DEFA14A: VELO3D Proposes Reverse Stock Split and Shareholder Written Consent, Postpones Annual Meeting

VELO3D, Inc. has announced a postponement of its 2025 annual meeting to June 27, 2025, adding proposals for a reverse stock split to meet exchange listing requirements and an amendment to allow stockholder action by written consent.

Summary

• The 2025 annual meeting of stockholders, originally scheduled for June 24, 2025, has been postponed to June 27, 2025, to provide additional time for stockholders to review new proposals and cast their vote.
• Two new proposals have been added to the agenda: Proposal 3 seeks approval for an amendment to the certificate of incorporation to effect a reverse stock split of common stock at a ratio ranging from one-for-five (1:5) to one-for-fifty (1:50), with the exact ratio to be determined by the Board of Directors.
• The primary goals of the reverse stock split are to increase the per-share market price of common stock to meet initial listing requirements for a national securities exchange (e.g., Nasdaq's general minimum bid price of $4.00) and to effectively increase the number of authorized and unissued shares available for future issuance.
• As of June 2, 2025, VELO3D had 211,009,815 shares of common stock outstanding, out of 500,000,000 authorized shares.
• Proposal 4 seeks approval for an amendment to the company's certificate of incorporation to allow stockholders to act by written consent, removing the current prohibition.
• The rationale for the written consent proposal includes providing flexibility and a cost-effective mechanism for obtaining stockholder approval for certain corporate matters, especially given that Arun Jeldi, the Chief Executive Officer and Chairman, holds approximately 88.1% of the outstanding common stock as of June 2, 2025.
• Both new proposals require the affirmative vote of the holders of a majority of the total outstanding shares of common stock.

Sentiment

Score: 5

Explanation: The document outlines necessary corporate actions (reverse stock split for potential uplisting, written consent for efficiency) that address current challenges (low stock price, need for flexibility). While the intent for uplisting is positive, the need for a reverse split often signals underlying stock performance issues. The written consent proposal, while efficient for the controlling shareholder, could be viewed negatively by minority shareholders due to reduced engagement opportunities.

Positives

• The proposed reverse stock split aims to increase the per-share market price of common stock, which is crucial for meeting initial listing requirements of national securities exchanges like Nasdaq, potentially enhancing the company's market visibility and attracting a broader investor base, including institutional investors.
• The reverse stock split will effectively increase the number of authorized and unissued shares of common stock, providing the Board with greater flexibility for future capital raising transactions, merger and acquisition activities, strategic collaborations, and the provision of equity incentives to employees, officers, directors, or consultants.
• Allowing stockholders to act by written consent could provide a more cost-effective and efficient mechanism for obtaining stockholder approval for certain corporate matters, streamlining governance processes.

Negatives

• There is no assurance that the reverse stock split will increase the market price of the common stock sufficiently or sustain it over the long term to meet national securities exchange listing requirements, or that the company will ultimately pursue or achieve such a listing.
• Future issuances of common stock, facilitated by the increased pool of authorized shares post-split, may lead to dilution of existing stockholders' earnings per share, voting power, and other interests.
• The reverse stock split may decrease the liquidity of common stock due to a reduced total number of outstanding shares, potentially leading to reduced trading volume and fewer market makers.
• The reverse stock split could result in more stockholders owning 'odd lots' (less than 100 shares), which may be more difficult to sell or incur incrementally higher transaction costs.
• The reverse stock split could lead to a decrease in the company's overall market capitalization if the per-share price does not increase proportionally or if the market views the split negatively.
• Allowing stockholder action by written consent may result in certain stockholders being denied the ability to vote on or be informed about proposed actions before they are taken, potentially disenfranchising smaller stockholders.
• The written consent mechanism could enable a minimum percentage of stockholders to take action without the benefit of hearing the views, questions, and arguments of other stockholders, and could potentially lead to multiple contradictory solicitations.

Risks

• The Reverse Stock Split may not increase the price of our Common Stock over the long-term or sufficiently to meet initial listing requirements for a national securities exchange.
• There can be no assurance that even if the Reverse Stock Split is effected, that the bid price of the Company's common stock will be sufficient for the Company to meet initial listing bid price requirements for a national securities exchange or that the Company will meet the other requirements for initial listing on a national securities exchange, and even if it does, that it will pursue such a listing.
• The Reverse Stock Split will increase the number of authorized and unissued shares of common stock, and future issuances of common stock may have a dilutive effect on the earnings per share, voting power, and other interests of existing stockholders.
• The issuance of authorized but unissued stock could be used to deter a potential takeover of the company that may otherwise be beneficial to stockholders.
• The Reverse Stock Split may decrease the liquidity of our Common Stock due to a reduced total number of outstanding shares.
• The Reverse Stock Split may result in some stockholders owning odd lots (less than 100 shares) that may be more difficult to sell or require greater transaction costs per share to sell.
• The Reverse Stock Split may lead to a decrease in our overall market capitalization if the per share market price does not increase in proportion to the Reverse Stock Split ratio or does not maintain or exceed such price.
• If the Reverse Stock Split Proposal is not approved, the Board will not have the authority to effect the Reverse Stock Split to increase the per share market price to meet initial listing requirements or to effectively increase available unissued shares for future financing and growth.
• Action by written consent may result in certain stockholders being denied the ability to vote on or otherwise have a say on or be informed about proposed stockholder actions.
• Action by written consent may enable the minimum percentage of stockholders required to approve an action to take action on a proposal without the benefit of hearing the views, questions, and arguments of other stockholders.
• Action by written consent could potentially result in multiple contradictory stockholder written consents being solicited simultaneously, creating administrative and financial burdens for the company and putting stockholders at risk of confusion.
• Action by written consent may disenfranchise smaller stockholders, particularly in a consent solicitation that does not require their involvement to achieve majority support.
• Action by written consent may enable a party attempting an unsolicited bid to circumvent negotiating with the Board and result in terms that may not be in the best interest of all stockholders.

Future Outlook

The company intends to pursue a potential listing of its common stock on a national securities exchange, such as Nasdaq, which generally requires a minimum bid price of $4.00. The proposed reverse stock split is a strategic move to meet these listing requirements and to increase the number of authorized and unissued shares available for future capital raising, mergers, acquisitions, and equity incentives to support continued business growth and development. The Board will determine the exact ratio and timing of the reverse stock split based on market conditions and the company's needs, with the authority to abandon the split if it is no longer deemed in the best interest of the company and its stockholders.

Management Comments

• "We have determined to (i) add a new Proposal 3... to effect a reverse stock split... (ii) add a new Proposal 4... to allow stockholders to act by written consent, and (iii) postpone the 2025 annual meeting... to provide additional time for stockholders to review the additional proposals and cast their vote." (Nancy Krystal, General Counsel and Secretary)
• "The Company's primary reason for approving and recommending the Reverse Stock Split is to meet the initial listing requirements of a national securities exchange." (Board of Directors)
• "Our Board intends to effect the Reverse Stock Split only if it believes that a decrease in the number of shares outstanding is in our best interests and those of our stockholders and is likely to improve the trading price of our common stock and improve the likelihood that we will meet the initial listing requirements of a national securities exchange." (Board of Directors)
• "The Board believes that a stockholder right to act by written consent is a way to bring an important matter to the attention of both management and stockholders outside of the traditional stockholder meeting process." (Board of Directors)
• "Stockholder written consents can also provide a cost-effective and efficient mechanism to obtain stockholder approval for certain corporate matters." (Board of Directors)
• "The Board believes the Written Consent Amendment will provide additional flexibility to the Company, the Board and management given the Company's current stock ownership." (Board of Directors)
• "Our Board currently intends to effect the Reverse Stock Split."

Industry Context

This filing reflects a common strategy for companies trading on OTC markets to seek uplisting to national exchanges like Nasdaq, often necessitated by minimum bid price requirements. Such moves are typically aimed at increasing liquidity, attracting institutional investors, and facilitating future capital raises, which are common needs for growth-oriented technology companies, particularly in specialized manufacturing sectors like additive manufacturing (3D printing). The pursuit of greater corporate governance flexibility, as seen with the written consent proposal, can also be a trend, especially in companies with a controlling shareholder.

Comparison to Industry Standards

• The document mentions Nasdaq's general minimum bid price requirement of $4.00 as a target for the reverse stock split, which is a standard listing criterion for major U.S. exchanges. No specific comparable companies, projects, or detailed financial results are provided for direct comparison within the industry.

Corporate Governance

Related Party Transactions

• Arun Jeldi, the Chief Executive Officer and Chairman, holds approximately 185,151,333 shares, or approximately 88.1%, of the company's outstanding common stock as of June 2, 2025. As a controlling stockholder, Mr. Jeldi would benefit from the ability to approve certain stockholder matters by written consent rather than at a duly called stockholder meeting.

Stakeholder Impact

• **Shareholders**: Will experience a reduction in the number of shares held due to the reverse stock split, but their proportionate equity interest will remain the same (except for those receiving a whole share in lieu of a fractional share). There is potential for increased stock price and liquidity if the company successfully uplists to a national exchange. However, future share issuances could dilute existing ownership, and the written consent mechanism may reduce the influence of minority shareholders.
• **Employees**: Equity incentives such as options and RSUs will be proportionately adjusted in terms of the number of shares and exercise price, ensuring the aggregate dollar amount payable for the purchase of shares remains materially unchanged.
• **Potential Investors**: A higher per-share stock price post-split may attract a broader pool of investors, particularly institutional investors who may prefer higher-priced shares, potentially improving the marketability of the common stock.

Next Steps

• Stockholders are urged to read the Proxy Statement and the Supplement in their entirety and promptly submit their proxy by completing the enclosed new proxy card or by voting via Internet or telephone.
• The annual meeting will be held virtually at www.virtualshareholdermeeting.com/VLD2025 on Friday, June 27, 2025, at 1:00 p.m. Pacific Time/4:00 p.m. Eastern Time.
• Stockholders will vote on the election of two Class I directors (Proposal 1) and the ratification of Frank, Rimmerman + Co. LLP as the independent registered public accounting firm for 2025 (Proposal 2).
• Stockholders will vote on the newly added Proposal 3 to approve the reverse stock split amendment and Proposal 4 to approve the written consent amendment.
• If the reverse stock split proposal is approved, the Board will have the sole authority to elect whether or not and when to amend the Certificate of Incorporation to effect the Reverse Stock Split, determining the exact ratio within the approved range.
• If the reverse stock split is effected, the company will file the Reverse Stock Split Charter Amendment with the Secretary of State of the State of Delaware.
• If the written consent amendment is approved, the company expects to file a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware shortly following the annual meeting.
• The company may, in the future, apply to list its common stock on a national securities exchange.

Key Dates

Recommendation

Keywords

VELO3D, VLD, SEC Filing, DEFA14A, Proxy Statement, Annual Meeting, Reverse Stock Split, Stock Split, Written Consent, Corporate Governance, Shareholder Meeting, Nasdaq Listing, Capital Raise, Equity Incentive Plan, Stock Dilution, Financial Reporting, Additive Manufacturing, 3D Printing