A couple of observations from the Proxy statement:

A couple of observations from the Proxy statement:

Effects of the Increase in Authorized Common Stock



The additional shares of common stock will have the same rights as the presently authorized shares, including the right to cast one vote per share of common stock. Although the authorization of additional shares will not, in itself, have any effect on the rights of any holder of our common stock, the future issuance of additional shares of common stock (other than by way of a stock split or dividend) would have the effect of diluting the voting rights and could have the effect of diluting earnings per share and book value per share of existing shareholders.

This quote, imho, highlights the possibilities of a spin off. As discussed on the board, the issuance of new shares would be considered a dividend in the new company, and the parent company might suffer some dilution based upon the issuance. Therefore, this highlighted section highlights such possibility. They might be getting us ready for that event.

At present, other than in connection with the possible conversion or exercise of securities convertible or exercisable into common stock, as set forth above (each at the option of their respective holders), the Board of Directors has no other plans to issue the additional shares of common stock to be authorized by the Common Shares Increase Amendment. However, it is possible that some of these additional shares could be used in the future for various other purposes without further shareholder approval, except as such approval may be required in particular cases by our charter documents, applicable law or the rules of any stock exchange or other market on which our securities may then be listed. These purposes may include: raising capital, providing equity incentives to employees, officers or directors, establishing strategic relationships with other companies, and expanding the Company’s business or product lines through the acquisition of other businesses or products.

Hmm..... "expanding the companies business or product lines, and relationships with other companies"... highlighting the possibility of a partnership in the near future. Also, I like the statement about equity when it comes to financing because that is exactly one of the reasons for a spin off. Create the new company, attract big institutions, and create a vehicle for long term equity financing.


We could also use the additional shares of common stock that will become available pursuant to the Common Shares Increase Amendment to oppose a hostile takeover attempt or to delay or prevent changes in control or management of the Company. Although the proposal to increase the authorized common stock has not been prompted by the threat of any hostile takeover attempt (nor is the Board currently aware of any such attempts directed at the Company), nevertheless, shareholders should be aware that the Common Shares Increase Amendment could facilitate future efforts by us to deter or prevent changes in control of the Company, including transactions in which shareholders of the Company might otherwise receive a premium for their shares over then current market prices. However, the Board of Directors has a fiduciary duty to act in the best interests of the Company's shareholders at all times.

Covering their basis in fact a tender offer, or hostile takeover does in fact take place. Overall, I think this echoes the sentiment of GC's latest blog, and I think further explains the reasoning why the shares are needed. I haven't seen anything relating to R/S yet, still rummaging through the whole document.