DEF 14A: Surf Air Mobility Seeks Stockholder Approval for Reverse Stock Split and Amended Equity Incentive Plan

Surf Air Mobility is asking stockholders to approve a reverse stock split to maintain its NYSE listing and an amended equity incentive plan to attract and retain talent.

Summary

• Surf Air Mobility Inc. is soliciting proxies for its 2024 Annual Meeting of Stockholders to be held on June 25, 2024.
• The key proposals include the election of two Class A directors, ratification of PricewaterhouseCoopers LLP as the independent registered public accounting firm, approval of a reverse stock split, and approval of an amended equity incentive plan.
• The proposed reverse stock split aims to increase the per share trading price of the company's common stock to maintain its listing on the NYSE, with a ratio ranging from 2:1 to 10:1.
• The company received a notification from the NYSE on April 2, 2024, stating that its average closing price was below $1.00 per share over a consecutive 30-day period.
• The company has until October 2, 2024, to regain compliance.
• The amended equity incentive plan seeks to increase the maximum number of shares available for issuance by 7,500,000 shares.
• The board believes this is necessary to attract and retain talented employees and align their interests with those of stockholders.
• The company's three-year average burn rate is approximately 3.85%, and the overhang as of April 9, 2024, was 12.50%.
• If the plan is approved, the company's overhang would increase to 14.44%.

Sentiment

Score: 5

Explanation: The document presents both positive and negative aspects. The reverse stock split is a reactive measure to avoid delisting, which is concerning. However, the amended equity incentive plan is a proactive step to attract and retain talent. The sentiment is neutral overall.

Positives

• The reverse stock split, if successful, could improve the marketability and liquidity of the company's common stock.
• The amended equity incentive plan aims to attract, retain, and motivate key employees, aligning their interests with those of stockholders.
• The company has a Related Person Transactions Policy to ensure fair dealings.
• The company has adopted stock ownership guidelines for non-employee directors and executive officers to align their interests with those of stockholders.

Negatives

• The company received a delisting notification from the NYSE due to its stock price falling below $1.00.
• The reverse stock split may not sufficiently increase the stock price or be completed before the NYSE commences delisting procedures.
• The reverse stock split could decrease the liquidity of the company's common stock and result in higher transaction costs.
• The implementation of a reverse stock split would result in an effective increase in the authorized number of shares of common stock available for issuance, which could, under certain circumstances, have anti-takeover implications.

Risks

• Failure to regain compliance with NYSE listing requirements could result in delisting, adversely affecting the company's ability to raise capital and investor confidence.
• The reverse stock split may not achieve the desired results of increasing marketability and liquidity.
• The additional shares of common stock available for issuance after the reverse stock split could be used to oppose a hostile takeover attempt or to delay or prevent changes in control.
• The company's future performance and general industry, market, and economic conditions could cause the stock price to decline even after a reverse stock split.

Future Outlook

The company aims to regain compliance with NYSE listing requirements by October 2, 2024. The company also intends to file a registration statement on Form S-8 covering the shares reserved for issuance under the amended equity incentive plan in 2024.

Industry Context

The document does not provide specific details on how this announcement relates to broader industry trends or competitors.

Management Changes

Related Party Transactions

• Park Lane Investments, LLC (Park Lane) is an entity owned by a family member of Liam Fayed, an officer and co-founder of Surf Air Global Limited (SAGL), a subsidiary of the Company.
• Park Lane owns four aircraft which it leases, via TVPX ARS (TVPX), as trustee for the aircraft, to SAGL.
• LamVen LLC (LamVen) is an entity owned by Mr. Fayed, and LamJam II LLC (LamJam) is an entity co-owned by Mr. Fayed and a family member of Mr. Fayed.
• On May 26, 2023, the Company approved the forgiveness of certain promissory notes associated with the issuance of restricted stock purchase agreements (RSPAs) to executives and directors.

Stakeholder Impact

• Shareholders: The reverse stock split and equity incentive plan could impact share value and ownership.
• Employees: The equity incentive plan is designed to attract, retain, and motivate employees.
• Customers: The document does not directly address the impact on customers.
• Suppliers: The document does not directly address the impact on suppliers.
• Creditors: The document does not directly address the impact on creditors.

Next Steps

• Stockholder vote on the proposals at the Annual Meeting on June 25, 2024.
• Board decision on whether to implement the reverse stock split and, if so, the ratio.
• Filing of the Certificate of Amendment with the Delaware Secretary of State if the reverse stock split is implemented.
• Filing of a registration statement on Form S-8 covering the shares reserved for issuance under the amended equity incentive plan.

Key Dates

Keywords

reverse stock split, equity incentive plan, proxy statement, annual meeting, NYSE, delisting, stockholders, directors, executive compensation, corporate governance, PricewaterhouseCoopers