
* |
|
| All current directors and executive officer
as a group (11 persons) |
|
|
4,881,526 |
|
|
|
33 |
% |
| |
|
|
|
|
|
|
|
|
| Persons or Groups Holding More than 5%
of the Common Stock |
|
|
|
|
|
|
|
|
Brookstone Partners Acquisition XXIV, LLC(10)
232 Madison Avenue, Suite 600
New York, NY 10016 |
|
|
3,750,000 |
|
|
|
25.4 |
% |
Justin
R. Dopierala and related entity:
DOMO
Capital Management, LLC(17)
N112
W16298 Mequon Rd., Suite No. 111, Germantown, Wisconsin, 53022 |
|
|
1,405,283 |
|
|
|
9.5 |
% |
________
| (1) | Based
on 14,783,748 shares of Common Stock outstanding on September 15, 2022 and, with respect
to each individual holder, rights to acquire shares of Common Stock exercisable within
60 days of September 15, 2022. |
| (2) | Unless
otherwise indicated, each of the stockholders has sole voting and investment power with
respect to the shares of Common Stock beneficially owned by the stockholder. |
| (3) | Includes
7,500 shares of restricted Common Stock held by Ms. Thomas that are subject to forfeiture
and 12,500 shares exercised shares of Common Stock issued to Ms. Thomas in which 6,969
shares were withheld to satisfy Ms. Thomas’s tax obligation upon the exercise of
12,500 of stock options granted to Ms. Thomas. Excludes 25,000 restricted stock units
that vest representing shares of Common Stock, which shall vest as follows: 25% vests
12 months from the date of the grant, or November 23, 2022, and the remaining 75% of
restricted stock units vest monthly for the remaining 36 months, in each case subject
to Ms. Thomas remaining in the service of the Company on each such vesting date. |
| (4) | Includes
7,500 shares of restricted common stock held by Mr. Binyamin that are subject to forfeiture
and 13,750 shares of common stock issuable to Mr. Binyamin upon exercise of stock options
exercisable within 60 days of April 1, 2022. Effective as of the April 11, 2022, the
Compensation Committee approved the vesting of all of Mr. Binyamin’s unvested options
and restricted stock awards. |
| (5) | Includes
7,500 shares of restricted Common Stock held by Mr. Toporek that are subject to forfeiture,
of which 3,366 were withheld to satisfy Mr. Toporek’s tax obligation upon the vesting
of the 7,500 restricted stock units, and 172,292 shares of Common Stock issuable to Mr. Toporek upon exercise of stock
options exercisable within 60 days of August 26, 2022. Also includes 3,750,000 shares
of Common Stock owned by Mr. Toporek indirectly pursuant to his position with Brookstone
XXIV and/or its affiliates. |
| (6) | Excludes
20,500 restricted stock units representing shares of Common Stock, which shall vest as
follows: 37% vests 12 months from the date of the grant, or January 14, 2023, 33% vests
24 months from the date of the grant, or January 14, 2024, and 30% vests 36 months from
the date of the grant, or January 14, 2025, in each case subject to Mr. Hirshfield remaining
in the service of the Company on each such vesting date. Includes 32,225 shares of Common
Stock issuable to Mr. Hirshfield upon exercise of stock options exercisable within 60
days of August 26, 2022. |
| (7) | Excludes
20,500 restricted stock units representing shares of Common Stock, which shall vest as
follows: 37% vests 12 months from the date of the grant, or January 14, 2023, 33% vests
24 months from the date of the grant, or January 14, 2024, and 30% vests 36 months from
the date of the grant, or January 14, 2025, in each case subject to Mr. Lipman remaining
in the service of the Company on each such vesting date. Includes 7,500 shares of restricted
common stock held by Mr. Lipman that are subject to forfeiture, and 32,225 shares of common stock issuable
to Mr. Lipman upon exercise of stock options exercisable within 60 days of August 26,
2022. Also includes 3,750,000 shares of Common Stock owned by Mr. Lipman indirectly pursuant
to his position with Brookstone Partners XXIV and/or its affiliates. |
| (8) | Excludes
20,500 and 20,500 restricted stock units representing shares of Common Stock, which shall
vest 12 months from the date of the grant, or January 14, 2023, 33% vests 24 months from
the date of the grant, or January 14, 2024, and 30% vests 36 months from the date of
the grant, or January 14, 2025, in each case subject to Mr. Marusak remaining in the
service of the Company on each such vesting date. Includes 15,233 shares of restricted
Common Stock held by Mr. Marusak that are subject to forfeiture and 26,600 shares of
Common Stock issuable to Mr. Marusak upon exercise of stock options exercisable within
60 days of August 26, 2022. |
| (9) | Excludes
20,500 and 20,500 restricted stock units representing shares of Common Stock, which shall
vest as follows: 37% vests 12 months from the date of the grant, or January 14, 2023,
33% vests 24 months from the date of the grant, or January 14, 2024, and 30% vests 36
months from the date of the grant, or January 14, 2025, in each case subject to Mr. Michaels
remaining in the service of the Company on each such vesting date. Includes 17,733 shares
of restricted Common Stock held by Mr. Michaels that are subject to forfeiture and 65,850
shares of Common Stock issuable to Mr. Michaels upon exercise of stock options exercisable
within 60 days of August 26, 2022. |
| (10) | Representatives
of Brookstone XXIV have provided us the following information: As the Manager of Brookstone
XXIV, Brookstone Partners I.A.C. may be deemed to beneficially own the shares of Common
Stock owned directly by Brookstone XXIV. Michael Toporek is President of Brookstone Partners
I.A.C. and Matthew Lipman is Secretary of Brookstone Partners I.A.C. and share voting
and dispositive power over the shares of Common Stock owned by Brookstone XXIV. As a
result of the foregoing, in computing the beneficial ownership of all executive officers
and directors, as a group, the 3,750,000 shares of Common Stock owned indirectly by each
of Mr. Toporek and Mr. Lipman, as a result of their interests in Brookstone XXIV and/or
its affiliates, is only counted once. The address of each of Brookstone XXIV, Brookstone
Partners I.A.C., Michael Toporek, and Matthew Lipman is 232 Madison Avenue, Suite 600,
New York, New York 10016. |
| (11) | Excludes
20,500 restricted stock units representing shares of Common Stock, which shall vest as
follows: 37% vests 12 months from the date of the grant, or January 14, 2023, 33% vests
24 months from the date of the grant, or January 14, 2024, and 30% vests 36 months from
the date of the grant, or January 14, 2025, in each case subject to Mr. Bottomley remaining
in the service of the Company on each such vesting date. Excludes 20,500 restricted stock
units representing shares of Common Stock, which shall vest as follows: 37% vests 12
months from the date of the grant, or January 26, 2023, 33% vests 24 months from the
date of the grant, or January 26, 2024, and 30% vests 36 months from the date of the
grant, or January 26, 2025, in each case subject to Mr. Bottomley remaining in the service
of the Company on each such vesting date. |
| (12) | Excludes
20,500 restricted stock units representing shares of Common Stock, which shall vest as
follows: 37% vests 12 months from the date of the grant, or January 14, 2023, 33% vests
24 months from the date of the grant, or January 14, 2024, and 30% vests 36 months from
the date of the grant, or January 14, 2025, in each case subject to Mr. Hazelip remaining
in the service of the Company on each such vesting date. Includes 2,500 shares of restricted
stock units that have vested as of August 26, 2022 and 31,600 shares of Common Stock
issuable to Mr. Hazelip upon exercise of stock options exercisable within 60 days of
August 26, 2022. |
| (13) | Excludes
20,500 and 40,000 restricted stock units representing shares of Common Stock, which shall
vest as follows: 37% vests 12 months from the date of the grant, or January 14, 2023,
33% vests 24 months from the date of the grant, or January 14, 2024, and 30% vests 36
months from the date of the grant, or January 14, 2025, in each case subject to Mr. Phelan
remaining in the service of the Company on each such vesting date. Excludes 20,500 restricted
stock units representing shares of Common Stock, which shall vest as follows: 37% vests
12 months from the date of the grant, or January 26, 2023, 33% vests 24 months from the
date of the grant, or January 26, 2024, and 30% vests 36 months from the date of the
grant, or January 26, 2025, in each case subject to Mr. Phelan remaining in the service
of the Company on each such vesting date. Includes 25,000 shares of restricted common
stock held by Mr. Phelan that are subject to forfeiture and 29,725 shares of common stock
issuable to Mr. Phelan upon exercise of stock options exercisable within 60 days of April
1, 2022. |
| (14) | Excludes
38,820 restricted stock units representing shares of Common Stock, which shall vest as
follows: 25% on the first anniversary of the grant date, or August 25, 2023, and monthly
thereafter for the next 36 months, in each case subject to Mr. Patman remaining in the
service of the Company on each such vesting date. |
| (15) | Includes
84,171 shares of restricted common stock held by Mr. Belizaire that are subject to forfeiture. |
| (16) | Excludes
11,086 of 14,782 restricted stock units representing shares of Common Stock, which shall
vest as follows: 25% vests 6 months from the date of the grant, or May 1, 2022, the remaining
restricted stock units vest ratably over the succeeding 36 month period, with one-thirty-sixth
of such shares vesting on the last day of each such complete calendar month. Includes
616 shares of restricted stock units that will vest within 60 days of August 26, 2022. |
| (17) | The
information was based upon Schedule 13G/A filed with the SEC on May 31, 2022 by DOMO
Capital Management, LLC and Mr. Dopierala. Both DOMO Capital Management, LLC and Mr.
Dopierala may be deemed to beneficially own 1,377,283 of the reported shares as a result
of the direct or indirect power to vote or dispose of such shares. DOMO Capital
Management, LLC and Mr. Dopierala have shared voting power over 1,377,283 shares of Common
Stock, and shared dispositive power over 1,377,283 shares of Common Stock. Mr. Dopierala
has sole voting power over 28,000 shares of Common Stock and sole dispositive power over
28,000 shares of Common Stock. |
| (18) | No
longer serving as an executive officer of the Company, effective as of August 16, 2022. |
| (19) | No
longer serving as an executive officer of the Company, effective as of May 27, 2022. |
| (20) | Serving
as Chief Financial Officer, Secretary and Treasurer
of the Company, effective as of August 16, 2022. |
STOCKHOLDER
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Stockholders
who wish to communicate with the Board, or a particular director, may send a letter to our Secretary at 325 Washington Avenue
Extension, Albany, New York 12205. The mailing envelope must contain a clear notation indicating that the enclosed letter is a
“Stockholder-Board Communication.” All such letters must identify the author as a stockholder and clearly state whether
the intended recipients are all members of the Board or certain specified individual directors. The Secretary will make copies
of all such letters and circulate them to the appropriate director or directors.
STOCKHOLDER
PROPOSALS
In
order to be included in the proxy materials for the Company’s annual meeting of stockholders to be held in 2023, stockholder
proposals submitted to the Company in compliance with SEC Rule 14a-8 (which concerns stockholder proposals that are requested
to be included in a company’s proxy statement) must be received by us at our offices, 325 Washington Avenue Extension, Albany,
New York 12205 on or before December 15, 2022. We suggest that proponents submit their proposals by certified mail, return receipt
requested, addressed to our Secretary.
With
respect to stockholder proposals to be submitted outside the Rule 14a-8 process for consideration at the 2023 annual meeting of
stockholders, if the Company does not receive notice of any such proposal to be presented at the 2023 annual meeting of stockholders
on or before February 28, 2023, the proxies designated by the Board will have discretionary authority to vote on any such proposal.
In addition, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees
must also comply with the additional requirements of Rule 14a-19(b).
OTHER
MATTERS
We
do not know of any matters that will be brought before the Special Meeting other than those specifically set forth in the notice
thereof. If any other matter properly comes before the meeting for which we did not receive notice by September 19, 2022, however, it is
intended that the shares represented by proxies will be voted with respect thereto in accordance with the best judgment of the
person voting them.
| |
By
Order of the Board of Directors, |
| |
|
| |
/s/
Philip F. Patman, Jr. |
| |
Philip
F. Patman, Jr. |
| |
Chief
Financial Officer and Secretary |
Albany,
New York
September 19, 2022
Important
Notice Regarding the Availability of Proxy Materials for the Special Meeting:
The
Notice of Special Meeting of Stockholders, Proxy Statement and Form of Proxy Card are available at
www.proxyvote.com. |
SOLUNA
HOLDINGS, INC.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL
MEETING OF STOCKHOLDERS
SEPTEMBER 29, 2022
The
stockholder(s) hereby appoint(s) Mr. Michael Toporek as proxy, with the power to appoint his
substitute, and hereby authorize(s) him to represent and to vote, as designated on the reverse
side of this ballot, all of the shares of common stock of Soluna Holdings, Inc. that the stockholder(s)
is/are entitled to vote at the Special Meeting of Stockholders to be held at 10:00 a.m., Eastern
Time, on Thursday, September 29, 2022, virtually at www.virtualshareholdermeeting.com/SLNH2022SM,
and any adjournment or postponement thereof.
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY
WILL BE VOTED “FOR” PROPOSALS 1 AND 2.
PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
|
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