DEF: Phoenix Motor Seeks Reverse Split, Quorum Change Amid Delisting

Phoenix Motor Inc. proposes a new reverse stock split and bylaws amendment to address Nasdaq delisting and facilitate shareholder meetings.

Summary

• Phoenix Motor Inc. will hold its 2025 Annual Meeting of Stockholders on December 23, 2025, to vote on several key proposals.
• The company seeks to elect five directors: Xiaofeng Denton Peng, HoongKhoeng Cheong, Julia Yu, Yongmei (May) Huang, and James Young.
• Stockholders will vote to ratify Summit Group CPAs as the independent registered public accounting firm for the year ending December 31, 2025.
• A critical proposal is to authorize the Board of Directors to approve a reverse stock split of up to 1-for-10 shares and amend the company's certificate of incorporation, primarily to meet Nasdaq's minimum bid price requirement.
• The company was delisted from Nasdaq on April 15, 2025, due to non-compliance with the $1.00 minimum bid price rule and currently trades on the OTC Pink Limited Market.
• A previous 1-for-5 reverse stock split was implemented on July 31, 2025, but failed to maintain the Nasdaq listing.
• The Board also seeks ratification of an amendment to the company's Bylaws to reduce the quorum requirement for shareholder meetings from a majority to one-third (33 1/3%) of outstanding shares.
• As of the Record Date (November 24, 2025), there were 12,917,508 shares of common stock outstanding.
• Related party transactions include significant loans to and from SPI Energy Co., Ltd., an affiliated entity, which was placed into official liquidation on July 22, 2025.
• The company was released from a $14,980,000 guarantee for SPI Energy's debt to Streeterville Capital, LLC on September 6, 2024.
• A private placement on August 3, 2025, involved Palo Alto Clean Tech Holding Limited (controlled by CEO Xiaofeng Denton Peng's family) and two officers purchasing shares and warrants at $0.30 per share.

Sentiment

Score: 2

Explanation: The sentiment is overwhelmingly negative due to the company's delisting from Nasdaq, the failure of a previous reverse stock split, and the need for another, more aggressive reverse split. Significant related party transactions, including the liquidation of a key affiliate and past guarantee liabilities, add to the concern. Delinquent Section 16(a) reports also indicate compliance issues. While new executive appointments and the release from a guarantee are minor positives, they are overshadowed by the fundamental challenges to the company's market standing and governance.

Positives

• The company successfully obtained a release from a $14,980,000 guarantee for an affiliated entity's debt, mitigating a significant potential liability.
• New executive appointments, John Walsh as President and Tony Shen as CFO, bring extensive industry and financial experience.
• The Board has three independent directors (Julia Yu, Yongmei (May) Huang, James Young) out of five, meeting Nasdaq's majority independence requirement.
• The company has adopted a hedging and pledging policy, a code of ethics, and an insider trading policy to enhance corporate governance.

Negatives

• The company was delisted from Nasdaq on April 15, 2025, and currently trades on the less liquid OTC Pink Limited Market.
• A previous 1-for-5 reverse stock split implemented on July 31, 2025, failed to achieve its primary purpose of maintaining Nasdaq listing, necessitating another proposed reverse split.
• Section 16 Reporting Persons (executive officers, directors, and greater than 10% stockholders) did not timely comply with filing requirements in 2024.
• SPI Energy Co., Ltd., a significant related party with common control by the CEO, was placed into official liquidation on July 22, 2025, and its shares were suspended by Nasdaq on January 15, 2025.
• The proposed reverse stock split carries risks, including no assurance of a sustained price increase, potential decrease in liquidity, increased transaction costs for odd lots, and a possible decrease in overall market capitalization.

Risks

• The proposed reverse stock split may not result in a sustained increase in the price of the common stock, failing to achieve Nasdaq re-listing.
• The reverse stock split could decrease the liquidity of the common stock due to a reduced number of outstanding shares and potentially fewer market makers.
• Stockholders owning odd lots (less than 100 shares) after the reverse stock split may face higher transaction costs per share when selling.
• The reverse stock split may be viewed negatively by the market, potentially leading to a decrease in the overall market capitalization of the company.
• The company's reliance on information systems and the internet exposes it to cybersecurity threats, which are regularly assessed by the Audit Committee.

Future Outlook

The company's primary forward-looking statement is the intention to use the proposed reverse stock split to increase its per share price to satisfy Nasdaq's minimum bid price requirement and other quantitative requirements, with the ultimate goal of re-listing on Nasdaq or another national securities exchange. The Board believes this will make the common stock more attractive to institutional and other investors.

Management Comments

• The Board believes that its current leadership structure, with Mr. Peng serving as both CEO and Chairman, will enhance and facilitate the implementation of the company's business strategy.
• The Board strongly believes that the Reverse Stock Split is necessary to resume our listing on Nasdaq or another national securities exchange.
• The Board believes that the Bylaws Amendment to reduce the quorum requirement will facilitate the timely holding of shareholder meetings and reduce the risk of adjournments due to lack of quorum.

Industry Context

The company operates in the electric vehicle (EV) sector, which is characterized by rapid technological advancements, intense competition, and significant capital requirements. The need for a reverse stock split and the prior delisting from Nasdaq highlight the challenges smaller EV companies can face in maintaining market capitalization and meeting exchange listing standards, which are crucial for investor visibility and access to capital. The company's efforts to re-list on Nasdaq indicate a desire to regain credibility and access broader investment pools, a common goal for growth-oriented companies in capital-intensive industries like EV manufacturing.

Management Changes

Corporate Governance

Related Party Transactions

• During 2024, the company borrowed $1,051,000 from SPI Energy Co., Ltd. (an affiliated entity under common control), and repaid a total of $1,914,000 (including the 2023 balance), resulting in no outstanding balance as of December 31, 2024.
• The company collected $130 from SolarJuice Co., Ltd. (affiliated) for electric forklift sales in 2024, and SolarJuice billed the company $128 for storage, which was paid in full.
• During 2024, SPI Energy Co., Ltd. borrowed $316,000 from the company, which was repaid in full.
• On June 22, 2024, the company entered a loan agreement to lend up to $3,000,000 to SPI Energy Co., Ltd. at 12% interest. The company lent $500,000 on June 25, 2024, and $1,750,000 on July 15, 2024. SPI repaid $2,250,000 principal and $22,000 interest by September 30, 2024, and the agreement was terminated on October 1, 2024.
• SPI Energy Co., Ltd. billed the company $794,000 for legal, human resources, and IT services in 2024, with $28,000 remaining outstanding as of December 31, 2024.
• On March 6, 2024, the company acted as guarantor for SPI Energy Co., Ltd.'s $14,980,000 debt to Streeterville Capital, LLC, but was released from this guarantee on September 6, 2024.
• During the nine months ended September 30, 2025, SPI Energy Co., Ltd. billed the company $104,000 for services, with $18,000 outstanding. A $5,000 loan to CEO Xiaofeng Denton Peng was also outstanding.
• During the nine months ended September 30, 2025, the company billed SPI Energy Co., Ltd. $17,000 for services, with $17,000 outstanding.
• On July 22, 2025, SPI Energy Co., Ltd. was placed into official liquidation by order of the Grand Court of the Cayman Islands, and its shares were suspended by Nasdaq on January 15, 2025.
• On August 3, 2025, Palo Alto Clean Tech Holding Limited (owned and controlled by CEO Xiaofeng Denton Peng's son and spouse) purchased 1,600,000 shares and warrants for 1,600,000 shares at $0.30 per share in a private placement.

Stakeholder Impact

• Shareholders face potential dilution and uncertainty regarding the value of their holdings due to the proposed reverse stock split, which may not guarantee a sustained increase in share price or re-listing on Nasdaq.
• Shareholders may incur higher transaction costs if they hold odd lots (less than 100 shares) after the reverse stock split.
• The reduction in the quorum requirement for shareholder meetings could potentially reduce the influence of individual shareholders by making it easier for a smaller percentage of shares to conduct business.
• Employees and executives are impacted by compensation structures, including base salaries and equity-based incentive awards, and new appointments bring changes to the management team.
• Creditors and investors are affected by the company's financial health, its ability to maintain exchange listings, and its related party dealings, particularly the liquidation of SPI Energy Co., Ltd.

Next Steps

• Hold the Annual Meeting of Stockholders on December 23, 2025, to vote on the proposed director elections, auditor ratification, reverse stock split, and bylaws amendment.
• If approved, the Board of Directors will determine the final ratio for the reverse stock split (up to 1-for-10) and file the necessary charter amendment.
• The Section 16 Reporting Persons are in the process of complying with their delinquent Section 16 filing requirements.
• Stockholders wishing to submit proposals for the 2026 Annual Meeting must do so by August 3, 2026.

Key Dates

Recommendation

The company's situation presents significant red flags for investors. The delisting from Nasdaq, the failure of a previous reverse stock split, and the necessity for another, more aggressive reverse split (up to 1-for-10) indicate severe challenges in maintaining market value and exchange compliance. The risks associated with the proposed reverse split, such as no guaranteed sustained price increase, decreased liquidity, and potential reduction in overall market capitalization, are substantial. Furthermore, the extensive related party transactions, including the liquidation of a key affiliated entity (SPI Energy) and past compliance issues (delinquent Section 16(a) reports), raise serious corporate governance concerns. While new management appointments and the release from a guarantee are minor positives, they are heavily outweighed by the fundamental issues impacting the company's viability and investor confidence. The stock's current trading on the OTC Pink Limited Market further limits its appeal and liquidity. A seasoned investor would likely view these factors as indicative of high risk and recommend divesting.

Keywords

Reverse Stock Split, Nasdaq Delisting, Corporate Governance, Proxy Statement, Electric Vehicles, Shareholder Meeting, Bylaws Amendment, Related Party Transactions, Director Election, Auditor Ratification