SCHEDULE 13D/A: Major Shareholder David Lazar Consolidates FiEE, Inc. Stake Amidst Board Shake-Up and Nasdaq Relisting Efforts

David E. Lazar, a significant shareholder in FiEE, Inc., has increased his beneficial ownership to 35.1% through recent transactions, triggering a board restructuring and setting conditions for a potential Nasdaq relisting and future earnout payments.

Summary

• David E. Lazar, a private investor, has increased his beneficial ownership in FiEE, Inc. to 2,802,254 shares, representing approximately 35.1% of the company's common stock.
• This ownership includes 2,681,980 shares of Common Stock and 120,274 shares of Common Stock convertible from Series A Preferred Stock within 60 days.
• Key transactions include the acquisition of 1,456,980 Common Shares for $50,000 on December 26, 2024, and 1,200,000 newly issued Common Shares on February 18, 2025.
• As part of the February 2025 Transactions, Lazar sold 2,219,447 Series A Preferred Stock, a warrant, and receivables to other purchasers, with $300,000 of the consideration paid to FiEE, Inc. and deemed a contribution by Lazar.
• The aggregate purchase price for the 2,802,254 shares beneficially owned by Lazar is approximately $454,343.
• The February Purchase Agreement includes covenants requiring the termination of consulting agreements, the resignation of five directors (Avraham Ben-Tzvi, Andrew Papanicolau, Matthew McMurdo, Patrick Rivard, and David Natan), and a reduction of the Board of Directors to three members.
• Lazar is eligible for an Earnout Payment of up to $3.4 million and Earnout Shares (3% of outstanding common stock) if specific conditions are met, including FiEE, Inc. successfully regaining a Nasdaq listing by December 31, 2025, and Lazar's continued assistance in this effort.
• The conversion price of Series A Preferred Stock is to be increased from $1.40 to $2.75, and Lazar has granted a purchaser voting power over a significant portion of his shares as security until this conversion increase is completed.

Sentiment

Score: 6

Explanation: The filing indicates a significant shareholder's increased commitment and a strategic effort to address the Nasdaq delisting issue, which are positive. However, the underlying delisting problem and the need for a board shake-up suggest past difficulties and ongoing challenges. The earnout structure provides strong incentives for positive outcomes but also highlights the conditional nature of future benefits.

Positives

• David E. Lazar has significantly increased his stake, demonstrating strong commitment and belief in the company's future.
• The February 2025 Transactions involved a $300,000 contribution to the Issuer, which could improve the company's liquidity or financial position.
• The earnout structure incentivizes Lazar to actively work towards regaining Nasdaq listing, which would be a significant positive for the company and its shareholders.
• The restructuring of the Board of Directors and termination of certain consulting agreements could lead to improved corporate governance and operational efficiency.

Negatives

• The company is facing delisting issues from Nasdaq, requiring significant effort to regain listing.
• The Series A Preferred Stock conversion price is being increased from $1.40 to $2.75, which could be seen as less favorable for existing Series A holders or indicate a higher valuation for future conversions.
• Lazar has granted voting power over a substantial portion of his shares to a purchaser as security, indicating a loss of direct control over those votes until a specific condition (conversion price increase) is met.

Risks

• Failure to regain Nasdaq listing by December 31, 2025, which would prevent the Earnout Milestones from being met and could negatively impact the company's stock liquidity and investor confidence.
• Potential challenges or delays in obtaining an SEC decision for a Nasdaq hearing concerning the Issuer's appeal against delisting.
• The company's ability to successfully implement the required corporate governance changes, including director resignations and board size reduction.
• The impact of the increased Series A Preferred Stock conversion price on future capital raising or investor perception.
• The potential for disputes or issues related to the Earnout Payment deductions, including indemnification claims and unapproved liabilities.

Future Outlook

The future outlook for FiEE, Inc. is heavily tied to its ability to regain a Nasdaq listing by December 31, 2025. David E. Lazar is incentivized through an earnout structure to assist in this process, which includes obtaining an SEC decision for a Nasdaq hearing regarding the delisting appeal. Successful relisting would trigger significant payments and share issuance to Lazar, indicating a potential positive inflection point for the company.

Industry Context

This filing reflects a common scenario for smaller public companies facing delisting challenges, where a significant shareholder or new investor steps in to recapitalize or restructure the company with the aim of restoring market compliance and liquidity. The focus on regaining Nasdaq listing highlights the importance of exchange compliance for investor confidence and access to capital markets, a critical factor for companies in various industries.

Management Changes

Corporate Governance

Legal Proceedings

• The Reporting Person must use best efforts to obtain a decision from the SEC requiring Nasdaq to hold a hearing concerning the Issuer's appeal against delisting, indicating an ongoing regulatory matter related to the company's listing status.

Related Party Transactions

• David E. Lazar, as a significant shareholder and director, was granted 25,000 shares of Common Stock and 305,357 shares of Series A Preferred Stock by the Issuer.
• David E. Lazar acquired 1,456,980 shares of Common Stock in a private transaction from an unspecified party.
• In the February 2025 Transactions, David E. Lazar sold Series A Preferred Stock, a warrant, and receivables to 'Purchasers,' with $300,000 of the consideration paid to the Issuer and deemed a contribution by Lazar, in exchange for 1,200,000 newly issued Common Shares from the Issuer. This complex transaction involves multiple parties and a significant shareholder.

Stakeholder Impact

• Shareholders: Potential for increased share price if Nasdaq relisting is successful; potential dilution from future share issuances (Earnout Shares); impact on Series A Preferred Stock holders due to increased conversion price.
• Management/Directors: Significant changes to the Board of Directors with five resignations and a reduction in board size.
• Creditors: The $300,000 contribution to the Issuer could improve the company's financial standing, potentially benefiting creditors.
• Employees: No direct impact mentioned, but successful relisting and improved company health could stabilize employment.

Next Steps

• FiEE, Inc. to amend its certificate of incorporation to increase the Series A Preferred Stock conversion price from $1.40 to $2.75.
• David E. Lazar to use best efforts to obtain a decision from the SEC requiring Nasdaq to hold a hearing concerning the Issuer's appeal against delisting.
• FiEE, Inc. to successfully regain a Nasdaq listing by December 31, 2025.
• David E. Lazar to continue providing services to assist the Issuer in achieving Nasdaq listing from the closing date through the Listing Date.
• If Earnout Milestones are satisfied, Purchasers will pay David E. Lazar up to $3.4 million (subject to deductions) and the Issuer will issue Lazar shares equal to 3% of outstanding common stock within 30 days of the Listing Date.

Key Dates

Recommendation

Keywords

FiEE Inc., David E. Lazar, Schedule 13D, Beneficial Ownership, Common Stock, Series A Preferred Stock, Nasdaq Listing, Corporate Governance, Board Resignation, Share Purchase Agreement, Earnout Payment, SEC Filing, Shareholder Stake, Delisting Appeal