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Leidi.com Lotte July 20

Electric vehicle company Faraday Future (stock code: FFIE, FF for short) today released an open letter from the company's board of directors and founder Jia Yueting, thanking all shareholders for their continued support and calling on all FFIE shareholders to participate in the annual shareholders' meeting to be held on July 31, 2024 and vote in favor.

In the open letter, the FF board of directors and Jia Yueting expressed their gratitude to shareholders for their continued support, saying that FF has experienced countless ups and downs in the past few years. Thank you shareholders for your firm support for Faraday Future over the years, guarding our common dream and saving Faraday Future. I hope all shareholders will vote in favor of the company at the annual shareholders' meeting on July 31, 2024 to continue to support the company.

The shareholders' meeting has a quorum requirement and all shareholders are expected to be present to vote in favor.

According to the open letter, this shareholder vote is crucial to meeting the quorum requirement for the annual general meeting of shareholders.

If there are not enough shares to vote, FF will not be able to hold an annual general meeting of shareholders, nor will it be able to seek approval to increase the number of authorized shares, grant the board of directors discretion to implement a reverse stock split and other matters, resulting in the company being unable to raise more funds to support the company's strategic goals, or the company may be delisted from Nasdaq, which may cause significant losses to FF shareholders. Therefore, for the benefit of all FF shareholders, FF must maintain the company's listing status, and FF hopes that all shareholders will vote in favor of all proposals submitted.

In the open letter, FF's board of directors also explained the difference between the number of authorized shares and the number of issued shares. That is, the number of authorized shares reflects the maximum number of shares that the company can issue (upper limit), and the number of issued shares reflects the number of shares actually issued.

Increasing the number of authorized shares, that is, increasing the upper limit of the company's issued shares, can help the company fulfill its existing obligations and issue shares when the obligations expire, or issue shares for potential acquisition transactions, stock dividends or stock splits, employee benefit plans or other corporate purposes. Now, the company is seeking shareholder approval to increase the number of authorized shares to support the above activities and obligations, and the corresponding actual shares will be issued gradually.

Vote in favor of the shareholding + additional issuance proposal to help achieve financing and maintain listing status

The share authorization proposal (additional issuance) and the reverse stock split proposal (stock consolidation) are the two most important proposals of FF's annual shareholders' meeting. If shareholders approve the additional issuance proposal, the number of authorized shares of the company's common stock will increase, which will help FF pave the way for future strategic financing, thereby supporting the production and delivery of FF 91 and the implementation of the China-US automotive industry bridge strategy.

If a stock authorization proposal, i.e., a proposal to issue additional shares, is not approved by shareholders, the company will be unable to raise funds, which could result in the company filing for bankruptcy. It could also prevent the company from fulfilling existing obligations to issue common stock when it becomes due, as well as hinder acquisition transactions, stock dividends or splits, the issuance of shares pursuant to employee benefit plans or other corporate purposes.

The reverse stock split proposal, i.e. the stock merger proposal, seeks shareholder approval for a reverse stock split at a ratio between 2:1 and 40:1. This measure is intended to help FF reach the minimum share price requirement required to maintain its listing status on the Nasdaq Capital Market. If the reverse stock split proposal is not approved, the company's common stock is likely to be delisted from Nasdaq, which may also hinder the company's ability to raise funds.

The Nasdaq hearing panel approved FF's continued listing application, provided that the minimum share price requirement is met by August 31, 2024. Approval of the reverse stock split will help the company avoid delisting. FF said that if the stock price naturally reaches Nasdaq's minimum share price requirement, the company's board of directors may decide to postpone or not implement the reverse stock split.

In the open letter, FF's board of directors explained why it proposed a reverse stock split ratio capped at 40:1. The board stated that a reverse stock split would not change shareholders' relative ownership of the company, but would affect the number of issued shares and the price per share. Therefore, the company believes that it should be prudent to provide the company with a long-term safety margin to meet Nasdaq's minimum stock price requirements. Considering that stock price trends are unpredictable, it is proposed that the reverse stock split ratio be capped at 40:1.

LeiDi was founded by media person Lei Jianping. Please indicate the source if reprinting.