DEFR14A: Phoenix Motor Inc. Amends Proxy Statement for 2024 Annual Meeting, Sets New Meeting Date

Phoenix Motor Inc. amends its proxy statement to revise the reverse stock split ratio, correct voting requirement errors, and announce a new annual meeting date of April 18, 2025.

Summary

• Phoenix Motor Inc. has filed an amendment to its definitive proxy statement.
• The amendment revises the range for the reverse stock split ratio to between 1-for-1.5 and 1-for-5 shares.
• It corrects errors regarding voting requirements and methods for casting votes.
• The company has announced a new meeting date of April 18, 2025, at 11:00 a.m. (Pacific time) at its Anaheim, CA offices.
• Stockholders who have already voted using the prior proxy card must vote again using the revised proxy card for their vote to be counted.
• The annual meeting will address the election of five directors, ratification of the appointment of Yu Certified Public Accountant PC, an advisory vote on executive compensation, an amendment to the 2021 Omnibus Equity Incentive Plan, and authorization of a reverse stock split.
• The record date for stockholders entitled to vote at the Annual Meeting is March 3, 2025.
• As of the record date, there were 45,979,404 shares of common stock outstanding.
• The board recommends voting for all director nominees, ratification of the auditor, approval of executive compensation, approval of the 2021 Plan Amendment, and approval of the reverse stock split.
• EdisonFuture, Inc. and Palo Alto Clean Tech Holding Limited, collectively owning approximately 38.1% of the company's outstanding shares, intend to vote in favor of all proposals.

Sentiment

Score: 5

Explanation: The document presents a mix of positive and negative aspects. The need for a reverse stock split is concerning, but the company is taking proactive steps to address the issue. The governance updates and proposed equity plan amendment are generally positive, but the overall sentiment is neutral due to the underlying financial challenges.

Positives

• The company is taking steps to maintain its listing on The Nasdaq Stock Market LLC through the proposed reverse stock split.
• The board is seeking stockholder input on key governance matters, including executive compensation and equity incentive plans.
• The company is providing stockholders with a revised proxy card and clear instructions on how to vote.
• The company is seeking approval for an amendment to the 2021 Omnibus Equity Incentive Plan to increase the total number of shares of the company's common stock authorized for issuance under the Plan to equal to 20% of the company's outstanding shares of common stock on a fully diluted basis.

Negatives

• The need for a reverse stock split suggests the company's stock price is below the minimum required for continued Nasdaq listing.
• The amendment to the proxy statement indicates previous errors in the original document regarding voting requirements and procedures.
• The company's Section 16 Reporting Persons were not timely complied with during 2024.

Risks

• Failure to approve the reverse stock split could result in delisting from Nasdaq.
• The reverse stock split may not result in a sustained increase in the stock price.
• The reverse stock split may decrease the liquidity of the common stock.
• The reverse stock split may lead to a decrease in the overall market capitalization of the company.
• The company's Section 16 Reporting Persons were not timely complied with during 2024.

Future Outlook

The company aims to maintain its Nasdaq listing through a reverse stock split and seeks stockholder approval for various proposals to enhance its corporate governance and incentive plans.

Management Comments

• The Board believes that effecting the Reverse Stock Split is in the Company's and our stockholders best interests.
• The Board strongly believes that the Reverse Stock Split is necessary to maintain our listing on Nasdaq.

Industry Context

The need for a reverse stock split highlights the challenges some companies face in maintaining stock prices high enough to meet exchange listing requirements, particularly in volatile or competitive sectors like the electric vehicle industry.

Comparison to Industry Standards

• The director compensation program, including cash retainers and stock options, is designed to be competitive with other public companies of comparable size.
• The company's corporate governance practices, such as having an audit committee and a code of ethics, align with standard practices for publicly traded companies.
• The proposed amendment to the equity incentive plan to reserve shares equal to 20% of outstanding shares is within the typical range for equity compensation plans in growth-oriented companies.
• The company's related party transactions, particularly those with SPI Energy Co., Ltd., are disclosed and subject to review by the Audit Committee, which is a standard practice to ensure fairness and transparency.

Corporate Governance

Related Party Transactions

• At December 31, 2023, the amount of $130,000 due from related parties is receivable from SolarJuice Co., Ltd., a subsidiary of SPI Energy Co., Ltd. (SPI), an affiliated entity under the common control of the Company, for sales of electric forklift during 2023.
• At December 31, 2023, the amount of $863,000 due to related parties is loan principal due to SPI.
• During the year ended December 31, 2024, the Company borrowed $1,051,000 from SPI.
• During the year ended December 31, 2024, the Company collected $46,000 from SolarJuice Co., Ltd for sales of electric forklift during 2023, resulting in a decrease in the balance of forklift receivables from $130,000 to $84,000.
• During the year ended December 31, 2024, SolarJuice Co., Ltd billed the Company storage fee of $128,000 which is paid in full as of December 31, 2024.
• During the year ended December 31, 2024, SPI borrowed $594,000 from the Company, and the loan principal was paid in full as of December 31, 2024.
• On June 22, 2024, the Company entered into a loan agreement with SPI. In the agreement, the Company agreed to lend up to an aggregate amount of $3,000,000 to SPI at a rate of 12% per annual.
• During the year ended December 31, 2024, SPI billed the Company $794,000 for legal, human resources and IT services provided by SPI employees and $766,000 was paid, with $28,000 remaining outstanding at of December 31, 2024.
• On March 6, 2024, SPI entered into a Deed of Settlement with its creditor, Streeterville Capital, LLC (Streeterville) to settle the unpaid balances of certain convertible notes via installment payments as agreed in the Deed of Settlement. As of part of this Deed of Settlement, the Company, as the guarantor, covenants to Streeterville to pay and satisfy on demand all liabilities due from SPI to Streeterville with a total amount of $14,980,000.
• On September 6, 2024, Streeterville provided a Deed of Release of Guarantor to the Company, confirming that Streeterville releases and discharges the Company from all past, present and future liability to Streeterville under the guarantee to Streeterville for SPI and also from all actions, claims and demands under or in connection with this guarantee.

Stakeholder Impact

• Stockholders may experience a change in the number of shares they own due to the reverse stock split.
• The reverse stock split aims to maintain the company's Nasdaq listing, which could benefit stockholders by preserving liquidity and access to capital markets.
• Employees and directors may be affected by the amendment to the equity incentive plan, which could impact their compensation and incentives.
• The company's ability to attract and retain talent could be influenced by the equity incentive plan and overall compensation structure.

Next Steps

• Stockholders need to vote on the proposals outlined in the proxy statement.
• The Board of Directors will determine the final ratio for the reverse stock split if approved.
• The company will file an amendment to its certificate of incorporation to reflect the reverse stock split if approved.
• The company will notify stockholders of the effective time of the reverse stock split.

Key Dates

Keywords

proxy statement, annual meeting, reverse stock split, stockholders, directors, executive compensation, 2021 Plan Amendment, Yu Certified Public Accountant PC, Nasdaq, voting rights