DEFR14A: Velo3D Proposes Reverse Stock Split to Maintain NYSE Listing and Increase Share Availability

Velo3D is seeking stockholder approval for a reverse stock split to meet NYSE listing requirements and increase authorized shares, alongside other proposals including director elections and auditor ratification.

Summary

• Velo3D has announced its 2024 Annual Meeting of Stockholders to be held virtually on June 10, 2024.
• The meeting will address the election of three Class III directors, ratification of PricewaterhouseCoopers LLP as the independent accounting firm, and a proposed reverse stock split.
• The reverse stock split aims to increase the company's stock price to meet NYSE's minimum requirements and to increase the number of authorized shares available for future issuance.
• The proposed reverse stock split ratio ranges from 1:5 to 1:50, to be determined by the board.
• Stockholders will also vote on approving the issuance of common stock related to secured notes to comply with NYSE regulations.
• The board recommends voting 'FOR' all proposals.

Sentiment

Score: 5

Explanation: The document presents a mix of positive and negative aspects. The reverse stock split is a necessary measure to maintain listing compliance, but it also carries risks. The overall sentiment is neutral, reflecting the company's efforts to navigate financial challenges.

Positives

• The reverse stock split could broaden the pool of investors and make the stock more attractive to institutional investors.
• Increasing the stock price may encourage investor interest and improve marketability.
• The company is committed to good corporate governance practices.
• The virtual format of the annual meeting makes it easier for stockholders to attend and participate.

Negatives

• The reverse stock split may not increase the stock price over the long term.
• The reverse stock split could decrease the liquidity of the common stock.
• Some stockholders may end up owning odd lots, which can be more difficult to sell.
• The reverse stock split may lead to a decrease in the overall market capitalization.

Risks

• Failure to maintain the NYSE listing could result in a less liquid trading market and reduced stock price.
• The reverse stock split may be viewed negatively by the market.
• Future issuances of common stock may dilute the earnings per share, voting power, and other interests of existing stockholders.
• The company may be required to make additional cash payments to the holders of the Secured Notes or the Additional Secured Convertible Notes if the Stock Issuance Proposal is not approved.

Future Outlook

The company aims to maintain its NYSE listing and increase the number of authorized shares available for future issuance through the proposed reverse stock split. They also seek to raise additional financing to operate the business and pursue continued growth.

Industry Context

Reverse stock splits are often used by companies facing delisting from major exchanges to regain compliance with minimum share price requirements. The approval of common stock issuance is standard practice to comply with exchange regulations when issuing a significant number of shares.

Comparison to Industry Standards

• Reverse stock splits are a common strategy for companies facing delisting from exchanges like the NYSE or NASDAQ.
• For example, companies like Cenntro Electric Group and Farmmi, Inc. have recently implemented reverse stock splits to maintain their NASDAQ listings.
• The specific ratio chosen (in Velo3D's case, a range of 1:5 to 1:50) depends on the company's current stock price and the exchange's requirements.
• The approval of common stock issuance is a standard practice to comply with exchange regulations when issuing a significant number of shares, similar to what companies like Tesla and Apple have done in the past.

Management Changes

Related Party Transactions

• From October 26, 2021 to November 30, 2023, Ronit Buller, wife of Mr. Buller, our former Chief Executive Officer and Director, was employed at Velo3D as our Vice President of Intellectual Property.
• On November 28, 2023, Ms. Buller, as the owner of R. Buller Law, entered into an Agreement for Legal Services, effective December 4, 2023, to provide the Company legal services related to intellectual property matters.

Stakeholder Impact

• The reverse stock split will affect all stockholders equally and will not affect any stockholders proportionate equity interest in us, except for those stockholders who receive an additional share of our common stock in lieu of a fractional share.
• The issuance of the shares issuable pursuant to the Secured Notes and, if issued, the Additional Secured Convertible Notes will not affect the rights of the holders of our outstanding common stock, but such issuance will have a dilutive effect on the existing stockholders, including the voting power and economic rights of the existing stockholders, and may result in a decline in our stock price or greater price volatility.

Next Steps

• Stockholders to vote on the proposals at the Annual Meeting on June 10, 2024.
• Board to determine the exact ratio for the reverse stock split if approved.
• Board to decide whether and when to implement the reverse stock split.
• Company to file the Reverse Stock Split Charter Amendment with the Secretary of State of the State of Delaware if the Board decides to implement the reverse stock split.

Key Dates

Keywords

reverse stock split, annual meeting, proxy statement, stock issuance, NYSE listing, directors, PricewaterhouseCoopers, Velo3D, stockholders