DEF: Fabric.AI 2026 Proxy Statement: Capital Raise & Plan Update

Fabric.AI, Inc. has filed its 2026 proxy statement detailing a $21.5 million private placement, a joint development agreement with Kopin Corporation, and a proposal to increase its long-term incentive plan shares.

Summary

• The company will hold its 2026 Annual Meeting of Stockholders virtually on June 18, 2026.
• Key proposals include the election of five directors, ratification of Stephano Slack LLC as the independent auditor, and approval of a $21.5 million private placement of Series K Preferred Stock and warrants.
• The company is seeking approval to increase the total shares authorized under its Long-Term Incentive Plan by 4,600,000 to a total of 5,000,000 shares.
• A Joint Development and License Agreement with Kopin Corporation was entered into on April 27, 2026, involving the issuance of Series J Preferred Stock.
• The company reported a net loss of $21,089,145 for the fiscal year ended December 31, 2025.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a neutral-to-cautious filing; while the company successfully raised capital, the significant dilution, recurring losses, and material weaknesses in internal controls present ongoing risks to shareholders.

Positives

• Secured $21.5 million in gross proceeds through a private placement to support business development and general corporate purposes.
• Established a strategic Joint Development and License Agreement with Kopin Corporation to develop interface technology for GPU-to-GPU connectivity.
• The company is actively managing its capital structure through the issuance of convertible preferred stock to fund operations.

Negatives

• Reported a significant net loss of $21,089,145 for the 2025 fiscal year.
• The company has a history of recurring losses and relies on external financing to maintain operations.
• The issuance of significant amounts of convertible preferred stock and warrants will result in substantial dilution to existing common stockholders.

Risks

• The company may not be able to obtain stockholder approval for the issuance of shares in excess of 20% of its outstanding common stock, which would trigger additional costs and potential operational constraints.
• The company is subject to strict restrictive covenants under the Series K and Series J Preferred Stock agreements, including limitations on incurring additional indebtedness and paying dividends.
• The company's ability to continue as a going concern is dependent on its ability to raise additional capital and achieve successful product development.
• The company has identified material weaknesses in its internal control over financial reporting.

Future Outlook

The company intends to use the proceeds from the private placement to fund the Joint Development and License Agreement with Kopin Corporation and for general corporate purposes. It aims to continue developing its product technology and managing its capital structure to support long-term growth.

Management Comments

• The Board believes the private placement was necessary to fund the JDA and meet business development requirements.
• Management emphasizes that the virtual meeting format improves stockholder participation and reduces costs.
• The Board recommends voting in favor of all proposals, including the increase in shares for the incentive plan to attract and retain talent.

Industry Context

StockSavvy.ai notes that Fabric.AI is operating in a highly competitive and capital-intensive technology sector, where frequent capital raises via convertible instruments are common for smaller, growth-stage companies. The reliance on private placements and strategic partnerships with established players like Kopin Corporation is a standard survival and growth strategy in this industry.

Comparison to Industry Standards

• The company's use of convertible preferred stock with anti-dilution provisions is consistent with financing structures used by other small-cap technology firms.
• The company's net loss and reliance on equity-based compensation are typical for early-stage companies in the AI and hardware development space.
• The governance structure, including the use of an Audit Committee with a financial expert, aligns with Nasdaq listing requirements.

Corporate Governance

Legal Proceedings

• None disclosed.

Related Party Transactions

• Gilbert Villarreal, President of AYRO Operating Company, Inc., received $1,534,975 for consulting services in 2025.
• Significant investments in private placements by Iroquois Capital Management L.L.C., Alpha Capital Anstalt, Mainfield Enterprises, and The Hewlett Fund LP, all of which are 5% stockholders.

Stakeholder Impact

• Shareholders face significant dilution from the conversion of Series K and Series J Preferred Stock and the exercise of various warrants.
• Employees and directors may benefit from the proposed increase in shares available under the Long-Term Incentive Plan.
• Creditors and investors are subject to the restrictive covenants imposed by the preferred stock agreements.

Next Steps

• Hold the 2026 Annual Meeting of Stockholders on June 18, 2026.
• Seek stockholder approval for the issuance of shares in excess of 20% of outstanding common stock.
• Implement the Fifth Amendment to the Long-Term Incentive Plan if approved.
• Continue development of the Project Technology under the JDA with Kopin Corporation.

Key Dates

Recommendation

The company is in a precarious financial position with significant losses and reliance on dilutive financing. While the strategic partnership with Kopin is a positive development, the high level of dilution and the need for ongoing capital raises make the stock a hold until there is clear evidence of operational profitability or successful product commercialization.

Keywords

Fabric.AI, Proxy Statement, Private Placement, Convertible Preferred Stock, Equity Incentive Plan, Kopin Corporation, Capital Raise, Corporate Governance