What changed in this filing

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Item 1A. Risk Factors

2024-05-09 compared with 2023-11-09 · 31 added, 3 removed, 2 unchanged (94% of the section changed)

For information regarding factors that could affect our business, results of operations, financial condition and liquidity, see the risk factors discussed under Part I, Item 1A included in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 31, 2023 and under Part II, Item 1A included in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, which was filed with the SEC on May 11, 2023. We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide updated quarterly information under this Item.

UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, ISSUER PURCHASES OF EQUITY SECURITIES

While, as a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, we are not required to provide updated quarterly information under this Item, we are providing the below disclosure as additional material risks we face.

If we are unable to comply with the continued listing requirements of the NYSE American, including our trading price per share of our common stock increasing and satisfying the obligations set forth in the Deficiency Letter with respect to our stockholders ’ equity being below the NYSE American ’ s minimum level, then our common stock will be delisted from the NYSE American.

Our common stock is currently listed on the NYSE American.

If we are unable to comply with the continued listing requirements of the NYSE American, our common stock will be delisted from the NYSE American, which will limit investors’ ability to effect transactions in our common stock and subject us to additional trading restrictions.

In order to maintain our listing, we must maintain certain share prices for our common stock, financial and share distribution targets, including maintaining a minimum amount of stockholders’ equity and a minimum number of public stockholders.

In addition to these objective standards, NYSE American may delist the securities of any issuer for other reasons involving the judgment of NYSE American.

Our common stock has been trading on the NYSE American under $0.20 per share for most of 2024, under $0.10 per share since April 8, 2024 and on May 7, 2024, the closing price of our common stock was $0.09 per share.

Due to our common stock trading at these prices over a period of time, the NYSE American has the discretion to (i) immediately delist our common stock if the price of our common stock continues to decline or (ii) issue a deficiency letter to us relating to the trading price of our common stock.

In order for the Company to be in compliance with Section 1003(f)(v) of the NYSE American Company Guide (the “ Company Guide ”) that sets forth requirements with respect to listed stock selling for a low price per share for a substantial period of time, we have submitted a proposal to stockholders at its 2024 annual meeting of stockholders (the “ 2024 Annual Meeting ”) to be held on May 28, 2024 to approve an amendment to our Amended and Restated Certificate of Incorporation to effect a reverse stock split of our common stock (the “ Reverse Stock Split ”).

However, there is no assurance that stockholders will approve the Reserve Stock Split at the 2024 Annual Meeting or that the price of our common stock will not further decline after the date hereof resulting in potential immediate delisting from the NYSE American prior to the 2024 Annual Meeting.

In addition, on April 18, 2024, we received a letter from the NYSE American (“ Deficiency Letter ”) notifying us that our stockholders’ equity as of December 31, 2023 was below the minimum requirements of Sections 1003(a)(ii) and 1003(iii) of the Company Guide requiring stockholders’ equity requiring $4.0 million or more if a company has reported losses from continuing operations and/or net losses in three of the four most recent fiscal years and $6.0 million or more if a company has reported losses from continuing operations and/or net losses in its five most recent fiscal years, respectively.

As of December 31, 2023, we had stockholders’ equity of $3.3 million.

Pursuant to the Deficiency Letter, we have become subject to the procedures and requirements of Section 1009 of the Company Guide and must submit a plan of compliance by May 18, 2024 addressing how we intend to regain compliance with Sections 1003(a)(ii) and 1003(a)(iii) of the Company Guide by October 18, 2025.

The Company has submitted its plan of compliance to the NYSE American for its review.

If the Company does not regain compliance with these standards, or does not make progress consistent with the plan, the NYSE American staff may commence delisting proceedings.

If our common stock is delisted from the NYSE American, then we could face significant and material adverse consequences as a result and our investors will experience limitations upon their ability to effect transactions in our common stock.

If the NYSE American delists our common stock from trading on its exchange, including if such delisting were to occur immediately without being able to submit a compliance plan or appeal such delisting, and we are not able to list our securities on another national securities exchange (though we expect the common stock would qualify to be quoted on an over-the-counter market), we could face significant material adverse consequences, including:

a limited availability of market quotations for our securities;

reduced liquidity for our securities;

substantial impairment on our ability to raise additional funds;

result in a loss of institutional investor interest and a decreased ability to issue additional securities or obtain additional financing in the future;

a determination that our Common Stock is a “penny stock,” which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

a limited amount of news and analyst coverage;

an event of default will occur under the terms of our Secured Convertible Notes, which, if not waived by the holders, such Secured Convertible Notes will be payable by us;

potential breaches of representations or covenants of our agreements pursuant to which we made representations or covenants relating to our compliance with applicable listing requirements, which, regardless of merit, could result in costly litigation, significant liabilities and diversion of our management’s time and attention and could have a material adverse effect on our financial condition, business and results of operations.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our common stock is listed on the NYSE American, our common stock qualifies as a covered securities under such statute.

Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case.

If we were no longer listed on the NYSE American, our common stock would not be a covered security and we would be subject to regulation in each state in which we offer our securities.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

DEFAULTS UPON SENIOR SECURITIES

MINE SAFETY DISCLOSURES

Not Applicable. 

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors