DEFR14C: FDCTech Seeks Stockholder Approval for Share Increase, Reverse Stock Split, and New Incentive Plan

FDCTech is notifying stockholders of actions approved by the board and a majority of voting stockholders, including increasing authorized shares, authorizing a reverse stock split, and adopting a new stock incentive plan.

Summary

• FDCTech is informing its stockholders about corporate actions approved by the Board of Directors and a majority of voting stockholders via written consent.
• These actions include amending the certificate of incorporation to increase the number of authorized common shares from 500,000,000 to 1,000,000,000.
• The board is also authorized to implement a reverse stock split at a ratio between 1-for-10 and 1-for-50 before June 30, 2024.
• Additionally, the company's 2023 Stock Incentive Plan has been approved, reserving 50,000,000 shares for issuance.
• Stockholders holding 72% of the company's voting power approved these actions on February 21, 2024, making further stockholder approval unnecessary.
• The changes are expected to become effective approximately 20 days after the information statement is mailed to stockholders.
• The board retains the right to abandon any or all of these actions before their effective date.

Sentiment

Score: 6

Explanation: The document is neutral in tone, primarily conveying information about corporate actions. While the actions themselves could be seen as positive (increased flexibility) or negative (potential dilution), the document itself doesn't express a strong sentiment.

Positives

• Increasing authorized shares provides greater flexibility for future corporate needs, including strategic transactions and financings.
• A reverse stock split could increase the per-share price, potentially meeting listing requirements for exchanges like NYSE or NASDAQ.
• A higher stock price may attract a broader range of investors and improve the perception of the company's stock.
• The 2023 Stock Incentive Plan is designed to attract, retain, and motivate key personnel through equity-based incentives.
• The 2023 Stock Incentive Plan has been designed to allow the Committee to grant stock options, stock appreciation rights, restricted stock, restricted stock units, and performance grants that qualify under an exception to the deduction limit of Section 162(m) for performance-based compensation.

Negatives

• Future issuance of additional authorized shares may dilute earnings per share and the equity and voting rights of existing stockholders.
• A reverse stock split may decrease the liquidity of the common stock due to the reduced number of outstanding shares.
• The reverse stock split may not result in a per share price that will attract investors who do not trade in lower priced stocks.
• The substantial increase in authorized common stock available for issuance without stockholder approval resulting from a reverse stock split could have the effect of discouraging unsolicited takeover attempts or inhibiting needed management changes.

Risks

• There is no guarantee that a reverse stock split will increase the stock price or benefit the market for the company's common stock.
• The market price for the common stock after a reverse stock split may not be proportionately the same, greater, or less than prior to the split.
• A material increase in unissued authorized common shares will occur, which may allow the company to dilute existing stockholders more substantially in the future.
• The potential issuance of increased authorized shares could discourage, delay, or even prevent unsolicited persons from gaining control of the company.
• The Board of Directors may determine, in its sole discretion, not to affect the Authorized Share Increase and not to file any amendment to our Certificate.

Future Outlook

The company anticipates that each of the Corporate Actions will become effective on or about the 20th calendar day after the date on which this Information Statement and the accompanying notice are mailed to our stockholders. The Board retains the authority to abandon either or both of the Corporate Actions for any reason at any time prior to the effective date of the respective Corporate Action.

Management Comments

• Our Board believes it is in FDCTechs best interests to increase the number of authorized shares of Common Stock in order to give us greater flexibility in considering and planning for future corporate needs.
• The Board believes that granting this discretion provides the Board with maximum flexibility to act in the best interests of our shareholders.
• Our board of directors and management believe that the effective use of stock-based long-term incentive compensation is vital to our ability to achieve strong performance in the future.

Industry Context

Companies often implement reverse stock splits to meet minimum listing requirements for major exchanges like NYSE or NASDAQ, which can increase visibility and attract institutional investors. Increasing authorized shares is a common practice to facilitate future acquisitions, financings, or equity compensation plans.

Comparison to Industry Standards

• Reverse stock splits are a relatively common strategy for companies trading at low share prices to regain compliance with exchange listing requirements; however, their success in improving long-term stock performance varies widely.
• Stock incentive plans are a standard tool for attracting and retaining talent in competitive industries, with the number of shares reserved typically benchmarked against company size and industry norms.
• Increasing authorized shares is a routine corporate action, but the potential dilution effect is closely scrutinized by investors, especially if the company's intentions for using the additional shares are not clearly defined.

Related Party Transactions

• In September 2022, the Company issued 30,000,000 shares of common stock for cash consideration of $300,000 and appointed Gope S. Kundnani as the Companys director.
• As directors compensation, the Company issued 5,000,000 valued at $60,000.
• In January 2023, the Company issued 115,000,000 shares of common stock to Mr. Kundnani, a director of the Company, for cash consideration of $550,000.
• The Company completed the acquisition on November 30, 2023, for full ownership of Alchemy Prime Ltd. (Alchemy UK) and the remaining 49.90% stake in Alchemy Markets Ltd. (Alchemy Malta) for 1,800,000 Series B Preferred Stock, valued at $1.41.
• The Company will receive $2,500,000 in direct investment from Alchemy Prime Holdings Shareholder for Series A Preferred, valued at $1.00 per share.
• The Company will receive $5,500,000 in direct investment from Alchemy Prime Holdings Shareholder for Common Stock valued at $0.11 per share.
• In January 2024, the Company issued 50,000 and 141,844 Series B Preferred Stock to Gope S. Kundnani for services rendered and cash of $200,000.

Stakeholder Impact

• Shareholders may experience dilution of their equity and voting rights if additional authorized shares are issued.
• Employees, directors, and consultants may benefit from the 2023 Stock Incentive Plan through equity-based incentives.
• The potential increase in stock price due to a reverse stock split could benefit shareholders.
• The reverse stock split may decrease the liquidity of the common stock, potentially impacting shareholders' ability to trade shares.

Next Steps

• The company will file a certificate of amendment to the Certificate relating to the Authorized Share Increase with the Secretary of State of the State of Delaware.
• The Board of Directors will determine whether to implement the reverse stock split.
• The company will notify shareholders that the reverse stock split had been effected.
• Shareholders holding shares in certificated form will be sent a transmittal letter by our transfer agent.

Key Dates

Keywords

stock incentive plan, reverse stock split, authorized shares, corporate actions, FDCTech, stockholders