My understanding is very limited, but I believe the holder of Preferred Shares Series A had tens of millions of shares that had no value - but had voting rights. I am guessing this person provided seed money to receive the A Series. I think the Keens had a similar arrangement, but a deal was negotiated a couple of years ago that transferred the shares to common stock (among other concessions/agreements). The remaining Series A holder declined a deal at that time. That is my recollection. This was done by the previous CEO whose primary contribution was to clear up the Surna balance sheets.
Enter Tony McDonald in Nov 2018 as the new CEO (share price in the ten or twelve cent range). Surna had an antiquated product portfolio and a backlog filled with mostly flimsy agreements. Shareholders at that time still saw Surna as a pick and shovel play that was in the right place at the right time. Surna, however, was a mess with a “swing for the fences” market strategy, offering only high-priced HVAC equipment.
McDonald began by sharing an investment sales materials presentation and quarterly conference calls. A reverse split was part of the initial growth strategy to the great disappointment of the shareholder community at that time. Surna shares began drifting and a dark cloud has followed ever since.
The proxy materials were issued on March 24 for a shareholder meeting on May 28. My impression is that once votes fell short on a couple of main proxy issues, the Board of Directors had to deal with the Series A holder whose voting rights came in to play. The vote on May 28 was suspended.
Since that time, Surna has initiated its organic growth strategy and hired a new CFO.
At some point,finally, the Series A holder acquiesced to the Board of Directors. The common shares will increase allowing the Series A to retire (at 1-100 conversion). The reverse split is approved. Series B emerges.
from the proxy materials;
Record Date and Voting Securities
You may vote your shares at the Annual Meeting only if you were a stockholder of record at the close of business on April [ 1 ], 2021 (the “Record Date”). On the Record Date, there were 236,526,838 shares of the Company’s common stock outstanding and 42,030,331 shares of the Company’s Series A preferred stock outstanding. The holders of common stock are entitled to one vote per share of common stock, and the holders of Series A preferred stock are entitled to one vote per share of preferred stock equivalent to one vote of common stock. The holders of Series A preferred stock have the right to one vote for each share of Series A preferred stock owned by them, together with holders of common stock, with respect to any matter upon which holders of common stock have the right to vote. The holders of Series A preferred stock also have the right to one vote for each share of Series A preferred stock owned by them with respect to Proposal 4, which requires the vote of the holders of Series A preferred stock as a single class. If you owned shares of our common or Series A preferred stock at the close of business on the Record Date, you are entitled to vote the shares owned by you as of that date.
(Proposal)4. To approve an amendment to the Company’s Articles of Incorporation to change the rights, preferences, limitations and terms of the Company’s Series A preferred stock (the “Series A preferred stock”) to allow the Company to redeem the outstanding shares of the Series A preferred stock by issuance of one share of the Company’s common stock for each one hundred shares of Series A preferred stock being redeemed by the Company; and
