Thank you for your ongoing support of Graze and your help in enabling our exciting journey to this point. During 2023, we experienced some transitions in the core leadership, and we recognize that we have not provided consistent communciation to you and other stockholders. With this letter, we will provide some key updates about Graze, as well as a request for certain actions on your part.
First things first, Graze continues to focus on our initial markets as we build a strong foundation for growth, focusing on airports, golf courses, solar fields and government applications. One of our most significant accomplishments of the year has been our successful pilot project to provide eco-friendly landscaping maintenance solutions for the Dallas/Fort Worth International Airport that began in July.
For 2024, we anticipate being able to build on that success with additional pilot demonstrations and potentially transitioning into delivering on actual orders. We have begun to accept non-binding pre-orders for next year, which shows to us that the potential demand is strong.
In order to fulfill that demand, we will need to raise additional capital to increase our R&D and production capabilities. However, current market conditions for raising capital continue to be a challenge and are expected to get worse in 2024. Furthermore, our investment bankers and the venture capital community have advised us that Graze’s current capital structure could make it difficult to raise the additional capital we need.
Given these circumstances that Graze is operating under, and considering the long-term market opportunity Graze is seeking, it is important that Graze takes the steps necessary to best position itself for long-term success. In particular, we have been advised by potential investors that they would prefer Graze to create a subsidiary (“Graze Robotics”) into which substantially all operating assets of Graze will be transferred and into which Graze can attract additional equity investment. This will create a holding company structure in which Graze, as the parent company, will continue to indirectly own the operating assets transferred to Graze Robotics. All current stockholders would remain as stockholders in Graze, as the parent company, benefiting from the operations of Graze Robotics, its initially wholly-owned subsidiary. The new subsidiary, Graze Robotics, would then be able to raise additional capital, allowing for increased R&D and production capabilities.
Accordingly, Graze’s board of directors (the“Board”) recommends that the stockholders vote to approve the creation of a subsidiary and to transfer substantially all operating assets of Graze into such subsidiary, which would then undertake its own equity fundraising efforts. A diagram of the proposed structure is provided below:
This restructuring achieves a number of changes that are necessary and that are in the long-term, best interest of all stockholders.
Graze, as the parent company, would continue to exercise control over Graze Robotics by maintaining its majority control of the stock of Graze Robotics through the initial fundraising. Graze would also be able to appoint the initial board and the initial executive officers of Graze Robotics. Institutional investors will likely negotiate for board seats at Graze Robotics.
Additionally, Graze intends to issue a series of convertible promissory notes (the “Notes”) pursuant to a Note Purchase Agreement to be entered into by Graze and the purchasers of the Notes. The Notes will be convertible into shares of Graze or Graze Robotics to the extent either of these entities complete a capital raising transaction with proceeds greater than $2,000,000. It is currently the intent of the Board that any such fundraising would be done at Graze Robotics following there structuring described herein.
The recommendations submitted for your consideration today supports our path to a rewarding outcome for you and all of Graze’s stockholders.
You will have received another email inviting you to the Graze Proxy Voting portal. In order to cast your vote on the Action by Written Consent of the Stockholders of Graze, please follow the instructions on that invitation email to access the voting portal. Once you are in the voting portal, please follow the instructions on the page, select “yes”, and enter your signature using the Hello Sign e-signature platform. In order to vote against the recommendations, you should select “no”. If your vote is not received within the next fourteen calendar days, the Board of Directors will be entitled to vote your shares in alignment with the majority of all voting Series A Preferred Stock or Series A-1 Preferred Stock pursuant to the terms of Graze’s Third Amended and Restated Certificate of Incorporation.
We remain of the belief that the long-term outlook for Graze is bright. We continue to enhance our R&D efforts, and our go-to-market strategy, focusing on airports, golf courses, solar fields and government applications, which provide the greatest potential for Graze. The additions of Ellen Bruno as Chief of Staff and Eddie Shaw as Chief Technology Officer have bolstered Graze’s already outstanding team. We also plan to expand the Board of Directors with the addition of President and CEO Logan Fahey and a new independent director, as part of the Board’s commitment to transparency and governance.
A snapshot of the current leadership of Graze is provided below:
We expect these individuals to also make up the initial leadership of Graze Robotics.
Looking forward, we are excited about the potential in our market and the customer response to our pilot projects,pointing to a promising future for Graze. Thank you, again, for your long-term support of Graze and its important mission.
Certain information contained herein constitutes ‘forward looking statements’. Forward looking statements address our current plans, intentions, beliefs and expectations and are statements of our expected future economic performance. Statements containing terms like ‘will’, ‘believes’, ‘does not believe’, ‘plans’, ‘expects’, ‘intends’, ‘estimates’, ‘anticipates’, ‘may’ and other phrases of similar meaning or the negative or other variations of these words or other comparable words or phrases are considered to imply uncertainty and are forward looking statements.
Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or achievements of Graze to be materially different from any future results or achievements of Graze expressed or implied by such forward looking statements. Such factors include, but are not limited to changes in economic conditions, government regulations, contract requirements and abilities, behavior of existing and new competitor companies and other risks and uncertainties.
We cannot guarantee our future results, level of activity, performance or achievements. Neither I nor any other person assumes responsibility for the accuracy and completeness of these forward looking statements. We are under no duty to update any of the forward looking statements after the date of this letter.
