Item 5.01. Changes in Control
of the Company
RAI is currently
the holder of approximately 60,000 shares of Common Stock of the Company (2.8% of the outstanding shares), has one common officer
with the Company, may be deemed to be a “Related Party” for accounting purposes and, upon consummation of the transaction
described in item 3.02 above and receipt of 3,000,000 newly issued shares of Common Stock, will be an “Affiliate” (
as defined in Rule 405 under the Securities Act of 1933, as amended). Upon consummation of the transaction described in item 3.02,
which will result in the issuance of 3,000,000 shares to RAI, a change in control of the Company will be deemed to occur when the
additional shares are issued. When the additional shares are issued, RAI will own 3,060,000 shares out of the then total outstanding
of 5,131,935 shares of Common Stock (approximately 59.6%).
RAI
is a Nevada corporation, organized by Articles of Incorporation filed with the Secretary of State of Nevada on May 4, 1990;
its sole stockholder is May Realty Holdings, Inc., a Nevada corporation (“
MRHI
”), which, in turn, is owned
by a trust established for the benefit of the children of Gene E. Phillips, known as the “May Trust.” The sole
director of both RAI and MRHI is Mickey Ned Phillips, and the officers of each entity are Daniel J. Moos, President, Gene S.
Bertcher, Vice President and Treasurer, and Louis J. Corna, Vice President and Secretary. All of the officers and directors
of RAI and MRHI are U. S. citizens. According to a Schedule 13D for event occurring May 22, 2018, filed on behalf of RAI and
MRHI, if the transaction described in item 3.02 above is consummated, the funds necessary to consummate such transaction, at
least $4,500,000, will come from the working capital of RAI. The basis of the deemed change of control will be the issuance
of the additional shares of Common Stock to RAI.
No
arrangement or understandings among members of any prior group in control of the Company and RAI presently exist with respect
to election of directors or any other matter. RAI has advised that there are no arrangements, including any pledge by any person
of securities of the Registrant, which may, at a subsequent date, result in a future change in control of the Registrant.
Item 5.07. Submission of
Matters to a Vote of Security Holders
On October
10, 2018, the Annual Meeting of Stockholders of the Company was called to be held following a solicitation of proxies, pursuant
to a Notice of Annual Meeting and related Proxy Statement, each dated September 4, 2018, distributed in accordance with the requirements
of Regulation 14A under the Exchange Act. On the record date of August 31, 2018, a total of 2,131,935 shares of Common Stock and
559 shares of Series B Preferred Stock were outstanding, with each share entitled to one vote.
At the meeting,
proxies representing at least 1,690,698 shares (79.37% of the outstanding) appeared and were cast, thereby establishing a quorum
present in person or by proxy. It was noted that, of the 2,131,935 outstanding shares of Common Stock, 1,923,647 shares are held
in CEDE accounts.
At the Annual
Meeting, which involved the election of directors, the following named persons received the number of votes cast for, against or
withheld, as well as the number of abstentions (broker nonvotes were not reported):
Name
|
|
# Votes For
|
|
# Votes
Withheld
|
|
# Votes
Abstained
|
|
Broker Non-votes
|
Gene S. Bertcher
|
|
|
334,501
|
|
|
|
-0-
|
|
|
|
7,847
|
|
|
|
-0-
|
|
Dan Locklear
|
|
|
334,497
|
|
|
|
-0-
|
|
|
|
7,851
|
|
|
|
-0-
|
|
Victor L. Lund
|
|
|
334,497
|
|
|
|
-0-
|
|
|
|
7,851
|
|
|
|
-0-
|
|
Raymond D. Roberts, Sr.
|
|
|
297,732
|
|
|
|
-0-
|
|
|
|
44,616
|
|
|
|
-0-
|
|
All of the
nominees named above, each of which is currently a director of the Company, were elected at such Annual Meeting.
The second
matter presented at the Annual Meeting was the ratification of the appointment of Swalm & Associates, PC as the independent
registered public accounting firm for the Company for the fiscal year ending December 31, 2018, and any interim period. A total
of 1,367,430 votes were cast FOR, 290,864 votes were cast AGAINST, and 32,401 votes were ABSTAINED from voting with respect to
such proposal. There were no broker non-votes. On the basis of such votes, the second proposal was approved.
The final
matter presented at the Annual Meeting was approval of the issuance of 3,000,000 new shares of Common Stock, par value $0.01 per
share, to RAI for cash to increase stockholders’ equity. A total of 311,704 votes were cast FOR, 29,778 votes were cast AGAINST,
and 866 votes were ABSTAINED from voting with respect to such proposal. There were no broker non-votes. On the basis of such votes,
the third proposal was approved.
The
Annual Meeting of the Board of Directors was held later on the same day, October 10, 2018. At such meeting, Gene S. Bertcher was
reelected Chairman of the Board, President, Chief Executive Officer and Chief Financial Officer of the Company.