SCHEDULE: Major Shareholder Boosts Stake in XCF Global to 49.6%

Randy Soule and Encore DEC, LLC have significantly increased their beneficial ownership in XCF Global, Inc. to 49.6% through a $28 million debt-to-equity conversion.

Summary

• Randy Soule and Encore DEC, LLC (collectively, the "Reporting Persons") have acquired additional Class A Common Stock of XCF Global, Inc.
• The acquisition was made by converting $28,000,000 of invoices payable to Encore into shares of XCF common stock.
• Following this transaction, Randy Soule beneficially owns 78,901,648 shares, representing 49.6% of XCF Global, Inc.'s Class A Common Stock.
• Encore DEC, LLC beneficially owns 36,779,193 shares, representing 17.6% of the class. Randy Soule, as the sole member of Encore, has the power to direct the vote and disposition of Encore's shares.
• The Reporting Persons do not intend to sell the acquired shares for a minimum of 6 months.

Sentiment

Score: 7

Explanation: The conversion of debt to equity is generally positive for the company's balance sheet and the significant increase in insider ownership signals strong confidence. However, the high concentration of ownership could be a governance concern for some investors.

Positives

• Conversion of $28,000,000 in invoices payable to Encore into equity strengthens XCF Global's balance sheet by reducing liabilities.
• Increased insider ownership by Randy Soule to 49.6% demonstrates strong commitment and confidence in the company's future.
• The 6-month lock-up period for the newly acquired shares indicates a long-term investment perspective from the Reporting Persons.

Negatives

• A single individual (Randy Soule) holding nearly 50% of the voting power could raise corporate governance concerns regarding minority shareholder influence.

Risks

• Concentrated ownership by Randy Soule (49.6%) could lead to potential conflicts of interest or reduced influence for other shareholders.
• The company's reliance on construction and engineering services (Encore's primary business) may expose it to industry-specific cyclical risks.

Future Outlook

The Reporting Persons currently do not intend to take any further actions described in Item 4 of Schedule 13D, but reserve the right to purchase and sell common stock in their sole discretion, subject to applicable law. They have committed to not trading the newly acquired shares for a minimum of 6 months.

Management Comments

• Randy Soule's primary business is providing construction and engineering services through Encore.
• The Reporting Persons do not intend to take any of the actions described in subsections (a) through (j) of Item 4 of Schedule 13D at this time; however, they reserve the right to do so.
• The Reporting Persons may purchase and sell common stock of XCF in their sole discretion and at such times as they deem convenient, subject to applicable law.
• The Reporting Person will not trade the shares acquired for a minimum of 6 months.

Industry Context

This filing indicates a significant internal restructuring of XCF Global's liabilities, potentially strengthening its financial position by converting debt to equity. The increased insider ownership by a key figure in the construction and engineering sector (Randy Soule, through Encore) suggests a strategic alignment and long-term commitment, which could be viewed positively in an industry often sensitive to financial stability and leadership confidence.

Comparison to Industry Standards

• A beneficial ownership stake of 49.6% by a single individual, while not uncommon in smaller or founder-led companies, approaches a controlling interest, which can be higher than the average for widely held public companies in the construction and engineering sector.
• Debt-to-equity conversions are a common financial strategy used by companies, particularly those with significant outstanding payables to key suppliers or related parties, to improve liquidity and reduce debt burden. This practice is observed across various industries, including construction, where project-based financing can lead to substantial inter-company balances.
• The 6-month lock-up period is a standard practice for significant share acquisitions, aligning with typical insider trading restrictions and demonstrating a commitment beyond short-term speculation, comparable to lock-up agreements seen in IPOs or private placements.

Corporate Governance

Related Party Transactions

• Conversion of $28,000,000 of invoices payable to Encore DEC, LLC (an entity controlled by Randy Soule) into shares of XCF Global, Inc. common stock.

Stakeholder Impact

• Shareholders: Potential dilution for existing shareholders (though the percentages are post-conversion), but increased insider confidence. Concentrated ownership may reduce minority shareholder influence.
• Creditors: Reduction in company liabilities (invoices payable) strengthens the balance sheet, potentially improving creditworthiness.
• Management: Stronger alignment with a major shareholder who is also involved in the company's core business (through Encore).

Next Steps

• Reporting Persons may purchase and sell common stock of XCF in their sole discretion after the 6-month lock-up period.

Key Dates

Keywords

XCF Global, Randy Soule, Encore DEC, Schedule 13D, Shareholder Stake, Debt-to-Equity Conversion, Insider Ownership, Construction and Engineering, Corporate Governance, Beneficial Ownership