DEF: 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 and an amended equity incentive plan at the upcoming annual meeting on June 26, 2025.

Summary

• Surf Air Mobility is holding its Annual Meeting of Stockholders on June 26, 2025, via live webcast.
• Stockholders of record as of April 28, 2025, are eligible to vote.
• The company is seeking approval for four proposals: electing three Class B directors, ratifying the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm, approving a reverse stock split, and approving the Surf Air Mobility Inc. Amended and Restated 2023 Equity Incentive Plan.
• The proposed reverse stock split would combine shares at a ratio ranging from 2:1 to 5:1, to be determined by the Board.
• The company is seeking an increase of 3,500,000 shares to the equity incentive plan.
• The Board recommends voting FOR all proposals.

Sentiment

Score: 6

Explanation: The document is neutral in tone, presenting information required for stockholder voting. It contains both positive aspects (efforts to maintain NYSE listing, attract talent) and negative aspects (potential dilution, risks associated with reverse stock split).

Positives

• The proposed reverse stock split aims to maintain the company's listing on the NYSE and potentially improve the marketability and liquidity of its common stock.
• The amended equity incentive plan is intended to attract, motivate, and retain key employees.
• The company is committed to good corporate governance practices, including stock ownership guidelines for directors and executive officers.
• The company has adopted a Compensation Recoupment (Clawback) Policy.

Negatives

• The reverse stock split may decrease the liquidity of the common stock and result in higher transaction costs.
• The reverse stock split could have anti-takeover implications.
• The company's three-year average burn rate for the last three fiscal years was approximately 12.04% and the company's overhang as of April 28, 2025 was 26.8%.
• If the Plan is approved, the Company's overhang would increase to 44.9%.

Risks

• The reverse stock split may not increase the stock price as expected or allow the company to maintain compliance with NYSE listing requirements.
• Delisting from the NYSE may adversely affect the company's ability to raise additional financing and the value and liquidity of its common stock.
• The company's future performance and general industry, market, and economic conditions could cause the stock price to decline.
• The potential increase in stock price may reduce the risk of market manipulation of our common stock, which we believe is enhanced when our stock trades below $1.00 per share.

Future Outlook

The company intends to file a registration statement on Form S-8 with the SEC covering the shares reserved for issuance under the Plan in 2025 following the annual meeting.

Industry Context

The document highlights the competitive landscape for employee talent and the need for equity compensation to attract and retain qualified personnel, which is a common concern in the technology and aerospace industries.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• However, the discussion of executive compensation, corporate governance, and related party transactions are typical of proxy statements for publicly traded companies.
• The document mentions the company's three-year average burn rate for the last three fiscal years was approximately 12.04% and the company's overhang as of April 28, 2025 was 26.8%.
• If the Plan is approved, the Company's overhang would increase to 44.9%.

Corporate Governance

Related Party Transactions

• Park Lane Investments, LLC (Park Lane) is an entity owned by a family member of Liam Fayed, a co-founder and former officer of Surf Air Global Limited (SAGL), a subsidiary of the Company.
• 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 November 14, 2024, the Company entered into a note exchange agreement with LamVen pursuant to which the Company issued a secured convertible promissory note (the LamVen Note) in aggregate principal amount of $50.0 million to LamVen, to refinance certain existing notes.
• Proxima Centauri, LLC, an entity wholly-owned by David Anderman, a director of the Company, provides advisory services to the Company for a monthly fee of $20,000 per month pursuant to an Advisory Services Agreement entered into on December 16, 2024.
• LamVen provides advisory services to the Company for an annual fee of $1 pursuant to an Advisory Services Agreement effective as of January 1, 2025.
• SRS Ventures LLC, an entity associated with Sudhin Shahani, a co-founder and Board member of the Company, provides advisory services to the Company for an annual fee of $450,000 to be paid in approximately equal monthly payments pursuant to an Advisory Services Agreement effective as of January 1, 2025.
• On November 14, 2024, in connection with the letter of credit backstopping the Credit Agreement, the Company entered into a Reimbursement Agreement with Park Lane, an entity owned by a family member of Mr. Fayed (the Reimbursement Agreement), which contains certain representations and warranties, covenants and events of default.
• As of December 31, 2024, the Company leased a total of three aircraft from JA Flight Services (JAFS) and one aircraft from BAJ Flight Services (BAJFS) under short-term operating leases.
• As of December 31, 2024, the Company leased six aircraft from Schuman Aviation Ltd. (Schuman), an entity which is owned by an employee and stockholder of the Company.
• 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

• Stockholders will be impacted by the reverse stock split and the potential dilution from the equity incentive plan.
• Employees will be impacted by the amended equity incentive plan, which is intended to attract, motivate, and retain key employees.
• The company's ability to maintain its listing on the NYSE will impact all stakeholders.
• The company's financial performance will impact the value of the awards granted under the equity incentive plan.

Next Steps

• Stockholders to vote on the proposals at the Annual Meeting on June 26, 2025.
• Board to determine whether to implement the reverse stock split and, if so, at what ratio.
• Company to file a registration statement on Form S-8 with the SEC covering the shares reserved for issuance under the Plan.

Key Dates

Keywords

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