6770 |
||||
(Jurisdiction of Incorporation or Organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
Matthew R. Pacey, P.C. Douglas E. Bacon, P.C. Kirkland & Ellis LLP 609 Main Street Houston, Texas 77002 (713) 836-3600 |
Shawn OHargan, P.C. Kirkland & Ellis LLP 601 Lexington Avenue New York, NY 10022 (212) 446-4800 |
Mark B. Baudler Andrew Hoffman Lillian Jenks Alexandra Perry Wilson Sonsini Goodrich & Rosati, P.C. One Market Plaza, Spear Tower, Suite 3300 San Francisco, CA 94105 (415) 947-2000 |
Large accelerated filer |
☐ | Accelerated filer | ☐ | |||||
Non-accelerated filer |
☒ | Smaller reporting company | ||||||
Emerging growth company |
| ||||||||
Title of Each Class of Securities to be Registered |
Amount to be Registered |
Proposed Maximum Offering Price per Share |
Proposed Maximum Aggregate Offering Price |
Amount of Registration Fee | ||||
New ESS Common Stock (1) |
148,420,778 |
$9.895(6) |
$1,468,623,598.31 |
$160,226.835(8) | ||||
New ESS Common Stock issuable upon exercise of the Warrants (2) |
12,416,667 |
$11.50(5) |
$142,791,671.50 |
$15,578.57(8) | ||||
Warrants to purchase New ESS Common Stock (3) |
12,416,667 |
N/A |
N/A(7) |
— (9) | ||||
Total (4) |
160,837,445 |
$175,805.41(10) | ||||||
| ||||||||
|
(1) |
Represents (i) 25,000,000 STWO Class A Ordinary Shares underlying units issued in the initial public offering of ACON S2 Acquisition Corp., a Cayman Islands exempted company (“STWO”), (ii) 6,250,000 STWO Class B Ordinary Shares held by STWO’s initial shareholders and (iii) up to 117,170,778 shares issued in connection with the Business Combination as described in the proxy statement/prospectus/information statement forming part of this registration statement. |
(2) |
Represents shares of New ESS Common Stock to be issued upon the exercise of (i) 8,333,333 warrants to purchase STWO Class A Ordinary Shares underlying units issued in STWO’s initial public offering and (ii) 4,083,334 warrants to purchase STWO Class A Ordinary Shares underlying units issued in a private placement simultaneously with the closing of STWO’s initial public offering (“Private Placement Warrants” and, together with the public warrants, the “STWO Warrants”). The STWO Warrants will convert into warrants to acquire shares of New ESS Common Stock. |
(3) |
The number of warrants to acquire shares of New ESS Common Stock being registered represents (i) 8,333,333 public warrants and (ii) 4,083,334 private placement warrants. |
(4) |
Pursuant to Rule 416(a) of the Securities Act of 1933, as amended (the “Securities Act”), there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. |
(5) |
Pursuant to Rule 457(g)(1) of the Securities Act and solely for the purpose of calculating the registration fee, the proposed maximum offering price of the shares of New ESS Common Stock underlying the STWO Warrants is calculated based on the exercise price of the STWO Warrants of $11.50 per share. |
(6) |
Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of the STWO Class A Ordinary Shares of STWO on the Nasdaq Capital Market on June 15, 2021 ($9.895 per Class A ordinary share). This calculation is in accordance with Rule 457(f)(1) of the Securities Act. |
(7) |
The maximum number of STWO Warrants and shares of New ESS Common Stock issuable upon exercise of the STWO Warrants are being simultaneously registered hereunder. Consistent with the response to Question 240.06 of the Securities Act Rules Compliance and Disclosure Interpretations, the registration fee with respect to the STWO Warrants has been allocated to the New ESS Common Stock underlying the STWO Warrants and those shares are included in the registration fee calculated in footnote (6) above. |
(8) |
Calculated by multiplying the proposed maximum aggregate offering price of securities to be registered by 0.0001091. |
(9) |
No separate registration fee is required pursuant to Rule 457(g) under the Securities Act. |
(10) |
Previously paid. |
* |
Immediately prior to the consummation of the Business Combination (as defined in the accompanying proxy statement/prospectus/information statement), STWO intends to effect a deregistration by way of continuation under the Cayman Islands Companies Act (2021 Revision) and a domestication under Part XII of the Delaware General Corporation Law, pursuant to which STWO’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware (the “Domestication”). All securities being registered will be issued by the continuing entity following the Domestication, which continuing entity will be renamed “ESS Tech, Inc.” following the Effective Time. As used herein, “New ESS” refers to STWO after giving effect to the Business Combination. |
Sincerely, |
|
John Roush Chairman |
• |
Proposal No. 1—The Domestication Proposal Existing Governing Documents de-registered in the Cayman Islands, STWO’s continuation and domestication as a corporation under the laws of the State of Delaware. |
• |
Proposal No. 2—The Business Combination Proposal Merger Agreement Merger Sub ESS de-registration by way of continuation of STWO as an exempted company in the Cayman Islands and the continuation and domestication of STWO as a corporation in the State of Delaware, (a) Merger Sub will merge with and into ESS, with ESS as the surviving company in the Merger, (b) at the Effective Time, among other things, (i) each share of common stock of Merger Sub, par value $0.0001 per share, issued and outstanding as of immediately prior to the Effective Time will be converted into and exchanged for one share of common stock of ESS, par value $0.0001 per share, (the “New ESS Common Stock |
warrant to acquire a number of shares of STWO common stock at an adjusted exercise price per share, as determined under the Merger Agreement and (vi) each restricted stock unit of ESS that is outstanding immediately prior to the Effective Time, will be converted into a restricted stock unit covering a number of shares of New ESS Common Stock equal to the number of shares of restricted stock unit of ESS subject to such restricted stock unit of ESS immediately prior to the Effective Time and (c) certain related agreements (including the Subscription Agreements, the Transaction Support Agreements, the Sponsor Letter Agreement, and the Amended and Restated Registration Rights Agreement, each in the form attached to the proxy statement/prospectus/information statement as Annex F, H, I and G, respectively), and the transactions contemplated thereby, be approved, ratified and confirmed in all respects. |
• |
Proposal No. 3—The Charter Proposal and Governance Proposals Proposed Certificate of Incorporation Charter Proposal inter alia |
• |
Proposal No. 3(A) |
• |
Proposal No. 3(B) |
• |
Proposal No. 3(C) |
• |
Proposal No. 3(D) |
• |
Proposal No. 4—The Election of Directors Proposal |
• |
Proposal No. 5—The Equity Incentive Plan Proposal |
• |
Proposal No. 6—The Nasdaq Proposal |
• |
Proposal No. 7—The Employee Stock Purchase Plan Proposal |
• |
Proposal No. 8—The Adjournment Proposal |
(i) |
(a) hold public shares or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and warrants prior to exercising your redemption rights with respect to the public shares; |
(ii) |
submit a written request to Continental Stock Transfer & Trust Company (“ Continental |
(iii) |
deliver your public shares to Continental, STWO’s transfer agent, physically or electronically through The Depository Trust Company. |
Sincerely, |
|
John Roush Chairman |
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Q: |
Why am I receiving this proxy statement/prospectus/information statement? |
A: | STWO shareholders are being asked to consider and vote upon, among other proposals, a proposal to approve and adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination. In accordance with the terms and subject to the conditions of the Merger Agreement, among other things, on the Closing Date at the Effective Time, (i) each share of common stock of Merger Sub, par value $0.0001 per share, issued and outstanding as of immediately prior to the Effective Time will be converted into and exchanged for one share of New ESS Common Stock, (ii) all shares of ESS Common Stock and ESS Preferred Stock held in the treasury of ESS or owned by STWO or Merger Sub will be canceled without any conversion thereof and no payment or distribution will be made with respect thereto, (iii) each share of ESS Preferred Stock issued and outstanding as of immediately prior to the Effective Time will be converted into ESS Common Stock on a one-for-one basis and, following such conversion, each share of ESS Common Stock issued and outstanding as of immediately prior to the Effective Time (other than any cancelled shares and dissenting shares), will receive a number of shares of New ESS Common Stock based on an adjusted equity value of ESS as set forth in the allocation schedule, plus Earnout Stock, as applicable, pursuant to the terms and conditions of the Merger Agreement, (iv) each ESS option outstanding as of immediately prior to the Effective Time will be converted into an option to purchase a number of shares of New ESS Common Stock as calculated in accordance with the Merger Agreement, (v) each warrant of ESS issued and outstanding as of immediately prior to the Effective Time shall have been “net” exercised in exchange for shares of ESS Capital Stock, or otherwise shall be assumed by STWO and will be automatically converted into a warrant to acquire a number of shares of STWO common stock at an adjusted exercise price per share, as determined under the Merger Agreement, and (vi) each restricted stock unit of ESS that is outstanding immediately prior to the Effective Time, will be converted into a restricted stock unit covering a number of shares of New ESS Common Stock equal to the number of shares of restricted stock unit of ESS subject to such restricted stock unit of ESS immediately prior to the Effective Time. For further details, see “ Proposal No. 2—The Business Combination Proposal |
Q: |
What proposals are shareholders of STWO being asked to vote upon? |
• | a proposal to approve by special resolution the Domestication; |
• | a proposal to approve by ordinary resolution and adopt the Merger Agreement, including the Merger, and the transactions contemplated thereby; |
• | a proposal to approve by special resolution the adoption of the Proposed Certificate of Incorporation, a copy of which is attached to this proxy statement/prospectus/information statement as Annex B; |
• | a proposal to approve by special resolution the change in the authorized share capital of STWO from (i) 500,000,000 STWO Class A Ordinary Shares, par value $0.0001 per share, 50,000,000 STWO Class B Ordinary Shares, par value $0.0001 per share, and 5,000,000 preference shares, par value $0.0001 per share, to (ii) 2,000,000,000 shares of New ESS Common Stock, par value $0.0001 per share, and 200,000,000 shares of New ESS Preferred Stock, par value $0.0001 per share; |
• | a proposal to approve by special resolution the New ESS Board to issue any or all shares of New ESS Preferred Stock in one or more classes or series, with such terms and conditions as may be expressly determined by the New ESS Board and as may be permitted by the Delaware General Corporation Law; |
• | a proposal to approve by special resolution that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, unless New ESS consents in writing to the selection of an alternative forum; and |
• | a proposal to approve by special resolution the removal of provisions in STWO’s current Existing Governing Documents related to our status as a blank check company that will no longer apply upon the consummation of the Business Combination. |
• | a proposal to approve by ordinary resolution the election, effective at Closing, of nine (9) directors to serve on the New ESS Board; |
• | a proposal to approve by ordinary resolution the issuance of shares of New ESS Common Stock in connection with the Business Combination in compliance with the Nasdaq Listing Rules; |
• | a proposal to approve and adopt by ordinary resolution the 2021 Equity Incentive Plan; |
• | a proposal to approve and adopt the 2021 Employee Stock Purchase Plan established to be effective upon the Closing; and |
• | a proposal to approve by ordinary resolution the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to, among other things, permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting. |
Q: |
Why is STWO proposing the Business Combination? |
A: | STWO is a blank check company incorporated on July 21, 2020 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities, which we refer to throughout this proxy statement/prospectus/information statement as our initial business combination. Based on STWO’s business activities, it is a “shell company” as defined under the Exchange Act because it has no operations and nominal assets consisting almost entirely of cash. |
Q: |
Did the STWO Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination? |
A: | No. The STWO Board did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. However, STWO’s management, the members of the STWO Board and other representatives of STWO have substantial experience in evaluating the operating and financial merits of companies engaged in the sustainability industry and reviewed certain financial information of ESS and compared it to certain publicly traded companies, selected based on the experience and the professional judgment of STWO’s management team, which enabled them to make the necessary analyses and determinations regarding the Business Combination. Accordingly, investors will be relying solely on the judgment of STWO’s management and the STWO Board in valuing ESS’ business and assuming the risk that STWO’s management and the STWO Board may not have properly valued such business. |
Q: |
What will ESS’ equityholders receive in return for the Business Combination with STWO? |
A: | Following the consummation of the Domestication, on the Closing Date, Merger Sub will merge with and into ESS, with ESS as the surviving company in the Merger. In accordance with the terms and subject to the conditions of the Merger Agreement, at the Effective Time, among others, (i) each share of common stock of Merger Sub, par value $0.0001 per share, issued and outstanding as of immediately prior to the Effective Time will be converted and exchanged for one share of New ESS Common Stock, (ii) all shares of ESS Common Stock and ESS Preferred Stock held in the treasury of ESS or owned by STWO or Merger Sub will be canceled without any conversion thereof and no payment or distribution will be made with respect thereto, (iii) each share of ESS Preferred Stock issued and outstanding as of immediately prior to the Effective Time will be converted into ESS Common Stock on a one-for-one basis and, following such conversion, each share of ESS Common Stock issued and outstanding as of immediately prior to the Effective Time (other than any cancelled shares and dissenting shares), will receive a number of shares of New ESS Common Stock based on an adjusted equity value of ESS as set forth in the allocation schedule, plus Earnout Stock, as applicable, pursuant to the terms and conditions of the Merger Agreement, (iv) each ESS option outstanding as of immediately prior to the Effective Time will be converted into an option to purchase a number of shares of New ESS Common Stock as calculated in accordance with the Merger Agreement, (v) each warrant of ESS issued and outstanding as of immediately prior to the Effective Time shall have been “net” exercised in exchange for shares of ESS Capital Stock, or otherwise shall be assumed by STWO and will be automatically converted into a warrant to acquire a number of shares of STWO common stock at an adjusted exercise price per share, as determined under the Merger Agreement, and (vi) each restricted stock unit of ESS that is outstanding immediately prior to the Effective Time, will be converted into a restricted stock unit covering a number of shares of New ESS Common Stock equal to the number of shares of restricted stock unit of ESS subject to such restricted stock unit of ESS immediately prior to the Effective Time. For further details, see “ Proposal No. 2—The Business Combination Proposal—Consideration to ESS Stockholders in the Business Combination |
Q: |
How will the combined company be managed following the business combination? |
A: | Following the Closing, it is expected that the current management of ESS will become the management of New ESS, and the New ESS Board will consist of up to nine (9) directors, who will be divided into three (3) classes (Class I, II and III) each consisting of three (3) directors. Pursuant to the Merger Agreement, the New ESS Board will consist of (i) seven (7) individuals designated by ESS, (ii) one (1) individual designated by Breakthrough Energy Ventures, LLC and (iii) one (1) individual designated by SB Energy Global Holdings One Ltd. Please see the section entitled “ Management After the Business Combination” |
Q: |
What equity stake will current STWO shareholders and current equityholders of ESS hold in New ESS immediately after the consummation of the Business Combination? |
A: | As of the date of this proxy statement/prospectus/information statement, there are 31,250,000 ordinary shares issued and outstanding, which includes an aggregate of 6,250,000 STWO Class B Ordinary Shares held by the STWO Initial Shareholders, including the Sponsor. In addition, as of the date of this proxy statement/prospectus/information statement, there is outstanding an aggregate of 13,000,000 warrants to acquire ordinary shares, comprised of 4,666,667 Private Placement Warrants (583,333 of which will be forfeited at Closing, 3,500,000 of which will vest at Closing and 583,334 of which will vest in two equal tranches upon the occurrence of the Earnout Milestone Events (as defined herein) pursuant to the Sponsor Letter Agreement) held by the Sponsor and 8,333,333 public warrants. Each whole warrant entitles the holder thereof to purchase one STWO Class B Ordinary Share and, following the Business Combination, will entitle the holder thereof to purchase one share of New ESS Common Stock. Therefore, as of the date of this proxy statement/prospectus/information statement (without giving effect to the Business Combination and assuming that none of STWO’s outstanding public shares are redeemed in connection with the Business Combination), STWO’s fully diluted share capital, giving effect to the exercise of all of the Private Placement Warrants to be outstanding and vested upon Closing and all of the public warrants, would be 43,083,333 ordinary shares. |
Share Ownership in New ESS (Percentage of Outstanding Shares) |
||||||||
No redemptions |
Maximum redemptions |
|||||||
ESS Stockholders (1) |
63.1 | % | 75.5 | % | ||||
PIPE Investors (2) |
16.4 | % | 19.6 | % | ||||
STWO Public Shareholders (3) |
4.1 | % | — | % | ||||
STWO Initial Shareholders (4) |
16.4 | % | 4.9 | % |
(1) | Assumes that the number of shares of New ESS Common Stock to be issued to ESS stockholders at Closing is 96,345,564 shares in both the no redemption scenario and in the maximum redemption scenario. The shares to be issued for outstanding warrants are calculated on a cashless exercise basis as if converted at the Closing. See “ Unaudited Pro Forma Condensed Combined Financial Information |
(2) | Consists of 25,000,000 shares to be acquired in connection with the PIPE Financing. |
(3) | Consists of 25,000,000 shares issued in connection with STWO’s initial public offering. |
(4) | Includes 6,250,000 shares of New ESS Common Stock. |
Q: |
Why is STWO proposing the Domestication? |
A: | Our board of directors believes that there are significant advantages to us that will arise as a result of a change of our domicile to Delaware. Further, our board of directors believes that any direct benefit that the Delaware General Corporation Law (the “ DGCL |
shareholders, who are the owners of the corporation. The board of directors believes that there are several reasons why transfer by way of continuation to Delaware is in the best interests of STWO and its shareholders, including, (i) the prominence, predictability and flexibility of the DGCL, (ii) Delaware’s well-established principles of corporate governance and (iii) the increased ability for Delaware corporations to attract and retain qualified directors, each of the foregoing are discussed in greater detail in the section entitled “ Proposal No. 1—The Domestication Proposal—Reasons for the Domestication |
Q: |
What is involved with the Domestication? |
A: | The Domestication will require STWO to file certain documents in both the Cayman Islands and the State of Delaware. At the effective time of the Domestication, which will be the Closing Date, STWO will cease to be a company incorporated under the laws of the Cayman Islands and, in connection with the Business Combination, STWO will continue as a Delaware corporation. The Existing Governing Documents will be replaced by the Proposed Governing Documents and your rights as a shareholder will cease to be governed by the laws of the Cayman Islands and will be governed by Delaware law. |
Q: |
What amendments will be made to the Existing Governing Documents of STWO? |
A: | The consummation of the Business Combination is conditional on, among other things, the Domestication. Accordingly, in addition to voting on the Business Combination, STWO’s shareholders also are being asked to consider and vote upon a proposal to approve the Domestication, and five (5) separate proposals to replace the Existing Governing Documents with the Proposed Governing Documents upon the Merger, which differ from the Existing Governing Documents in the following material respects: |
Existing Governing Documents |
Proposed Governing Documents | |||
Authorized Shares (Governing Documents Proposals) |
The share capital under the Existing Governing Documents is $55,500 divided into 500,000,000 STWO Class A Ordinary Shares of par value $0.0001 per share, 50,000,000 STWO Class B Ordinary Shares of par value $0.0001 per share and 5,000,000 preference shares of par value $0.0001 per share. | The Proposed Governing Documents authorize 2,200,000,000 shares of which 2,000,000,000 shares are New ESS Common Stock, par value $0.0001 per share, and 200,000,000 shares of New ESS Preferred Stock, par value $0.0001 per share. | ||
Authorize the Board of Directors to Issue Preferred Stock Without Shareholder Consent (Governing Documents Proposals) |
The Existing Governing Documents authorize the issuance of 5,000,000 preference shares with such designation, rights and preferences as may be determined from time to time by our board of directors. Accordingly, our board of | The Proposed Governing Documents authorize the board of directors to issue preferred stock from time to time in one or more series, and, with respect to each series, to establish the number of shares in each such series, to fix the designation, |
Existing Governing Documents |
Proposed Governing Documents | |||
directors is empowered under the Existing Governing Documents, without shareholder approval, to issue preference shares with dividend, or other distribution, voting, return of capital or other rights which could adversely affect the voting power or other rights of the holders of ordinary shares. | powers (including voting powers), preferences and relative, participating, optional or other special rights, if any, of each such series and any qualifications, limitations or restrictions thereof, and, subject to the rights of such series, to increase or decrease the number of shares of any such series. | |||
Corporate Name (Governing Documents Proposals) |
The Existing Governing Documents provide the name of the company is “ACON S2 Acquisition Corp.” | The Proposed Governing Documents will provide that the name of the corporation will be “ESS Tech, Inc.” | ||
Exclusive Forum (Governing Documents Proposals) |
The Existing Governing Documents do not contain a provision adopting an exclusive forum for certain shareholder litigation. | The Proposed Governing Documents adopt Delaware as the exclusive forum for certain shareholder litigation and the federal courts of the United States as the exclusive forum for litigation arising out of the Securities Act. | ||
Perpetual Existence (Governing Documents Proposals) |
The Existing Governing Documents provide that if we do not consummate a business combination (as defined in the Existing Governing Documents) by September 21, 2022 (twenty-four months after the closing of STWO’s initial public offering), STWO will cease all operations except for the purposes of winding up and will redeem the shares issued in STWO’s initial public offering and liquidate its trust account. | The Proposed Governing Documents do not include any provisions relating to New ESS’ ongoing existence; the default rule under the DGCL will make New ESS’ existence perpetual. This is the default rule under the DGCL. | ||
Provisions Related to Status as Blank Check Company (Governing Documents Proposals) |
The Existing Governing Documents set forth various provisions related to our status as a blank check company prior to the consummation of a business combination. | The Proposed Governing Documents do not include such provisions related to our status as a blank check company, which no longer will apply upon consummation of the Business Combination, as we will cease to be a blank check company at such time. |
Q: |
How will the Business Combination, including the Domestication, affect my ordinary shares, warrants and units? |
A: | In connection with the Business Combination, including the Domestication, on the Closing Date prior to the Effective Time, (i) each issued and outstanding STWO Class A Ordinary Share will convert automatically by operation of law, on a one-for-one one-for-one one-third of one warrant, with such whole warrant representing the right to acquire one share of New ESS Common Stock at an exercise price of $11.50 per share of New ESS Common Stock on the terms and conditions set forth in the warrant agreement. See “Proposal No. 1—The Domestication Proposal. |
Q: |
What are the U.S. federal income tax consequences of the Domestication? |
A: | As discussed more fully under “ Material U.S. Federal Income Tax Considerations Material U.S. Federal Income Tax Considerations—U.S. Holders |
• | a U.S. holder that holds STWO public shares that have a fair market value of less than $50,000 on the date of the Domestication and that, on the date of the Domestication owns (actually and constructively) |
less than 10% of the total combined voting power of all classes of our stock entitled to vote and less than 10% of the total value of all classes of our stock, generally will not recognize any gain or loss and will not be required to include any part of STWO’s earnings in income; |
• | a U.S. holder that holds public shares that have a fair market value of $50,000 or more and that, on the date of the Domestication, owns (actually and constructively) less than 10% of the total combined voting power of all classes of our stock entitled to vote and less than 10% of the total value of all classes of our stock generally will recognize gain (but not loss) on the exchange of STWO public shares for STWO Delaware public shares pursuant to the Domestication. As an alternative to recognizing gain, such U.S. holder may file an election to include in income as a deemed dividend the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367(b) of the Code) attributable to its public shares provided certain other requirements are satisfied; and |
• | a U.S. holder that holds public shares that have a fair market value of $50,000 or more and that, on the date of the Domestication, owns (actually or constructively) 10% or more of the total combined voting power of all classes of our stock entitled to vote or 10% or more of the total value of all classes of our stock generally will be required to include in income as a deemed dividend the “all earnings and profits amount” attributable to its public shares provided certain other requirements are satisfied. Any such U.S. holder that is a corporation may, under certain circumstances, effectively be exempt from taxation on a portion or all of the deemed dividend pursuant to Section 245A of the Code (commonly referred to as the participation exemption). |
Q: |
Do I have redemption rights? |
A: | If you are a holder of public shares, you have the right to request that we redeem all or a portion of your public shares for cash if you follow the procedures and deadlines described elsewhere in this proxy statement/prospectus/information statement. Public shareholders may elect to redeem all or a portion of the public shares held by them regardless of if or how they vote in respect of the Business Combination Proposal How do I exercise my redemption rights? |
Q: |
How do I exercise my redemption rights? |
A: | In connection with the proposed Business Combination, pursuant to the Existing Governing Documents, STWO’s public shareholders may request that STWO redeem all or a portion of such public shares for cash if the Business Combination is consummated. If you are a public shareholder and wish to exercise your right to redeem the public shares, you must: |
(i) | (a) hold public shares or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; |
(ii) | submit a written request to Continental, STWO’s transfer agent, in which you (i) request that we redeem all or a portion of your public shares for cash, and (ii) identify yourself as the beneficial holder of the public shares and provide your legal name, phone number and address; and |
(iii) | deliver your public shares to Continental, our transfer agent, physically or electronically through The Depository Trust Company (“ DTC |
Q: |
How do redemptions affect the value of my New ESS Common Stock? |
A: | The value of shares of New ESS Common Stock held by a non-redeeming STWO public stockholder may be impacted by the number of shares that are redeemed, as well as other events that may significantly dilute the value of such shares of New ESS Common Stock. For example, the following table shows the potential impact of varying levels of redemptions and certain dilutive events on the per share value of the New ESS Common Stock held by non-redeeming STWO public stockholders, in each case assuming an enterprise value of $1.072 billion for New ESS upon consummation of the Business Combination. |
No Redemption Scenario |
50% Redemption Scenario |
Maximum Redemption Scenario(1) |
||||||||||
Shares held by ESS Stockholders(2)(3)(4)(5) |
96,345,564 | 96,345,564 | 96,345,564 | |||||||||
STWO Public Shares |
25,000,000 | 12,500,000 | — | |||||||||
Sponsor Shares |
6,250,000 | 6,250,000 | 6,250,000 | |||||||||
PIPE Shares |
25,000,000 | 25,000,000 | 25,000,000 | |||||||||
|
|
|
|
|
|
|||||||
Total shares (projected to be issued and outstanding) |
152,595,564 | 140,095,564 | 127,595,564 | |||||||||
Implied Value Per Share |
||||||||||||
Shares issued and outstanding(6) |
$ |
10.30 |
|
$ |
10.33 |
|
$ |
10.36 |
| |||
Shares issued, outstanding and fully diluted(7) |
$ | 9.56 | $ | 9.52 | $ | 9.48 | ||||||
Deferred Underwriting Fee(8) |
||||||||||||
Effective Deferred Underwriting Fee(9) |
1.76 | % | 2.35 | % | 3.52 | % |
(1) | Assumes maximum redemptions of 25,000,000 STWO Class A Ordinary Shares in connection with the Business Combination at approximately $10.00 per share based on trust account figures as of June 30, 2021. |
(2) | Excludes up to 16,500,000 shares of Earnout Stock that eligible ESS securityholders will have the right to receive following the Closing in two equal tranches upon the occurrence of the Earnout Milestone Events |
during the Earnout Period. We have excluded the Earnout Stock from the pro forma New ESS Common Stock issued to ESS stockholders after the Business Combination because they are contingently issuable based upon the share price of New ESS meeting reaching certain thresholds that have not yet been achieved. |
(3) | Includes an estimated 64,916,988 shares of New ESS Common Stock that will be issued to holders of an aggregate of 45,593,357 shares of ESS Common Stock and ESS Preferred Stock at an estimated per share consideration of approximately $1.42. |
(4) | Includes an estimated 3,247,264 shares of New ESS Common Stock that will be issued to 2,280,661 ESS warrant holders at an estimated per share consideration of approximately $1.42 and excludes 825,000 shares of New ESS Common Stock to be reserved as part of the Acquiror Common Stock Consideration (as defined in the Merger Agreement), for potential future issuance upon the settlement of New ESS RSUs, which will be issued at the Closing. Also assumes all outstanding vested and unvested ESS Options will be converted into New ESS Options exercisable for shares of New ESS Common Stock with the same terms except for the number of shares exercisable and the exercise price, each of which was adjusted using an estimated per share consideration of approximately $1.42. |
(5) | Includes the expected issuance of 28,181,312 shares of New ESS Common Stock resulting from expected conversion of 5,427,464 shares of ESS Series C-2 Preferred Stock and related 14,365,207 ESS Series C-2 Preferred Stock warrants, which will be issued prior to the Closing, at an estimated per share consideration of approximately $1.42. |
(6) | Calculation of implied value per share assumes (i) enterprise value of $1.072 billion of New ESS upon consummation of the Business Combination, (ii) $250.0 million of cash proceeds received from the PIPE Financing upon consummation of the Business Combination, (iii) approximately $250.0 million of funds in the trust account immediately prior to any redemptions and (iv) no exercise of warrants that remain outstanding after consummation of the Business Combination regardless of the level of redemptions. |
(7) | Calculation of implied value per share assumes (i) enterprise value of $1.072 billion upon consummation of the Business Combination, (ii) $250.0 million of cash proceeds received from the PIPE Financing upon consummation of the Business Combination, (iii) approximately $250.0 million of funds in the trust account immediately prior to any redemptions and (iv) the exercise of all 8,333,333 Public Warrants and 3,500,000 Private Placement Warrants that will remain outstanding after consummation of the Business Combination regardless of the level of redemptions, which excludes the 583,334 Private Placement Warrant Earnout Shares (as defined herein) that vest in two equal tranches upon the occurrence of the Earnout Milestone Events pursuant to the Sponsor Letter Agreement. |
(8) | Reflects $8,800,000 in deferred underwriting fees in connection with STWO’s IPO. |
(9) | The level of redemption impacts the effective underwriting fee incurred in connection with the IPO. In a no redemption scenario, the effective underwriting fee is based on $250.0 million in proceeds from the PIPE Financing and $250.0 million in the trust account. In a 50% redemption scenario, the effective underwriting fee is based on $250.0 million in proceeds from the PIPE Financing and $125.0 million in the trust account. In a 100% redemption scenario, the effective underwriting fee is based on $250.0 million in proceeds from the PIPE Financing and $0 in the trust account. |
Q: |
If I am a holder of STWO Units, can I exercise redemption rights with respect to my STWO Units? |
A: | No. Holders of issued and outstanding STWO Units must elect to separate the STWO Units into the underlying Public Shares and Public Warrants prior to exercising redemption rights with respect to the Public Shares. If you hold your STWO Units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the STWO Units into the underlying Public Shares and Public Warrants, or if you hold STWO Units registered in your own name, you must contact Continental, our |
transfer agent, directly and instruct them to do so. The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number and address to Continental in order to validly redeem its shares. You are requested to cause your Public Shares to be separated and delivered to Continental, our transfer agent, by , Eastern Time, on , 2021 (two business days before the extraordinary general meeting) in order to exercise your redemption rights with respect to your Public Shares. |
Q: |
What are the U.S. federal income tax consequences of exercising my redemption rights? |
A: | We expect that a U.S. holder (defined in “ U.S. Federal Income Tax Considerations—U.S. Holders Material U.S. Federal Income Tax Considerations. |
Q: |
What happens to the funds deposited in the trust account after consummation of the Business Combination? |
A: | Following the closing of STWO’s initial public offering, an amount equal to $250,000,000 ($10.00 per unit) of the net proceeds from our initial public offering and the sale of the Private Placement Warrants was placed in the trust account. As of June 30, 2021, funds in the trust account totaled approximately $250,011,922, all of which were held in U.S. treasury securities. These funds will remain in the trust account, except for the withdrawal of interest to pay income taxes, if any, until the earliest of (i) the completion of a business combination (including the closing of the Business Combination) or (ii) the redemption of all of the public shares if we are unable to complete a business combination by September 21, 2022 (unless such date is extended in accordance with the Existing Governing Documents), subject to applicable law. |
Q: |
What happens if a substantial number of the public shareholders vote in favor of the Business Combination Proposal and exercise their redemption rights? |
A: | Our public shareholders are not required to vote “FOR” the Business Combination in order to exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds |
available from the trust account and the number of public shareholders are reduced as a result of redemptions by public shareholders, subject to the satisfaction or waiver of the condition in the Merger Agreement requiring a minimum of $200,000,000 in the Trust Account. |
Q: |
What conditions must be satisfied to complete the Business Combination? |
A: | The consummation of the Business Combination is conditioned upon, among other things, (i) the approval by the STWO shareholders of the Condition Precedent Proposals being obtained; (ii) the applicable waiting period under the HSR Act relating to the Business Combination having expired or been terminated; (iii) the aggregate cash proceeds from STWO’s trust account, together with the proceeds from the PIPE Financing, equaling no less than $200,000,000 (after deducting any amounts paid to STWO’s shareholders that exercise their redemption rights in connection with the Business Combination and net of unpaid transaction expenses incurred or subject to reimbursement by STWO) and (iv) the New ESS Common Stock to be issued in connection with the Business Combination having been approved for listing on Nasdaq. Therefore, unless these conditions are waived by the applicable parties to the Merger Agreement, the Merger Agreement could terminate and the Business Combination may not be consummated. |
Q: |
When do you expect the Business Combination to be completed? |
A: | It is currently expected that the Business Combination will be consummated in the third quarter of 2021. This date depends, among other things, on the approval of the proposals to be put to STWO shareholders at the extraordinary general meeting. However, such extraordinary general meeting could be adjourned if the Adjournment Proposal is adopted by our shareholders at the extraordinary general meeting and we elect to adjourn the extraordinary general meeting to a later date or dates to consider and vote upon a proposal to approve by ordinary resolution the adjournment of the extraordinary general meeting to a later date or dates (i) to the extent necessary to ensure that any required supplement or amendment to this proxy statement/prospectus/information statement is provided to STWO shareholders, (ii) in order to solicit additional proxies from STWO shareholders in favor of one or more of the proposals at the extraordinary general meeting or (iii) if STWO shareholders redeem an amount of public shares such that the minimum cash condition in the Merger Agreement would not be satisfied. For a description of the conditions for the completion of the Business Combination, see “ Proposal No. 2—The Business Combination Proposal |
Q: |
What happens if the Business Combination is not consummated? |
A: | STWO will not complete the Domestication to Delaware unless all other conditions to the consummation of the Business Combination have been satisfied or waived by the parties in accordance with the terms of the Merger Agreement. If STWO is not able to consummate the Business Combination with ESS nor able to complete another business combination by September 21, 2022, in each case, as such date may be extended pursuant to our Existing Governing Documents, we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses) divided by |
the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. |
Q: |
Do I have appraisal rights in connection with the proposed Business Combination and the proposed Domestication? |
A: | Neither our shareholders nor our warrant holders have appraisal rights in connection with the Business Combination or the Domestication under the Cayman Islands Companies Act or under the DGCL. |
Q: |
What do I need to do now? |
A: | We urge you to read this proxy statement/prospectus/information statement, including the Annexes and the documents referred to herein, carefully and in their entirety and to consider how the Business Combination will affect you as a shareholder and/or warrant holder. Our shareholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus/information statement and on the enclosed proxy card. |
Q: |
How do I vote? |
A: | If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, and were a holder of record of ordinary shares on , 2021, the record date for the extraordinary general meeting, you may vote with respect to the proposals in person or virtually at the extraordinary general meeting, or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. For the avoidance of doubt, the record date does not apply to STWO shareholders that hold their shares in registered form and are registered as shareholders in STWO’s register of members. All holders of shares in registered form on the day of the extraordinary general meeting are entitled to vote at the extraordinary general meeting. |
Q: |
If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me? |
A: | No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this proxy statement/prospectus/information statement may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent. As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote.” Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal. If you decide to vote, you should provide instructions to your broker, bank or other nominee on how to vote in accordance with the information and procedures provided to you by your broker, bank or other nominee. |
Q: |
When and where will the extraordinary general meeting be held? |
A: | The extraordinary general meeting will be held on , 2021, unless postponed or adjourned to a later date. In light of the novel coronavirus (referred to as “COVID-19”) pandemic and to support the well-being of STWO’s shareholders and partners, the extraordinary general meeting will be held virtually (albeit the physical location of the meeting will at the offices of Kirkland & Ellis LLP located at 609 Main Street, |
Houston, Texas 77002 for the purposes of the Existing Governing Documents). All STWO shareholders as of the record date, or their duly appointed proxies, may attend the extraordinary general meeting. Registration will begin at Eastern Time. |
Q: |
How can STWO’s shareholders attend the extraordinary general meeting? |
A: | As a registered shareholder, you received a Notice and Access instruction form or proxy card from Continental Stock Transfer & Trust Company (“ CST e-mail address below. CST’s contact information is as follows: +1 (917) 262-2373, or email proxy@continentalstock.com. |
Q: |
Who is entitled to vote at the extraordinary general meeting? |
A: | We have fixed , 2021 as the record date for the extraordinary general meeting. If you were a shareholder of STWO at the close of business on the record date, you are entitled to vote on matters that come before the extraordinary general meeting. However, a shareholder may only vote his or her shares if he or she is present in person or is represented by proxy at the extraordinary general meeting. |
Q: |
How many votes do I have? |
A: | On a poll, STWO shareholders are entitled to one vote at the extraordinary general meeting for each ordinary share held of record as of the record date. As of the close of business on the record date for the extraordinary general meeting, there were 31,250,000 ordinary shares issued and outstanding, of which 25,000,000 were issued and outstanding public shares. |
Q: |
What constitutes a quorum? |
A: | A quorum of STWO shareholders is necessary to hold a valid meeting. A quorum will be present at the extraordinary general meeting if one or more shareholders holding at least a majority of the issued and outstanding ordinary shares entitled to vote at the extraordinary general meeting are represented in person or by proxy at the extraordinary general meeting. As of the record date for the extraordinary general meeting, ordinary shares would be required to achieve a quorum. |
Q: |
What vote is required to approve each proposal at the extraordinary general meeting? |
A: | The following votes are required for each proposal at the extraordinary general meeting: |
(i) | Domestication Proposal: two-thirds (2/3) of the ordinary shares who, being present in person or represented by proxy at the extraordinary general meeting and entitled to vote on such matter, vote on such matter. |
(ii) | Business Combination Proposal: |
(iii) | Charter Proposal: two-thirds (2/3) of the ordinary shares who, being present in person or represented by proxy at the extraordinary general meeting and entitled to vote on such matter, vote on such matter. |
(iv) | Governance Proposals: |
(v) | Election of Directors Proposal: |
(vi) | Equity Incentive Plan Proposal: |
(vii) | Nasdaq Proposal: |
(viii) | Employee Stock Purchase Plan Proposal: |
(ix) | Adjournment Proposal: |
Q: |
What are the recommendations of the STWO Board? |
A: | The STWO Board believes that the Business Combination Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of STWO and unanimously recommends that its shareholders vote “FOR” the Business Combination Proposal, “FOR” the Domestication Proposal, “FOR” the Charter Proposal, “FOR” each of the separate Governance Proposals, “FOR” the Election of Directors Proposal, “FOR” the Nasdaq Proposal, “FOR” the Equity Incentive Plan Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the shareholders at the extraordinary general meeting. |
Q: |
How do the Sponsor and the other STWO Initial Shareholders intend to vote their shares? |
A: | Unlike some other blank check companies in which the STWO Initial Shareholders agree to vote their shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business combination, the STWO Initial Shareholders have agreed to vote all their shares in favor of all the proposals being presented at the extraordinary general meeting. As of the date of this proxy statement/prospectus/information statement, our Initial Shareholders own 20.0% of the issued and outstanding ordinary shares. |
Q: |
What happens if I sell my STWO ordinary shares before the extraordinary general meeting? |
A: | The record date for the extraordinary general meeting is earlier than the date of the extraordinary general meeting and earlier than the date that the Business Combination is expected to be completed. If you transfer your public shares after the applicable record date, but before the extraordinary general meeting, unless you grant a proxy to the transferee, you will retain your right to vote at such general meeting. |
Q: |
May I change my vote after I have mailed my signed proxy card? |
A: | Yes. Shareholders may send a later-dated, signed proxy card to our general counsel at our address set forth below so that it is received by our general counsel prior to the vote at the extraordinary general meeting (which is scheduled to take place on , 2021) or attend the extraordinary general meeting in person and vote. Shareholders also may revoke their proxy by sending a notice of revocation to our general counsel, which must be received by our general counsel prior to the vote at the extraordinary general meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote. |
Q: |
What happens if I fail to take any action with respect to the extraordinary general meeting? |
A: | If you fail to vote with respect to the extraordinary general meeting and the Business Combination is approved by shareholders and the Business Combination is consummated, you will become a shareholder and/or warrant holder of New ESS. If you fail to vote with respect to the extraordinary general meeting and the Business Combination is not approved, you will remain a shareholder and/or warrant holder of STWO. However, if you fail to vote with respect to the extraordinary general meeting, you will nonetheless be able to elect to redeem your public shares in connection with the Business Combination. |
Q: |
What should I do if I receive more than one set of voting materials? |
A: | Shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus/information statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting |
instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your ordinary shares. |
Q: |
Who will solicit and pay the cost of soliciting proxies for the extraordinary general meeting? |
A: | STWO will pay the cost of soliciting proxies for the extraordinary general meeting. STWO has engaged , as proxy solicitor (“ ”) to assist in the solicitation of proxies for the extraordinary general meeting. STWO has agreed to pay a fee of $ , plus disbursements, and will reimburse for its reasonable out-of-pocket |
Q: |
Where can I find the voting results of the extraordinary general meeting? |
A: | The preliminary voting results will be announced at the extraordinary general meeting. STWO will publish final voting results of the extraordinary general meeting in a Current Report on Form 8-K within four (4) business days after the extraordinary general meeting. |
Q: |
Who can help answer my questions? |
A: | If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus/information statement or the enclosed proxy card you should contact: |
• | Proposal No. 3 |
• | Proposal No. 3(A) |
• | Proposal No. 3(B) |
• | Proposal No. 3(C) |
• | Proposal No. 3(D) |
• | the fact that the STWO Initial Shareholders have agreed not to redeem any ordinary shares held by them in connection with a shareholder vote to approve a proposed initial business combination; |
• | the fact that the Sponsor paid an aggregate of $25,000 for 6,250,000 STWO Class B Ordinary Shares, the aggregate value of which is estimated to be approximately $62,000,000 (assuming the per share value of the New ESS Common Stock is the same as the $9.92 per share closing price of STWO Class A Ordinary Shares on Nasdaq as of July 23, 2021) all of which are currently owned by the STWO Initial Shareholders and such securities will have a significantly higher value at the time of the Business Combination than the Sponsor paid for such shares; |
• | the fact that the Sponsor paid $7,000,000 for its Private Placement Warrants, the aggregate value of which is estimated to be approximately $6,160,000 (assuming the per warrant value of the New ESS warrants is the same as the $1.32 per warrant closing price of the Public Warrants on Nasdaq as of July 23, 2021) and the Private Placement Warrants would be worthless if a business combination is not consummated by September 21, 2022 (unless such date is extended in accordance with the Existing Governing Documents); |
• | the fact that the STWO Initial Shareholders and certain of STWO’s current officers have agreed to waive their rights to liquidating distributions from the trust account with respect to any ordinary shares (other than public shares) held by them if STWO fails to complete an initial business combination by September 21, 2022 (no consideration was given to the Initial Shareholders or members of our management team in exchange for such waiver); |
• | the fact that the Amended and Restated Registration Rights Agreement will be entered into by the Sponsor and certain other affiliates of STWO; |
• | the fact that, at the option of the Sponsor, any amounts outstanding under any loan made by the Sponsor or any of its affiliates to STWO in an aggregate amount of up to $1,500,000 may be converted into warrants to purchase STWO Class A Ordinary Share in connection with the consummation of the Business Combination; |
• | the continued indemnification of STWO’s directors and officers and the continuation of STWO’s directors’ and officers’ liability insurance after the Business Combination (i.e., a “tail policy”); |
• | the fact that, following the Business Combination, our Sponsor and its affiliates can earn a positive rate of return on their investment, even if other shareholders of STWO experience a negative rate of return on their investment; |
• | the fact that the Sponsor and STWO’s officers and directors will lose their entire investment in STWO and will not be reimbursed for any out-of-pocket |
• | the fact that if the trust account is liquidated, including in the event STWO is unable to complete an initial business combination by September 21, 2022, the Sponsor has agreed to indemnify STWO to ensure that the proceeds in the trust account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the trust account on the liquidation date, by the claims of prospective target businesses with which STWO has entered into an acquisition agreement or claims of any third party for services rendered or products sold to STWO, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the trust account; |
• | the fact that STWO may be entitled to distribute or pay over funds held by STWO outside the Trust Account to the Sponsor or any of its Affiliates prior to the Closing; and |
• | the fact that the STWO Initial Shareholders entered into the Sponsor Letter Agreement pursuant to which the original lock-up period to which our Sponsor and our directors and executive officers are bound by is affirmed to continue to be in effect and binding against such parties. |
• | ESS’ operating and financial results and market growth forecast rely in large part upon assumptions and analyses developed by ESS. If these assumptions or analyses prove to be incorrect, ESS’ actual operating results may be materially different from ESS’ forecasted results. |
• | ESS faces significant barriers in its attempts to produce ESS energy storage products, ESS’ energy storage products are still under development, and ESS may not be able to successfully develop its energy storage products at commercial scale. If ESS cannot successfully overcome those barriers, its business will be negatively impacted and could fail. |
• | ESS is in the early stage of commercialization and has yet to ship any of its Energy Warehouse or Energy Center products with its second generation S200 batteries. In addition, certain aspects of ESS’ technology have not been fully field tested. If ESS is unable to develop its business and effectively commercialize its energy storage products as anticipated, ESS may not be able to generate revenues or achieve profitability. |
• | ESS may experience delays, disruptions, or quality control problems in its manufacturing operations. |
• | ESS depends on third party suppliers for the development and supply of key raw materials and components for ESS’ energy storage products. Delays in ESS’ supply chain could harm its ability to manufacture and commercialize ESS’ energy storage products. In addition, ESS does not know whether it will be able to maintain long-term supply relationships with its critical suppliers, or secure new long-term supply relationships on terms that will allow ESS to achieve its objectives, if at all. |
• | ESS may be unable to adequately control the costs associated with its operations and the components necessary to build its energy storage products, and if ESS is unable to reduce its cost structure and effectively scale its operations in the future, ESS’ ability to become profitable may be impaired. |
• | ESS relies on complex technology for its operations and the production of ESS’ iron flow batteries involves a significant degree of risk and uncertainty in terms of operational performance and costs. |
• | ESS has a history of losses and has to deliver significant business growth to achieve sustained, long-term profitability and long-term commercial success. |
• | For the year ended December 31, 2020, ESS’ independent registered public accounting firm has included an explanatory paragraph relating to ESS’ ability to continue as a going concern in its report on ESS’ audited financial statements included elsewhere in this proxy statement/prospectus/information statement. If the Business Combination is not consummated and ESS is not able to obtain sufficient funding, its business, prospects, financial condition and results of operations will be harmed and it may be unable to continue as a going concern. |
• | ESS’ warranty insurance provided by Munich RE is important to many potential customers. Should ESS be unable to maintain its relationship with Munich RE and be unable to find a similar replacement, demand for ESS’ products may suffer. |
• | Failure to deliver the benefits offered by ESS’ technology, or the emergence of improvements to competing technologies, could reduce demand for ESS’ energy storage products and harm its business. |
• | ESS’ plans are dependent on the development of a market acceptance of its products and the development of a market for long-duration batteries. |
• | ESS may face regulatory challenges to or limitations on ESS’ ability to sell its Energy Centers and Energy Warehouses directly in certain markets. Expanding operations internationally could expose ESS to additional risks. |
• | If ESS fails to protect, or incurs significant costs in defending, ESS’ intellectual property and other proprietary rights, then ESS’ business and results of operations could be materially harmed. |
• | As ESS endeavors to expand its business, ESS will incur significant costs and expenses, which could outpace ESS’ cash reserves. Unfavorable conditions or disruptions in the capital and credit markets may adversely impact business conditions and the availability of credit. |
Share Ownership in New ESS (Percentage of Outstanding Shares) |
||||||||
No redemptions |
Maximum redemptions |
|||||||
ESS Stockholders (1) |
63.1 | % | 75.5 | % | ||||
PIPE Investors (2) |
16.4 | % | 19.6 | % | ||||
STWO Public Shareholders (3) |
16.4 | % | — | % | ||||
STWO Initial Shareholders (4) |
4.1 | % | 4.9 | % |
(1) | Assumes that the number of shares of New ESS Common Stock to be issued to ESS stockholders at Closing is 96,345,564 shares in both the no redemption scenario and the maximum redemption scenario. The shares to be issued for outstanding warrants are calculated on a cashless exercise basis as if converted at the Closing. See “ Unaudited Pro Forma Condensed Combined Financial Information |
(2) | Consists of 25,000,000 shares to be acquired in connection with the PIPE Financing. |
(3) | Consists of 25,000,000 shares issued in connection with STWO’s initial public offering. |
(4) | Includes 6,250,000 shares of New ESS Common Stock. |
Statement of Operations Data |
For the six months ended June 30, 2021 (unaudited) |
For the six months ended June 30, 2020 (unaudited) |
For the Year Ended December 31, 2020 |
For the Year Ended December 31, 2019 |
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(In thousands, except Share and per Share Amounts) | ||||||||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
$ | 11,874 | $ | 4,968 | $ | 12,896 | $ | 6,660 | ||||||||
Sales and marketing |
1,213 | 597 | 1,158 | 908 | ||||||||||||
General and administrative |
5,351 | 1,548 | 3,338 | 2,321 | ||||||||||||
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|
|
|
|
|
|
|
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Total operating expenses |
18,438 | 7,113 | 17,392 | 9,889 | ||||||||||||
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|
|
|
|
|
|
|
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Loss from operations |
(18,438 | ) | (7,113 | ) | (17,392 | ) | (9,889 | ) | ||||||||
Other income (expense): |
||||||||||||||||
Interest expense, net |
(111 | ) | (68 | ) | (132 | ) | (1,019 | ) | ||||||||
Gain (loss) on revaluation of warrant liabilities |
(14,804 | ) | 54 | (1,296 | ) | (341 | ) | |||||||||
Gain (loss) on revaluation of derivative liabilities |
(211,988 | ) | 3,760 | (11,532 | ) | (19 | ) | |||||||||
Other expense, net |
(19 | ) | (62 | ) | (67 | ) | (199 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other income (expense) |
(226,922 | ) | 3,684 | (13,027 | ) | (1,578 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss and comprehensive loss |
(245,360 | ) | (3,429 | ) | (30,419 | ) | (11,467 | ) | ||||||||
Series B Redeemable Preferred Stock accretion |
— | — | — | (79 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss and comprehensive loss to common stockholders |
$ | (245,360 | ) | $ | (3,429 | ) | $ | (30,419 | ) | $ | (11,467 | ) | ||||
|
|
|
|
|
|
|
|
|||||||||
Net loss per share—basic and diluted |
$ | (29.66 | ) | $ | (0.48 | ) | $ | (4.28 | ) | $ | (1.64 | ) | ||||
Weighted average shares—basic and diluted |
8,271,509 | 7,098,016 | 7,108,389 | 7,043,575 | ||||||||||||
|
Balance Sheet Data |
June 30, 2021 (unaudited) |
December 31, 2020 |
December 31, 2019 |
|||||||||
(In thousands) | ||||||||||||
Cash and cash equivalents |
$ | 1,822 | $ | 4,901 | $ | 18,290 | ||||||
Working capital (1) |
(6,144 | ) | (1,533 | ) | 16,060 | |||||||
Total assets |
8,241 | 9,023 | 21,224 | |||||||||
Total liabilities |
250,590 | 36,911 | 19,010 | |||||||||
Redeemable convertible preferred stock |
64,257 | 34,372 | 34,372 | |||||||||
Accumulated deficit |
(308,853 | ) | (63,493 | ) | (33,074 | ) | ||||||
Total stockholders’ deficit |
(306,606 | ) | (62,260 | ) | (32,158 | ) |
(1) | We define working capital as current assets less current liabilities. |
Statement of Operations Data |
Six Months Ended June 30, 2021 (Unaudited) |
Period From July 21, 2020 (Inception) Through December 31, 2020 (As Restated) |
||||||
General and administrative expenses |
$ | 923,151 | $ | 708,829 | ||||
|
|
|
|
|||||
Loss from operations |
(923,151 | ) | (708,829 | ) | ||||
Other income |
||||||||
Change in fair value of derivative warrant liabilities |
3,370,040 | (1,854,400 | ) | |||||
Financing costs—derivative warrant liabilities |
— | (735,490 | ) | |||||
Gain on marketable securities (net) and dividends held in Trust Account |
7,468 | 4,454 | ||||||
|
|
|
|
|||||
Total other income |
3,377,508 | (2,585,436 | ) | |||||
|
|
|
|
|||||
Net income (loss) |
$ | 2,454,357 | $ | (3,294,265 | ) | |||
|
|
|
|
|||||
Weighted average ordinary shares outstanding of Redeemable Class A, basic and diluted |
22,024,254 | 21,719,426 | ||||||
|
|
|
|
|||||
Basic and diluted net income per share, Redeemable Class A ordinary shares |
— | — | ||||||
|
|
|
|
|||||
Weighted average ordinary shares outstanding of Non-Redeemable Class A and Class B, basic and diluted |
9,225,746 | 8,310,766 | ||||||
|
|
|
|
|||||
Basic and diluted net loss per share, Non-Redeemable Class A and Class B ordinary shares |
$ | 0.27 | $ | (0.40 | ) | |||
|
|
|
|
Balance Sheet Data |
June 30, 2021 (Unaudited) |
December 31, 2020 (As Restated) |
||||||
Total assets |
$ | 250,304,732 | $ | 250,827,490 | ||||
Total liabilities |
27,266,392 | 30,243,507 | ||||||
STWO Class A Ordinary Shares; 21,803,833 and 21,558,398 shares subject to possible redemption at $10.00 per share at June 30, 2021 and December 31, 2020, respectively |
218,038,330 | 215,583,980 | ||||||
Shareholders’ Equity |
||||||||
STWO Class A Ordinary Shares, $0.0001 par value; 5,000,000 shares authorized; 3,196,167 and 3,441,602 shares issued and outstanding (excluding 21,803,833 and 21,558,398 shares subject to possible redemption) at June 30, 2021 and December 31, 2020, respectively |
320 | 344 | ||||||
STWO Class B Ordinary Shares, $0.0001 par value; 50,000,000 shares authorized; 6,250,000 shares issued and outstanding at June 30, 2021 and December 31, 2020 |
625 | 625 | ||||||
Total shareholders’ equity |
5,000,010 | 5,000,003 |
Cash Flow Data |
Six Months Ended June 30, 2021 (unaudited) |
Period From July 21, 2020 (Inception) Through December 31, 2020 (As Restated) |
||||||
Net cash used in operating activities |
$ | (442,482 | ) | $ | (976,685 | ) | ||
Net cash used in investing activities |
— | (250,000,000 | ) | |||||
Net cash provided by financing activities |
— | 251,446,758 |
• | Assuming No Redemption—this scenario assumes that no STWO Class A Ordinary Shares are redeemed; and |
• | Assuming Maximum Redemption—this scenario assumes that all 25,000,000 STWO Class A Ordinary Shares are redeemed for an aggregate payment of $250.0 million, which is derived from the number of shares that could be redeemed in connection with the Business Combination at an assumed redemption price of approximately $10.00 per share based on funds held in the trust account as of June 30, 2021 and still satisfy the minimum available cash amount required to consummate the Business Combination of at least $200.0 million, after giving effect to the PIPE Financing and before giving effect to the payment to settle the estimated transaction costs of $50.0 million incurred in connection with the Business Combination. |
Assuming No Redemption Scenario |
Assuming Maximum Redemption Scenario |
|||||||||||||||||||||||
Statement of Operations—Six Months Ended June 30, 2021 (in thousands, except share and per share data) |
ESS (Historical) |
STWO (Historical) |
Transaction Accounting Adjustments |
Pro Forma Combined |
Additional Transaction Accounting Adjustments |
Pro Forma Combined |
||||||||||||||||||
Operating expenses |
||||||||||||||||||||||||
Research and development |
$ | 11,874 | $ | — | $ | — | $ | 11,874 | $ | — | $ | 11,874 | ||||||||||||
Sales and marketing |
1,213 | — | — | 1,213 | — | 1,213 | ||||||||||||||||||
General and administrative |
5,351 | 923 | 4,410 | 10,684 | — | 10,684 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total operating expenses |
18,438 | 923 | 4,410 | 23,771 | — | 23,771 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss from operations |
(18,438 | ) | (923 | ) | 4,410 | (23,771 | ) | — | (23,771 | ) | ||||||||||||||
Other income (expense), net |
||||||||||||||||||||||||
Gain on marketable securities, net, and dividends held in Trust Account |
— | 7 | (7 | ) | — | — | — | |||||||||||||||||
Change in fair value of derivative warrant liabilities |
(14,804 | ) | 3,370 | (499 | ) | 2,871 | — | 2,871 | ||||||||||||||||
— | — | 14,804 | — | — | — | |||||||||||||||||||
Change in fair value of derivative liability |
(211,988 | ) | — | 211,988 | — | — | — | |||||||||||||||||
Interest expense, net |
(111 | ) | — | — | (111 | ) | — | (111 | ) | |||||||||||||||
Other expense, net |
(19 | ) | — | — | (19 | ) | — | (19 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total other income (expense), net |
(226,922 | ) | 3,377 | 226,286 | 2,741 | — | 2,741 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income (loss) before provision for income taxes |
(245,360 | ) | 2,454 | 230,696 | (21,030 | ) | — | (21,030 | ) | |||||||||||||||
Provision for income taxes |
— | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income (loss) |
$ | (245,360 | ) | $ | 2,454 | $ | 230,696 | $ | (21,030 | ) | $ | — | $ | (21,030 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Weighted average shares outstanding of New ESS common stock—basic |
— | — | — | 152,595,564 | — | 127,595,564 | ||||||||||||||||||
Basic net loss per share—New ESS |
— | — | — | $ | (0.14 | ) | — | $ | (0.16 | ) | ||||||||||||||
Weighted average shares outstanding of New ESS common stock—diluted |
— | — | — | 152,595,564 | — | 127,595,564 | ||||||||||||||||||
Diluted net loss per share—New ESS |
— | — | — | $ | (0.14 | ) | — | $ | (0.16 | ) | ||||||||||||||
Weighted average shares outstanding of ESS common stock—basic and diluted |
8,271,509 | — | — | — | — |
Assuming No Redemption Scenario |
Assuming Maximum Redemption Scenario |
|||||||||||||||||||||||
Statement of Operations—Six Months Ended June 30, 2021 (in thousands, excepts share and per share data) |
ESS (Historical) |
STWO (Historical) |
Transaction Accounting Adjustments |
Pro Forma Combined |
Additional Transaction Accounting Adjustments |
Pro Forma Combined |
||||||||||||||||||
Basic and diluted net loss per share—ESS |
$ | (29.66 | ) | — | — | — | — | |||||||||||||||||
Weighted average shares outstanding of Class A common stock subject to possible redemption—basic and diluted |
— | 22,024,254 | — | — | — | |||||||||||||||||||
Basic and diluted net income per share—Class A common stock subject to possible redemption |
— | $ | — | — | — | — | ||||||||||||||||||
Weighted average shares outstanding of Class A and B common stock, non redeemable ordinary shares |
— | 9,225,746 | — | — | — | |||||||||||||||||||
Basic and diluted net income per share—Class A and B common stock, non redeemable ordinary shares |
— | $ | 0.27 | — | — | — |
Assuming No Redemption Scenario |
Assuming Maximum Redemption Scenario |
|||||||||||||||||||||||
Statement of Operations—Year Ended December 31, 2020 (in thousands, except share and per share data) |
ESS (Historical) |
STWO (Historical) (As Restated) (1) |
Transaction Accounting Adjustments |
Pro Forma Combined |
Additional Transaction Accounting Adjustments |
Pro Forma Combined |
||||||||||||||||||
Operating expenses |
||||||||||||||||||||||||
Research and development |
$ | 12,896 | $ | — | $ | — | $ | 12,896 | $ | — | $ | 12,896 | ||||||||||||
Sales and marketing |
1,158 | — | — | 1,158 | — | 1,158 | ||||||||||||||||||
General and administrative |
3,338 | 709 | — | 4,047 | — | 4,047 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total operating expenses |
17,392 | 709 | — | 18,101 | — | 18,101 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss from operations |
(17,392 | ) | (709 | ) | — | (18,101 | ) | — | (18,101 | ) | ||||||||||||||
Other income (expense), net |
||||||||||||||||||||||||
Gain on marketable securities, net, and dividends held in Trust Account |
— | 4 | (4 | ) | — | — | — | |||||||||||||||||
Change in fair value of derivative warrant liabilities |
(1,296 | ) | (1,854 | ) | 182 | (1,672 | ) | — | (1,672 | ) | ||||||||||||||
— | — | 1,296 | — | — | — | |||||||||||||||||||
Change in fair value of derivative liability |
(11,532 | ) | — | 11,532 | — | — | — | |||||||||||||||||
Financing costs—derivative warrant liabilities |
— | (735 | ) | 735 | — | — | — | |||||||||||||||||
Other income (expense), net |
(199 | ) | — | — | (199 | ) | — | (199 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total other income (expense), net |
(13,027 | ) | (2,585 | ) | 13,741 | (1,871 | ) | — | (1,871 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss before provision for income taxes |
(30,419 | ) | (3,294 | ) | 13,741 | (19,972 | ) | — | (19,972 | ) | ||||||||||||||
Provision for income taxes |
— | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss |
$ | (30,419 | ) | $ | (3,294 | ) | $ | 13,741 | $ | (19,972 | ) | $ | — | $ | (19,972 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Assuming No Redemption Scenario |
Assuming Maximum Redemption Scenario |
|||||||||||||||||||||||
Statement of Operations—Year Ended December 31, 2020 (in thousands, except share and per share data) |
ESS (Historical) |
STWO (Historical) (As Restated) (1) |
Transaction Accounting Adjustments |
Pro Forma Combined |
Additional Transaction Accounting Adjustments |
Pro Forma Combined |
||||||||||||||||||
Weighted average shares outstanding of New ESS Common Stock—basic |
— | — | — | 152,595,564 | — | 127,595,564 | ||||||||||||||||||
Basic net loss per share—New ESS |
— | — | — | $ | (0.13 | ) | $ | — | $ | (0.16 | ) | |||||||||||||
Weighted average shares outstanding of New ESS Common Stock—diluted |
— | — | — | 152,595,564 | — | 127,595,564 | ||||||||||||||||||
Diluted net loss per share—New ESS |
— | — | — | $ | (0.13 | ) | $ | — | $ | (0.16 | ) | |||||||||||||
Weighted average shares outstanding of ESS Common Stock—basic and diluted |
7,108,389 | — | — | — | — | — | ||||||||||||||||||
Basic and diluted net loss per share—ESS |
$ | (4.28 | ) | — | — | — | — | — | ||||||||||||||||
Weighted average shares outstanding of STWO Class A Ordinary Shares subject to possible redemption—basic and diluted |
— | 21,719,426 | — | — | — | — | ||||||||||||||||||
Basic and diluted net loss per share—STWO Class A Ordinary Shares subject to possible redemption |
— | — | — | — | — | — | ||||||||||||||||||
Weighted average shares outstanding of STWO Class A and B Ordinary Shares, non redeemable |
— | 8,310,766 | — | — | — | — | ||||||||||||||||||
Basic and diluted net loss per share—STWO Class A and B Ordinary Shares, non redeemable |
— | $ | (0.40 | ) | — | — | — | — |
(1) | STWO’s financial statements for the period from July 21, 2020 (inception) through December 31, 2020 and for the period from July 21, 2020 (inception) through September 30, 2020 (the “Affected Periods”), are restated in its Annual Report on Form 10-K to correct the misapplication of accounting guidance related to STWO Warrants in STWO’s previously issued audited and unaudited condensed financial statements for such periods. |
• | our ability to consummate the Business Combination; |
• | the expected benefits of the Business Combination; |
• | New ESS’ financial and business performance following the Business Combination, including financial projections and business metrics; |
• | changes in New ESS’ strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; |
• | the implementation, market acceptance and success of New ESS’ technology implementation and business model; |
• | New ESS’ ability to scale in a cost-effective manner; |
• | developments and projections relating to ESS’ competitors and industry; |
• | the impact of health epidemics, including the COVID-19 pandemic, on ESS’ business and the actions ESS may take in response thereto; |
• | ESS’ expectations regarding its ability to obtain and maintain intellectual property protection and not infringe on the rights of others; |
• | expectations regarding the time during which we will be an emerging growth company under the JOBS Act; |
• | ESS’ future capital requirements and sources and uses of cash; |
• | ESS’ ability to obtain funding for its operations; |
• | ESS’ business, expansion plans and opportunities; and |
• | the outcome of any known and unknown litigation and regulatory proceedings. |
• | the occurrence of any event, change or other circumstances that could delay, impede or prevent the Business Combination or give rise to the termination of the Merger Agreement; |
• | the outcome of any legal proceedings that may be instituted against STWO or New ESS following announcement of the proposed Business Combination and transactions contemplated thereby; |
• | the inability to complete the Business Combination due to the failure to obtain approval of the shareholders of STWO or of the parties to satisfy other conditions to the Closing in the Merger Agreement; |
• | the ability to obtain or maintain the listing of New ESS common stock on the NYSE following the Business Combination; |
• | the risk that the proposed Business Combination disrupts current plans and operations of ESS as a result of the announcement and consummation of the transactions described herein; |
• | our ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of New ESS to grow and manage growth profitably following the Business Combination; |
• | costs related to the Business Combination; |
• | changes in applicable laws or regulations; |
• | the effect of the COVID-19 pandemic on ESS’ business; |
• | the ability of ESS to execute its business model, including market acceptance of its planned products and services; |
• | New ESS’ ability to raise capital; |
• | the possibility that STWO or New ESS may be adversely affected by other economic, business, and/or competitive factors; and |
• | other risks and uncertainties described in this proxy statement/prospectus/information statement, including those under the section entitled “ Risk Factors |
• | The conversion of all outstanding shares of ESS Preferred Stock into shares of ESS Common Stock at the then-effective conversion rate as calculated pursuant to the ESS Certificate of Incorporation; |
• | The exercise and settlement of all outstanding ESS Warrants into shares of ESS Common Stock; |
• | The cancellation of each issued and outstanding share of ESS Common Stock (including shares of ESS Common Stock resulting from the conversion of ESS Preferred Stock and the exercise and settlement of all outstanding ESS Warrants) and the conversion into the right to receive a number of shares of New ESS Common Stock equal to an estimated per share consideration of approximately $1.42; |
• | The conversion of all outstanding vested and unvested ESS Options into New ESS Options exercisable for shares of New ESS Common Stock with the same terms except for the number of shares exercisable and the exercise price, each of which was adjusted using an estimated per share consideration of approximately $1.42; and |
• | The conversion of all outstanding vested and unvested ESS RSUs into New ESS RSUs for shares of New ESS common stock with the same terms except for the number of shares, which was adjusted using estimated per share consideration of approximately $1.42. |
• | The issuance and sale of 25,000,000 shares of New ESS Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of $250.0 million pursuant to the PIPE Financing; |
• | ESS employees shall be granted an estimated 825,000 shares to be reserved for the potential future settlement of New ESS restricted stock units (“RSUs”), which will be issued prior to Closing subject to meeting certain future Earnout Milestone Events and continued service; |
• | During the Earnout Period (as defined in the Merger Agreement), New ESS may issue to eligible ESS securityholders up to 16,500,000 shares of additional New ESS Common Stock, consisting of two separate tranches of 8,250,000 shares per tranche, upon the occurrence of the respective Earnout Milestone Event. As the Earnout Milestone Events have not yet been achieved, the Earnout Stock are contingently issuable, and accordingly, are accounted for as liability classified equity instruments in the unaudited pro forma financial information. The issuance of the Earnout Stock would dilute all New ESS Common Stock outstanding at that time. Assuming the expected capital structure as of the Closing, the 8,250,000 shares issued in connection with each Earnout Milestone Event would represent approximately 5% each of shares outstanding for the no redemption scenario and 6.1% each for the maximum redemption scenario, respectively. |
• | ESS stockholders will have a relative majority of the voting power of New ESS; |
• | The board of directors of New ESS will have nine members, and ESS will have the ability to designate the majority of the members of the board of directors; |
• | ESS’s senior management will comprise the senior management roles of New ESS and be responsible for the day-to-day |
• | New ESS will assume the ESS Tech, Inc. name; and |
• | The intended strategy and operations of New ESS will continue ESS’ current strategy and operations. |
• | Assuming No Redemption — this scenario assumes that no STWO Class A Ordinary Shares are redeemed; and |
• | Assuming Maximum Redemption — this scenario assumes that all 25,000,000 STWO Class A Ordinary Shares are redeemed for an aggregate payment of $250.0 million, which is derived from the number of shares that could be redeemed in connection with the Business Combination at an assumed redemption price of approximately $10.00 per share based on funds held in the trust account as of June 30, 2021 and still satisfy the minimum available cash amount required to consummate the Business Combination of at least $200.0 million, after giving effect to the PIPE Financing and before giving effect to the payment to settle the estimated transaction costs of approximately $50.0 million incurred in connection with the Business Combination. |
Share Ownership in New ESS |
||||||||||||||||
Pro Forma Combined (Assuming No Redemption) |
Pro Forma Combined (Assuming Maximum Redemption) (1) |
|||||||||||||||
Number of Shares |
% Ownership |
Number of Shares |
% Ownership |
|||||||||||||
ESS Stockholders (2)(3)(4)(5) |
96,345,564 | 63.1 | % | 96,345,564 | 75.5 | % | ||||||||||
STWO Public Shareholders |
25,000,000 | 16.4 | % | — | — | % | ||||||||||
STWO Initial Shareholders (6) |
6,250,000 | 4.1 | % | 6,250,000 | 4.9 | % | ||||||||||
PIPE Investors |
25,000,000 | 16.4 | % | 25,000,000 | 19.6 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
152,595,564 | 100.0 | % | 127,595,564 | 100.0 | % | ||||||||||
|
|
|
|
|
|
|
|
(1) | Assumes maximum redemptions of 25,000,000 STWO Class A Ordinary Shares in connection with the Business Combination at approximately $10.00 per share based on trust account figures as of June 30, 2021. |
(2) | Excludes up to 16,500,000 shares of Earnout Stock that eligible ESS securityholders will have the right to receive following the Closing in two equal tranches upon the occurrence of the Earnout Milestone Events during the Earnout Period. We have excluded the Earnout Stock from the pro forma New ESS Common Stock issued to ESS stockholders after the Business Combination because they are contingently issuable based upon the share price of New ESS meeting reaching certain thresholds that have not yet been achieved. |
(3) | Includes an estimated 64,916,988 shares of New ESS Common Stock that will be issued to holders of an aggregate of 45,593,357 shares of ESS Common Stock and ESS Preferred Stock at an estimated per share consideration of approximately $1.42. |
(4) | Includes an estimated 3,247,264 shares of New ESS Common Stock that will be issued to holders of 2,280,661 ESS warrants at an estimated per share consideration of approximately $1.42 and excludes 825,000 shares of New ESS Common Stock to be reserved as part of the Acquiror Common Stock Consideration, for potential future issuance upon the settlement of New ESS RSUs, which will be issued at the Business Combination Closing Date. Also assumes all outstanding vested and unvested ESS Options will be converted into New ESS Options exercisable for shares of New ESS Common Stock with the same terms except for the number of shares exercisable and the exercise price, each of which was adjusted using an estimated per share consideration of approximately $1.42. |
(5) | Includes the expected issuance of 28,181,312 shares of New ESS Common Stock resulting from expected conversion of 5,427,464 shares of ESS Series C-2 Preferred Stock and related 14,365,207 ESS Series C-2 Preferred Stock warrants, which will be issued prior to the Business Combination Closing Date, at an estimated per share consideration of approximately $1.42. |
(6) | Includes 6,250,000 shares subscribed for by the Sponsor in return for STWO Class B Ordinary Shares. Excludes 583,334 shares related to the Private Placement Warrants earnout which will convert to New ESS Common Stock on a one-to-one |
Assuming No Redemption Scenario |
Assuming Maximum Redemption Scenario |
|||||||||||||||||||||||||||||||||||||||||||
ESS (Historical) |
ESS Transaction Accounting Adjustments |
ESS As Adjusted |
STWO (Historical) |
Transaction Accounting Adjustments |
Pro Forma Combined |
Additional Transaction Accounting Adjustments |
Pro Forma Combined |
|||||||||||||||||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||||||||||||||||||
Current assets: |
||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents |
$ | 1,822 | $ | 16,000 | A |
$ | 17,823 | $ | 28 | $ | 250,012 | C |
$ | 463,473 | $ | (250,000 | ) | Q |
$ | 213,473 | ||||||||||||||||||||||||
— | 1 | B |
— | — | 250,000 | D |
— | — | — | |||||||||||||||||||||||||||||||||||
— | — | — | — | (17,050 | ) | J |
— | — | — | |||||||||||||||||||||||||||||||||||
— | — | — | — | (28,590 | ) | K |
— | — | — | |||||||||||||||||||||||||||||||||||
— | — | — | — | (8,750 | ) | L |
— | — | — | |||||||||||||||||||||||||||||||||||
Restricted cash |
1,217 | — | 1,217 | — | — | 1,217 | — | 1,217 | ||||||||||||||||||||||||||||||||||||
Prepaid expenses and other current assets |
3,390 | — | 3,390 | 224 | (1,994 | ) | J |
1,620 | — | 1,620 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total current assets |
6,429 | 16,001 | 22,430 | 252 | 443,628 | 466,310 | (250,000 | ) | 216,310 | |||||||||||||||||||||||||||||||||||
Non-current assets: |
||||||||||||||||||||||||||||||||||||||||||||
Property and equipment, net |
1,737 | — | 1,737 | — | — | 1,737 | — | 1,737 | ||||||||||||||||||||||||||||||||||||
Cash equivalents held in Trust Account |
— | — | — | 250,012 | (250,012 | ) | C |
— | — | — | ||||||||||||||||||||||||||||||||||
Restricted cash |
75 | — | 75 | — | — | 75 | — | 75 | ||||||||||||||||||||||||||||||||||||
Other assets |
— | — | — | 41 | — | 41 | — | 41 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total non-current assets |
1,812 | — | 1,812 | 250,053 | (250,012 | ) | 1,853 | — | 1,853 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
TOTAL ASSETS |
$ | 8,241 | $ | 16,001 | $ | 24,242 | $ | 250,305 | $ | 193,616 | $ | 468,163 | $ | (250,000 | ) | $ | 218,163 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) |
||||||||||||||||||||||||||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||||||||||||||||||||||||||
Accounts payable |
$ | 1,858 | $ | — | $ | 1,858 | $ | 334 | $ | — | $ | 2,192 | $ | — | $ | 2,192 | ||||||||||||||||||||||||||||
Accrued and other current liabilities |
5,185 | — | 5,185 | 98 | (1,724 | ) | J |
3,559 | — | 3,559 | ||||||||||||||||||||||||||||||||||
Accrued liabilities—related party |
— | — | — | 100 | — | 100 | — | 100 | ||||||||||||||||||||||||||||||||||||
Notes payable |
5,530 | — | 5,530 | — | — | 5,530 | — | 5,530 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total current liabilities |
12,573 | — | 12,573 | 532 | (1,724 | ) | 11,381 | — | 11,381 | |||||||||||||||||||||||||||||||||||
Non-current liabilities: |
||||||||||||||||||||||||||||||||||||||||||||
Earnout liability |
— | — | — | — | 152,043 | O |
152,696 | — | 152,696 | |||||||||||||||||||||||||||||||||||
— | — | — | — | 653 | P |
— | — | — | ||||||||||||||||||||||||||||||||||||
Derivative liabilities |
211,747 | — | 211,747 | — | (211,747 | ) | M |
— | — | — | ||||||||||||||||||||||||||||||||||
Derivative warrant liabilities |
22,860 | 1 | B |
22,861 | 17,985 | (22,861 | ) | M |
16,551 | — | 16,551 | |||||||||||||||||||||||||||||||||
— | — | — | — | (1,434 | ) | N |
— | — | — |
Assuming No Redemption Scenario |
Assuming Maximum Redemption Scenario |
|||||||||||||||||||||||||||||||||||||||||||
ESS (Historical) |
ESS Transaction Accounting Adjustments |
ESS As Adjusted |
STWO (Historical) |
Transaction Accounting Adjustments |
Pro Forma Combined |
Additional Transaction Accounting Adjustments |
Pro Forma Combined |
|||||||||||||||||||||||||||||||||||||
Deferred underwriting commissions |
— | — | — | 8,750 | (8,750 | ) | L |
— | — | — | ||||||||||||||||||||||||||||||||||
Other non-current liabilities |
3,399 | — | 3,399 | — | — | 3,399 | — | 3,399 | ||||||||||||||||||||||||||||||||||||
Notes payable |
11 | — | 11 | — | — | 11 | — | 11 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total non-current liabilities |
238,017 | 1 | 238,018 | 26,735 | (92,096 | ) | 172,657 | — | 172,657 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total liabilities |
250,590 | 1 | 250,591 | 27,267 | (93,820 | ) | 184,038 | — | 184,038 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Commitments and contingencies |
||||||||||||||||||||||||||||||||||||||||||||
Redeemable convertible preferred stock |
64,257 | 16,000 | A |
80,257 | — | (80,257 | ) | G |
— | — | — | |||||||||||||||||||||||||||||||||
Class A common stock subject to possible redemption |
— | — | — | 218,038 | (218,038 | ) | E |
— | — | — | ||||||||||||||||||||||||||||||||||
Stockholders’ equity (deficit) |
||||||||||||||||||||||||||||||||||||||||||||
Class A common stock |
— | — | — | — | — | F |
— | — | — | |||||||||||||||||||||||||||||||||||
Class B common stock |
— | — | — | 1 | (1 | ) | F |
— | — | — | ||||||||||||||||||||||||||||||||||
ESS common stock |
1 | — | 1 | — | (1 | ) | H |
— | — | — | ||||||||||||||||||||||||||||||||||
ESS common stock warrants |
153 | — | 153 | — | (153 | ) | M |
— | — | — | ||||||||||||||||||||||||||||||||||
New ESS common stock |
— | — | — | — | 3 | D |
13 | (2 | ) | Q |
11 | |||||||||||||||||||||||||||||||||
— | — | — | — | 2 | E |
— | — | — | ||||||||||||||||||||||||||||||||||||
— | — | — | — | 1 | F |
— | — | — | ||||||||||||||||||||||||||||||||||||
— | — | — | — | 6 | G |
— | — | — | ||||||||||||||||||||||||||||||||||||
— | — | — | — | 1 | H |
— | — | — | ||||||||||||||||||||||||||||||||||||
Additional paid-in capital |
2,093 | — | 2,093 | 6,785 | 249,997 | D |
597,375 | (249,998 | ) | Q |
347,377 | |||||||||||||||||||||||||||||||||
— | — | — | — | 218,036 | E |
— | — | — | ||||||||||||||||||||||||||||||||||||
— | — | — | — | (1,786 | ) | I |
— | — | — | |||||||||||||||||||||||||||||||||||
— | — | — | — | (12,910 | ) | J |
— | — | — | |||||||||||||||||||||||||||||||||||
— | — | — | — | (28,590 | ) | K |
— | — | — | |||||||||||||||||||||||||||||||||||
— | — | — | — | 22,861 | M |
— | — | — | ||||||||||||||||||||||||||||||||||||
— | — | — | — | 211,747 | M |
— | — | — | ||||||||||||||||||||||||||||||||||||
— | — | — | — | 153 | M |
— | — | — | ||||||||||||||||||||||||||||||||||||
— | — | — | — | 1,434 | N |
— | — | — | ||||||||||||||||||||||||||||||||||||
— | — | — | — | (152,043 | ) | O |
— | — | — | |||||||||||||||||||||||||||||||||||
— | — | — | — | 80,251 | G |
— | — | — | ||||||||||||||||||||||||||||||||||||
— | — | — | — | (653 | ) | P |
— | — | — | |||||||||||||||||||||||||||||||||||
Accumulated deficit |
(308,853 | ) | — | (308,853 | ) | (1,786 | ) | 1,786 | I |
(313,263 | ) | — | (313,263 | ) | ||||||||||||||||||||||||||||||
— | — | — | — | (4,410 | ) | J |
— | — | — | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total stockholders’ equity (deficit) |
(306,606 | ) | — | (306,606 | ) | 5,000 | 585,731 | 284,125 | (250,000 | ) | 34,125 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) |
$ | 8,241 | $ | 16,001 | $ | 24,242 | $ | 250,305 | $ | 193,616 | $ | 468,163 | $ | (250,000 | ) | $ | 218,163 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming No Redemption Scenario |
Assuming Maximum Redemption Scenario |
|||||||||||||||||||||||||||||||
ESS (Historical) |
STWO (Historical) |
Transaction Accounting Adjustments |
Pro Forma Combined |
Additional Transaction Accounting Adjustments |
Pro Forma Combined |
|||||||||||||||||||||||||||
Operating expenses |
||||||||||||||||||||||||||||||||
Research and development |
$ | 11,874 | $ | — | $ | — | $ | 11,874 | $ | — | $ | 11,874 | ||||||||||||||||||||
Sales and marketing |
1,213 | — | — | 1,213 | — | 1,213 | ||||||||||||||||||||||||||
General and administrative |
5,351 | 923 | 4,410 | EE |
10,684 | — | 10,684 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total operating expenses |
18,438 | 923 | 4,410 | 23,771 | — | 23,771 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Loss from operations |
(18,438 | ) | (923 | ) | 4,410 | (23,771 | ) | — | (23,771 | ) | ||||||||||||||||||||||
Other income (expense), net |
||||||||||||||||||||||||||||||||
Gain on marketable securities, net, and dividends held in Trust Account |
— | 7 | (7 | ) | AA |
— | — | — | ||||||||||||||||||||||||
Change in fair value of derivative warrant liabilities |
(14,804 | ) | 3,370 | (499 | ) | BB |
2,871 | — | 2,871 | |||||||||||||||||||||||
— | — | 14,804 | CC |
— | — | — | ||||||||||||||||||||||||||
Change in fair value of derivative liability |
(211,988 | ) | — | 211,988 | CC |
— | — | — | ||||||||||||||||||||||||
Interest expense, net |
(111 | ) | — | — | (111 | ) | — | (111 | ) | |||||||||||||||||||||||
Other expense, net |
(19 | ) | — | — | (19 | ) | — | (19 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total other income (expense), net |
(226,922 | ) | 3,377 | 226,286 | 2,741 | — | 2,741 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Income (loss) before provision for income taxes |
(245,360 | ) | 2,454 | 230,696 | (21,030 | ) | — | (21,030 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Provision for income taxes |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net income (loss) |
$ | (245,360 | ) | $ | 2,454 | $ | 230,696 | $ | (21,030 | ) | $ | — | $ | (21,030 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Weighted average shares outstanding of New ESS common stock—basic |
— | — | — | 152,595,564 | — | 127,595,564 | ||||||||||||||||||||||||||
Basic net loss per share—New ESS |
— | — | — | $ | (0.14 | ) | — | $ | (0.16 | ) | ||||||||||||||||||||||
Weighted average shares outstanding of New ESS common stock—diluted |
— | — | — | 152,595,564 | — | 127,595,564 | ||||||||||||||||||||||||||
Diluted net loss per share—New ESS |
— | — | — | $ | (0.14 | ) | — | $ | (0.16 | ) | ||||||||||||||||||||||
Weighted average shares outstanding of ESS common stock—basic and diluted |
8,271,509 | — | — | — | — | |||||||||||||||||||||||||||
Basic and diluted net loss per share—ESS |
$ | (29.66 | ) | — | — | — | — | |||||||||||||||||||||||||
Weighted average shares outstanding of Class A common stock subject to possible redemption—basic and diluted |
— | 22,024,254 | — | — | — | |||||||||||||||||||||||||||
Basic and diluted net income per share—Class A common stock subject to possible redemption |
— | $ | — | — | — | — | ||||||||||||||||||||||||||
Weighted average shares outstanding of Class A and B common stock, non redeemable ordinary shares |
— | 9,225,746 | — | — | — | |||||||||||||||||||||||||||
Basic and diluted net income per share—Class A and B common stock, non redeemable ordinary shares |
— | $ | 0.27 | — | — | — |
Assuming No Redemption Scenario |
Assuming Maximum Redemption Scenario |
|||||||||||||||||||||||||||
ESS (Historical) |
STWO (Historical) (As Restated)(1) |
Transaction Accounting Adjustments |
Pro Forma Combined |
Additional Transaction Accounting Adjustments |
Pro Forma Combined |
|||||||||||||||||||||||
Operating expenses |
||||||||||||||||||||||||||||
Research and development |
$ | 12,896 | $ | — | $ | — | $ | 12,896 | $ | — | $ | 12,896 | ||||||||||||||||
Sales and marketing |
1,158 | — | — | 1,158 | — | 1,158 | ||||||||||||||||||||||
General and administrative |
3,338 | 709 | — | 4,047 | — | 4,047 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total operating expenses |
17,392 | 709 | — | 18,101 | — | 18,101 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Loss from operations |
(17,392 | ) | (709 | ) | — | (18,101 | ) | — | (18,101 | ) | ||||||||||||||||||
Other income (expense), net |
||||||||||||||||||||||||||||
Gain on marketable securities, net, and dividends held in Trust Account |
— | 4 | (4 | ) | AA |
— | — | — | ||||||||||||||||||||
Change in fair value of derivative warrant liabilities |
(1,296 | ) | (1,854 | ) | 182 | BB |
(1,672 | ) | — | (1,672 | ) | |||||||||||||||||
— | — | 1,296 | CC |
— | — | — | ||||||||||||||||||||||
Change in fair value of derivative liability |
(11,532 | ) | — | 11,532 | — | — | — | |||||||||||||||||||||
Financing costs—derivative warrant liabilities |
— | (735 | ) | 735 | DD |
— | — | — | ||||||||||||||||||||
Other income (expense), net |
(199 | ) | — | — | (199 | ) | — | (199 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total other income (expense), net |
(13,027 | ) | (2,585 | ) | 13,741 | (1,871 | ) | — | (1,871 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Loss before provision for income taxes |
(30,419 | ) | (3,294 | ) | 13,741 | (19,972 | ) | — | (19,972 | ) | ||||||||||||||||||
Provision for income taxes |
— | — | — | — | — | — | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net loss |
$ | (30,419 | ) | $ | (3,294 | ) | $ | 13,741 | $ | (19,972 | ) | $ | — | $ | (19,972 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Weighted average shares outstanding of New ESS common stock—basic |
— | — | — | 152,595,564 | — | 127,595,564 | ||||||||||||||||||||||
Basic net loss per share—New ESS |
— | — | — | $ | (0.13 | ) | $ | — | $ | (0.16 | ) | |||||||||||||||||
Weighted average shares outstanding of New ESS common stock—diluted |
— | — | — | 152,595,564 | — | 127,595,564 | ||||||||||||||||||||||
Diluted net loss per share—New ESS |
— | — | — | $ | (0.13 | ) | $ | — | $ | (0.16 | ) | |||||||||||||||||
Weighted average shares outstanding of ESS common stock—basic and diluted |
7,108,389 | — | — | — | — | — | ||||||||||||||||||||||
Basic and diluted net loss per share—ESS |
$ | (4.28 | ) | — | — | — | — | — | ||||||||||||||||||||
Weighted average shares outstanding of Class A common stock subject to possible redemption—basic and diluted |
— | 21,719,426 | — | — | — | — | ||||||||||||||||||||||
Basic and diluted net loss per share—Class A common stock subject to possible redemption |
— | — | — | — | — | — | ||||||||||||||||||||||
Weighted average shares outstanding of Class A and B common stock, non redeemable ordinary shares |
— | 8,310,766 | — | — | — | — | ||||||||||||||||||||||
Basic and diluted net loss per share— Class A and B common stock, non redeemable ordinary shares |
— | $ | (0.40 | ) | — | — | — | — |
(1) | STWO’s financial statements for the period from July 21, 2020 (inception) through December 31, 2020 and for the period from July 21, 2020 (inception) through September 30, 2020 (the “Affected Periods”), are restated in its Annual Report on Form 10-K to correct the misapplication of accounting guidance related to STWO’s warrants in STWO’s previously issued audited and unaudited condensed financial statements for such periods. |
1. |
Basis of Presentation |
2. |
Accounting Policies |
3. |
Adjustments to Unaudited Pro Forma Condensed Combined Financial Information |
(A) | Reflects 5,427,464 shares of ESS Series C-2 Preferred Stock that will be issued prior to Closing at a price of $2.95 per share, and related proceeds of $16.0 million. Upon the close of the Business Combination, ESS Series C-2 Preferred Stock will convert into New ESS common stock at an estimated per share consideration of approximately $1.42. |
(B) | Reflects the issuance of 14,365,207 preferred warrants to purchase ESS Series C-2 Preferred Stock prior to Closing at a price of $0.0001 per warrant, and related proceeds of $1,437. Upon the close of the Business Combination, the ESS Series C-2 Preferred warrants will be converted into common stock at an estimated per share consideration of approximately $1.42. |
(C) | Reflects the liquidation and reclassification of $250.0 million of investments held in the Trust Account to cash and cash equivalents that becomes available for general use by New ESS. |
(D) | Reflects the proceeds of $250.0 million from the issuance and sale of 25.0 million shares of New ESS common stock at $10.00 per share pursuant to the Subscription Agreements in connection with the PIPE Financing. |
(E) | Reflects the reclassification of 25,000,000 STWO Class A Ordinary Shares subject to possible redemption into permanent equity and immediate conversion of all 25,000,000 shares of STWO Class A Ordinary Shares into shares of New ESS Common Stock on a one-to-one |
(F) | Reflects the conversion of STWO’s 6,250,000 STWO Class B Ordinary Shares and 3,196,167 STWO Class A Ordinary Shares, subject to possible redemption, into shares of New ESS Common Stock on a one-to-one |
(G) | Reflects the conversion of ESS Series A, B, C-1 and C-2 redeemable convertible preferred stock into shares of New ESS Common Stock pursuant to an estimated per share consideration of approximately $1.42. |
(H) | Represents the issuance of new shares of New ESS common stock to holders of ESS Common Stock at the Closing pursuant to the Merger Agreement to affect the reverse recapitalization at the Closing, at an estimated per share consideration of approximately $1.42. |
(I) | Reflects the elimination of STWO’s historical accumulated deficit with a corresponding adjustment to additional paid-in capital for New ESS in connection with the reverse recapitalization at the Business Combination Closing Date. |
(J) | Represents the reclassification of $2.0 million capitalized as deferred offering costs in prepaid expenses and other current assets on the balance sheet as of June 30, 2021, and additional cash disbursements for the preliminary estimated direct and incremental transaction costs of $17.1 million to be incurred by ESS prior to, or concurrent with, the Business Combination Closing Date. The total estimated direct and incremental transaction costs consist of $12.9 million (of which $0.2 million has already been paid and included in the historical financial statements and $1.8 million included in accrued and other current liabilities) which represents advisory, legal, accounting and other fees that qualify as equity issuance costs to be offset against additional paid-in capital and $4.4 million which represents transaction costs that are not eligible to be capitalized which are recorded to accumulated deficit. |
(K) | Represents the cash disbursement for the preliminary estimated direct and incremental transaction costs of $28.6 million to be incurred by STWO prior to, or concurrent with, the Business Combination Closing Date, excluding the $8.8 million of deferred underwriting fees related to STWO’s IPO. Transaction costs that are not eligible to be capitalized were expensed and have already been included in the historical financial statements. |
(L) | Reflects the cash disbursement of $8.8 million to settle the deferred underwriters’ fees due upon the Closing which were originally incurred by STWO during its IPO. |
(M) | Reflects the reclassification of ESS’s warrant and derivative liability related to Common and Preferred Stock, to APIC as a result of ESS Common and Preferred Stock warrants being net settled into shares of ESS Common Stock immediately prior to the Business Combination Closing Date |
(N) | Per the Merger Agreement, out of the outstanding 4,666,667 Private Placement Warrants, upon Closing, 3,500,000 warrants will vest, 583,333 warrants will be forfeited and the remaining 583,334 warrants will vest as Private Placement Warrants-contingent earnouts, based on meeting certain future Earnout Milestone Events. This adjustment reflects the reclassification of 583,334 Private Placement Warrants which will vest contingent on meeting certain Earnout Milestone Events and forfeiture of 583,333 Private Placement Warrants. Refer to Adjustment “P” for recording the fair value of the 583,334 Private Placement Warrants Earnout Shares. |
(O) | Reflects the preliminary estimated fair value of the Earnout Stock contingently issuable to the eligible ESS Securityholders as of the Closing. The preliminary fair values were determined using the most reliable information available. The actual fair values could change materially once the final valuation is determined at the Closing. |
(P) | Reflects the preliminary estimated fair value of the Private Placement Warrants Earnout Shares as of the Closing. The preliminary estimated fair values were determined using the most reliable information available. The actual fair values could change materially once the final valuation is determined at the Closing. |
(Q) | Represents the cash disbursed under the maximum redemption scenario to redeem 25,000,000 shares of STWO Class A Ordinary Shares subject to redemption in connection with the Business Combination at an assumed redemption price of approximately $10.00 per share based on funds held in the trust account as of June 30, 2021. |
(AA) | Reflects the elimination of interest income of the trust account. |
(BB) | Reflects the elimination of the impact of change in fair value of 583,334 Private Placement Warrant liabilities replaced with the Private Placement Warrants Earnout Shares, which will vest upon the occurrence of the Earnout Milestone Events, and forfeiture of 583,333 Private Placement Warrants. Therefore, the 583,333 Private Placement Warrants forfeited will not be marked to market at each reporting period. Refer to Adjustment “P” for recording the fair value of 583,334 Private Placement Warrants Earnout Shares. |
(CC) | Reflects the elimination of the impact of change in fair value of the warrant and derivative liabilities as these securities are expected to become equity classified as a result of the Business Combination, and therefore will not be marked to market at each reporting period. |
(DD) | Represents the elimination of the financing costs associated with the derivative warrant liabilities. |
(EE) | Reflects the portion of estimated transaction costs not eligible for capitalization of $5.9 million. Of this amount, $1.5 million is already incurred and expensed in the historical statement of operations for the six months ended June 30, 2021. This is a non-recurring item. |
4. |
Loss per Share |
Six Months Ended June 30, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||
(in thousands, except share and per share data) |
Assuming No Redemption Scenario |
Assuming Maximum Redemption Scenario |
Assuming No Redemption Scenario |
Assuming Maximum Redemption Scenario |
||||||||||||
Numerator: |
||||||||||||||||
Net loss |
$ | (21,030 | ) | $ | (21,030 | ) | $ | (19,972 | ) | $ | (19,972 | ) | ||||
|
|
|
|
|
|
|
|
|||||||||
Net loss attributable to common stockholders—basic and diluted |
$ | (21,030 | ) | $ | (21,030 | ) | $ | (19,972 | ) | $ | (19,972 | ) | ||||
Denominator: |
||||||||||||||||
ESS Stockholders |
96,345,564 | 96,345,564 | 96,345,564 | 96,345,564 | ||||||||||||
STWO Public Shareholders |
25,000,000 | — | 25,000,000 | — | ||||||||||||
STWO Initial Shareholders |
6,250,000 | 6,250,000 | 6,250,000 | 6,250,000 | ||||||||||||
PIPE Investors |
25,000,000 | 25,000,000 | 25,000,000 | 25,000,000 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average shares outstanding—basic |
152,595,564 | 127,595,564 | 152,595,564 | 127,595,564 | ||||||||||||
STWO’s warrants |
— | — | — | — | ||||||||||||
New ESS RSUs |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average shares outstanding—diluted |
152,595,564 | 127,595,564 | 152,595,564 | 127,595,564 | ||||||||||||
Net loss attributable to common stockholders—basic |
$ | (0.14 | ) | $ | (0.16 | ) | $ | (0.13 | ) | $ | (0.16 | ) | ||||
Net loss attributable to common stockholders—diluted |
$ | (0.14 | ) | $ | (0.16 | ) | $ | (0.13 | ) | $ | (0.16 | ) |
Six Months Ended June 30, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||
Assuming No Redemption Scenario |
Assuming Maximum Redemption Scenario |
Assuming No Redemption Scenario |
Assuming Maximum Redemption Scenario |
|||||||||||||
STWO warrants (1) |
11,833,333 | 11,833,333 | 11,833,333 | 11,833,333 | ||||||||||||
New ESS awards (2) |
825,000 | 825,000 | 825,000 | 825,000 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
12,658,333 | 12,658,333 | 12,658,333 | 12,658,333 | |||||||||||||
|
|
|
|
|
|
|
|
(1) | Includes STWO 8,333,333 Public Warrants and 3,500,000 Private Placement Warrants vesting at the Closing Date, which are all antidilutive, as their exercise price is $11.50. |
(2) | New ESS RSUs will be granted to employees prior to Closing Date and require future service throughout certain contingent triggering vesting dates. |
5. |
Earnout Stock and Private Placement Warrants Earnout Shares |
(i) | 50% of the Earnout Stock if over any 20 Trading Days within any 30 Trading Day period the volume-weighted average price (VWAP) of the shares of New ESS Common Stock is greater than or equal to $12.50 per share; and |
(ii) | an additional 50% of the Earnout Stock if over any 20 Trading Days within any 30 Trading Day period the VWAP of the shares of Acquiror Common Stock is greater than or equal to $15.00 per share. |
• | The expansion or construction of any manufacturing facilities will be subject to the risks inherent in the development and construction of new facilities, including risks of delays and cost overruns as a result of factors outside our control, which may include delays in government approvals, burdensome permitting conditions, and delays in the delivery of manufacturing equipment and subsystems that we manufacture or obtain from suppliers. |
• | In order for us to expand internationally, we anticipate entering into strategic partnerships, joint venture and licensing agreements that allow us to add manufacturing capability outside of the United States. Adding manufacturing capacity in any international location will subject us to new laws and regulations including those pertaining to labor and employment, environmental and export / import. In addition, it brings with it the risk of managing larger scale foreign operations. |
• | We may be unable to achieve the production throughput necessary to achieve our target annualized production run rate at our current and future manufacturing facilities. |
• | Manufacturing equipment may take longer and cost more to engineer and build than expected, and may not operate as required to meet our production plans. |
• | We may depend on third-party relationships in the development and operation of additional production capacity, which may subject us to the risk that such third parties do not fulfill their obligations to us under our arrangements with them. |
• | We may be unable to attract or retain qualified personnel. |
• | the cost competitiveness of our products including availability and output expectations and total cost of ownership; |
• | the future costs associated with renewable energies; |
• | perceived complexity and novelty of our technology and customer reluctance to try a new product; |
• | the market for energy storage solutions and government policies that affect those markets; |
• | government incentives, mandates or other programs favoring zero carbon energy sources; |
• | local permitting and environmental requirements; |
• | customer preference for lithium-ion based technologies, including but not limited to the power density offered by lithium-ion batteries; and |
• | the emergence of newer, more competitive technologies and products. |
• | cost competitiveness, reliability and performance of our products compared to lithium-ion products; |
• | levels of investment by end users of energy storage products, which may decrease when economic growth or energy demand slows resulting in a reduction in battery purchases generally; |
• | strength of the renewable energy industry and associated integration opportunities for our products; |
• | a favorable regulatory landscape, including: the upholding by the states in the United States of the Federal Energy Regulatory Commission’s Order 841, which mandates that battery storage can participate in the demand response and ancillary markets; incentives for the implementation of battery storage by state regulators; and adoption by Congress of an investment tax credit for standalone battery storage; and |
• | the emergence, continuance or success of other alternative energy storage technologies and products. |
• | the pervasiveness of electric grid congestion, creating an opportunity to deploy batteries to reduce the peak energy usage of a customer in specific locations where infrastructure constraints create a need for transmission and/or distribution upgrades; |
• | increasing demand for longer duration energy storage of more than four hours; |
• | global interest in achieving higher penetration of renewable energy such as wind and solar power, which are fluctuating in nature and dependent upon effective energy storage solutions; |
• | the demand for co-location of battery assets on solar or wind farms to store off-peak intermittent renewable energy production and provide on-peak energy at higher prices than alternative energy; |
• | utilities turning to energy storage as an alternative to expanded transmission; |
• | C&I end users’ adoption of alternative energy generation technologies to supplement or replace on-the-grid |
• | microgrid expansion including for means of preventing wildfires in California and Australia; and |
• | the existence of various market mechanisms that would allow the owners and operators of our products to monetize their investments in our products, such as ancillary service markets, capacity markets and others. |
• | gain access to our network or Energy Warehouses or networks of our customers; |
• | steal proprietary information related to our business, products, employees, and customers; |
• | or interrupt our systems or those of our customers. |
• | the loss of key employees; |
• | the disruption of operations and business; |
• | the retention or transition of customers and vendors; |
• | the integration of corporate cultures and maintenance of employee morale; |
• | inability to maintain and increase competitive presence; |
• | customer loss and revenue loss; |
• | possible inconsistencies in standards, control procedures and policies; |
• | problems with the assimilation of new operations, sites or personnel, which could divert resources from our regular operations; |
• | integration of financial reporting and regulatory reporting functions; and/or |
• | potential unknown liabilities. |
• | we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; |
• | our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and |
• | our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time. |
• | incur additional debt, including providing guarantees or credit support; |
• | incur liens securing indebtedness or other obligations; |
• | make certain investments; |
• | dispose of assets; |
• | make certain acquisitions; |
• | pay dividends or make distributions and make other restricted payments; and |
• | engage in any new businesses. |
• | the fact that the STWO Initial Shareholders have agreed not to redeem any STWO Class A Ordinary Shares held by them in connection with a shareholder vote to approve a proposed initial business combination; |
• | the fact that the Sponsor paid an aggregate of $25,000 for 7,187,500 STWO Class B Ordinary Shares, 6,250,000 of which are currently owned by the STWO Initial Shareholders, the aggregate value of which is estimated to be approximately $62,000,000, assuming the per share value of the New ESS Common Stock is the same as the $9.92 per share closing price of our STWO Class A Ordinary Shares on Nasdaq as of July 23, 2021; |
• | the fact that the Sponsor paid $7,000,000 for its Private Placement Warrants, the aggregate value of which is estimated to be approximately $6,160,000, assuming the per warrant value of the New ESS warrants is the same as the $1.32 per warrant closing price of the STWO Warrants on Nasdaq as of July 23, 2021, and the Private Placement Warrants would be worthless if a business combination is not consummated by September 21, 2022 (unless such date is extended in accordance with the Existing Governing Documents); |
• | the fact that the STWO Initial Shareholders and certain of STWO’s current officers have agreed to waive their rights to liquidating distributions from the trust account with respect to any ordinary shares (other than public shares) held by them if STWO fails to complete an initial business combination by September 21, 2022 (no consideration was given to the Initial Shareholders or members of our management team in exchange for such waiver); |
• | the fact that the Registration Rights Agreement will be entered into by the Sponsor; |
• | the fact that, at the option of the Sponsor, any amounts outstanding under any loan made by the Sponsor or any of its affiliates to STWO in an aggregate amount of up to $1,500,000 may be converted into warrants to purchase STWO Class A Ordinary Shares in connection with the consummation of the Business Combination; |
• | the continued indemnification of STWO’s directors and officers and the continuation of STWO’s directors’ and officers’ liability insurance after the Business Combination ( i.e. |
• | the fact that, following the Business Combination, our Sponsor and its affiliates can earn a positive rate of return on their investment, even if other shareholders of STWO experience a negative rate of return on their investment; |
• | the fact that the Sponsor and STWO’s officers and directors will lose their entire investment in STWO and will not be reimbursed for any out-of-pocket |
• | the fact that if the trust account is liquidated, including in the event STWO is unable to complete an initial business combination by September 21, 2022, the Sponsor has agreed to indemnify STWO to ensure that the proceeds in the trust account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the trust account on the liquidation date, by the claims of prospective target businesses with which STWO has entered into an acquisition agreement or claims of any third party for services rendered or products sold to STWO, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the trust account; and |
• | the fact that STWO may be entitled to distribute or pay over funds held by STWO outside the Trust Account to the Sponsor or any of its Affiliates prior to the Closing. |
• | changes in the industries in which New ESS and its customers operate; |
• | variations in its operating performance and the performance of its competitors in general; |
• | material and adverse impact of the COVID-19 pandemic on the markets and the broader global economy; |
• | actual or anticipated fluctuations in New ESS’ quarterly or annual operating results; |
• | the public’s reaction to New ESS’ press releases, its other public announcements and its filings with the SEC; |
• | New ESS’ failure or the failure of its competitors to meet analysts’ projections or guidance that New ESS or its competitors may give to the market; |
• | additions and departures of key personnel; |
• | changes in laws and regulations affecting its business; |
• | commencement of, or involvement in, litigation involving New ESS; |
• | changes in New ESS’ capital structure, such as future issuances of securities or the incurrence of additional debt; |
• | publication of research reports by securities analysts about New ESS or its competitors or its industry; |
• | sales of shares of New ESS Common Stock by the PIPE Investors; |
• | the volume of shares of New ESS Common Stock available for public sale, including as a result of the termination of the post-closing lock-up pursuant to the terms thereof; and |
• | general economic and political conditions such as recessions, interest rates, fuel prices, foreign currency fluctuations, international tariffs, social, political and economic risks and acts of war or terrorism. |
• | a limited availability of market quotations for New ESS’ securities; |
• | reduced liquidity for New ESS’ securities; |
• | a determination that New ESS Common Stock is a “penny stock” which will require brokers trading in New ESS Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for New ESS’ securities; |
• | a limited amount of news and analyst coverage; and |
• | a decreased ability to issue additional securities or obtain additional financing in the future. |
• | the book-building process undertaken by underwriters that helps to inform efficient price discovery with respect to opening trades of newly listed securities; |
• | underwriter support to help stabilize, maintain or affect the public price of the new issue immediately after listing; and |
• | underwriter due diligence review of the offering and potential liability for material misstatements or omissions of fact in a prospectus used in connection with the securities being offered or for statements made by its securities analysts or other personnel. |
• | You can vote by signing and returning the enclosed proxy card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by the STWO Board “FOR” the Domestication Proposal, “FOR” the Business Combination Proposal, “FOR” each of the separate Governing Documents Proposals, “FOR” the Election of Directors Proposal, “FOR” the Equity Incentive Plan Proposal, “FOR” the Nasdaq Proposal, “FOR” the Employee Stock Purchase Plan Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the extraordinary general meeting. Votes received after a matter has been voted upon at the extraordinary general meeting will not be counted. |
• | You can attend the extraordinary general meeting and vote virtually even if you have previously voted by submitting a proxy pursuant to any of the methods noted above. However, if your ordinary shares in the capital of STWO are held in the name of your broker, bank or other nominee, you must get a proxy from the broker, bank or other nominee. That is the only way STWO can be sure that the broker, bank or nominee has not already voted your ordinary shares in the capital of STWO. |
• | you may send another proxy card with a later date; |
• | you may notify STWO’s secretary in writing before the extraordinary general meeting that you have revoked your proxy; or |
• | you may attend the extraordinary general meeting, revoke your proxy, and vote in person, as indicated above. |
(i) | (a) hold public shares or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and warrants prior to exercising your redemption rights with respect to the public shares; |
(ii) | submit a written request to Continental Stock Transfer & Trust Company, STWO’s transfer agent, in which you (a) request that STWO redeem all or a portion of your public shares for cash, and (b) identify yourself as the beneficial holder of the public shares and provide your legal name, phone number and address; and |
(iii) | deliver your public shares to Continental Stock Transfer & Trust Company, STWO’s transfer agent, physically or electronically through DTC. |
• | Sustainability . non-flammable, non-toxic and present no risk of explosion, and support the acceleration of renewable sources making up a larger component of our energy mix by providing stability to the grid. |
• | Technological Advantage lithium-ion batteries, including its operational flexibility, longer asset life, ambient operating temperature, safety record and availability, cost and recyclability of its components. Further, ESS has a robust, defensible patent portfolio, which will make it more difficult for others to enter and compete directly in the industrial-scale iron flow battery space. Additionally, ESS’ technology has been deployed in the market in varying capacities since 2015. |
• | Alignment with STWO’s Key Target Criteria |
• | Growth Prospects |
• | Large Addressable Market |
• | Experienced and Knowledgeable Management Team |
• | Valuation Supported by Due Diligence |
• | Strong Commitment of Existing ESS Stockholders |
• | Negotiated Transaction |
• | Timeliness de-carbonization, the STWO Board is persuaded that this is the right time for this kind of technology to enter the public sphere. |
• | Other Alternatives |
• | Anticipated Benefits May Not be Achieved |
• | Macroeconomic Risks |
• | STWO Shareholder Vote |
• | Redemption Risk |
• | Limitations of Review |
• | Closing Conditions |
• | Potential Litigation |
• | Fees and expenses. |
• | Listing Risks. |
• | ESS Stockholder Dynamics |
• | Exclusivity |
• | Liquidation of STWO |
• | Other Risk Factors Risk Factors |
Values in 000s |
2021 |
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
|||||||||||||||||||||
Revenue |
||||||||||||||||||||||||||||
Product—EW Purchase & Lease |
$ | 2,381 | $ | 22,679 | $ | 34,520 | $ | 47,203 | $ | 66,328 | $ | 94,808 | $ | 135,248 | ||||||||||||||
Product—EC Purchase |
— | $ | 14,224 | $ | 256,249 | $ | 696,998 | $ | 1,447,504 | $ | 2,222,420 | $ | 2,986,242 | |||||||||||||||
Product—EF Purchase |
— | — | $ | 4,177 | $ | 28,696 | $ | 41,797 | $ | 50,522 | $ | 61,113 | ||||||||||||||||
Service Agreement |
$ | 15 | $ | 314 | $ | 5,535 | $ | 29,808 | $ | 88,884 | $ | 203,964 | $ | 379,833 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Revenue |
$ |
2,396 |
$ |
37,217 |
$ |
300,481 |
$ |
802,704 |
$ |
1,644,513 |
$ |
2,571,715 |
$ |
3,562,436 |
||||||||||||||
Market Share (%) |
0 | % | 0 | % | 1 | % | 2 | % | 4 | % | 6 | % | 6 | % | ||||||||||||||
Cost of Goods Sold(1) |
$ | 4,560 | $ | 50,424 | $ | 253,087 | $ | 585,929 | $ | 1,136,469 | $ | 1,622,129 | $ | 2,229,953 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Gross Profit |
$ |
(2,163 |
) |
$ |
(13,207 |
) |
$ |
47,393 |
$ |
216,776 |
$ |
508,044 |
$ |
949,586 |
$ |
1,332,483 |
||||||||||||
Gross Margin (%) |
NM |
NM |
16 |
% |
27 |
% |
31 |
% |
37 |
% |
37 |
% | ||||||||||||||||
Total Operating Expense |
$ |
17,659 |
$ |
29,854 |
$ |
45,841 |
$ |
86,264 |
$ |
148,230 |
$ |
210,718 |
$ |
273,590 |
||||||||||||||
EBITDA |
$ |
(19,822 |
) |
$ |
(43,062 |
) |
$ |
1,552 |
$ |
130,511 |
$ |
359,813 |
$ |
738,868 |
$ |
1,058,894 |
||||||||||||
Margin (%) |
NM |
NM |
1 |
% |
16 |
% |
22 |
% |
29 |
% |
30 |
% | ||||||||||||||||
Depreciation |
$ | 432 | $ | 4,712 | $ | 17,737 | $ | 32,842 | $ | 46,508 | $ | 63,580 | $ | 69,824 | ||||||||||||||
Interest Expense |
— | $ | 59 | $ | 287 | $ | 414 | $ | 530 | $ | 656 | $ | 817 | |||||||||||||||
Taxes (net of NOL) |
— | — | — | — | $ | 56,715 | $ | 141,673 | $ | 207,533 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net Income (Loss) |
$ |
(20,255 |
) |
$ |
(47,833 |
) |
$ |
(16,472 |
) |
$ |
97,255 |
$ |
256,059 |
$ |
532,959 |
$ |
780,720 |
|||||||||||
Portion of Revenue (%) |
NM |
NM |
NM |
12 |
% |
16 |
% |
21 |
% |
22 |
% | |||||||||||||||||
CapEx |
||||||||||||||||||||||||||||
Maintenance CapEx |
$ | (3,259 | ) | $ | (8,240 | ) | $ | (8,487 | ) | $ | (8,742 | ) | $ | (9,004 | ) | $ | (9,274 | ) | $ | (9,552 | ) | |||||||
Leased Equipment |
— | $ | (7,980 | ) | $ | (6,680 | ) | $ | (6,532 | ) | $ | (8,100 | ) | $ | (10,270 | ) | $ | (13,875 | ) | |||||||||
Manufacturing Capacity Growth CapEx |
$ | (500 | ) | $ | (21,200 | ) | $ | (49,000 | ) | $ | (93,500 | ) | $ | (31,500 | ) | $ | (87,000 | ) | $ | (124,162 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total CapEx |
$ |
(3,759 |
) |
$ |
(37,420 |
) |
$ |
(64,167 |
) |
$ |
(108,774 |
) |
$ |
(48,604 |
) |
$ |
(106,544 |
) |
$ |
(147,589 |
) | |||||||
Portion of Revenue (%) |
157 |
% |
101 |
% |
21 |
% |
14 |
% |
3 |
% |
4 |
% |
4 |
% | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
EBITDA |
$ |
(23,581 |
) |
$ |
(80,482 |
) |
$ |
(62,615 |
) |
$ |
21,738 |
$ |
311,209 |
$ |
632,324 |
$ |
911,305 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating Cash Flows |
$ |
(21,145 |
) |
$ |
(84,544 |
) |
$ |
(97,759 |
) |
$ |
(49,913 |
) |
$ |
151,619 |
$ |
409,416 |
$ |
664,954 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cash on Balance Sheet |
$ |
470,816 |
$ |
390,967 |
$ |
296,708 |
$ |
249,857 |
$ |
405,087 |
$ |
818,909 |
$ |
1,489,775 |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Units Sold |
2021 |
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
|||||||||||||||||||||
Product—EW Purchase |
27 | 179 | 200 | 252 | 376 | 552 | 824 | |||||||||||||||||||||
Product—EW Lease |
— | 40 | 40 | 48 | 64 | 84 | 120 | |||||||||||||||||||||
Product—EC Purchase |
— | 33 | 600 | 1,571 | 3,433 | 5,379 | 7,449 |
• | “EW” = Energy Warehouses |
• | “EC” = Energy Centers |
• | “EF” = Energy Franchise |
(1) | Assumes that ESS exits the research and development phase in 2021. |
• | Near-term (as defined by less than 12 months) and medium term (as defined by 12 to 36 months) projections were based on customer demand and projects with an anticipated conversion rate based on what we’ve seen with our current contracts. |
• | Long-term projections are based on high-level market data incorporating several analyst forecasts of anticipated dollars spent for energy storage in coming years and assumed capturing a percentage of market share based on those forecasts. |
• | The overall projections and growth rates were compared against other renewable energy companies growth rates through periods of growth, most notably the solar industry. |
• | The overall projections were also compared against internal and external analysis of business needs, use cases, and market demand should a viable long duration energy storage project, like the Energy Warehouse and Energy Center products ESS is developing, come to market at scale. |
• | Projected revenue is based on a variety of operational estimates and is premised on the assumption that our projected $7.0 billion pipeline of visible potential opportunity will result in near-term growth, and that the deployment of ESS’ next generation S200 energy storage products will enable ESS to build customer confidence in its technology, which in turn will increase revenues and customer growth. 100% of the projected revenues of $2.4 million for 2021 have been signed. For 2022, approximately 6% of the $37.2 million projected revenues has been signed, 66% has been awarded through the bidding process and 28% is in the process of being negotiated. For 2023, approximately 20% of the $300.5 million projected revenues has been signed and 40% are being in the process of being negotiated. Our projected $7.0 billion pipeline for 2021 through 2027 was determined based on named projects with potential customers that ESS has spoken to and signed non-disclosure agreements with in order to discuss the projects. We have assumed project volumes of eight, 10 and 12-hour energy storage durations and pricing based on our current 2021 pricing for our products. Actual pricing will be project specific. Our pipeline includes both Energy Warehouse and Energy Center projects and global opportunities. There is no assurance that we will enter into all of the markets that we have projected in our pipeline. For future years, ESS expects revenues to grow from additional units sold and leased to new and existing customers based on its projected manufacturing capacity and sales force growth. ESS based its projected revenues of $3.5 billion in 2027 on high-level market data incorporating several analyst forecasts of anticipated dollars spent for energy storage in coming years and assumed that ESS will be able to capture a percentage of market share based on those forecasts. ESS has designed what it believes is a category defining product for long-duration energy storage. The $3.5 billion projected revenue in 2027 represents approximately 6% of the total addressable market for the microgrid, distributed energy and utility industries as estimated by Guidehouse Insights. |
• | Revenue from Energy Warehouses: ESS has assumed that projected revenue for 2021 will be collected from its existing contracts with customers for its Energy Warehouses. For 2022 and future years, ESS expects revenues to grow from additional units sold and leased to new and existing customers based on its projected manufacturing capacity and sales force growth. ESS assumes global expansion to Australia and Europe in 2023 and 2024, respectively, to support continued sales growth. |
• | Revenue from Energy Centers: ESS expects to begin shipping its second, larger-scale energy storage product, the Energy Center, beginning in 2022. ESS anticipates its Energy Center product to offer energy storage capacities starting at three megawatts and six to 12-hours of energy storage duration (as compared to 50 to 90 kilowatts and four to 12-hours of duration of its Energy Warehouse product), and the Energy Center’s modular, customizable design to allow the product to scale to meet the needs of larger customers such as independent power producers and utilities. Therefore, ESS expects sales and margins from its Energy Center will be materially greater than that of its Energy Warehouses. Energy Centers are core to ESS’ growth thesis given the opportunity to sell increased volumes of energy storage and generate repeat business from utility customers. |
• | Revenue from Energy Franchises and Services: ESS plans to implement a franchising business model where it will ship various components of its energy storage products to third parties with whom it develops partnerships, who will then assemble completed units for system integrators and end-use customers. ESS has assumed that sales from Energy Franchises will begin in 2023. ESS also assumes to earn revenues from servicing its existing products for its customers. Revenues from Energy Franchises and services are assumed to become a bigger contributor to total revenue as ESS’ business expands. |
• | ESS has assumed that cash made available from STWO’s trust account and PIPE Financing will allow it to grow its revenue, EBITDA and net income. ESS’ planned investments in its business include |
opening additional manufacturing facilities and expanding its sales force through hiring additional employees and growing its channel partner system. ESS has assumed these investments will result in increased manufacturing capacity and sales of its energy storage products, and that ESS will be able to ramp up its manufacturing capacity to fulfill the customer demand that it sees in the marketplace. ESS’ manufacturing process is relatively simple and since ESS uses non-hazardous materials in the manufacturing of its battery modules, its manufacturing facilities require less permitting, maintenance and operating costs than that of competing energy storage technologies such as lithium-ion, which is the current industry standard. Adding manufacturing capacity will require a smaller capital investment given ESS’ low-cost manufacturing approach. As ESS increases its manufacturing capabilities and refines its operations, ESS expects it will be able to reduce its scrap rate and decrease per unit manufacturing costs, making its manufacturing process even more cost effective. |
• | ESS has assumed that existing market and regulatory trends in favor of renewable energy and sustainability will continue and expand. |
• | the fact that the STWO Initial Shareholders have agreed not to redeem any STWO Class A Ordinary Shares held by them in connection with a shareholder vote to approve a proposed initial business combination; |
• | the fact that the Sponsor paid an aggregate of $25,000 for 7,187,500 STWO Class B Ordinary Shares, 6,250,000 of which are currently owned by the STWO Initial Shareholders, the aggregate value of which is estimated to be approximately $62,000,000, assuming the per share value of the New ESS Common Stock is the same as the $9.92 per share closing price of STWO Class A Ordinary Shares on Nasdaq as of July 23, 2021; |
• | the fact that Sponsor paid $7,000,000 for its Private Placement Warrants, the aggregate value of which is estimated to be approximately $6,160,000, assuming the per warrant value of the New ESS warrants is the same as the $1.32 per warrant closing price of the STWO Warrants on Nasdaq as of July 23, 2021, and the Private Placement Warrants would be worthless if a business combination is not consummated by September 21, 2022 (unless such date is extended in accordance with the Existing Governing Documents); |
• | the fact that the STWO Initial Shareholders and certain of STWO’s current officers have agreed to waive their rights to liquidating distributions from the trust account with respect to any ordinary shares (other than public shares) held by them if STWO fails to complete an initial business combination by September 21, 2022 (no consideration was given to the Initial Shareholders or members of our management team in exchange for such waiver); |
• | the fact that the Registration Rights Agreement will be entered into by the Sponsor and certain other affiliates of STWO; |
• | the continued indemnification of STWO’s directors and officers and the continuation of STWO’s directors’ and officers’ liability insurance after the Business Combination (i.e., a “tail policy”); |
• | the fact that, following the Business Combination, our Sponsor and its affiliates can earn a positive rate of return on their investment, even if other shareholders of STWO experience a negative rate of return on their investment; |
• | the fact that the Sponsor and STWO’s officers and directors will lose their entire investment in STWO and will not be reimbursed for any out-of-pocket |
July 27, 2021, if an initial business combination is not consummated by September 21, 2022. There are no assurances that the out-of-pocket expenses will not increase leading up to closing. No loans from the Sponsor to the Company are currently outstanding; |
• | the fact that if the trust account is liquidated, including in the event STWO is unable to complete an initial business combination by September 21, 2022, the Sponsor has agreed to indemnify STWO to ensure that the proceeds in the trust account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the trust account on the liquidation date, by the claims of prospective target businesses with which STWO has entered into an acquisition agreement or claims of any third party for services rendered or products sold to STWO, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the trust account; and |
• | the fact that STWO may be entitled to distribute or pay over funds held by STWO outside the Trust Account to the Sponsor or any of its Affiliates prior to the Closing. |
• | Certain of ESS’ directors and executive officers are expected to become directors and/or executive officers of New ESS upon the Closing. Specifically, the following individuals who are currently executive officers of ESS are expected to become executive officers of New ESS upon the Closing, serving in the offices set forth opposite their names below. |
Name |
Position | |
• | In addition, the following individuals who are currently directors of ESS are expected to become directors of New ESS upon the Closing: |
• | Certain of ESS’ executive officers and non-employee directors hold options to purchase shares of ESS Common Stock, which will be assumed by STWO upon the Closing. The treatment of such equity awards in connection with the Business Combination is described in the section entitled “The Merger Agreement—Conversion of Securities non-employee directors as of , 2021, is set forth in the table below. |
Name |
Vested Stock Options |
Unvested Stock Options |
Restricted Units |
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Named Executive Officers |
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All Other Executive Officers as a Group |
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Non-Employee Directors |
• | Certain of ESS’ executive officers hold shares of ESS Capital Stock, the treatment of which is described in the section entitled “ The Merger Agreement |
• | The following non-employee directors of ESS have a direct or indirect ownership interest in ESS Capital Stock: |
• | ESS’ existing stockholders will have the greatest voting interest in the combined entity after giving effect to the Merger under the no redemption and maximum redemption scenarios with at least 63.1% or 75.5% voting interest, in each case; |
• | After giving effect to the Merger, the largest individual minority stockholder of the combined entity will be an existing stockholder of ESS; |
• | ESS’ existing directors and individuals designed by existing ESS Stockholders will represent the majority of the New ESS board of directors; |
• | ESS’ senior management will be the senior management of New ESS; and |
• | ESS is the larger entity based on historical revenue and has the larger employee base. |
• | On the Closing Date, prior to the time at which the Effective Time occurs, STWO will change its jurisdiction of incorporation by deregistering by way of continuation as a Cayman Islands exempted company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware; and |
• | the parties to the Merger Agreement will cause a certificate of merger to be executed and filed with the Secretary of State of the State of Delaware, pursuant to which Merger Sub will merge with and into ESS, with ESS as the surviving company in the Merger and, after giving effect to such Merger, ESS shall be a wholly-owned subsidiary of STWO. In accordance with the terms and subject to the conditions of the Merger Agreement, at the Effective Time, (a) each share of ESS Preferred Stock issued and outstanding as of immediately prior to the Effective Time will be converted into ESS Common Stock on a one-for-one basis and, following such conversion, each share of ESS Common Stock issued and outstanding as of immediately prior to the Effective Time (other than any cancelled shares and dissenting shares), will receive a number of shares of New ESS Common Stock based on an adjusted equity value of ESS and as set forth in the allocation schedule, plus earnout stock, as applicable pursuant to the terms and conditions of the Merger Agreement and (b) each warrant and equity award of ESS outstanding as of immediately prior to the Effective Time will be exchanged for comparable warrants or equity awards that are exercisable for a fraction of a share of New ESS Common Stock as calculated in accordance with the Merger Agreement. For further details, see “ Proposal No. 2—The Business Combination Proposal—Consideration to ESS Stockholders in the Business Combination |
• | each issued and outstanding share of STWO Class A Ordinary Share will convert automatically by operation of law, on a one-for-one |
• | each issued and outstanding STWO Class B Ordinary Share will convert automatically by operation of law, on a one-for-one |
• | each issued and outstanding whole warrant to purchase STWO Class A Ordinary Shares will represent the right to purchase one share of New ESS Common Stock at an exercise price of $11.50 per share on the terms and conditions set forth in the STWO Warrant Agreement; |
• | the governing documents of STWO will be amended and restated and become the certificate of incorporation and the bylaws as described in this proxy statement/prospectus/information statement; |
• | the form of the certificate of incorporation and the bylaws will be appropriately adjusted to give effect to any amendments contemplated by the form of certificate of incorporation or the bylaws that are not adopted and approved by the STWO shareholders, other than the amendments to the STWO governing documents that are contemplated by the Governing Documents Proposals, which is a condition to the closing of the Business Combination; and |
• | in connection with the first three (3) bullets above, each issued and outstanding unit of STWO that has not been previously separated into the underlying STWO Class A Ordinary Share and one-third of one STWO warrant upon the request of the holder thereof prior to the Domestication will be cancelled and will entitle the holder thereof to one share of New ESS Common Stock and one-third of one warrant representing the right to purchase one share of New ESS Common Stock at an exercise price of $11.50 per share on the terms and subject to the conditions set forth in the STWO warrant agreement. |
• | the applicable waiting period under the HSR Act relating to the Business Combination having expired or been terminated; |
• | no order or law issued by any court of competent jurisdiction or other governmental entity or other legal restraint or prohibition preventing the consummation of the transactions contemplated by the Merger Agreement being in effect; |
• | the Offer (as such term is defined in the Merger Agreement) shall have been completed in accordance with the terms of the Merger Agreement and this proxy statement; |
• | this Registration Statement, of which this proxy statement/prospectus/information statement forms a part, becoming effective in accordance with the provisions of the Securities Act, no stop order being issued by the SEC and remaining in effect with respect to this Registration Statement and no proceeding seeking such a stop order being threatened or initiated by the SEC and remaining pending; and |
• | the approval of the Proposals being obtained by the requisite number of shareholders of STWO in accordance with the Existing Governing Documents. |
• | the representations and warranties of ESS regarding organization and qualification of ESS, ESS’ authority to, among other things, execute and deliver the Merger Agreement and each of the ancillary documents attached thereto to which it is or will be a party and to consummate the transactions contemplated thereby, capitalization, absence of certain changes or events and brokers fees being true and correct in all material respects as of the Closing Date as if made at and as of such date (or, if given as of an earlier date, as of such earlier date); |
• | the other representations and warranties of ESS being true and correct (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” or any similar limitation set forth in the |
Merger Agreement) as of the Closing Date (or, if given as of an earlier date, as of such earlier date), except where the failure of such representations and warranties to be true and correct, taken as a whole, does not result in Material Adverse Effect; |
• | ESS having performed and complied in all material respects with the covenants and agreements required to be performed or complied with by it under the Merger Agreement prior to the Closing; |
• | delivery to STWO of a certificate signed by an officer of ESS confirming that the conditions set forth in the three (3) immediately preceding bullet points have been satisfied; and |
• | since the date of the Merger Agreement, no Material Adverse Effect will have occurred that is continuing. |
• | the representations and warranties of STWO and Merger Sub regarding organization and qualification, the authority to execute and deliver the Merger Agreement and each of the ancillary documents to which it is or will be a party and to consummate the transactions contemplated thereby, absence of certain changes or events, brokers fees and capitalization being true and correct, in all material respects as of the Closing Date, as though made on and as of the Closing Date (or, if given as of an earlier date, as of such earlier date); |
• | the other representations and warranties of STWO and Merger Sub being true and correct (without giving effect to any limitation of “materiality” or “material adverse effect” or any similar limitation set forth in the Merger Agreement) as of the Closing Date, except where the failure of such representations and warranties to be true and correct, taken as a whole, does not result in a material adverse effect on STWO; |
• | STWO having performed and complied in all material respects with the covenants and agreements required to be performed or complied with by it under the Merger Agreement; |
• | delivery to ESS of a certificate signed by an officer of STWO confirming that the conditions set forth in the three (3) immediately preceding bullet points have been satisfied; |
• | the New ESS Common Stock to be issued in connection with the Business Combination shall have been approved for listing on NYSE or, to the extent NYSE is not available to New ESS, NASDAQ subject only to official notice of issuance thereof and the requirement to have a sufficient number of round lot holders; |
• | the aggregate cash proceeds from STWO’s trust account, together with the proceeds from the PIPE Financing, equaling no less than $200,000,000 (after deducting any amounts paid to STWO shareholders that exercise their redemption rights in connection with the Business Combination and net of unpaid transaction expenses incurred or subject to reimbursement by STWO) and STWO shall have made arrangements for such amounts held in the trust account to be released from the trust account at the Effective Time; |
• | certain directors and all executive officers of STWO shall have been replaced in their respective positions by the persons selected by ESS pursuant to the Merger Agreement, in each case, effective as of the Effective Time; and |
• | the completion of the Domestication. |
• | Subject to certain exceptions (including with respect to potential suspension of operations for COVID-19) or as consented to in writing by STWO (such consent not to be unreasonably conditioned, withheld or delayed), prior to the Closing, ESS will conduct and operate its business in the ordinary course, consistent with past practice, in all material respects, use commercially reasonable efforts to preserve intact ESS’ current business organization and ongoing businesses, and maintain its existing relations and goodwill with its customers, suppliers, distributors and creditors, and use commercially reasonable efforts to retain the services of its present officers. |
• | Subject to certain exceptions specified in the Merger Agreement, prior to the Closing, ESS will not do any of the following without STWO’s consent (such consent not to be unreasonably conditioned, withheld or delayed): |
• | change or amend the certificate of incorporation, bylaws or other organizational documents of ESS; |
• | declare, make or pay any dividend or other distribution to ESS stockholders; |
• | create, allot, issue, redeem or repurchase any shares or other securities convertible into shares of ESS; |
• | enter into, or amend or modify any material term of, terminate or waive or release any material right, claim or benefit under any related-party contract, other than in the ordinary course of business consistent with past practice; |
• | sell, transfer or subject to any lien any assets, properties or businesses of ESS (including its intellectual property), subject to certain exceptions contemplated in the Merger Agreement; |
• | adopt or materially amend any material benefit plan or any collective bargaining agreement, or waive or release any noncompetition, nonsolicitation, nondisclosure, nondisparagement or other restrictive covenant of current or former employees of ESS, subject to certain exceptions contemplated in the Merger Agreement; |
• | fail to maintain its existence or acquire any material portion of assets or equity of any business or adopt any plan of liquidation, dissolution, merger or other reorganization; |
• | make capital expenditures outside of ESS’ annual capital expenditure budget in excess of a specified threshold; |
• | make any loans, advances or capital contributions to, or investments in, any other Person or materially change its existing borrowing and lending arrangements other than would be consistent with past practice in the ordinary course of business; |
• | make, revoke or change any material tax election or change any material tax accounting method or period; |
• | waive, release or settle any liability, other than in the ordinary course of business consistent with past practice, in excess of a specified threshold; |
• | incur, issue, assume, guarantee or otherwise become liable for any indebtedness in excess of a specified threshold; |
• | enter into any material new line of business; |
• | make any material change in financial accounting methods, principles or practices; |
• | fail to maintain, cancel or materially change coverage under any insurance policy maintained with respect to ESS and its assets; or |
• | agree to take any of the above-listed actions. |
• | As promptly as practicable after this Registration Statement of which this proxy statement/prospectus/information statement forms a part, is declared effective under the Securities Act, ESS will solicit a written consent of the ESS stockholders (holding (a) at least a majority of all outstanding shares of ESS Common Stock and ESS Preferred Stock, voting together as a single class on an as-converted basis, and (b) at least 85% of the then-outstanding shares of ESS Preferred Stock, voting together as a single class on an as-converted basis) approving and adopting the Merger Agreement and, through its board of directors, will recommend to the ESS stockholders, the approval and adoption of the Merger Agreement. |
• | ESS acknowledged that STWO is a blank check company, has waived any past, present or future claim of any kind against the Trust Account and agreed not to seek recourse against the Trust Account for any reason. |
• | Prior to the Closing or termination of the Merger Agreement in accordance with its terms, ESS shall not, and shall cause its representatives not to: (a) solicit, initiate, encourage (including by means of furnishing or disclosing information), knowingly facilitate, discuss or negotiate, directly or indirectly, any inquiry, proposal or offer with respect to an ESS Acquisition Proposal; (b) furnish or disclose any non-public information to any Person in connection with, or that could reasonably be expected to lead to, an ESS Acquisition Proposal; (c) enter into any contract or other arrangement or understanding regarding a ESS Acquisition Proposal; (d) make any filings with the SEC in connection with a public offering of any equity or other securities of ESS; or (e) otherwise cooperate in any way with, or assist or participate in, or knowingly facilitate or encourage any effort or attempt by any Person (other than STWO) to do or seek to do any of the foregoing. |
• | Subject to certain exceptions, prior to the Closing, STWO will, and will cause Merger Sub to, not do any of the following without ESS’ written consent (such consent not to be unreasonably conditioned, withheld or delayed): |
• | change, modify or amend the Trust Agreement or the organizational documents of STWO or Merger Sub; |
• | declare, make or pay any dividend or other distribution in respect of any of its outstanding capital stock or other equity interests or otherwise adjust its capital structure; |
• | make, revoke or change any material tax election or change any material tax accounting method or period; |
• | enter into, renew or amend in any material respect any related-party contract, subject to certain exceptions contemplated in the Merger Agreement; |
• | enter into, or amend or modify any material term of (in a manner adverse to itself), terminate or waive or release any material right, claim or benefit under any material contract, subject to certain exceptions contemplated in the Merger Agreement; |
• | incur, create, assume, refinance, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any indebtedness; |
• | offer, issue, grant or sell any of its capital stock, other equity interests or securities convertible into any such capital stock or equity interests, other than in connection with the exercise of outstanding warrants, the Business Combination or the PIPE Financing; |
• | fail to maintain its existence or acquire, merge or consolidate with or purchase a material portion of the assets or equity of another Person; |
• | make any capital expenditures; |
• | make any loans, advances or capital contributions to, or investments in, any other Person or make any change in its existing borrowing or lending arrangements; |
• | enter into any new line of business; |
• | make any change in financial accounting methods, principles or practices; or |
• | agree to take any of the above-listed actions. |
• | STWO will use reasonable best efforts, as promptly as reasonably practicable following the effectiveness of this Registration Statement of which this proxy statement/prospectus/information statement forms a part, to duly convene and hold the special meeting in accordance with its Articles of Association. |
• | Subject to certain exceptions, STWO shall use its reasonable best efforts to ensure STWO remains listed as a public company on Nasdaq and to cause the New ESS Common Stock to be issued in connection with the Business Combination to be approved for listing on NYSE. |
• | Prior to the Closing, STWO will purchase a “tail” policy providing liability insurance coverage for ESS’ directors and officers with respect to matters existing or occurring at or prior to the Effective Time. |
• | Prior to the Closing or termination of the Merger Agreement, STWO will not, and use its reasonable best efforts to cause its representatives not to, (a) solicit, initiate, encourage (including by means of furnishing or disclosing information), knowingly facilitate, discuss or negotiate, directly or indirectly, any inquiry, proposal or offer (written or oral) with respect to an STWO Acquisition Proposal; (b) furnish or disclose any non-public information to any Person in connection with, or that could reasonably be expected to lead to, an STWO Acquisition Proposal; (c) enter into any Contract or other arrangement or understanding regarding an STWO Acquisition Proposal; or (d) otherwise cooperate in any way with, or assist or participate in, or knowingly facilitate or encourage any effort or attempt by any Person (other than the Company) to do or seek to do any of the foregoing. |
• | using commercially reasonable efforts to consummate the Business Combination; |
• | making relevant public announcements and solicitation of Company Stockholder Approvals (as defined in the Merger Agreement); |
• | keeping certain information confidential in accordance with the existing non-disclosure agreements; |
• | treating the Domestication and the Merger as a “reorganization” within the meaning of Section 368 of the Code and agreeing not to take any action that would reasonably be expected to cause the Domestication or the Merger to fail to qualify for such treatment; and |
• | cooperating in connection with certain tax matters and filings. |
• | by the mutual written consent of STWO and ESS; |
• | by STWO, subject to certain exceptions, if any of the representations or warranties made by ESS are not true and correct or if ESS fails to perform any of its respective covenants or agreements under the Merger Agreement (including an obligation to consummate the Closing) such that certain conditions to the obligations of STWO, as described in the section entitled “—Conditions to Closing of the Business Combination” above, could not be satisfied and the breach (or breaches) of such representations or warranties or failure (or failures) to perform such covenants or agreements is (or are) not cured or cannot be cured within the earlier of (a) 30 days after written notice thereof and (b) November 6, 2021 (the “Termination Date”); |
• | by ESS, subject to certain exceptions, if any of the representations or warranties made by STWO are not true and correct or if STWO fails to perform any of its covenants or agreements under the Merger Agreement (including an obligation to consummate the Closing) such that the condition to the obligations of ESS, as described in the section entitled “—Conditions to Closing of the Business Combination” above could not be satisfied and the breach (or breaches) of such representations or warranties or failure (or failures) to perform such covenants or agreements is (or are) not cured or cannot be cured within the earlier of (a) 30 days after written notice thereof and (b) the Termination Date; |
• | by either STWO or ESS if the Company Stockholder Approvals are not obtained at the extraordinary general meeting (subject to any adjournment or recess of the meeting); and |
• | by STWO, if the Company Stockholder Approvals have not been obtained within two Business Days following the date that the Registration Statement is declared effective. |
• | financial institutions or financial services entities; |
• | broker-dealers; |
• | S corporations; |
• | taxpayers that are subject to the mark-to-market |
• | tax-exempt entities; |
• | governments or agencies or instrumentalities thereof; |
• | insurance companies; |
• | regulated investment companies or real estate investment trusts; |
• | expatriates or former long-term residents of the United States; |
• | persons that actually or constructively own five percent or more of our voting shares or five percent or more of the total value of all classes of our shares (except as specifically addressed below); |
• | persons that acquired our securities pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation; |
• | persons that hold our securities as part of a straddle, constructive sale, hedging, conversion or other integrated or similar transaction; |
• | persons whose functional currency is not the U.S. dollar; |
• | controlled foreign corporations; |
• | persons who purchase stock in STWO Delaware as part of the PIPE Financing; |
• | accrual method taxpayers that file applicable financial statements as described in Section 451(b) of the Code; |
• | foreign corporations with respect to which there are one or more U.S. shareholders within the meaning of Treasury Regulations Section 1.367-3(b)(1)(ii); or |
• | passive foreign investment companies. |
• | an individual who is a citizen or resident of the United States as determined for U.S. federal income tax purposes; |
• | a corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) under the laws of the United States, any state thereof or the District of Columbia; |
• | an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or |
• | a trust, if (i) a court within the United States is able to exercise primary supervision over the administration of such trust and one or more “United States persons” (within the meaning of the Code) have the authority to control all substantial decisions of the trust, or (ii) the trust has validly elected to be treated as a United States person for U.S. federal income tax purposes. |
• | a statement that the Domestication is a Section 367(b) exchange (within the meaning of the applicable Treasury Regulations); |
• | a complete description of the Domestication; |
• | a description of any stock, securities or other consideration transferred or received in the Domestication; |
• | a statement describing the amounts required to be taken into account for U.S. federal income tax purposes as income or as an adjustment to basis, earnings and profits or other tax attributes; |
• | a statement that the U.S. holder is making the election that includes (A) a copy of the information that the U.S. holder received from STWO (or STWO Delaware) establishing and substantiating the U.S. |
holder’s all earnings and profits amount with respect to the U.S. holder’s STWO public shares, and (B) a representation that the U.S. holder has notified STWO (or STWO Delaware) that the U.S. holder is making the election; and |
• | certain other information required to be furnished with the U.S. holder’s tax return or otherwise furnished pursuant to the Code or the Treasury Regulations. |
• | the U.S. holder’s gain will be allocated ratably over the U.S. holder’s holding period for such U.S. holder’s public shares; |
• | the amount of gain allocated to the U.S. holder’s taxable year in which the U.S. holder recognized the gain, or to the period in the U.S. holder’s holding period before the first day of the first taxable year in which STWO was a PFIC, will be taxed as ordinary income; |
• | the amount of gain allocated to other taxable years (or portions thereof) of the U.S. holder and included in such U.S. holder’s holding period would be taxed at the highest tax rate in effect for that year and applicable to the U.S. holder; and |
• | an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the U.S. holder in respect of the tax attributable to each such other taxable year of such U.S. holder. |
(i) | such non-U.S. holder is an individual who was present in the United States for 183 days or more in the taxable year of such disposition (subject to certain exceptions as a result of the COVID pandemic) and certain other requirements are met, in which case any gain realized will generally be subject to a flat 30% U.S. federal income tax; |
(ii) | the gain is effectively connected with a trade or business of such non-U.S. holder in the United States (and if an income tax treaty applies, is attributable to a U.S. permanent establishment or fixed base maintained by such non-U.S. holder), in which case such gain will be subject to U.S. federal income tax, net of certain deductions, at the same graduated individual or corporate rates applicable to U.S. holders, and, if the non-U.S. holder is a corporation, an additional “branch profits tax” may also apply; or |
(iii) | STWO Delaware is or has been a “U.S. real property holding corporation” at any time during the shorter of the five-year period preceding such disposition and such non-U.S. holder’s holding period and either (A) the STWO Delaware public shares has ceased to be regularly traded on an established securities market or (B) such non-U.S. holder has owned or is deemed to have owned, at any time during the shorter of the five-year period preceding such disposition and such non-U.S. holder’s holding period more than 5% of outstanding STWO Delaware public shares. |
• | insurance companies, |
• | tax-exempt entities or organizations (including an “individual retirement account” or “Roth IRA” as defined in Section 408 or 408A of the Code), |
• | banks, broker-dealers, financial institutions, |
• | traders in securities that elect to mark to market, |
• | certain former citizens or long-term residents of the United States, |
• | partnerships or other pass-through entities for U.S. federal income tax purposes, |
• | holders who hold the ESS Capital Stock as part of a hedge, straddle, constructive sale or conversion transaction, |
• | holders who may have acquired the ESS Capital Stock in a transaction subject to the gain rollover provisions of Section 1045 of the Code or as “qualified small business stock”, |
• | holders who are subject to the alternative minimum tax or the Medicare tax on net investment income provisions of the Code, |
• | holders whose functional currency is not the U.S. dollar, or |
• | holders who acquired the ESS Capital Stock pursuant to the exercise of employee incentive stock options or otherwise as compensation, all of whom may be subject to tax rules that differ significantly from those summarized below. |
• | An individual who is a citizen or resident of the United States, as determined for U.S. federal income tax purposes; |
• | A corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States or any state thereof or the District of Columbia; |
• | A trust, if (i) the substantial decisions of which are controlled by one or more United States Persons (within the meaning of the Code) and which is subject to the primary supervision of a United States court, or (ii) a trust that has validly elected under applicable Treasury regulations to be treated as a United States person for U.S. federal income tax purposes; or |
• | An estate that is subject to U.S. federal income tax on its income regardless of source. |
• | No gain or loss will be recognized by a U.S. holder of ESS Capital Stock for U.S. federal income tax purposes on the exchange of its shares of ESS Capital Stock for New ESS Common Stock (including any Earnout Stock) in the Merger, except, in each case, with respect to cash received in lieu of fractional shares and imputed interest. |
• | Other than with respect to Earnout Stock treated as imputed interest (as described below), the aggregate tax basis of the New ESS Common Stock, including any Earnout Stock, received in the Merger by a U.S. holder of ESS Capital Stock will be equal to the aggregate tax basis of the ESS Capital Stock it exchanged in the Merger, except that such U.S. holder’s aggregate tax basis in the New ESS Common Stock will be reduced by the tax basis allocable to any fractional share interest in the New ESS Common Stock for which cash was received. |
• | Other than with respect to Earnout Stock treated as imputed interest (as described below), the tax holding period of the New ESS Common Stock, including any Earnout Stock, received in the Merger by a U.S. holder of ESS Capital Stock, including any fractional interest for which such holder receives cash, will include the holding period of the ESS Capital Stock that it surrendered in exchange therefor in the Merger. |
Existing Governing Documents |
Proposed Governing Documents | |||
Authorized Shares (Governing Documents Proposals) |
The share capital under the Existing Governing Documents is $55,500 divided into 500,000,000 STWO Class A Ordinary Shares of par value $0.0001 per share, 50,000,000 STWO Class B Ordinary Shares of par value $0.0001 per share and 5,000,000 preference shares of par value $0.0001 per share. | The Proposed Governing Documents authorize 2,200,000,000 shares of which 2,000,000,000 are New ESS Common Stock, par value $0.0001 per share, and 200,000,000 shares of New ESS Preferred Stock, par value $0.0001 per share. | ||
Authorize the Board of Directors to Issue Preferred Stock Without Shareholder Consent (Governing Documents Proposals) |
The Existing Governing Documents authorize the issuance of 5,000,000 preference shares with such designation, rights and preferences as may be determined from time to time by our board of directors. Accordingly, our board of directors is empowered under the Existing Governing Documents, without shareholder approval, to issue preference shares with dividend, or other distribution, voting, return of capital or other rights which could | The Proposed Governing Documents authorize the board of directors to issue preferred stock from time to time in one or more series, and, with respect to each series, to establish the number of shares in each such series, to fix the designation, powers (including voting powers), preferences and relative, participating, optional or other special rights, if any, of each such series and any qualifications, limitations or restrictions thereof, and, subject to the rights of such |
Existing Governing Documents |
Proposed Governing Documents | |||
adversely affect the voting power or other rights of the holders of ordinary shares. | series, to increase or decrease the number of shares of any such series. | |||
Corporate Name (Governing Documents Proposals) |
The Existing Governing Documents provide the name of the company is “ACON S2 Acquisition Corp.” | The Proposed Governing Documents will provide that the name of the corporation will be “ESS Tech, Inc.” | ||
Exclusive Forum (Governing Documents Proposals) |
The Existing Governing Documents do not contain a provision adopting an exclusive forum for certain shareholder litigation. | The Proposed Governing Documents adopt Delaware as the exclusive forum for certain shareholder litigation and the federal courts of the United States as the exclusive forum for litigation arising out of the Securities Act. | ||
Perpetual Existence (Governing Documents Proposals) |
The Existing Governing Documents provide that if we do not consummate a business combination (as defined in the Existing Governing Documents) by September 21, 2022 (twenty-four months after the closing of STWO’s initial public offering), STWO will cease all operations except for the purposes of winding up and will redeem the shares issued in STWO’s initial public offering and liquidate its trust account. | The Proposed Governing Documents do not include any provisions relating to New ESS’ ongoing existence; the default rule under the DGCL will make New ESS’ existence perpetual. This is the default rule under the DGCL. | ||
Provisions Related to Status as Blank Check Company (Governing Documents Proposals) |
The Existing Governing Documents set forth various provisions related to our status as a blank check company prior to the consummation of a business combination. | The Proposed Governing Documents do not include such provisions related to our status as a blank check company, which no longer will apply upon consummation of the Business Combination, as we will cease to be a blank check company at such time. |
• | Proposal No. 3(A) |
• | Proposal No. 3(B) |
• | Proposal No. 3(C) |
• | Proposal No. 3(D) |
• | The 2021 Equity Incentive Plan will continue until terminated by the New ESS Board or New ESS’ compensation committee; |
• | The 2021 Equity Incentive Plan provides for the grant of stock options, both incentive stock options and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, and performance awards; |
• | shares of New ESS Common Stock will be authorized for issuance pursuant to awards under the 2021 Equity Incentive Plan, plus up to shares of New ESS Common Stock that may become available for issuance as a result of recycling of awards under the 2014 Equity Incentive Plan, as described below; |
• | The 2021 Equity Incentive Plan provides for an automatic share reserve increase feature, whereby the share reserve will automatically be increased on the first day of each fiscal year beginning with the 2021 fiscal year, in an amount equal to the least of (i) shares, (ii) 5% of the total number of shares of all classes of New ESS Common Stock outstanding on the last day of the immediately preceding fiscal year, and (iii) a lesser number of shares as determined by the administrator. The automatic share reserve feature will cease immediately after the increase on the first day of the 2031 fiscal year. |
• | The 2021 Equity Incentive Plan will be administered by the New ESS Board or, if designated by the New ESS Board, New ESS’ compensation committee. |
• | shares of New ESS Common Stock; |
• | 5% of the total number of shares of all classes of New ESS Common Stock as of the last day of our immediately preceding fiscal year; or |
• | Such lesser amount determined by the administrator. |
• | immediately after the grant would own capital stock and/or hold outstanding options to purchase such stock possessing 5% or more of the total combined voting power or value of all classes of capital stock of ours or of any parent or subsidiary of ours; or |
• | holds rights to purchase shares of New ESS Common Stock under all employee stock purchase plans of ours or any parent or subsidiary of ours that accrue at a rate that exceeds $25,000 worth of shares of New ESS Common Stock for each calendar year in which such rights are outstanding at any time. |
• | Simple, Revolutionary Technology |
• | Compelling Value Proposition |
• | Most Sustainable Solution lithium-ion batteries, owing to our use of predominantly earth-abundant materials, a far longer operating life and easy end-of-life |
• | Rapid Expansion Capability lithium-ion, because our production facilities operate, where simple pick-and-place low-cost manufacturing approach will allow us to scale more rapidly and with lower capital expenditures in the future as new opportunities arise. |
• | Significant and Proprietary Technology Head Start 10-year journey as a company has provided invaluable learnings and technical know-how that any potential competitor would need to discover for themselves. We continue to develop and maintain our knowledge base (both patented and not), which we believe provides us with a substantial strategic head start and competitive advantage against competition in the iron flow battery storage space. |
• | Innovative Leadership Team with Experience Commercializing New Products |
• | Expanded Scale |
• | Technology Improvements |
• | Energy Center Sales front-of-the-meter |
• | International Growth lithium-ion batteries are unable to compete due to their operational shortcomings. Australia and Spain are particularly promising markets that we intend to enter. Additionally, we plan to implement a franchising business model, or Energy Franchises, where we will ship various components of our energy storage products to third parties with whom we develop partnerships with, who will then assemble completed units for system integrators and end-use customers. |
• | Leasing one-time sale. Leasing will also provide us with a way to introduce new customers to our energy storage products without requiring large upfront investments. |
• | Service |
• | Munich Re 10-year performance guarantee which is backed by investment-grade, 10-year warranty and project insurance policies from Munich Re, a leading provider of reinsurance, primary insurance and insurance-related risk solutions, which stands behind the performance of our energy storage products. We are the first long duration energy storage company to receive this type of insurance, which provides a warranty backstop for our proprietary flow battery technology, supporting our performance guarantee regardless of project size or location and de-risking the technology for our customers. We have also collaborated with Munich Re to develop separate project finance coverage. This allows us to secure project finance when installing our energy storage products, reducing the cost of capital for deployment, and can be extended in order to provide long-term assurance of project performance to our customers, investors and lenders. |
• | Aon and OneBeacon Insurance |
• | Export-Import Bank of the United States |
• | Safety and reliability; |
• | Duration; |
• | Performance and uptime; |
• | Operational flexibility; |
• | Asset life length and cyclability; |
• | Ease of integration; |
• | Operability in extreme temperatures; |
• | Environmental sustainability; |
• | Historical track record; and |
• | Field-proven technology |
• | Craig Evans, President, Co-Founder and director; former Chief Executive Officer |
• | Dr. Julia Song, Chief Technology Officer and Co-Founder |
• | Amir Moftakhar, Chief Financial Officer |
Name and Principal Position |
Year |
Salary ($) |
Option Awards ($) (2) |
Nonequity Incentive Compensation ($) (1) |
All Other Compensation ($) (3) |
Total ($) |
||||||||||||||||||
Craig Evans |
2020 | 175,000 | 91,250 | 92,000 | 10,724 | 368,974 | ||||||||||||||||||
President, Co-Founder and Director; former Chief Executive Officer | ||||||||||||||||||||||||
Dr. Julia Song |
2020 | 175,000 | 167,900 | 82,000 | 9,895 | 434,795 | ||||||||||||||||||
Chief Technology Officer & Co-Founder | ||||||||||||||||||||||||
Amir Moftakhar |
2020 | 210,000 | 152,500 | 58,500 | 7,700 | 428,700 | ||||||||||||||||||
Chief Financial Officer |
(1) | The amounts reported represent cash bonuses earned under our 2020 bonus plan based upon the achievement of company objectives for the year ended December 31, 2020, which were paid in 2021. The bonus plans are more fully described below under the section titled “— Bonus Plan |
(2) | The amounts in this column represent the aggregate grant-date fair value of awards granted to each named executive officer, computed in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. See Note 12 to ESS’ audited financial statements included elsewhere in this proxy statement/prospectus/information statement for a discussion of the assumptions made by ESS in determining the grant-date fair value of ESS’ equity awards. |
(3) | The amounts in this column represent matching 401(k) contributions. |
Name |
Option Awards (1) |
|||||||||||||||||||
Grant Date |
Number of Securities Underlying Unexercised Options Exercisable (#) |
Number of Securities Underlying Unexercised Options Unexercisable (#) |
Option Exercise Price ($) |
Option Expiration Date |
||||||||||||||||
Craig Evans |
1/22/2016 | (2) | 30,000 | — | 0.15 | 1/22/2026 | ||||||||||||||
4/20/2018 | (3) | 216,459 | — | 0.4503 | 4/20/2028 | |||||||||||||||
7/24/2020 | (4) | — | 125,000 | 0.4862 | 7/24/2030 | |||||||||||||||
Dr. Julia Song |
1/22/2016 | (2) | 64,500 | — | 0.15 | 1/22/2026 | ||||||||||||||
4/20/2018 | (3) | 236,459 | — | 0.4503 | 4/20/2028 | |||||||||||||||
7/24/2020 | (5) | 23,958 | 206,042 | 0.4862 | 7/24/2030 | |||||||||||||||
Amir Moftakhar |
1/11/2020 | (6) | 177,099 | 209,299 | 0.4862 | 1/10/2030 | ||||||||||||||
12/18/2020 | (7) | 5,208 | 119,792 | 0.49 | 12/18/2030 |
(1) | All stock options were granted pursuant to the 2014 Equity Incentive Plan. |
(2) | The option was fully vested at grant. |
(3) | 1/36 th of the total shares vested each month beginning on February 1, 2017. |
(4) | 1/48 th of the total shares vested or will vest each month beginning on February 22, 2021, subject to the holder’s continuous service through each vesting date. |
(5) | 1/48 th of the total shares vested or will vest each month beginning on August 24, 2020, subject to the holder’s continuous service through each vesting date. |
(6) | 1/4 th of the total shares vested on February 18, 2020, and 1/48th vested or will vest each month thereafter, subject to the holder’s continuous service through each vesting date. |
(7) | 1/48 th of the total shares vested or will vest each month beginning on November 23, 2020, subject to the holder’s continuous service through each vesting date. |
• | An initial option grant covering a number of shares equal to 0.2% of the anticipated fully-diluted shares of New ESS as of the Closing, with an exercise price per share equal to the fair market value of a share on the date of grant (the “initial option”). The initial option will vest as to 1/4th of the shares subject to the initial option on the one-year anniversary of Mr. Dresselhuys’s start date, and 1/48th monthly thereafter, subject to Mr. Dresselhuys’s continued service through each vesting date. |
• | An award of restricted stock units equal to 0.64% of the anticipated fully-diluted shares of New ESS as of the Closing (the “time-based RSU award”). The time-based RSU award will vest as to 1/4th of the shares subject to the time-based RSU award on the one-year anniversary of Mr. Dresselhuys’s start date, and 1/16th monthly thereafter, subject to Mr. Dresselhuys’s continued service through each vesting date. |
• | An award of restricted stock units equal to 0.2% of the anticipated fully-diluted shares of New ESS as of the Closing (the “stock-based RSU award”). The stock-based RSU award will vest as to 50% of the shares subject to the performance-based RSU award upon a “stock price target” (as defined in and determined under Mr. Dresselhuys’s employment agreement) of $12.50, and 50% upon a stock price target of $15.00, in case, subject to Mr. Dresselhuys’s continued service through each vesting date. |
• | An award of restricted stock units equal to 0.4% of the anticipated fully-diluted shares of New ESS as of the Closing (the “revenue-based RSU award”). The revenue-based RSU award will vest against |
achievement with respect to an annual revenue target, with no portion vesting if annual revenue is below $600 million, 100% vesting if annual revenue is $800 million, and 200% vesting if annual revenue is $1.6 billion, subject to Mr. Dresselhuys’s continued service through each vesting date. Linear interpolation will apply for achievement between annual revenue targets. Annual revenue will be determined based on the previous quarters preceding the end of any quarter, with the revenue-based RSU award terminating to the extent not vested on December 31, 2016. |
Name |
All Other Compensation ($) |
Total ($) |
||||||
Michael R. Niggli |
— | — | ||||||
Raffi Garabedian |
— | — | ||||||
Rich Hossfeld |
— | — | ||||||
Shirley Speakman |
— | — | ||||||
Kyle Teamey |
— | — | ||||||
Daryl Wilson |
$ | 24,000 | (1) | $ | 24,000 | |||
Ken Schultz (2) |
$ | 19,436 | (1) | $ | 19,463 |
(1) | Represents fees for advisor services. |
(2) | Ken Shultz resigned from the ESS Board on October 23, 2020. |
Three Months Ended June 30, |
$ Change |
% Change |
Six Months Ended June 30, |
$ Change |
% Change |
|||||||||||||||||||||||||||
($ in thousands) |
2021 |
2020 |
2021 |
2020 |
||||||||||||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||||||||||
Research and development |
$ | 6,222 | $ | 2,438 | $ | 3,784 | 155.2 | % | $ | 11,874 | $ | 4,968 | $ | 6,906 | 139.0 | % | ||||||||||||||||
Sales and marketing |
701 | 272 | 429 | 157.7 | 1,213 | 597 | 616 | 103.2 | ||||||||||||||||||||||||
General and administrative |
3,231 | 849 | 2,382 | 280.6 | 5,351 | 1,548 | 3,803 | 245.7 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total operating expenses |
10,154 | 3,559 | 6.595 | 185.3 | 18,438 | 7,113 | 11,325 | 159.2 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Loss from operations |
(10,154 | ) | (3,559 | ) | (6,595 | ) | 185.3 | (18,438 | ) | (7,113 | ) | 11,325 | 159.2 | |||||||||||||||||||
Other income (expenses): |
||||||||||||||||||||||||||||||||
Interest expense, net |
(54 | ) | (50 | ) | 4 | 8.0 | (111 | ) | (68 | ) | 43 | 63.2 | ||||||||||||||||||||
Gain (loss) on revaluation of warrant liabilities |
(6,378 | ) | 10 | 6,388 | N/M | (14,804 | ) | 54 | 14,858 | N/M | ||||||||||||||||||||||
Gain (loss) on revaluation of derivative liabilities |
(73,847 | ) | 1,405 | (75,252 | ) | N/M | (211,988 | ) | 3,760 | 215,748 | N/M | |||||||||||||||||||||
Other expense, net |
(9 |
) |
— |
(9 |
) |
N/M |
(19 |
) |
(62 |
) |
(43 |
) |
69.4 |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total other income (expense) |
(80,288 | ) | 1,365 | (81,653 | ) | N/M | (226,922 | ) | 3,684 | 230,606 | N/M | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net loss |
$ | (90,442 | ) | $ | (2,194 | ) | $ | (88,248 | ) | N/M | $ | (245,360 | ) | $ | (3,429 | ) | $ | 241,931 | N/M | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
$ Change |
% Change |
||||||||||||||
($ in thousands) |
2020 |
2019 |
||||||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
$ | 12,896 | $ | 6,660 | $ | 6,236 | 93.6 | |||||||||
Sales and marketing |
1,158 | 908 | 250 | 27.5 | ||||||||||||
General and administrative |
3,338 | 2,321 | 1,017 | 43.8 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
17,392 | 9,889 | 7,503 | 75.9 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss from operations |
(17,392 | ) | (9,889 | ) | 7,503 | 75.9 | ||||||||||
Other income (expense): |
||||||||||||||||
Interest expense, net |
(132 | ) | (1,019 | ) | (887 | ) | (87.0 | ) | ||||||||
Loss on revaluation of warrant liabilities |
(1,296 | ) | (341 | ) | 955 | N/M | ||||||||||
Loss on revaluation of derivative liabilities |
(11,532 | ) | (19 | ) | 11,513 | N/M | ||||||||||
Other income (expense), net |
(67 | ) | (199 | ) | (132 | ) | (66.3 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other income (expense) |
(13,027 | ) | (1,578 | ) | 11,449 | N/M | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | (30,419 | ) | $ | (11,467 | ) | $ | 18,952 | 163.5 |
|||||||
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
Fiscal Year Ended December 31, |
|||||||||||||||
($ in thousands) |
2021 |
2020 |
2020 |
2019 |
||||||||||||
Net cash used in operating activities |
$ | (15,024 | ) | $ | (7,370 | ) | $ | (16,645 | ) | $ | (6,675 | ) | ||||
Net cash used in investing activities |
(173 | ) | (427 | ) | (502 | ) | (851 | ) | ||||||||
Net cash provided by financing activities |
11,917 | 4,806 | 4,722 | 22,254 |
• | Expected term |
• | Expected volatility |
• | Risk-free interest rate |
• | Expected dividend yield |
• | ESS has been or is to be a participant; |
• | the amount involved exceeded or exceeds $120,000; and |
• | any of ESS’ directors, executive officers, or beneficial holders of more than 5% of any class of ESS Capital Stock, or any immediate family member of, or person sharing the household with, any of these individuals or entities, had or will have a direct or indirect material interest. |
Investor |
Shares of ESS Series C-1 Preferred Stock upon Conversion |
Aggregate Principal Amount and Accrued Interest ($) |
Warrant to Purchase Shares of ESS Series B Preferred Stock upon Issuance |
|||||||||
Pangaea Ventures Fund III, LP |
334,167 | 572,542 | 97,517 | |||||||||
Entities affiliated with Michael Niggli (1) |
578,170 | 520,493 | 88,652 | |||||||||
Cycle Capital Fund III, L.P. |
1,207,425 | 2,070,575 | 354,609 | |||||||||
BASF Venture Capital GmbH |
1,388,538 | 2,381,162 | 407,801 | |||||||||
Presidio-IPM j.s.a |
1,030,601 | 828,907 | 144,709 |
(1) | Michael Niggli is a member of the ESS board of directors. |
Stockholder |
Shares of ESS Series C-1 Preferred Stock |
Total Purchase Price Commitment |
||||||
BASF Venture Capital GmbH* |
1,388,538 | $ | 2,506,685 | |||||
Breakthrough Energy Ventures, LLC |
5,427,467 | $ | 9,999,999 | |||||
Cycle Capital Fund III, L.P.* |
2,455,742 | $ | 4,479,725 | |||||
Entities affiliated with Michael Niggli* |
578,170 | $ | 1,053,328 | |||||
Pangaea Ventures Fund III, LP* |
334,167 | $ | 602,559 | |||||
Presidio-IPM j.s.a* |
1,790,446 | $ | 3,284,545 | |||||
SB Energy Global Holdings One Ltd. (1) |
814,120 | $ | 1,500,000 |
* | Includes shares issued upon conversion of the 2018 Convertible Notes. |
(1) | Rich Hossfeld is a member of the ESS board of directors and an affiliate of SB Energy Global Holdings One Ltd. |
Stockholder |
Shares of ESS Series C-2 Preferred Stock |
Warrant Shares |
Total Purchase Price Commitment |
|||||||||
Breakthrough Energy Ventures, LLC |
2,544,124 | 381,618 | $ | 7,500,001 | ||||||||
Cycle Capital Fund III, L.P. |
254,412 | 38,161 | $ | 749,999 | ||||||||
Pangaea Ventures Fund III, LP |
169,608 | 25,441 | $ | 499,999 | ||||||||
Presidio-IPM j.s.a. |
339,216 | 50,882 | $ | 999,999 |
• | the risks, costs, and benefits to New ESS; |
• | the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated; |
• | the terms of the transaction; |
• | the availability of other sources for comparable services or products; and |
• | the terms available to or from, as the case may be, unrelated third parties. |
Name |
Age |
Position | ||||
Executive Officers |
||||||
Eric P. Dresselhuys |
56 | Chief Executive Officer and Director | ||||
Craig Evans |
45 | President, Co-Founder and Director | ||||
Julia Song |
43 | Chief Technology Officer and Co-Founder | ||||
Amir Moftakhar |
44 | Chief Financial Officer |
• | evaluating the performance, independence and qualifications of New ESS’ independent auditors and determining whether to retain New ESS’ existing independent auditors or engage new independent auditors; |
• | reviewing New ESS’ financial reporting processes and disclosure controls; |
• | reviewing and approving the engagement of New ESS’ independent auditors to perform audit services and any permissible non-audit services; |
• | reviewing the adequacy and effectiveness of New ESS’ internal control policies and procedures, including the responsibilities, budget, staffing and effectiveness of New ESS’ internal audit function; |
• | reviewing with the independent auditors the annual audit plan, including the scope of audit activities and all critical accounting policies and practices to be used by New ESS; |
• | obtaining and reviewing at least annually a report by New ESS’ independent auditors describing the independent auditors’ internal quality control procedures and any material issues raised by the most recent internal quality-control review; |
• | monitoring the rotation of partners of New ESS’ independent auditors on New ESS’ engagement team as required by law; |
• | prior to engagement of any independent auditor, and at least annually thereafter, reviewing relationships that may reasonably be thought to bear on their independence, and assessing and otherwise taking the appropriate action to oversee the independence of New ESS’ independent auditor; |
• | reviewing New ESS’ annual and quarterly financial statements and reports, including the disclosures contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and discussing the statements and reports with New ESS’ independent auditors and management; |
• | reviewing with New ESS’ independent auditors and management significant issues that arise regarding accounting principles and financial statement presentation and matters concerning the scope, adequacy, and effectiveness of New ESS’ financial controls and critical accounting policies; |
• | reviewing with management and New ESS’ auditors any earnings announcements and other public announcements regarding material developments; |
• | establishing procedures for the receipt, retention and treatment of complaints received by New ESS regarding financial controls, accounting, auditing or other matters; |
• | preparing the report that the SEC requires in New ESS’ annual proxy statement; |
• | reviewing and providing oversight of any related party transactions in accordance with New ESS’ related party transaction policy and reviewing and monitoring compliance with legal and regulatory responsibilities, including New ESS’ code of ethics; |
• | reviewing New ESS’ major financial risk exposures, including the guidelines and policies to govern the process by which risk assessment and risk management is implemented; and |
• | reviewing and evaluating on an annual basis the performance of the audit committee and the audit committee charter. |
• | reviewing and approving the corporate objectives that pertain to the determination of executive compensation; |
• | reviewing and approving the compensation and other terms of employment of New ESS’ executive officers; |
• | reviewing and approving performance goals and objectives relevant to the compensation of New ESS’ executive officers and assessing their performance against these goals and objectives; |
• | making recommendations to the New ESS Board regarding the adoption or amendment of equity and cash incentive plans and approving amendments to such plans to the extent authorized by the New ESS Board; |
• | reviewing and making recommendations to the New ESS Board regarding the type and amount of compensation to be paid or awarded to New ESS’ non-employee board members; |
• | reviewing and assessing the independence of compensation consultants, legal counsel and other advisors as required by Section 10C of the Exchange Act; |
• | administering New ESS’ equity incentive plans, to the extent such authority is delegated by the New ESS Board; |
• | reviewing and approving the terms of any employment agreements, severance arrangements, change in control protections, indemnification agreements and any other material arrangements for New ESS’ executive officers; |
• | reviewing with management New ESS’ disclosures under the caption “Compensation Discussion and Analysis” in New ESS’ periodic reports or proxy statements to be filed with the SEC, to the extent such caption is included in any such report or proxy statement; |
• | preparing an annual report on executive compensation that the SEC requires in New ESS’ annual proxy statement; and |
• | reviewing and evaluating on an annual basis the performance of the compensation committee and recommending such changes as deemed necessary with the New ESS Board. |
• | identifying, reviewing and making recommendations of candidates to serve on the New ESS Board; |
• | evaluating the performance of the New ESS Board, committees of the New ESS Board and individual directors and determining whether continued service on the New ESS Board is appropriate; |
• | evaluating nominations by stockholders of candidates for election to the New ESS Board; |
• | evaluating the composition, organization, and governance of the New ESS Board and its committees and making recommendations to the New ESS Board for approvals; |
• | developing a set of corporate governance policies and principles and recommending to the New ESS Board any changes to such policies and principles; |
• | reviewing issues and developments related to corporate governance and identifying and bringing to the attention of the New ESS Board current and emerging corporate governance trends; and |
• | reviewing periodically the nominating and corporate governance committee charter, structure and membership requirements and recommending any proposed changes to the New ESS Board, including undertaking an annual review of its own performance. |
• | for any transaction from which the director derives an improper personal benefit; |
• | for any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; |
• | for any unlawful payment of dividends or redemption of shares; or |
• | for any breach of a director’s duty of loyalty to the corporation or its stockholders. |
• | 2,000,000,000 shares are designated as common stock, par value $0.0001 per share (“New ESS Common Stock”); and |
• | 200,000,000 shares are designated as preferred stock, par value $0.0001 per share (“New ESS Preferred Stock”). |
• | in whole and not in part; |
• | at a price of $0.01 per Public Warrant; |
• | upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and |
• | if, and only if, the closing price of the STWO Class A Ordinary Shares equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under the heading “—Anti-Dilution Adjustments 30-trading day period ending three (3) trading days before STWO sends the notice of redemption to the warrant holders. |
• | in whole and not in part; |
• | at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table below, based on the redemption date and the “fair market value” of STWO Class A Ordinary Shares (as defined below) except as otherwise described below; |
• | if, and only if, the closing price of STWO Class A Ordinary Shares equals or exceeds $10.00 per public share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under the heading “— Anti-Dilution Adjustments 30-trading day period ending three (3) trading days before STWO sends the notice of redemption to the warrant holders; and |
• | if the closing price of the STWO Class A Ordinary Shares for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which STWO sends the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under the heading “—Anti-dilution Adjustments |
Redemption Date |
Fair Market Value of STWO Class A Ordinary Shares |
|||||||||||||||||||||||||||||||||||
(period to expiration of warrants) |
£ |
10.00 | 11.00 | 12.00 | 13.00 | 14.00 | 15.00 | 16.00 | 17.00 | ³ |
18.00 | |||||||||||||||||||||||||
60 months |
0.261 | 0.281 | 0.297 | 0.311 | 00.324 | 0.337 | 0.348 | 0.358 | 0.361 | |||||||||||||||||||||||||||
57 months |
0.257 | 0.277 | 0.294 | 0.310 | 0.324 | 0.337 | 0.348 | 0.358 | 0.361 | |||||||||||||||||||||||||||
54 months |
0.252 | 0.272 | 0.291 | 0.307 | 0.322 | 0.335 | 0.347 | 0.357 | 0.361 | |||||||||||||||||||||||||||
51 months |
0.246 | 0.268 | 0.287 | 0.304 | 0.320 | 0.333 | 0.346 | 0.357 | 0.361 | |||||||||||||||||||||||||||
48 months |
0.241 | 0.263 | 0.283 | 0.301 | 0.317 | 0.332 | 0.344 | 0.356 | 0.361 | |||||||||||||||||||||||||||
45 months |
0.235 | 0.258 | 0.279 | 0.298 | 0.315 | 0.330 | 0.343 | 0.356 | 0.361 | |||||||||||||||||||||||||||
42 months |
0.228 | 0.252 | 0.274 | 0.294 | 0.312 | 0.328 | 0.342 | 0.355 | 0.361 | |||||||||||||||||||||||||||
39 months |
0.221 | 0.246 | 0.269 | 0.290 | 0.309 | 0.325 | 0.340 | 0.354 | 0.361 | |||||||||||||||||||||||||||
36 months |
0.213 | 0.239 | 0.263 | 0.285 | 0.305 | 0.323 | 0.339 | 0.353 | 0.361 | |||||||||||||||||||||||||||
33 months |
0.205 | 0.232 | 0.257 | 0.280 | 0.301 | 0.320 | 0.337 | 0.352 | 0.361 | |||||||||||||||||||||||||||
30 months |
0.196 | 0.224 | 0.250 | 0.274 | 0.297 | 0.316 | 0.335 | 0.351 | 0.361 | |||||||||||||||||||||||||||
27 months |
0.185 | 0.214 | 0.242 | 0.268 | 0.291 | 0.313 | 0.332 | 0.350 | 0.361 | |||||||||||||||||||||||||||
24 months |
0.173 | 0.204 | 0.233 | 0.260 | 0.285 | 0.308 | 0.329 | 0.348 | 0.361 | |||||||||||||||||||||||||||
21 months |
0.161 | 0.193 | 0.223 | 0.252 | 0.279 | 0.304 | 0.326 | 0.347 | 0.361 | |||||||||||||||||||||||||||
18 months |
0.146 | 0.179 | 0.211 | 0.242 | 0.271 | 0.298 | 0.322 | 0.345 | 0.361 | |||||||||||||||||||||||||||
15 months |
0.130 | 0.164 | 0.197 | 0.230 | 0.262 | 0.291 | 0.317 | 0.342 | 0.361 | |||||||||||||||||||||||||||
12 months |
0.111 | 0.146 | 0.181 | 0.216 | 0.250 | 0.282 | 0.312 | 0.339 | 0.361 | |||||||||||||||||||||||||||
9 months |
0.090 | 0.125 | 0.162 | 0.199 | 0.237 | 0.272 | 0.305 | 0.336 | 0.361 | |||||||||||||||||||||||||||
6 months |
0.065 | 0.099 | 0.137 | 0.178 | 0.219 | 0.259 | 0.296 | 0.331 | 0.361 | |||||||||||||||||||||||||||
3 months |
0.034 | 0.065 | 0.104 | 0.150 | 0.197 | 0.243 | 0.286 | 0.326 | 0.361 | |||||||||||||||||||||||||||
0 months |
— | — | 0.042 | 0.115 | 0.179 | 0.233 | 0.281 | 0.323 | 0.361 |
• | prior to the date of the transaction, the board of directors approved either the Business Combination or the transaction that resulted in the stockholder becoming an interested stockholder; |
• | upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or |
• | at or subsequent to the date of the transaction, the business combination is approved by the board of di-rectors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder. |
• | 1% of the total number of shares of New ESS Common Stock then outstanding; or |
• | the average weekly reported trading volume of New ESS Common Stock during the four (4) calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. |
• | the issuer of the securities that was formerly a shell company has ceased to be a shell company; |
• | the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; |
• | the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and |
• | at least one year has elapsed from the time that the issuer filed current Form 10-type information with the SEC reflecting its status as an entity that is not a shell company. |
• | 1% of the total shares of the Combined Entity’s common stock then outstanding; or |
• | the average weekly reported trading volume of the New ESS’ Common Stock during the four (4) calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. |
• | the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; |
• | the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and |
• | at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC, which is expected to be filed promptly after completion of the Business Combination, reflecting its status as an entity that is not a shell company. |
• | each person who is, or is expected to be, the beneficial owner of more than 5% of outstanding shares of STWO Ordinary Shares or of New ESS Common Stock; |
• | each of our current executive officers and directors; |
• | each person who will become an executive officer or director of New ESS; and |
• | all executive officers and directors of STWO as a group pre-Business Combination and all executive officers and directors of New ESS. |
After the Business Combination |
||||||||||||||||||||||||||||||||||||
Before the Business Combination |
Assuming No Redemption |
Assuming Maximum Redemption |
||||||||||||||||||||||||||||||||||
Name of Beneficial Owner |
Number of STWO Class A Ordinary Shares |
Number of STWO Class B Ordinary Shares |
% of Class |
Number of Shares of New ESS Common Stock |
% of Class |
% of Total Voting Power |
Number of shares of New ESS Common Stock |
% of Class |
% of Total Voting Power |
|||||||||||||||||||||||||||
Five Percent Holders |
||||||||||||||||||||||||||||||||||||
BASF Venture Capital GmbH (1) |
— | — | — | % | 7,571,878 | 5.0 | % | 5.0 | % | 7,571,878 | 5.9 | % | 5.9 | % | ||||||||||||||||||||||
Breakthrough Energy Ventures, LLC (2) |
— | — | — | % | 15,377,317 | 10.1 | % | 10.1 | % | 15,377,317 | 12.1 | % | 12.1 | % | ||||||||||||||||||||||
Cycle Capital Fund III, L.P. (3) |
— | — | — | % | 9,432,227 | 6.2 | % | 6.2 | % | 9,432,227 | 7.4 | % | 7.4 | % | ||||||||||||||||||||||
Pangaea Ventures Fund III, LP (4) |
— | — | — | % | 10,480,662 | 6.9 | % | 6.9 | % | 10,480,662 | 8.2 | % | 8.2 | % | ||||||||||||||||||||||
SB Energy Global Holdings One Ltd. (5) |
— | — | — | % | 26,127,200 | 17.1 | % | 17.1 | % | 26,127,200 | 20.5 | % | 20.5 | % | ||||||||||||||||||||||
Weiss Asset Management LP |
2,000,000 | — | 8.0 | % | 2,000,000 | 1.3 | % | 1.3 | % | 2,000,000 | 1.6 | % | 1.6 | % | ||||||||||||||||||||||
Glazer Asset Management LP |
2,113,988 | — | 8.5 | % | 2,113,988 | 1.4 | % | 1.4 | % | 2,113,988 | 1.7 | % | 1.7 | % | ||||||||||||||||||||||
ACON S2 Sponsor, L.L.C. |
— | 6,100,000 | 97.9 | % | 6,100,000 | 4.0 | % | 4.0 | % | 6,100,000 | 4.8 | % | 4.8 | % | ||||||||||||||||||||||
Directors and Executive Officers of STWO |
||||||||||||||||||||||||||||||||||||
Adam Kriger (10) |
— | — | — | % | — | — | % | — | % | — | — | — | ||||||||||||||||||||||||
John Roush (10) |
— | — | — | % | — | — | % | — | % | — | — | — | ||||||||||||||||||||||||
Jonathan Ginns (10) |
— | — | — | % | — | — | % | — | % | — | — | — | ||||||||||||||||||||||||
Daniel Jinich (10) |
— | — | — | % | — | — | % | — | % | — | — | — | ||||||||||||||||||||||||
Sarah Kirshbaum Levy (10) |
— | 50,000 | * | % | 50,000 | * | % | * | % | 50,000 | * | % | * | % | ||||||||||||||||||||||
Ryan Shadrick Wilson (10) |
— | 50,000 | * | % | 50,000 | * | % | * | % | 50,000 | * | % | * | % | ||||||||||||||||||||||
Janie Goddard (10) |
— | 50,000 | * | % | 50,000 | * | % | * | % | 50,000 | * | % | * | % | ||||||||||||||||||||||
STWO Sponsor, officers and directors as a group |
— | 6,250,000 | 100 | % | 6,250,000 | 4.1 | % | 4.1 | % | 6,250,000 | 4.9 | % | 4.9 | % | ||||||||||||||||||||||
Directors and Executive Officers of New ESS After the Closing (9) |
||||||||||||||||||||||||||||||||||||
Eric Dresselhuys |
— | — | — | % | — | — | % | — | % | — | — | % | — | % | ||||||||||||||||||||||
Craig E. Evans (6) |
— | — | — | % | 4,469,381 | 2.9 | % | 2.9 | % | 4,469,381 | 3.5 | % | 3.5 | % | ||||||||||||||||||||||
Amir Moftakhar (7) |
— | — | — | % | 579,826 | * | * | 579,826 | * | * | ||||||||||||||||||||||||||
Julia Song (8) |
— | — | — | % | 1,930,648 | 1.3 | % | 1.3 | % | 1,930,648 | 1.5 | % | 1.5 | % | ||||||||||||||||||||||
All Directors and Executive Officers of New ESS as a Group (4 Individuals) |
— | — | — | % | 6,979,855 | 4.6 | % | 4.6 | % | 6,979,855 | 5.5 | % | 5.5 | % |
* | Represents beneficial ownership of less than 1%. |
(1) | Consists of shares to be held directly by BASF Ventures Capital GmbH upon Closing. The address for BASF Ventures Capital GmbH is BE 01, Benckiserplatz 1, Ludwigshagen/Rhine, Germany 67059. |
(2) | Consists of shares to be held directly by Breakthrough Energy Ventures, LLC upon Closing. Breakthrough Energy Ventures, LLC is managed by Breakthrough Energy Investments, LLC, its manager, which may be deemed to have beneficial ownership over the shares and exercises voting and investment control through its investment committee. The address for each of Breakthrough Energy Ventures, LLC and Breakthrough Energy Investments, LLC is 250 Summer Street, 4th Floor, Boston, MA 02210. |
(3) | Consists of shares to be held directly by Cycle Capital Fund III, L.P. (“Cycle Capital Fund III”) upon Closing. Cycle Capital Management II Inc., is the general manager of Cycle Capital III, L.P., which is the general partner of Cycle Capital Fund III. Andrée-Lise Methot and Claude Vachet, as managing partners of Cycle Capital III, L.P., can be deemed to share beneficial ownership over the shares held by Cycle Capital Fund III. The address for each of the Cycle Capital entities, Andrée-Lise Methot and Claude Vachet is 100 Sherbrooke West, Suite 1610, Montreal, Québec, Canada H3A 3G4. |
(4) | Consists of shares to be held directly by Pangaea Venture Funds III, LP upon Closing.Pangaea Venture Funds III, LP is managed by its general partner, Pangaea Ventures III LLC (“Pangaea GP”). Pangaea GP is managed and controlled by Vicap Ltd., PSee Ventures LLC and Monoc Capital Ltd., which are owned and controlled by Chris Erickson, Purnesh Seegopaul and Andrew Haughian, respectively. The address for each of these entities and individuals is c/o Pangaea Ventures III LLC, 5080 North 40th Street, Unit 105, Phoenix, AZ 85018. |
(5) | Consists of shares to be held directly by SB Energy Global Holdings One Ltd., an affiliate of Softbank Group Corp., upon Closing. The address for SB Energy Global Holdings One Ltd. is 69 Grosvenor Street, London, United Kingdom, W1K 3JP. The address of SoftBank Group Corporation is 1-9-1, Minato-ku, Tokyo 105-7303 Japan. |
(6) | Consists of (i) 4,450,843 shares held by Mr. Evans and (ii) options to purchase 18,538 shares exercisable within 60 days of June 30, 2021. |
(7) | Consists of (i) 263,620 shares held by Mr. Moftakhar and (ii) options to purchase 316,206 shares exercisable within 60 days of June 30, 2021. |
(8) | Consists of (i) 1,855,601 shares held by Dr. Song and (ii) options to purchase 75,047 shares exercisable within 60 days of June 30, 2021. |
(9) | Unless otherwise indicated, the address of each of New ESS’ directors and executive officers is c/o ESS Tech, Inc., 26440 SW Parkway Ave., Bldg. 83, Wilsonville, OR 97070. |
(10) | Does not include any shares indirectly owned by this individual as a result of their membership interest in our sponsor. |
Page |
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ESS Tech, Inc. Audited Financial Statements |
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F-2 |
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F-3 |
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F-4 |
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F-5 |
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F-6 |
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F-7 |
F-29 |
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F-30 |
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F-31 |
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F-32 |
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F-33 |
F-47 |
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F-48 |
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F-49 |
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F-50 |
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F-51 |
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F-52 |
F-73 |
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F-74 |
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F-75 |
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F-76 |
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F-77 |
2020 |
2019 |
|||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 4,901 | $ | 18,290 | ||||
Restricted cash |
1,167 | — | ||||||
Prepaid expenses and other current assets |
793 | 658 | ||||||
|
|
|
|
|||||
Total current assets |
6,861 | 18,948 | ||||||
Property and equipment, net |
1,836 | 1,663 | ||||||
Restricted cash |
326 | 529 | ||||||
|
|
|
|
|||||
TOTAL ASSETS |
$ | 9,023 | $ | 21,140 | ||||
|
|
|
|
|||||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT |
||||||||
CURRENT LIABILITIES: |
||||||||
Accounts payable |
$ | 522 | $ | 697 | ||||
Accrued and other current liabilities |
2,194 | 1,826 | ||||||
Notes payable |
5,678 | 365 | ||||||
|
|
|
|
|||||
Total current liabilities |
8,394 | 2,888 | ||||||
Notes payable |
19 | 463 | ||||||
Customer deposits |
2,258 | 2,207 | ||||||
Derivative liabilities |
22,911 | 11,379 | ||||||
Warrant liabilities |
3,329 | 1,989 | ||||||
|
|
|
|
|||||
TOTAL LIABILITIES |
36,911 | 18,926 | ||||||
COMMITMENTS AND CONTINGENCIES (NOTE 9) |
||||||||
REDEEMABLE CONVERTIBLE PREFERRED STOCK: |
||||||||
Redeemable preferred stock, $0.0001 par value, 61,436,037 shares authorized, 32,865,949 shares issued and outstanding as of December 31, 2020 and 2019, liquidation preferences of $46,391 as of December 31, 2020 and 2019 |
34,372 | 34,372 | ||||||
STOCKHOLDERS’ DEFICIT: |
||||||||
Common stock ($0.0001 par value; 79,000,000 shares authorized as of December 31, 2020 and 2019, 7,134,668 and 7,060,668 shares issued and outstanding as of December 31, 2020 and 2019, respectively) |
1 | 1 | ||||||
Common stock warrants |
153 | 153 | ||||||
Additional paid-in capital |
1,079 | 762 | ||||||
Accumulated deficit |
(63,493 | ) | (33,074 | ) | ||||
|
|
|
|
|||||
Total stockholders’ deficit |
(62,260 | ) | (32,158 | ) | ||||
|
|
|
|
|||||
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT |
$ | 9,023 | $ | 21,140 | ||||
|
|
|
|
2020 |
2019 |
|||||||
Operating expenses |
||||||||
Research and development |
$ | 12,896 | $ | 6,660 | ||||
Sales and marketing |
1,158 | 908 | ||||||
General and administrative |
3,338 | 2,321 | ||||||
|
|
|
|
|||||
Total operating expenses |
17,392 | 9,889 | ||||||
Loss from operations |
(17,392 | ) | (9,889 | ) | ||||
Other income (expenses) |
||||||||
Interest expense, net |
(132 | ) | (1,019 | ) | ||||
(Loss) on revaluation of warrant liabilities |
(1,296 | ) | (341 | ) | ||||
(Loss) on revaluation of derivative liabilities |
(11,532 | ) | (19 | ) | ||||
Other expense, net |
(67 | ) | (199 | ) | ||||
|
|
|
|
|||||
Total other income (expenses) |
(13,027 | ) | (1,578 | ) | ||||
|
|
|
|
|||||
Net loss and comprehensive loss |
(30,419 | ) | (11,467 | ) | ||||
Series B Redeemable Preferred Stock accretion |
— | (79 | ) | |||||
|
|
|
|
|||||
Net loss and comprehensive loss to Common Stockholders |
$ | (30,419 | ) | $ | (11,546 | ) | ||
|
|
|
|
|||||
Net loss per share - basic and diluted |
$ | (4.28 | ) | $ | (1.64 | ) | ||
Weighted average shares used in per share calculation - basic and diluted |
7,108,389 | 7,043,575 |
Redeemable Convertible Preferred Stock |
Common Stock | Common Stock Warrants |
Additional Paid-In Capital |
Accumulated Deficit |
Total Stockholders’ Deficit |
|||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
Balance as of December 31, 2018 |
16,590,261 | $ | 15,897 | 7,030,668 | $ | 1 | $ | 153 | $ | 660 | $ | (21,607 | ) | $ | (20,793 | ) | ||||||||||||||||
Stock options exercised |
— | — | 30,000 | — | — | 6 | — | 6 | ||||||||||||||||||||||||
Issuance of Series C Redeemable Convertible Preferred Stock |
16,275,688 | 18,396 | — | — | — | — | — | — | ||||||||||||||||||||||||
Series B Redeemble Convertible Preferred Stock accretion |
— | 79 | — | — | — | (79 | ) | — | (79 | ) | ||||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | — | 175 | — | 175 | ||||||||||||||||||||||||
Net loss |
— | — | — | — | — | (11,467 | ) | (11,467 | ) | |||||||||||||||||||||||
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|
|
|
|
|
|
|||||||||||||||||
Balance as of December 31, 2019 |
32,865,949 | 34,372 | 7,060,668 | 1 | 153 | 762 | (33,074 | ) | (32,158 | ) | ||||||||||||||||||||||
Stock options exercised |
— | — | 74,000 | — | — | 7 | — | 7 | ||||||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | — | 310 | — | 310 | ||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | (30,419 | ) | (30,419 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance as of December 31, 2020 |
32,865,949 | $ | 34,372 | 7,134,668 | $ | 1 | $ | 153 | $ | 1,079 | $ | (63,493 | ) | $ | (62,260 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
2019 |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net loss |
$ | (30,419 | ) | $ | (11,467 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Depreciation |
436 | 260 | ||||||
Non-cash interest expense |
91 | 976 | ||||||
Stock-based compensation expense |
310 | 175 | ||||||
Loss on extinguishment of debt |
62 | 116 | ||||||
Change in fair value of warrant liabilities |
1,296 | 341 | ||||||
Change in fair value of derivative liabilities |
11,532 | 19 | ||||||
Changes in operating assets and liabilities: |
||||||||
Grant receivable |
— | 423 | ||||||
Prepaid expenses and other current assets |
(135 | ) | (499 | ) | ||||
Accounts payable |
(221 | ) | 521 | |||||
Accrued and other current liabilities |
352 | 1,122 | ||||||
Customer deposits |
51 | 1,338 | ||||||
|
|
|
|
|||||
Net cash used in operating activities |
(16,645 | ) | (6,675 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Purchases of property and equipment |
(502 | ) | (851 | ) | ||||
|
|
|
|
|||||
Net cash used in investing activities |
(502 | ) | (851 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Borrowings on notes payable |
4,936 | — | ||||||
Principal payments on notes payable |
(221 | ) | (262 | ) | ||||
Borrowing on convertible notes payable, net of debt issuance cost |
— | 2,722 | ||||||
Proceeds from stock options exercised |
7 | 6 | ||||||
Proceeds from sale of redeemable convertible preferred stock, net of issuance costs |
— | 19,788 | ||||||
|
|
|
|
|||||
Net cash provided by financing activities |
4,722 | 22,254 | ||||||
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
(12,425 | ) | 14,728 | |||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR |
18,819 | 4,091 | ||||||
|
|
|
|
|||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR |
$ | 6,394 | $ | 18,819 | ||||
|
|
|
|
|||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
||||||||
Cash paid during the year for: |
||||||||
Interest |
$ | 111 | $ | 38 | ||||
Non-cash investing and financing transactions: |
||||||||
Property and equipment purchases financed with term loan |
$ | 52 | $ | 79 | ||||
Conversion of convertible notes payable and accrued interest to Series B Redeemable Convertible Preferred Stock |
$ | — | $ | 9,845 | ||||
Purchase of property and equipment included in accounts payable and accrued and other current liabilities |
$ | 55 | $ | 87 | ||||
Cash and cash equivalents |
$ | 4,901 | $ | 18,290 | ||||
Restricted cash, current |
1,167 | — | ||||||
Restricted cash, non-current |
326 | 529 | ||||||
|
|
|
|
|||||
Total cash, cash equivalents and restricted cash shown in the statements of cash flows |
$ | 6,394 | $ | 18,819 | ||||
|
|
|
|
1. |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Emerging |
Growth Company |
Liquidity |
and Going concern |
2. |
CUSTOMER DEPOSITS |
2020 |
2019 |
|||||||
Customer deposits - beginning balance |
$ | 2,207 | $ | 869 | ||||
Additions |
506 | 1,983 | ||||||
Cancellations |
(455 | ) | (645 | ) | ||||
|
|
|
|
|||||
Customer deposits - ending balance |
$ | 2,258 | $ | 2,207 | ||||
|
|
|
|
3. |
LOSS PER SHARE |
2020 |
2019 |
|||||||
Net loss |
$ | (30,419 | ) | $ | (11,467 | ) | ||
Series B Redeemable Convertible Preferred Stock accretion |
— | (79 | ) | |||||
|
|
|
|
|||||
Net Loss to Common Stockholders |
$ | (30,419 | ) | $ | (11,546 | ) | ||
|
|
|
|
|||||
Weighted-average shares outstanding – Basic and Diluted |
7,108,389 | 7,043,575 | ||||||
|
|
|
|
|||||
Net loss per share – Basic and Diluted |
$ | (4.28 | ) | $ | (1.64 | ) |
2020 |
2019 |
|||||||
Stock options |
3,891,768 | 2,104,223 | ||||||
Preferred stock |
32,865,949 | 32,865,949 | ||||||
Warrants |
1,738,382 | 1,668,382 | ||||||
|
|
|
|
|||||
38,496,099 | 36,638,554 | |||||||
|
|
|
|
4. |
PREPAID EXPENSES AND OTHER CURRENT ASSETS |
2020 |
2019 |
|||||||
Vendor advances |
$ | 473 | $ | 507 | ||||
IT services and other office expenses |
157 | 50 | ||||||
Insurance |
107 | 41 | ||||||
Other |
56 | 60 | ||||||
|
|
|
|
|||||
Total prepaids and other current assets |
$ | 793 | $ | 658 | ||||
|
|
|
|
5. |
PROPERTY AND EQUIPMENT, NET |
2020 |
2019 |
|||||||
Machinery and equipment |
$ | 2,217 | $ | 1,430 | ||||
Furniture and fixtures |
90 | 60 | ||||||
Leasehold improvements |
677 | 496 | ||||||
Construction in process |
— | 389 | ||||||
|
|
|
|
|||||
Total property and equipment |
2,984 | 2,375 | ||||||
Less accumulated depreciation |
(1,148 | ) | (712 | ) | ||||
|
|
|
|
|||||
Total property and equipment, net |
$ | 1,836 | $ | 1,663 | ||||
|
|
|
|
6. |
ACCRUED AND OTHER CURRENT LIABILITIES |
2020 |
2019 |
|||||||
Payroll and related benefits |
$ | 777 | $ | 351 | ||||
Materials and related purchases |
464 | 474 | ||||||
Deferred rent |
462 | 524 | ||||||
Professional & consulting fees |
248 | 103 | ||||||
Customer refund |
— | 352 | ||||||
Other |
243 | 22 | ||||||
|
|
|
|
|||||
Total accrued and other current liabilities |
$ | 2,194 | $ | 1,826 | ||||
|
|
|
|
7. |
LEASES |
2021 |
$ | 840 | ||
2022 |
865 | |||
2023 |
891 | |||
2024 |
917 | |||
2025 |
157 | |||
|
|
|||
Future Operating Lease Payments |
$ | 3,670 | ||
|
|
8. |
BORROWINGS |
2020 |
2019 |
|||||||
Notes payable |
$ | 4,761 | $ | 828 | ||||
PPP loan |
936 | — | ||||||
|
|
|
|
|||||
Total notes payable |
5,697 | 828 | ||||||
Less current portion of notes payable |
5,678 | 365 | ||||||
|
|
|
|
|||||
Long-term notes payable, net of current portion |
$ | 19 | $ | 463 | ||||
|
|
|
|
2021 |
$ | 48 | ||
2022 |
18 | |||
2023 |
1 | |||
|
|
|||
Total principal payments on notes payable |
$ | 67 | ||
|
|
9. |
COMMITMENTS AND CONTINGENCIES |
10. |
REDEEMABLE CONVERTIBLE PREFERRED STOCK |
Shares Authorized |
Shares Issued and Outstanding |
Issuance Price |
Net Carrying Value |
Aggregate Liquidation Preference |
||||||||||||||||
Series A |
5,941,109 | 5,941,109 | $ | 0.56 | $ | 3,228 | $ | 3,321 | ||||||||||||
Series B |
12,011,923 | 10,649,152 | 1.22848 | 12,746 | 13,082 | |||||||||||||||
Series C- 1 |
16,345,688 | 16,275,688 | 1.84248 | 18,398 | 29,988 | |||||||||||||||
Series C- 2 |
27,137,317 | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
61,436,037 | 32,865,949 | $ | 34,372 | $ | 46,391 | |||||||||||||||
|
|
|
|
|
|
|
|
2020 |
2019 |
|||||||
Common Stock Warrants |
305,611 | 305,611 | ||||||
Series B Preferred Warrants |
1,362,771 | 1,362,771 | ||||||
Series C Preferred Warrants |
70,000 | — | ||||||
|
|
|
|
|||||
Total Warrants |
1,738,382 | 1,668,382 | ||||||
|
|
|
|
At issuance date |
||||||||||||
Common Warrants |
Preferred B warrants |
Preferred C-1 warrants |
||||||||||
Expected volatility |
80 | % | 80 | % | 80 | % | ||||||
Expected term (in years) |
5.00 | 5.00 | 3.75 | |||||||||
Risk-free interest rate |
2.20 | % | 2.20 - 2.73 |
% | 0.29 | % | ||||||
Dividend yield |
0 | % | 0 | % | 0 | % |
As of December 31, 2020 |
||||||||||
Common Warrants |
Preferred B warrants |
Preferred C-1 warrants |
||||||||
Expected volatility |
N/A | 80 | % | 80 | % | |||||
Expected term (in years) |
N/A | 2.00 | 2.00 | |||||||
Risk-free interest rate |
N/A | 0.13 | % | 0.13 | % | |||||
Dividend yield |
N/A | 0 | % | 0 | % |
As of December 31, 2019 |
||||||||||
Common Warrants |
Preferred B warrants |
Preferred C-1 warrants |
||||||||
Expected volatility |
N/A | 80 | % | 80 | % | |||||
Expected term (in years) |
N/A | 4.00 | 4.00 | |||||||
Risk-free interest rate |
N/A | 1.66 | % | 1.66 | % | |||||
Dividend yield |
N/A | 0 | % | 0 | % |
11. |
COMMON STOCK |
12. |
STOCK-BASED COMPENSATION PLAN |
2020 |
2019 |
|||||||
Shares Available for future grant |
5,993,465 | 7,855,010 | ||||||
|
|
|
|
Options Outstanding | ||||||||||||||||
Number of shares |
Weighted average exercise price |
Weighted average remaining contractual term (years) |
Aggregate intrinsic values ($‘000s) |
|||||||||||||
Balances as of December 31, 2018 |
2,238,598 | $ | 0.37 | 8.83 | $ | 332 | ||||||||||
Granted |
17,500 | $ | 0.45 | |||||||||||||
Exercised |
(30,000) | $ | 0.22 | |||||||||||||
Forfeited |
(121,875) | $ | 0.45 | |||||||||||||
|
|
|||||||||||||||
Balances as of December 31, 2019 |
2,104,223 | $ | 0.37 | 7.82 | $ | 821 | ||||||||||
Granted |
2,221,278 | $ | 0.49 | |||||||||||||
Exercised |
(74,000) | $ | 0.09 | |||||||||||||
Forfeited |
(359,733) | $ | 0.43 | |||||||||||||
|
|
|||||||||||||||
Balances as of December 31, 2020 |
3,891,768 | $ | 0.44 | 8.23 | $ | 4,333 | ||||||||||
|
|
|||||||||||||||
Options vested and exercisable - December 31, 2019 |
1,424,380 | $ | 0.34 | 7.48 | $ | 604 | ||||||||||
|
|
|||||||||||||||
Options vested and exercisable - December 31, 2020 |
1,918,067 | $ | 0.39 | 7.21 | $ | 2,215 | ||||||||||
|
|
2020 |
2019 |
|||||||
Risk-free rate |
0.93 | % | 2.63 | % | ||||
Expected dividends |
— | — | ||||||
Expected term |
6 years | 6 years | ||||||
Expected volatility |
71.06 | % | 76.77 | % |
2020 |
2019 |
|||||||
Research and development |
$ | 79 | $ | 59 | ||||
Sales and marketing |
47 | 38 | ||||||
General and administrative |
184 | 78 | ||||||
|
|
|
|
|||||
Total stock-based compensation |
$ | 310 | $ | 175 | ||||
|
|
|
|
13. |
FAIR VALUE MEASUREMENTS |
December 31, 2020 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: |
||||||||||||||||
Cash equivalents and restricted cash: |
||||||||||||||||
Money market funds |
$ | 3,046 | $ | — | $ | — | $ | 3,046 | ||||||||
Certificate of deposit |
— | 326 | — | 326 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Assets |
$ | 3,046 | $ | 326 | $ | — | $ | 3,372 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities: |
||||||||||||||||
Derivative liabilities |
$ | — | $ | — | $ | 22,911 | $ | 22,911 | ||||||||
Warrant liabilities |
— | — | 3,329 | 3,329 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Liabilities |
$ | — | $ | — | $ | 26,240 | $ | 26,240 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
December 31, 2019 | ||||||||||||||||
Assets: |
||||||||||||||||
Restricted cash: |
||||||||||||||||
Certificate of deposit |
$ | — | $ | 529 | $ | — | $ | 529 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Assets |
$ | — | $ | 529 | $ | — | $ | 529 | ||||||||
|
|
|
|
|
|
|
|
December 31, 2020 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Liabilities: |
||||||||||||||||
Derivative liabilities |
$ | — | $ | — | $ | 11,379 | $ | 11,379 | ||||||||
Warrant liabilities |
— | — | 1,989 | 1,989 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Liabilities |
$ | — | $ | — | $ | 13,368 | $ | 13,368 | ||||||||
|
|
|
|
|
|
|
|
2020 |
2019 |
|||||||
Warrant liabilities: |
||||||||
Beginning balance January 1 |
$ | 1,989 | $ | 1,648 | ||||
Change in fair value |
1,296 | 341 | ||||||
Fair value of warrants issued |
44 | — | ||||||
|
|
|
|
|||||
Ending balance December 31 |
3,329 | 1,989 | ||||||
|
|
|
|
|||||
2018 Convertible Note Automatic Conversion Rights liability: |
||||||||
Beginning balance January 1 |
— | 9 | ||||||
Change in fair value |
— | 19 | ||||||
Fair value of derivatives extinguished upon note conversion |
— | (28 | ) | |||||
|
|
|
|
|||||
Ending balance December 31 |
— | — | ||||||
|
|
|
|
|||||
Series C-2 Convertible Preferred Stock Issuance Right liability: |
||||||||
Beginning balance January 1 |
11,379 | — | ||||||
Change in fair value |
11,532 | — | ||||||
Fair value of derivatives issued |
— | 11,379 | ||||||
|
|
|
|
|||||
Ending balance December 31 |
22,911 | 11,379 | ||||||
|
|
|
|
|||||
Total |
$ | 26,240 | $ | 13,368 | ||||
|
|
|
|
14. |
INCOME TAXES |
As of December 31, |
||||||||
2020 |
2019 |
|||||||
Deferred Tax Assets: |
||||||||
Net operating losses |
$ | 11,566 | $ | 7,365 | ||||
Tax credit carryforward |
47 | 12 | ||||||
Other |
837 | 513 | ||||||
|
|
|
|
|||||
Deferred tax assets |
12,450 | 7,890 | ||||||
Valuation allowance |
(12,450 | ) | (7,890 | ) | ||||
|
|
|
|
|||||
Deferred tax assets, net of valuation allowance |
$ | — | $ | — | ||||
|
|
|
|
Years Ended December 31, |
||||||||
2020 |
2019 |
|||||||
Tax computed at federal statutory rate |
21.0 | % | 21.0 | % | ||||
State tax, net of federal tax benefit |
3.0 | 4.4 | ||||||
Stock compensation |
(0.2 | ) | (0.2 | ) | ||||
Permanent differences |
(8.9 | ) | (2.3 | ) | ||||
163(I) Interest |
— | (0.9 | ) | |||||
R&D tax credits |
0.1 | 0.1 | ||||||
Other |
— | (0.1 | ) | |||||
Valuation allowance |
(15.0 | ) | (22.0 | ) | ||||
|
|
|
|
|||||
Income tax expense (benefit) |
0.0 | % | 0.0 | % | ||||
|
|
|
|
Balance as of December 31, 2018 |
$ | — | ||
Additions in 2019 |
12 | |||
|
|
|||
Balance as of December 31, 2019 |
12 | |||
Additions in 2020 |
35 | |||
|
|
|||
Balance as of December 31, 2020 |
$ | 47 | ||
|
|
15. |
DEFINED CONTRIBUTION PLAN |
16. |
RELATED PARTY TRANSACTIONS |
17. |
SUBSEQUENT EVENTS |
As of |
||||||||
June 30, 2021, |
December 31, |
|||||||
(Unaudited) |
2020 |
|||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 1,822 | $ | 4,901 | ||||
Restricted cash |
1,217 | 1,167 | ||||||
Prepaid expenses and other current assets |
3,390 | 793 | ||||||
Total current assets |
6,429 | 6,861 | ||||||
Property and equipment, net |
1,737 | 1,836 | ||||||
Restricted cash |
75 | 326 | ||||||
TOTAL ASSETS |
$ | 8,241 | $ | 9,023 | ||||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT |
||||||||
CURRENT LIABILITIES: |
||||||||
Accounts payable |
$ | 1,858 | $ | 522 | ||||
Accrued and other current liabilities |
5,185 | 2,194 | ||||||
Notes payable |
5,530 | 5,678 | ||||||
Total current liabilities |
12,573 | 8,394 | ||||||
Notes payable |
11 | 19 | ||||||
Other non-current liabilities |
3,399 | 2,258 | ||||||
Derivative liabilities |
211,747 | 22,911 | ||||||
Warrant liabilities |
22,860 | 3,329 | ||||||
Total liabilities |
250,590 | 36,911 | ||||||
COMMITMENTS AND CONTINGENCIES (NOTE 5) |
||||||||
REDEEMABLE CONVERTIBLE PREFERRED STOCK: |
||||||||
Redeemable convertible preferred stock ($0.0001 par value, 62,072,064 and 61,436,037 shares authorized, 36,809,092 and 32,865,949 shares issued and outstanding, liquidation preferences of $58,009 and $46,391 as of June 30, 2021 and December 31, 2020, respectively) |
64,257 | 34,372 | ||||||
STOCKHOLDERS’ DEFICIT: |
||||||||
Common stock ($0.0001 par value; 79,000,000 shares authorized as of June 30, 2021 and December 31, 2020 8,784,265 and 7,134,668 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively) |
1 | 1 | ||||||
Common stock warrants |
153 | 153 | ||||||
Additional paid-in capital |
2,093 | 1,079 | ||||||
Accumulated deficit |
(308,853 | ) | (63,493 | ) | ||||
Total stockholders’ deficit |
(306,606 | ) | (62,260 | ) | ||||
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT |
$ | 8,241 | $ | 9,023 | ||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Operating expenses |
||||||||||||||||
Research and development |
$ | 6,222 | $ | 2,438 | $ | 11,874 | $ | 4,968 | ||||||||
Sales and marketing |
701 | 272 | 1,213 | 597 | ||||||||||||
General and administrative |
3,231 | 849 | 5,351 | 1,548 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
10,154 | 3,559 | 18,438 | 7,113 | ||||||||||||
Loss from operations |
(10,154 | ) | (3,559 | ) | (18,438 | ) | (7,113 | ) | ||||||||
Other income (expense): |
||||||||||||||||
Interest expense, net |
(54 | ) | (50 | ) | (111 | ) | (68 | ) | ||||||||
Gain (loss) on revaluation of warrant liabilities |
(6,378 | ) | 10 | (14,804 | ) | 54 | ||||||||||
Gain (loss) on revaluation of derivative liabilities |
(73,847 | ) | 1,405 | (211,988 | ) | 3,760 | ||||||||||
Other expense, net |
(9 | ) | — | (19 | ) | (62 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other income (expense) |
(80,288 | ) | 1,365 | (226,922 | ) | 3,684 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss and comprehensive loss |
$ | (90,442 | ) | $ | (2,194 | ) | $ | (245,360 | ) | $ | (3,429 | ) | ||||
|
|
|
|
|
|
|
|
|||||||||
Net loss per share—basic and diluted |
$ | (10.31 | ) | $ | (0.31 | ) | $ | (29.66 | ) | $ | (0.48 | ) | ||||
Shares used in per share calculation—basic and diluted |
8,768,051 | 7,100,668 | 8,271,509 | 7,098,016 |
Three Months Ended June 30, 2020 |
||||||||||||||||||||||||||||||||||||||||
Redeemable Convertible Preferred Stock |
Common Stock |
Common Stock Warrants |
Additional Paid-In Capital |
Accumulated Deficit |
Total Stockholders’ Deficit |
|||||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2020 |
32,865,949 | $ | 34,372 | 7,100,668 | $ | 1 | $ | 153 | $ | 878 | $ | (34,309 | ) | $ | (33,277 | ) | ||||||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | — | 64 | — | 64 | ||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | (2,194 | ) | (2,194 | ) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Balance as of June 30, 2020 |
32,865,949 | $ | 34,372 | 7,100,668 | $ | 1 | $ | 153 | $ | 942 | $ | (36,503 | ) | $ | (35,407 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Six Months Ended June 30, 2020 |
||||||||||||||||||||||||||||||||||||||||
Redeemable Convertible Preferred Stock |
Common Stock |
Common Stock Warrants |
Additional Paid-In Capital |
Accumulated Deficit |
Total Stockholders’ Deficit |
|||||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2019 |
32,865,949 | $ | 34,372 | 7,060,668 | $ | 1 | $ | 153 | $ | 762 | $ | (33,074 | ) | $ | (32,158 | ) | ||||||||||||||||||||||||
Stock options exercised |
— | — | 40,000 | — | — | 6 | — | 6 | ||||||||||||||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | — | 174 | — | 174 | ||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | (3,429 | ) | (3,429 | ) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Balance as of June 30, 2020 |
32,865,949 | $ | 34,372 | 7,100,668 | $ | 1 | $ | 153 | $ | 942 | $ | (36,503 | ) | $ | (35,407 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Three Months Ended June 30, 2021 |
||||||||||||||||||||||||||||||||||||||||
Redeemable Convertible Preferred Stock |
Common Stock |
Common Stock Warrants |
Additional Paid-In Capital |
Accumulated Deficit |
Total Stockholders’ Deficit |
|||||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2021 |
36,807,955 | $ | 64,244 | 8,749,959 | $ | 1 | $ | 153 | $ | 1,726 | $ | (218,411 | ) | $ | (216,531 | ) | ||||||||||||||||||||||||
Stock options exercised |
— | — | 33,595 | — | — | 136 | — | 136 | ||||||||||||||||||||||||||||||||
Warrants exercised |
1,137 | 13 | 711 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | — | 231 | — | 231 | ||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | (90,442 | ) | (90,442 | ) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Balance as of June 30, 2021 |
36,809,092 | $ | 64,257 | 8,784,265 | $ | 1 | $ | 153 | $ | 2,093 | $ | (308,853 | ) | $ | (306,606 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Six Months Ended June 30, 2021 |
||||||||||||||||||||||||||||||||||||||||
Redeemable Convertible Preferred Stock |
Common Stock |
Common Stock Warrants |
Additional Paid-In Capital |
Accumulated Deficit |
Total Stockholders’ Deficit |
|||||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2020 |
32,865,949 | $ | 34,372 | 7,134,668 | $ | 1 | $ | 153 | $ | 1,079 | $ | (63,493 | ) | $ | (62,260 | ) | ||||||||||||||||||||||||
Issuance of Series C-2 Redeemable Convertible Preferred Stock |
3,900,988 | 29,516 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Stock options exercised |
— | — | 1,648,886 | — | — | 654 | — | 654 | ||||||||||||||||||||||||||||||||
Warrants exercised |
42,155 | 369 | 711 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | — | 360 | — | 360 | ||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | (245,360 | ) | (245,360 | ) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Balance as of June 30, 2021 |
36,809,092 | $ | 64,257 | 8,784,265 | $ | 1 | $ | 153 | $ | 2,093 | $ | (308,853 | ) | $ | (306,606 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For six months ended June 30, |
||||||||
2021 |
2020 |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net loss |
$ | (245,360 | ) | $ | (3,429 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Depreciation |
264 | 197 | ||||||
Non-cash interest expense |
46 | 44 | ||||||
Stock-based compensation expense |
360 | 174 | ||||||
Loss on extinguishment of debt |
— | 62 | ||||||
Change in fair value of warrant liabilities |
14,804 | (54 | ) | |||||
Change in fair value of derivative liabilities |
211,988 | (3,760 | ) | |||||
Changes in operating assets and liabilities: |
||||||||
Prepaid expenses and other current assets |
(2,597 | ) | (200 | ) | ||||
Accounts payable |
1,382 | (325 | ) | |||||
Accrued and other current liabilities |
2,948 | (79 | ) | |||||
Other non-current liabilities |
1,141 | — | ||||||
|
|
|
|
|||||
Net cash used in operating activities |
(15,024 | ) | (7,370 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Purchases of property and equipment |
(173 | ) | (427 | ) | ||||
|
|
|
|
|||||
Net cash used in investing activities |
(173 | ) | (427 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Principal payments on notes payable |
(198 | ) | (136 | ) | ||||
Proceeds from sale of redeemable convertible preferred stock, net of issuance costs |
11,461 | — | ||||||
Borrowing on notes payable, net of debt issuance cost |
— | 4,936 | ||||||
Proceeds from stock options exercised |
654 | 6 | ||||||
|
|
|
|
|||||
Net cash provided by financing activities |
11,917 | 4,806 | ||||||
|
|
|
|
|||||
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
(3,280 | ) | (2,991 | ) | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD |
6,394 | 18,819 | ||||||
|
|
|
|
|||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD |
$ | 3,114 | $ | 15,828 | ||||
|
|
|
|
|||||
SUPPLEMENTAL DISCLOSURE OF CASHFLOW INFORMATION: |
||||||||
Cash paid during the year for: |
||||||||
Interest |
$ | 112 | $ | 28 | ||||
Non-cash investing and financing transactions: |
||||||||
Property and equipment purchases financed with term loan |
$ | — | $ | 52 | ||||
Non-cash extinguishment of derivative liabilities upon sale of Series C-2 redeemable convertible preferred stock, net of amount allocated to warrants |
$ | 18,055 | $ | — | ||||
Non-cash extinguishment of warrant liabilities upon exercise of Series B and Series C-2 redeemable convertible preferred stock warrants |
$ | 369 | $ | — | ||||
Purchase of property and equipment included in accounts payable and accrued and other current liabilities |
$ | 47 | $ | 15 | ||||
Cash and cash equivalents |
$ | 1,822 | $ | 15,266 | ||||
Restricted cash, current |
1,217 | 30 | ||||||
Restricted cash, non-current |
75 | 532 | ||||||
|
|
|
|
|||||
Total cash, cash equivalents and restricted cash shown in the statements of cash flows |
$ | 3,114 | $ | 15,828 | ||||
|
|
|
|
1. |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
2. |
CUSTOMER DEPOSITS |
June 30, 2021 |
December 31, 2020 |
|||||||
Customer deposits, beginning balance |
$ | 2,258 | $ | 2,207 | ||||
Additions |
552 | 506 | ||||||
Cancellations |
— | (455 | ) | |||||
|
|
|
|
|||||
Customer deposits, ending balance |
$ | 2,810 | $ | 2,258 | ||||
|
|
|
|
3. |
LOSS PER SHARE |
Three Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Net loss |
$ | (90,442 | ) | $ | (2,194 | ) | ||
Weighted- average shares outstanding – Basic and Diluted |
8,768,051 | 7,100,668 | ||||||
Net loss per share – Basic and Diluted |
$ | (10.31 | ) | $ | (0.31 | ) |
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Net loss |
$ | (245,360 | ) | $ | (3,429 | ) | ||
Weighted- average shares outstanding – Basic and Diluted |
8,271,509 | 7,098,016 | ||||||
Net loss per share – Basic and Diluted |
$ | (29.66 | ) | $ | (0.48 | ) |
Three Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Stock options |
3,162,883 | 3,055,376 | ||||||
Redeemable convertible preferred stock |
36,809,092 | 32,865,949 | ||||||
Warrants |
2,280,661 | 1,738,382 | ||||||
|
|
|
|
|||||
42,252,636 | 37,659,707 | |||||||
|
|
|
|
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Stock options |
3,162,883 | 3,055,376 | ||||||
Redeemable convertible preferred stock |
36,809,092 | 32,865,949 | ||||||
Warrants |
2,280,661 | 1,738,382 | ||||||
|
|
|
|
|||||
42,252,636 | 37,659,707 | |||||||
|
|
|
|
4. |
BORROWINGS |
June 30, 2021 |
December 31, 2020 |
|||||||
Notes payable |
$ | 4,605 | $ | 4,761 | ||||
PPP loan |
936 | 936 | ||||||
|
|
|
|
|||||
Total notes payable |
5,541 | 5,697 | ||||||
Less current portion of notes payable |
5,530 | 5,678 | ||||||
|
|
|
|
|||||
Long-term notes payable, net of current portion |
$ | 11 | $ | 19 | ||||
|
|
|
|
5. |
COMMITMENTS AND CONTINGENCIES |
6. |
REDEEMABLE CONVERTIBLE PREFERRED STOCK |
Shares Authorized |
Shares Issued and Outstanding |
Issuance Price |
Net Carrying Value |
Aggregate Liquidation Preference |
||||||||||||||
Series A |
5,941,109 | 5,941,109 | $ | 0.56 | $ | 3,228 | $ | 3,321 | ||||||||||
Series B |
12,011,923 | 10,653,146 | 1.23 | 12,783 | 13,087 | |||||||||||||
Series C-1 |
16,345,688 | 16,275,688 | 1.84 | 18,398 | 29,988 | |||||||||||||
Series C-2 |
27,773,344 | 3,939,149 | 2.95 | 29,848 | 11,613 | |||||||||||||
|
|
|
|
|
|
|
||||||||||||
62,072,064 | 36,809,092 | $ | 64,257 | $ | 58,009 | |||||||||||||
|
|
|
|
|
|
|
As of June 30, 2021 | ||||||||||||
Quantity | Price | Proceeds | ||||||||||
Series C-2 Redeemable Convertible Preferred Stock Purchase Right |
23,236,328 | $ | 2.95 | $ | 68,499,998 | |||||||
|
|
As of June 30, 2021 Upon Completion of SPAC merger |
||||||||||||
Quantity | Price | Proceeds | ||||||||||
Series C-2 Redeemable Convertible Preferred Stock Purchase Right |
5,427,464 | $ | 2.95 | $ | 16,000,000 | |||||||
Series C-2 Warrant exercisable upon SPAC merger |
14,365,207 | 0.0001 | 1,437 | |||||||||
|
|
|||||||||||
Total Proceeds Upon Exercise |
$ | 16,001,437 | ||||||||||
|
|
As of June 30, 2021 Milestones without SPAC merger |
||||||||||||
Quantity | Price | Proceeds | ||||||||||
Series C -2 Redeemable Convertible Preferred Stock Purchase Right |
22,897,111 | $ | 2.95 | $ | 67,499,996 | |||||||
|
|
June 30, 2021 |
December 31, 2020 |
|||||||
Common Stock Warrants |
304,900 | 305,611 | ||||||
Series B Preferred Stock Warrants |
1,358,777 | 1,362,771 | ||||||
Series C Preferred Stock Warrants |
616,984 | 70,000 | ||||||
|
|
|
|
|||||
Total Warrants |
2,280,661 | 1,738,382 | ||||||
|
|
|
|
As of June 30, 2021 |
||||||||||||||
Common Stock Warrants |
Series B Preferred warrants |
Series C-1 Preferred warrants |
Series C-2 Preferred warrants |
|||||||||||
Expected volatility |
N/A | 80 | % | 80 | % | 80 | % | |||||||
Expected term (in years) |
N/A | 2 | 2 | 2 | ||||||||||
Risk-free interest rate |
N/A | 0.25 | % | 0.25 | % | 0.25 | % | |||||||
Dividend yield |
N/A | 0 | % | 0 | % | 0 | % | |||||||
As of December 31, 2020 |
||||||||||||||
Common Stock Warrants |
Series B Preferred warrants |
Series C-1 Preferred warrants |
Series C-2 Preferred warrants |
|||||||||||
Expected volatility |
N/A | 80 | % | 80 | % | N/A | ||||||||
Expected term (in years) |
N/A | 2 | 2 | N/A | ||||||||||
Risk-free interest rate |
N/A | 0.13 | % | 0.13 | % | N/A | ||||||||
Dividend yield |
N/A | 0 | % | 0 | % | N/A |
7. |
STOCK-BASED COMPENSATION PLAN |
Options Outstanding | ||||||||||||||||
Number of shares |
Weighted average exercise price |
Weighted average remaining contractual term (years) |
Aggregate intrinsic values ($‘000s) |
|||||||||||||
Balances as of December 31, 2020 |
3,891,768 | $ | 0.44 | 8.23 | $ | 4,333 | ||||||||||
Granted |
987,500 | $ | 2.57 | |||||||||||||
Exercised |
(1,648,886 | ) | $ | 0.40 | ||||||||||||
Forfeited |
(200,499 | ) | $ | 0.68 | ||||||||||||
|
|
|||||||||||||||
Balances as of June 30, 2021 |
3,029,883 | $ | 1.14 | 8.81 | $ | 27,999 | ||||||||||
|
|
|||||||||||||||
Options vested and exercisable-June 30, 2021 |
576,707 | $ | 0.42 | 7.45 | $ | 5,742 | ||||||||||
|
|
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Risk-free rate |
1.01 | % | 1.67 | % | ||||
Expected dividends |
— | — | ||||||
Expected term |
6 years | 6 years | ||||||
Expected volatility |
75 | % | 68 | % |
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Research and development |
$ | 141 | $ | 29 | ||||
Sales and marketing |
32 | 20 | ||||||
General and administrative |
187 | 125 | ||||||
|
|
|
|
|||||
Total stock-based compensation |
$ | 360 | $ | 174 | ||||
|
|
|
|
8. |
FAIR VALUE MEASUREMENTS |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
June 30, 2021 |
||||||||||||||||
Assets: |
||||||||||||||||
Cash equivalents and restricted cash: |
||||||||||||||||
Money market funds |
$ | 919 | $ | — | $ | — | $ | 919 | ||||||||
Certificate of deposit |
— | 125 | — | 125 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Assets |
$ | 919 | $ | 125 | $ | — | $ | 1,044 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities: |
||||||||||||||||
Derivative liabilities |
$ | — | $ | — | $ | 211,747 | $ | 211,747 | ||||||||
Warrant liabilities |
— | — | 22,860 | 22,860 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Liabilities |
$ | — | $ | — | $ | 234,607 | $ | 234,607 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
December 31, 2020 |
||||||||||||||||
Assets: |
||||||||||||||||
Cash equivalents and restricted cash: |
||||||||||||||||
Money market funds |
$ | 3,046 | $ | — | $ | — | $ | 3,046 | ||||||||
Certificate of deposit |
— | 326 | — | 326 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Assets |
$ | 3,046 | $ | 326 | $ | — | $ | 3,372 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities: |
||||||||||||||||
Derivative liabilities |
$ | — | $ | — | $ | 22,911 | $ | 22,911 | ||||||||
Warrant liabilities |
— | — | $ | 3,329 | 3,329 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Liabilities |
$ | — | $ | — | $ | 26,240 | $ | 26,240 | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Warrant liabilities: |
||||||||
Beginning balance March 31 |
$ | 16,495 | $ | 1,989 | ||||
Change in fair value |
6,378 | (10 | ) | |||||
Fair value of warrants exercised |
(13 | ) | — | |||||
|
|
|
|
|||||
Ending balance June 30 |
22,860 | 1,979 | ||||||
|
|
|
|
|||||
Series C- 2 Convertible Preferred Stock Issuance Right liability: |
||||||||
Beginning balance March 31 |
137,900 | 9,024 | ||||||
Change in fair value |
73,847 | (1,405 | ) | |||||
|
|
|
|
|||||
Ending balance June 30 |
211,747 | 7,619 | ||||||
|
|
|
|
|||||
Total Liabilities |
$ | 234,607 | $ | 9,598 | ||||
|
|
|
|
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Warrant liabilities: |
||||||||
Beginning balance December 31 |
$ | 3,329 | $ | 1,989 | ||||
Change in fair value |
14,804 | (54 | ) | |||||
Fair value of warrants issued |
5,096 | 44 | ||||||
Fair value of warrants exercised |
(369 | ) | — | |||||
|
|
|
|
|||||
Ending balance June 30 |
22,860 | 1,979 | ||||||
|
|
|
|
|||||
Series C- 2 Convertible Preferred Stock Issuance Right liability: |
||||||||
Beginning balance December 31 |
22,911 | 11,379 | ||||||
Change in fair value |
211,988 | (3,760 | ) | |||||
Fair value of derivatives extinguished |
(23,152 | ) | — | |||||
|
|
|
|
|||||
Ending balance June 30 |
211,747 | 7,619 | ||||||
|
|
|
|
|||||
Total Liabilities |
$ | 234,607 | $ | 9,598 | ||||
|
|
|
|
9. |
INCOME TAXES |
10. |
SUBSEQUENT EVENTS |
Assets |
||||
Current assets: |
||||
Cash |
$ | |||
Prepaid expenses |
||||
|
|
|||
Total current assets |
||||
|
|
|||
Other assets |
||||
Investments held in Trust Account |
||||
|
|
|||
Total Assets |
$ |
|||
|
|
|||
Liabilities and Shareholders’ Equity |
||||
Current liabilities: |
||||
Accrued expenses |
$ | |||
Accrued expenses—related party |
||||
|
|
|||
Total current Liabilities |
||||
Deferred underwriting commissions |
||||
|
|
|||
Derivative warrant liabilities |
||||
|
|
|||
Total Liabilities |
||||
Commitments and Contingencies |
||||
Class A ordinary shares; |
||||
Shareholders’ Equity: |
||||
Preference shares, $ |
||||
Class A ordinary shares, $ |
||||
Class B ordinary shares, $ |
||||
Additional paid-in capital |
||||
Accumulated deficit |
( |
) | ||
|
|
|||
Total Shareholders’ Equity |
||||
|
|
|||
Total Liabilities and Shareholders’ Equity |
$ |
|||
|
|
General and administrative expenses |
$ | |||
Loss from operations |
( |
) | ||
Other income |
||||
Change in fair value of derivative warrant liabilities |
( |
) | ||
Financing costs – derivative warrant liabilities |
( |
) | ||
Gain on marketable securities (net) and dividends held in Trust Account |
||||
Total other income |
( |
) | ||
Net |
$ | ( |
) | |
Weighted average ordinary shares outstanding of Redeemable Class A, basic and diluted |
||||
Basic and diluted net income per share, Redeemable Class A ordinary shares |
$ | |||
Weighted average ordinary shares outstanding of Non-Redeemable Class A and Class B, basic and diluted |
||||
Basic and diluted net loss per share, Non-Redeemable Class A and Class B ordinary shares |
$ | ( |
) | |
Ordinary Shares |
Additional Paid-in Capital |
Accumulated Deficit |
Total Shareholders’ Equity |
|||||||||||||||||||||||||
Class A |
Class B |
|||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||
Balance—July 21, 2020 (inception) |
$ | $ | $ | $ | $ |
|||||||||||||||||||||||
Issuance of ordinary shares to Sponsor |
— | — | — | |||||||||||||||||||||||||
Sale of units in initial public offering, gross |
— | — | — | |||||||||||||||||||||||||
Offering costs |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
Forfeiture of Class B ordinary shares |
— | — | ( |
) | ( |
) | — | — | ||||||||||||||||||||
Shares subject to possible redemption |
( |
) | ( |
) | — | — | ( |
) | — | ( |
) | |||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Balance—December 31, 2020 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||||||||
Cash Flows from Operating Activities: |
||||
Net loss |
$ | ( |
) | |
Adjustments to reconcile net loss to net cash used in operating activities: |
||||
General and administrative expenses paid by Sponsor in exchange for issuance of Class B ordinary shares |
||||
Gain on marketable securities,(net) and dividends held in Trust Account |
( |
) | ||
Change in fair value of derivative warrant liabilities |
||||
Financing costs—derivative warrant liabilities |
||||
Changes in operating assets and liabilities: |
||||
Prepaid expenses and other assets |
( |
) | ||
Accrued expenses |
||||
Accrued expenses—related party |
||||
|
|
|||
Net cash used in operating activities |
( |
) | ||
|
|
|||
Cash Flows from Investing Activities: |
||||
Cash deposited in Trust Account |
( |
) | ||
|
|
|||
Net cash used in investing activities |
( |
) | ||
|
|
|||
Cash Flows from Financing Activities: |
||||
Proceeds from note payable to related party |
||||
Repayment of note payable to related party |
( |
) | ||
Proceeds received from initial public offering, gross |
||||
Proceeds received from private placement |
||||
Offering costs paid |
( |
) | ||
|
|
|||
Net cash provided by financing activities |
||||
|
|
|||
Net increase in cash |
||||
Cash—beginning of the period |
||||
|
|
|||
Cash—ending of the period |
$ |
|||
|
|
|||
Supplemental disclosure of noncash investing and financing activities: |
||||
Offering costs paid by Sponsor in exchange for issuance of Class B ordinary shares |
$ | |||
Offering costs included in accrued expenses |
$ | |||
Offering costs included in note payable—related party |
$ | |||
Deferred underwriting commissions |
$ | |||
Initial value of Class A ordinary shares subject to possible redemption |
$ | |||
Change in value of Class A ordinary shares subject to possible redemption |
$ | ( |
) | |
Forfeiture of Class B ordinary shares |
$ |
As of December 31, 2020 |
||||||||||||
As Previously Reported |
Restatement Adjustment |
As Restated |
||||||||||
Balance Sheet |
||||||||||||
Total assets |
$ |
$ |
— |
$ |
||||||||
Liabilities and shareholders’ equity |
||||||||||||
Total current liabilities |
$ |
$ |
— |
$ |
||||||||
Deferred underwriting commissions |
— |
|||||||||||
Derivative warrant liabilities |
— |
|||||||||||
Total liabilities |
||||||||||||
Class A ordinary share, $ |
( |
) |
||||||||||
Shareholders’ equity |
||||||||||||
Preference shares—$ |
||||||||||||
Class A ordinary shares—$ |
||||||||||||
Class B ordinary shares—$ |
— |
|||||||||||
Additional paid-in-capital |
||||||||||||
Accumulated deficit |
( |
) |
( |
) |
( |
) | ||||||
Total shareholders’ equity |
— |
|||||||||||
Total liabilities and shareholders’ equity |
$ |
$ |
— |
$ |
||||||||
Period From July 21, 2020 (Inception) Through December 31, 2020 |
||||||||||||
As Previously Reported |
Restatement Adjustment |
As Restated |
||||||||||
Statement of Operations |
||||||||||||
Loss from operations |
$ |
( |
) |
$ |
— |
$ |
( |
) | ||||
Other (expense) income: |
||||||||||||
Change in fair value of derivative warrant liabilities |
— |
( |
) |
( |
) | |||||||
Financing costs—derivative warrant liabilities |
— |
( |
) |
( |
) | |||||||
Gain on marketable securities (net), and dividends held in Trust Account |
— |
|||||||||||
Total other (expense) income |
( |
) |
( |
) | ||||||||
Net loss |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||
Basic and Diluted weighted-average Class A ordinary share outstanding |
||||||||||||
Basic and Diluted net income per Class A ordinary shares |
$ |
$ |
— |
|||||||||
Basic and Diluted weighted-average Class B ordinary share outstanding |
||||||||||||
Basic and Diluted net loss per Class B ordinary shares |
$ |
( |
) |
$ |
( |
) | ||||||
Period From July 21, 2020 (Inception) Through December 31, 2020 |
||||||||||||
As Previously Reported |
Restatement Adjustment |
As Restated |
||||||||||
Statement of Cash Flows |
||||||||||||
Net loss |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||
Adjustments to reconcile net loss to net cash used in operating activities |
||||||||||||
Net cash used in operating activities |
( |
) |
— |
( |
) | |||||||
Net cash used in investing activities |
( |
) |
— |
( |
) | |||||||
Net cash provided by financing activities |
— |
|||||||||||
Net change in cash |
$ |
$ |
— |
$ |
||||||||
As of September 30, 2020 |
||||||||||||
As Previously Reported |
Restatement Adjustment |
As Restated |
||||||||||
Unaudited Condensed Balance Sheet |
||||||||||||
Total assets |
$ | $ | — | $ | ||||||||
Liabilities and shareholders’ equity |
||||||||||||
Total current liabilities |
$ | $ | — | $ | ||||||||
Deferred underwriting commissions |
— | |||||||||||
Derivative warrant liabilities |
— | |||||||||||
Total liabilities |
||||||||||||
Class A ordinary share, $ |
( |
) | ||||||||||
Shareholders’ equity |
||||||||||||
Preference shares—$ |
||||||||||||
Class A ordinary shares—$ |
||||||||||||
Class B ordinary shares—$ |
— | |||||||||||
Additional paid-in-capital |
||||||||||||
Accumulated deficit |
( |
) | ( |
) | ( |
) | ||||||
Total shareholders’ equity |
— | |||||||||||
Total liabilities and shareholders’ equity |
$ | $ | — | $ | ||||||||
Period From July 21, 2020 (Inception) Through September 30, 2020 |
||||||||||||
As Previously Reported |
Restatement Adjustment |
As Restated |
||||||||||
Unaudited Condensed Statement of Operations |
||||||||||||
Loss from operations |
$ |
( |
) |
$ |
— |
$ |
( |
) | ||||
Other (expense) income: |
||||||||||||
Change in fair value of derivative warrant liabilities |
— |
— |
— |
|||||||||
Financing costs—derivative warrant liabilities |
— |
( |
) |
( |
) | |||||||
Total other (expense) income |
— |
( |
) |
( |
) | |||||||
Net loss |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||
Basic and Diluted weighted-average Class A ordinary share outstanding |
— |
|||||||||||
Basic and Diluted net income per Class A ordinary shares |
$ |
— |
$ |
— |
||||||||
Basic and Diluted weighted-average Class B ordinary share outstanding |
||||||||||||
Basic and Diluted net loss per Class B ordinary shares |
$ |
( |
) |
$ |
( |
) | ||||||
Period From July 21, 2020 (Inception) Through September 30, 2020 |
||||||||||||
As Previously Reported |
Restatement Adjustment |
As Restated |
||||||||||
Unaudited Condensed Statement of Cash Flows |
||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Adjustment to reconcile net loss to net cash used in operating activities |
||||||||||||
Net cash used in operating activities |
( |
) | — | ( |
) | |||||||
Net cash used in investing activities |
( |
) | — | ( |
) | |||||||
Net cash provided by financing activities |
— | |||||||||||
Net change in cash |
$ | $ | — | $ | ||||||||
• | Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; |
• | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
• | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
For The Period From July 21, 2020 (inception) through December 31, 2020 |
||||
Class A Ordinary shares subject to possible redemption |
||||
Numerator: Earnings allocable to ordinary shares subject to possible redemption |
||||
Income from investments held in Trust Account |
$ | |||
Less: Company’s portion available to be withdrawn to pay taxes |
— | |||
Net income attributable |
$ |
|||
Denominator: Weighted average Class A ordinary shares subject to possible redemption |
||||
Basic and diluted weighted average shares outstanding |
||||
Basic and diluted net income per share |
$ |
|||
Non-Redeemable Ordinary Shares |
||||
Numerator: Net Loss minus Net Earnings |
||||
Net loss |
$ | ( |
) | |
Less: Net income allocable to Class A ordinary shares subject to possible redemption |
||||
Non-redeemable net loss |
$ |
( |
) | |
Denominator: weighted average Non-redeemable ordinary shares |
||||
Basic and diluted weighted average shares outstanding, Non-redeemable ordinary shares |
||||
Basic and diluted net loss per share, Non-redeemable ordinary shares |
$ |
( |
) | |
• | in whole and not in part; |
• | at a price of $ |
• | upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and |
• | if, and only if, the last reported sale price (the “closing price”) of Class A ordinary shares equals or exceeds $ a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders. |
• | in whole and not in part; |
• | at $ provided |
• | if, and only if, the closing price of Class A ordinary shares equals or exceeds $ the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders; and |
• | if the closing price of the Class A ordinary shares for any a period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $ |
Description |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable Inputs (Level 3) |
|||||||||
Assets: |
||||||||||||
Investments held in Trust Account |
$ | $ | — | $ | — | |||||||
Liabilities: |
||||||||||||
Derivative warrant liabilities—Public Warrants |
$ | $ | — | $ | — | |||||||
Derivative warrant liabilities—Private Warrants |
$ | — | $ |
— |
$ |
As of September 21, 2020 |
As of September 30, 2020 |
As of December 31, 2020 |
||||||||||
Stock price |
$ | $ | $ | |||||||||
Volatility |
% | % | % | |||||||||
Expected life of the options to convert |
||||||||||||
Risk-free rate |
% | % | % | |||||||||
Dividend yield |
% | % | % | |||||||||
Probability of merger |
% | % | % |
Public Warrants |
Private Warrants |
Total |
||||||||||
Derivative warrant liabilities at July 3, 2020 (inception) |
$ | — | $ | — | $ | — | ||||||
Issuance of Warrants |
||||||||||||
Change in fair value of derivative warrant liabilities |
||||||||||||
Transfer of Public Warrants to level 1 |
( |
) | — | ( |
) | |||||||
Derivative warrant liabilities at December 31, 2020 |
$ | — | $ | $ | ||||||||
June 30, 2021 |
December 31, 2020 |
|||||||
(unaudited) |
||||||||
Assets |
||||||||
Current assets: |
||||||||
Cash |
$ | $ | ||||||
Prepaid expenses |
||||||||
Total current assets |
||||||||
Other assets |
||||||||
Investments held in Trust Account |
||||||||
Total Assets |
$ |
$ |
||||||
Liabilities and Shareholders’ Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | $ | — | |||||
Accrued expenses |
||||||||
Accrued expenses - related party |
||||||||
Total current liabilities |
||||||||
Deferred underwriting commissions |
||||||||
Derivative warrant liabilities |
||||||||
Total liabilities |
||||||||
Commitments and Contingencies (Note 6) |
||||||||
Class A ordinary shares; |
||||||||
Shareholders’ Equity: |
||||||||
Preference shares, $ |
||||||||
Class A ordinary shares, $ |
||||||||
Class B ordinary shares, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
Total shareholders’ equity |
||||||||
Total Liabilities and Shareholders’ Equity |
$ |
$ |
||||||
For the three months ended June 30, 2021 |
For the six months ended June 30, 2021 |
|||||||
General and administrative expenses |
$ | $ | ||||||
Loss from operations |
( |
) | ( |
) | ||||
Other income (expense) |
||||||||
Change in fair value of derivative warrant liabilities |
( |
) | ||||||
Gain on marketable securities (net), and dividends held in Trust Account |
||||||||
Total other (expense) income |
( |
) | ||||||
Net (loss) income |
$ | ( |
) | $ | ||||
Weighted average shares outstanding of non-redeemable ordinary shares subject to redemption, basic and diluted |
||||||||
Basic and diluted net income per share, Class A ordinary shares subject to redemption |
$ | $ | ||||||
Weighted average shares outstanding of Class A ordinary shares, basic and diluted |
||||||||
Basic and diluted net (loss) income per share, common stock |
$ | ( |
) | $ | ||||
Ordinary Shares |
Additional |
Retained Earnings |
Total |
|||||||||||||||||||||||||
Class A |
Class B |
Paid-in |
(Accumulated |
Shareholders’ |
||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Capital |
Deficit) |
Equity |
||||||||||||||||||||||
Balance - January 1, 2021 |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||||
Shares subject to possible redemption |
( |
) | ( |
) | — | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Net income |
— | — | — | — | — | |||||||||||||||||||||||
Balance - March 31, 2021 (unaudited) |
$ |
$ |
$ | — | $ |
$ |
||||||||||||||||||||||
Shares subject to possible redemption |
— | — | — | |||||||||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Balance - June 30, 2021 (unaudited) |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||||
Cash Flows from Operating Activities: |
||||
Net income |
$ | |||
Adjustments to reconcile net income to net cash used in operating activities: |
||||
Gain on marketable securities (net), and dividends held in Trust Account |
( |
) | ||
Change in fair value of derivative warrant liabilities |
( |
) | ||
Changes in operating assets and liabilities: |
||||
Prepaid expenses |
||||
Accounts payable |
||||
Accrued expenses |
( |
) | ||
Accrued expenses - related party |
||||
Net cash used in operating activities |
( |
) | ||
Net decrease in cash |
( |
) | ||
Cash - beginning of the period |
||||
Cash - end of the period |
$ |
|||
Supplemental disclosure of noncash investing and financing activities: |
||||
Change in value of Class A ordinary shares subject to possible redemption |
$ | ( |
) |
• | Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; |
• | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
• | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
For the three months ended June 30, 2021 |
For the six months ended June 30, 2021 |
|||||||
Class A Ordinary share subject to possible redemption |
||||||||
Numerator: Earnings allocable to Ordinary shares subject to possible redemption |
||||||||
Income from investments held in Trust Account |
$ | $ | ||||||
Less: Company’s portion available to be withdrawn to pay taxes |
— | — | ||||||
Net income attributable |
$ |
$ |
||||||
Denominator: Weighted average Class A ordinary shares subject to possible redemption |
||||||||
Basic and diluted weighted average shares outstanding |
||||||||
Basic and diluted net income per share |
$ |
$ |
||||||
Non-Redeemable Ordinary Shares |
||||||||
Numerator: Net (Loss) Income minus Net Earnings |
||||||||
Net (loss) income |
$ | ( |
) | $ | ||||
Less: Net income allocable to Class A ordinary shares subject to possible redemption |
||||||||
Non-redeemable net (loss) income |
$ |
( |
) |
$ |
||||
Denominator: weighted average Non-redeemable ordinary shares |
||||||||
Basic and diluted weighted average shares outstanding, Non-redeemable ordinary shares |
||||||||
Basic and diluted net (loss) income per share, Non-redeemable ordinary shares |
$ |
( |
) |
$ |
||||
• | in whole and not in part; |
• | at a price of $ |
• | upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and |
• | if, and only if, the last reported sale price (the “closing price”) of Class A ordinary shares equals or exceeds $ |
• | in whole and not in part; |
• | at $ provided |
• | if, and only if, the closing price of Class A ordinary shares equals or exceeds $ 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders; and |
• | if the closing price of the Class A ordinary shares for any |
June 30, 2021 |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable Inputs (Level 3) |
|||||||||
Description | ||||||||||||
Assets: |
||||||||||||
Investments held in Trust Account |
$ | $ | — | $ | — | |||||||
Liabilities: |
||||||||||||
Warrant liabilities - Public warrants |
$ | $ | — | $ | — | |||||||
Warrant liabilities - Private warrants |
$ | — | $ | — | $ |
December 31, 2020 |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable Inputs (Level 3) |
|||||||||
Description | ||||||||||||
Assets: |
||||||||||||
Investments held in Trust Account |
$ | $ | — | $ | — | |||||||
Liabilities: |
||||||||||||
Warrant liabilities - Public warrants |
$ | $ | — | $ | — | |||||||
Warrant liabilities - Private warrants |
$ | — | $ | — | $ |
As of June 30, 2021 |
As of December 31 2020 |
|||||||
Stock price |
$ | $ | ||||||
Volatility |
% | % | ||||||
Expected life of the options to convert |
||||||||
Risk-free rate |
% | % | ||||||
Dividend yield |
— | — |
Derivative warrant liabilities at December 31, 2020 |
$ | |||
Change in fair value of derivative warrant liabilities |
( |
) | ||
Derivative warrant liabilities at June 30, 2021 |
$ | |||
Page |
||||
ARTICLE I CERTAIN DEFINITIONS |
A-2 | |||
1.01 Definitions |
A-2 | |||
1.02 Construction |
A-14 | |||
ARTICLE II THE MERGER; CLOSING |
A-15 | |||
2.01 The Merger |
A-15 | |||
2.02 Effects of the Merger |
A-15 | |||
2.03 Closing |
A-15 | |||
2.04 Effect on Capital Stock |
A-16 | |||
2.05 Equitable Adjustments |
A-16 | |||
2.06 Allocation Schedule. |
A-16 | |||
2.07 Treatment of Company Options, Company RSUs and Company Warrants |
A-17 | |||
2.08 Exchange of Company Certificates and Company Book-Entry Shares |
A-19 | |||
2.09 Earnout |
A-21 | |||
2.10 Organizational Documents of the Company and Acquiror |
A-22 | |||
2.11 Directors and Officers of the Companies |
A-22 | |||
2.12 Withholding |
A-23 | |||
2.13 Cash in Lieu of Fractional Shares |
A-24 | |||
2.14 Dissenting Shares |
A-24 | |||
2.15 Payment of Expenses |
A-24 | |||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
A-25 | |||
3.01 Organization, Standing and Corporate Power |
A-25 | |||
3.02 Corporate Authority; Approval; Non-Contravention |
A-25 | |||
3.03 Governmental Approvals |
A-26 | |||
3.04 Capitalization |
A-26 | |||
3.05 Subsidiaries |
A-27 | |||
3.06 Financial Statements; Internal Controls |
A-27 | |||
3.07 Compliance with Laws |
A-28 | |||
3.08 Absence of Certain Changes or Events |
A-29 | |||
3.09 No Undisclosed Liabilities |
A-29 | |||
3.10 Information Supplied |
A-29 | |||
3.11 Litigation |
A-29 | |||
3.12 Contracts |
A-30 | |||
3.13 Employment Matters |
A-32 |
Page |
||||
3.14 Taxes |
A-34 | |||
3.15 Intellectual Property |
A-34 | |||
3.16 Data Protection |
A-36 | |||
3.17 Information Technology |
A-36 | |||
3.18 Real Property |
A-36 | |||
3.19 Corrupt Practices; Sanctions |
A-37 | |||
3.20 Insurance |
A-38 | |||
3.21 Competition and Trade Regulation |
A-38 | |||
3.22 Environmental Matters |
A-38 | |||
3.23 Brokers |
A-39 | |||
3.24 Affiliate Agreements |
A-39 | |||
3.25 No Other Representations or Warranties |
A-39 | |||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB |
A-39 | |||
4.01 Organization, Standing and Corporate Power |
A-40 | |||
4.02 Corporate Authority; Approval; Non-Contravention |
A-40 | |||
4.03 Litigation |
A-41 | |||
4.04 Compliance with Laws |
A-41 | |||
4.05 Employee Benefit Plans |
A-41 | |||
4.06 Financial Ability; Trust Account |
A-41 | |||
4.07 Taxes |
A-42 | |||
4.08 Brokers |
A-43 | |||
4.09 Acquiror SEC Reports; Financial Statements; Sarbanes-Oxley Act |
A-43 | |||
4.10 Business Activities; Absence of Changes |
A-44 | |||
4.11 Registration Statement |
A-45 | |||
4.12 No Outside Reliance |
A-45 | |||
4.13 Capitalization |
A-46 | |||
4.14 NASDAQ Stock Market Quotation |
A-47 | |||
4.15 Contracts; No Defaults |
A-47 | |||
4.16 Title to Property |
A-48 | |||
4.17 Investment Company Act |
A-48 | |||
4.18 Affiliate Agreements |
A-48 | |||
4.19 Corrupt Practices |
A-48 | |||
4.20 Takeover Statutes and Charter Provisions |
A-48 | |||
4.21 Subscription Agreements |
A-49 | |||
4.22 Defense Production Act |
A-49 |
Page |
||||
4.23 No Other Representations or Warranties |
A-49 | |||
ARTICLE V COVENANTS OF THE COMPANY |
A-50 | |||
5.01 Conduct of Business |
A-50 | |||
5.02 Inspection |
A-52 | |||
5.03 HSR Act and Regulatory Approvals |
A-53 | |||
5.04 No Claim Against the Trust Account |
A-53 | |||
5.05 Proxy Solicitation; Other Actions |
A-54 | |||
5.06 Cooperation under the Credit Documents; Investor Rights Agreement |
A-55 | |||
5.07 Incentive Company RSU Grants |
A-55 | |||
ARTICLE VI COVENANTS OF ACQUIROR |
A-55 | |||
6.01 HSR Act and Regulatory Approvals |
A-55 | |||
6.02 Indemnification and Insurance |
A-56 | |||
6.03 Conduct of Acquiror During the Interim Period |
A-57 | |||
6.04 Trust Account |
A-59 | |||
6.05 Inspection |
A-59 | |||
6.06 Acquiror Stock Exchange Listing |
A-59 | |||
6.07 Acquiror Public Filings |
A-59 | |||
6.08 Financing |
A-60 | |||
6.09 Additional Insurance Matters |
A-60 | |||
6.10 Section 16 Matters |
A-60 | |||
6.11 Director and Officer Appointments |
A-60 | |||
6.12 Domestication |
A-60 | |||
6.13 Equity Incentive Plan; Employee Stock Purchase Plan |
A-61 | |||
6.14 Bylaws. |
A-61 | |||
ARTICLE VII JOINT COVENANTS |
A-61 | |||
7.01 Support of Transaction |
A-61 | |||
7.02 Exclusivity |
A-61 | |||
7.03 Preparation of Registration Statement; Special Meeting; Solicitation of Company Stockholder Approvals |
A-62 | |||
7.04 Tax Matters |
A-64 | |||
7.05 Confidentiality; Publicity |
A-66 | |||
7.06 Post-Closing Cooperation; Further Assurances |
A-66 | |||
7.07 Transaction Litigation |
A-66 | |||
ARTICLE VIII CONDITIONS TO OBLIGATIONS |
A-67 | |||
8.01 Conditions to Obligations of All Parties |
A-67 |
Page |
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8.02 Additional Conditions to Obligations of Acquiror |
A-67 | |||
8.03 Additional Conditions to the Obligations of the Company |
A-68 | |||
ARTICLE IX TERMINATION/EFFECTIVENESS |
A-69 | |||
9.01 Termination |
A-69 | |||
9.02 Effect of Termination |
A-70 | |||
ARTICLE X MISCELLANEOUS |
A-70 | |||
10.01 Waiver |
A-70 | |||
10.02 Notices |
A-70 | |||
10.03 Assignment |
A-71 | |||
10.04 Rights of Third Parties |
A-71 | |||
10.05 Expenses |
A-71 | |||
10.06 Governing Law |
A-71 | |||
10.07 Captions; Counterparts |
A-71 | |||
10.08 Schedules and Exhibits |
A-72 | |||
10.09 Entire Agreement |
A-72 | |||
10.10 Amendments |
A-72 | |||
10.11 Severability |
A-72 | |||
10.12 Jurisdiction; WAIVER OF TRIAL BY JURY |
A-72 | |||
10.13 Enforcement |
A-73 | |||
10.14 Non-Recourse |
A-73 | |||
10.15 Non-survival of Representations, Warranties and Covenants |
A-73 | |||
10.16 Acknowledgements |
A-73 |
Exhibits |
Exhibit A – Form of Subscription Agreement |
Exhibit B – Form of Company Support Agreement |
Exhibit C – Form of Sponsor Letter Agreement |
Exhibit D – Form of Certificate of Incorporation of Acquiror |
Exhibit E – Form of Bylaws of Acquiror |
(a) | If to Acquiror or Merger Sub, to: |
(b) | If to the Company to: |
ACON S2 ACQUISITION CORP. | ||
By: | /s/ Adam Kriger | |
Name: Adam Kriger | ||
Title: Chief Executive Officer |
SCHARGE MERGER SUB, INC. | ||
By: | /s/ Adam Kriger | |
Name: Adam Kriger | ||
Title: Chief Executive Officer |
ESS TECH, INC. | ||
By: | /s/ Craig Evans | |
Name: Craig Evans | ||
Title: President & Founder |
1 |
To be date of redomestication. |
By: |
/s/ [insert name] | |
[ insert name | ||
[Chief Executive Officer] |
Employee’s ID Number: | |
|||
Employee’s Address: | |
Dated: |
| |
Signature of Employee |
Name and Address of Participant: |
|
|
Signature: |
|
Date: |
ACON S2 ACQUISITION CORP. | ||
By: | /s/ Adam Kriger | |
Name: Adam Kriger | ||
Title: Chief Executive Officer | ||
ACON S2 SPONSOR, L.L.C. | ||
By: | /s/ Teresa Bernstein | |
Name: Teresa Bernstein | ||
Title: Secretary | ||
ESS TECH, INC. | ||
By: | /s/ Craig Evans | |
Name: Craig Evans | ||
Title: President and Founder |
INSIDERS: |
By: /s/ Adam Kriger |
Name: Adam Kriger |
By: /s/ Jonathan Ginns |
Name: Jonathan Ginns |
By: /s/ John Roush |
Name: John Roush |
By: /s/ Daniel Jinich |
Name: Daniel Jinich |
By: /s/ Sarah Kirshbaum Levy |
Name: Sarah Kirshbaum Levy |
By: /s/ Ryan Shadrick Wilson |
Name: Ryan Shadrick Wilson |
By: /s/ Janie Goddard |
Name: Janie Goddard |
ACON S2 ACQUISITION CORP. | ||
By: | | |
Name: | Adam Kriger | |
Title: | Chief Executive Officer |
[STOCKHOLDER] | ||
By: | | |
Name: | ||
Title: |
Class/Series Securities |
Number of Shares |
|||
[●] |
[ | ●] | ||
[●] |
[ | ●] | ||
[●] |
[ | ●] | ||
[●] |
[ | ●] |
• | Second Amended and Restated Investors’ Rights Agreement, dated as of August 28, 2019 between the Company, SB Energy Global Holdings One Ltd., Breakthrough Energy Ventures, LLC, Cycle Capital Fund III, L.P., Pangaea Ventures Fund III, LP, Sand Hill Angels XV, LLC, Seattle Angel Conference Investors, LLC, Fund VI 2014 Series only, Portland Seed Fund II, LP, Oregon Nanoscience and Microtechnologies Institute, Brian Arbogast, John E. Chadwick, Kathy Washienko, Energethic, LLC, 3x4y Angels – ESS 2015 LLC, 3x4y Angels – ESS 2016 LLC, Eimar Boesjes , Douglas G. Swartz, Eric Robert Berman and Luann Kay Suthers Berman Living Trust, dated July 18, 2012, Erick Petersen, Jabe Blumenthal, Ramez Naam, RNN Ventures ESS Series C Note LLC, Monoc Capital Ltd. EESS LLC, Obsidian Renewables, LLC, BASF Venture Capital GmbH, Presidio-IPM j.s.a., Vicap LLC, Michael R. Niggli Family Trust, Linda Naviaux Niggli Trust , Agharta Capital Ltd. , Evergy Ventures, Inc., GC Ventures America, Craig Evans , including Side Letter dated as of March 1, 2021 |
• | Second Amended and Restated Right of First Refusal and Co-Sale Agreement, dated August 28, 2019, by and among the Company, SB Energy Global Holdings One Ltd., Breakthrough Energy Ventures, LLC, Cycle Capital Fund III, L.P., Pangaea Ventures Fund III, LP, Sand Hill Angels XV, LLC, Seattle Angel Conference Investors, LLC, Fund VI 2014 Series only, Portland Seed Fund II, LP, Oregon Nanoscience and Microtechnologies Institute, Oregon Built Environment and Sustainable Technologies Center, Inc. Brian Arbogast, John E. Chadwick, Kathy Washienko, Energethic, LLC, 3x4y Angels – ESS 2015 LLC, 3x4y Angels – ESS 2016 LLC, Eimar Boesjes , Douglas G. Swartz, Eric Robert Berman and Luann Kay Suthers Berman Living Trust, dated July 18, 2012, Erick Petersen, Jabe Blumenthal, Ramez Naam, RNN Ventures ESS Series C Note LLC, Monoc Capital Ltd. EESS LLC, Obsidian Renewables, LLC, BASF Venture Capital GmbH, Presidio-IPM j.s.a., Vicap LLC, Michael R. Niggli Family Trust, Linda Naviaux Niggli Trust , Agharta Capital Ltd. , Evergy Ventures, Inc., GC Ventures America, Craig Evans and Yang Song. |
• | Second Amended and Restated Voting Agreement, dated August 28, 2019, by and among the Company, SB Energy Global Holdings One Ltd., Breakthrough Energy Ventures, LLC, Cycle Capital Fund III, L.P., Pangaea Ventures Fund III, LP, Sand Hill Angels XV, LLC, Seattle Angel Conference Investors, LLC, Fund VI 2014 Series only, Portland Seed Fund II, LP, Oregon Nanoscience and Microtechnologies Institute, Oregon Built Environment and Sustainable Technologies Center, Inc. Brian Arbogast, John E. Chadwick, Kathy Washienko, Energethic, LLC, 3x4y Angels – ESS 2015 LLC, 3x4y Angels – ESS 2016 LLC, Eimar Boesjes , Douglas G. Swartz, Eric Robert Berman and Luann Kay Suthers Berman Living Trust, dated July 18, 2012, Erick Petersen, Jabe Blumenthal, Ramez Naam, RNN Ventures ESS Series C Note LLC, Monoc Capital Ltd. EESS LLC, Obsidian Renewables, LLC, BASF Venture Capital GmbH, Presidio-IPM j.s.a., Vicap LLC, Michael R. Niggli Family Trust, Linda Naviaux Niggli Trust , Agharta Capital Ltd. , Evergy Ventures, Inc., GC Ventures America, Craig Evans and Yang Song. |
• | Omibus Amendment to the Financing Agreements dated March 1, 2021 by and among the Company, SB Energy Global Holdings One Ltd., Breakthrough Energy Ventures, LLC, Cycle Capital Fund III, L.P., Pangaea Ventures Fund III, LP, Evergy Ventures, Inc., GC Ventures America, Craig Evans and Yang Song. |
• | Side Letter dated as of August 28, 2019 between the Company and Breakthrough Energy Ventures, LLC. |
• | Side Letter dated as of October 15, 2019 between the Company and GC Ventures America and Amended and Restated side letter by and between the Company and GC Ventures America, dated as of March 1, 2021. |
• | Side Letter dated as of July 10, 2018 between the Company and Presidio-IPM j.s.a. |
• | Side Letter dated as of December 11, 2017 between the Company Presidio-IPM j.s.a., Cycle Capital Fund III, L.P. and BASF Venture Capital GmbH. |
• | Side Letter dated as of March 3, 2015 signed by the Company for the benefit of each member of Element 8 Group. |
Name of Investor: | State/Country of Formation or Domicile: | |
By: |
||
Name: |
||
Title: |
||
Name in which Shares are to be registered (if different): | Date: , 2021 | |
Investor’s EIN: | ||
Business Address-Street: | Mailing Address-Street (if different): | |
City, State, Zip: | City, State, Zip: | |
Attn: |
Attn: | |
Telephone No.: | Telephone No.: | |
Facsimile No.: Email: |
Facsimile No.: | |
Number of Shares subscribed for: | ||
Aggregate Subscription Amount: $ | Price Per Share: $10.00 |
ACON S2 ACQUISITION CORP. |
By: | |
Name: Adam Kriger | ||
Title: Managing Partner |
A. | QUALIFIED INSTITUTIONAL BUYER STATUS |
B. | INSTITUTIONAL ACCREDITED INVESTOR STATUS |
1. | ☐ The Investor is an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act or an entity in which all of the equity holders are accredited investors within the meaning of Rule 501(a) under the Securities Act), and has marked and initialed the appropriate box below indicating the provision under which the Investor qualifies as an “accredited investor.” |
2. | ☐ The Investor is not a natural person. |
COMPANY: | ||
ESS Tech, Inc. | ||
a Delaware corporation | ||
By: | | |
Name: | ||
Title: | ||
HOLDER: | ||
[ ] | ||
By: | | |
Name: | ||
Title: | ||
SPONSOR: | ||
ACON S2 Sponsor, L.L.C. | ||
a Delaware limited liability company | ||
By: | | |
Name: | ||
Title: |
Signature of Stockholder |
Print Name of Stockholder |
Its: |
Address: |
|
|
Agreed and Accepted as of [ ], 20[ ] | ||
ESS Tech, Inc. | ||
By: | | |
Name: | ||
Its: |
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1. | The name of the company is ACON S2 Acquisition Corp. (the “ Company |
2. | The registered office of the Company will be situated at the offices of Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands or at such other location as the Directors may from time to time determine. |
3. | The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by any law as provided by Section 7(4) of the Companies Law (as amended) of the Cayman Islands (the |
4. | The Company shall have and be capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit as provided by Section 27(2) of the Companies Law. |
5. | The Company will not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands; provided that nothing in this section shall be construed as to prevent the Company effecting and concluding contracts in the Cayman Islands, and exercising in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands. |
6. | The liability of the shareholders of the Company is limited to the amount, if any, unpaid on the shares respectively held by them. |
7. | The authorised share capital of the Company is US$55,500 500,000,000 US$0.0001 50,000,000 US$0.0001 5,000,000 US$0.0001 |
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or to any conditions or restrictions whatsoever and so that unless the conditions of issue shall otherwise expressly provide every issue of shares whether stated to be ordinary, preference or otherwise shall be subject to the powers on the part of the Company hereinbefore provided. |
8. | The Company may exercise the power contained in Section 206 of the Companies Law to deregister in the Cayman Islands and be registered by way of continuation in some other jurisdiction. |
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1. | In these Articles the following defined terms will have the meanings ascribed to them, if not inconsistent with the subject or context: |
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(a) | passed by a simple majority of such Shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company and where a poll is taken regard shall be had in computing a majority to the number of votes to which each Shareholder is entitled; or |
(b) | approved in writing by all of the Shareholders entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Shareholders and the effective date of the resolution so adopted shall be the date on which the instrument, or the last of such instruments, if more than one, is executed. |
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(a) | passed by a majority of not less than two-thirds (or, (i) prior to the consummation of a Business Combination only, with respect to amending Article 170(b) 100% of the votes cast at a meeting of the Shareholders and (ii) with respect to amending Article 99, a majority of not less than two-thirds of the votes cast at a meeting of the Shareholders including a simple majority of the holders of Class B Shares (and if the Shareholders vote in favor of such act but the approval of a simple majority of the holders of Class B Shares has not yet been obtained, the holders of a simple majority of Class B Shares shall have, in such vote, voting rights equal to the aggregate voting power of all the Shareholders of the Company who voted in favor of the resolution plus one)) of such Shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company of which notice specifying the intention to propose the resolution as a special resolution has been duly given and where a poll is taken regard shall be had in computing a majority to the number of votes to which each Shareholder is entitled; or |
(b) | approved in writing by all of the Shareholders entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Shareholders and the effective date of the special resolution so adopted shall be the date on which the instrument or the last of such instruments, if more than one, is executed. |
2. | In these Articles, save where the context requires otherwise: |
(a) | words importing the singular number shall include the plural number and vice versa; |
(b) | words importing the masculine gender only shall include the feminine gender and any Person as the context may require; |
(c) | the word “may” shall be construed as permissive and the word “shall” shall be construed as imperative; |
(d) | reference to a dollar or dollars or USD (or $) and to a cent or cents is reference to dollars and cents of the United States of America; |
(e) | reference to a statutory enactment shall include reference to any amendment or reenactment thereof for the time being in force; |
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(f) | reference to any determination by the Directors shall be construed as a determination by the Directors in their sole and absolute discretion and shall be applicable either generally or in any particular case; and |
(g) | reference to “in writing” shall be construed as written or represented by any means reproducible in writing, including any form of print, lithograph, email, facsimile, photograph or telex or represented by any other substitute or format for storage or transmission for writing or partly one and partly another. |
3. | Subject to the preceding Articles, any words defined in the Companies Law shall, if not inconsistent with the subject or context, bear the same meaning in these Articles. |
4. | The business of the Company may be commenced at any time after incorporation. |
5. | The Office shall be at such address in the Cayman Islands as the Directors may from time to time determine. The Company may in addition establish and maintain such other offices and places of business and agencies in such places as the Directors may from time to time determine. |
6. | The expenses incurred in the formation of the Company and in connection with the offer for subscription and issue of Shares shall be paid by the Company. Such expenses may be amortised over such period as the Directors may determine and the amount so paid shall be charged against income and/or capital in the accounts of the Company as the Directors shall determine. |
7. | The Directors shall keep, or cause to be kept, the Register at such place or (subject to compliance with the Companies Law and these Articles) places as the Directors may from time to time determine. In the absence of any such determination, the Register shall be kept at the Office. The Directors may keep, or cause to be kept, one or more Branch Registers as well as the Principal Register in accordance with the Companies Law, provided always that a duplicate of such Branch Register(s) shall be maintained with the Principal Register in accordance with the Companies Law and the rules or requirements of any Designated Stock Exchange. |
8. | Subject to these Articles, and, where applicable, the rules of the Designated Stock Exchange and/or any competent regulatory authority, all Shares for the time being unissued shall be under the control of the Directors who may: |
(a) | issue, allot and dispose of the same to such Persons, in such manner, on such terms and having such rights and being subject to such restrictions as they may from time to time determine; and |
(b) | grant options with respect to such Shares and issue warrants or similar instruments with respect thereto; |
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9. | The Company may issue units of securities in the Company, which may be comprised of whole or fractional Shares, rights, options, warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to subscribe for, purchase or receive any class of Shares or other securities in the Company, upon such terms as the Directors may from time to time determine. The securities comprising any such units which are issued pursuant to the IPO can only be traded separately from one another on the 52nd day following the date of the prospectus relating to the IPO unless the Underwriters determine that an earlier date is acceptable, subject to the Company having filed a current report on Form 8-K with the SEC and a press release announcing when such separate trading will begin. Prior to such date, the units can be traded, but the securities comprising such units cannot be traded separately from one another. |
10. | The Directors, or the Shareholders by Ordinary Resolution, may authorise the division of Shares into any number of Classes and sub-classes and Series and sub-series and the |
11. | The Company may insofar as may be permitted by law, pay a commission to any Person in consideration of his subscribing or agreeing to subscribe whether absolutely or conditionally for any Shares. Such commissions may be satisfied by the payment of cash or the lodgement of fully or partly paid-up Shares or partly in one way and partly in the other. The Company may also pay such brokerage as may be lawful on any issue of Shares. |
12. | The Directors may refuse to accept any application for Shares, and may accept any application in whole or in part, for any reason or for no reason. |
13. | Except as otherwise specified in these Articles or required by law, the holders of the Class A Shares and the Class B Shares (on an as converted basis) shall vote as a single class |
14. | On the first business day following the consummation of the Company’s initial Business Combination or at any earlier date at the option of the holders of the Class B Ordinary Shares, the issued and outstanding Class B Ordinary Shares shall automatically be converted into such number of Class A Shares as is equal to 20% of the sum of: |
(a) | the total number of Class A Ordinary Shares issued in the IPO (including pursuant to the Over-Allotment Option), plus |
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(b) | the total number of Class A Ordinary Shares issued or deemed issued, or issuable upon the conversion or exercise of any equity-linked securities issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial Business Combination, excluding (x) any Class A Ordinary Shares or equity-linked securities exercisable for or convertible into Class A Ordinary Shares issued, or to be issued, to any seller in the initial Business Combination and (y) any private placement warrants issued to the Sponsor, its affiliates or any member of our management team upon conversion of working capital loans. |
15. | Notwithstanding anything to the contrary contained herein in no event shall the Class B Ordinary Shares convert into Class A Shares at a ratio that is less than one-for-one. |
16. | References in Articles 14 to Article 18 to “ converted conversion exchange |
17. | Each Class B Share shall convert into its pro rata number of Class A Shares as set forth in this Article 17. The pro rata share for each holder of Class B Shares will be determined as follows: Each Class B Ordinary Share shall convert into such number of Class A Shares as is equal to the product of 1 multiplied by a fraction, the numerator of which shall be the total number of Class A Shares into which all of the issued and outstanding Class B Shares shall be converted pursuant to Article 14 and the denominator of which shall be the total number of issued and outstanding Class B Shares at the time of conversion. |
18. | The Directors may effect such conversion in the manner contemplated by Article 16 or in any other manner available under applicable law, including redeeming or repurchasing the relevant Class B Shares and applying the proceeds thereof towards payment for the new Class A Shares. For purposes of the repurchase or redemption, the Directors may, subject to the Company being able to pay its debts in the ordinary course of business, make payments out of amounts standing to the credit of the Company’s share premium account or out of its capital. |
19. | Whenever the capital of the Company is divided into different Classes (and as otherwise determined by the Directors) the rights attached to any such Class may, subject to any rights or restrictions for the time being attached to any Class only be materially adversely varied or abrogated with the consent in writing of the holders of not less than two-thirds of the issued Shares of the relevant Class, or with the sanction of a |
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resolution passed at a separate meeting of the holders of the Shares of such Class by a majority of two-thirds of the votes cast at such a meeting. To every such separate meeting all the provisions of these Articles relating to general meetings of the Company or to the proceedings thereat shall, mutatis mutandis one-third in nominal or par value amount of the issued Shares of the relevant Class (but so that if at any adjourned meeting of such holders a quorum as above defined is not present, those Shareholders who are present shall form a quorum) and that, subject to any rights or restrictions for the time being attached to the Shares of that Class, every Shareholder of the Class shall on a poll have one vote for each Share of the Class held by him. For the purposes of this Article the Directors may treat all the Classes or any two or more Classes as forming one Class if they consider that all such Classes would be affected in the same way by the proposals under consideration, |
20. | The rights conferred upon the holders of the Shares of any Class issued with preferred or other rights shall not, subject to any rights or restrictions for the time being attached to the Shares of that Class, be deemed to be materially adversely varied or abrogated by, inter alia |
21. | If so determined by the Directors, any Person whose name is entered as a member in the Register may receive a certificate in the form determined by the Directors. All certificates shall specify the Share or Shares held by that person and the amount paid up thereon, provided that in respect of a Share or Shares held jointly by several persons the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a Share to one of several joint holders shall be sufficient delivery to all. All certificates for Shares shall be delivered personally or sent through the post addressed to the member entitled thereto at the Member’s registered address as appearing in the Register. |
22. | Every share certificate of the Company shall bear legends required under the applicable laws (if any), including the Exchange Act. |
23. | Any two or more certificates representing Shares of any one Class held by any Member may at the Member’s request be cancelled and a single new certificate for such Shares issued in lieu on payment (if the Directors shall so require) of $1.00 or such smaller sum as the Directors shall determine. |
24. | If a share certificate shall be damaged or defaced or alleged to have been lost, stolen or destroyed, a new certificate representing the same Shares may be issued to the relevant Member upon request subject to delivery up of the old certificate or (if alleged to have been lost, stolen or destroyed) compliance with such conditions as to evidence and indemnity and the payment of out-of-pocket |
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25. | In the event that Shares are held jointly by several persons, any request may be made by any one of the joint holders and if so made shall be binding on all of the joint holders. |
26. | The Directors may issue fractions of a Share and, if so issued, a fraction of a Share shall be subject to and carry the corresponding fraction of liabilities (whether with respect to nominal or par value, premium, contributions, calls or otherwise), limitations, preferences, privileges, qualifications, restrictions, rights (including, without prejudice to the generality of the foregoing, voting and participation rights) and other attributes of a whole Share. If more than one fraction of a Share of the same Class is issued to or acquired by the same Shareholder such fractions shall be accumulated. |
27. | The Company has a first and paramount lien on every Share (whether or not fully paid) for all amounts (whether presently payable or not) payable at a fixed time or called in respect of that Share. The Company also has a first and paramount lien on every Share (whether or not fully paid) registered in the name of a Person indebted or under liability to the Company (whether he is the sole registered holder of a Share or one of two or more joint holders) for all amounts owing by him or his estate to the Company (whether or not presently payable). The Directors may at any time declare a Share to be wholly or in part exempt from the provisions of this Article. The Company’s lien on a Share extends to any amount payable in respect of it. |
28. | The Company may sell, in such manner as the Directors may determine, any Share on which the Company has a lien, but no sale shall be made unless an amount in respect of which the lien exists is presently payable nor until the expiration of fourteen days after a notice in writing, demanding payment of such part of the amount in respect of which the lien exists as is presently payable, has been given to the registered holder for the time being of the Share, or the Persons entitled thereto by reason of his death or bankruptcy. |
29. | For giving effect to any such sale the Directors may authorise some Person to transfer the Shares sold to the purchaser thereof. The purchaser shall be registered as the holder of the Shares comprised in any such transfer and he shall not be bound to see to the application of the purchase money, nor shall his title to the Shares be affected by any irregularity or invalidity in the proceedings in reference to the sale. |
30. | The proceeds of the sale after deduction of expenses, fees and commission incurred by the Company shall be received by the Company and applied in payment of such part of the amount in respect of which the lien exists as is presently payable, and the residue shall (subject to a like lien for sums not presently payable as existed upon the Shares prior to the sale) be paid to the Person entitled to the Shares immediately prior to the sale. |
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31. | The Directors may from time to time make calls upon the Shareholders in respect of any moneys unpaid on their Shares, and each Shareholder shall (subject to receiving at least fourteen days’ notice specifying the time or times of payment) pay to the Company at the time or times so specified the amount called on such Shares. |
32. | The joint holders of a Share shall be jointly and severally liable to pay calls in respect thereof. |
33. | If a sum called in respect of a Share is not paid before or on the day appointed for payment thereof, the Person from whom the sum is due shall pay interest upon the sum at the rate of eight percent per annum from the day appointed for the payment thereof to the time of the actual payment, but the Directors shall be at liberty to waive payment of that interest wholly or in part. |
34. | The provisions of these Articles as to the liability of joint holders and as to payment of interest shall apply in the case of non-payment of any sum which, by the terms of issue of a Share, becomes payable at a fixed time, whether on account of the amount of the Share, or by way of premium, as if the same had become payable by virtue of a call duly made and notified. |
35. | The Directors may make arrangements on the issue of partly paid Shares for a difference between the Shareholders, or the particular Shares, in the amount of calls to be paid and in the times of payment. |
36. | The Directors may, if they think fit, receive from any Shareholder willing to advance the same all or any part of the moneys uncalled and unpaid upon any partly paid Shares held by him, and upon all or any of the moneys so advanced may (until the same would, but for such advance, become presently payable) pay interest at such rate (not exceeding without the sanction of an Ordinary Resolution, eight percent per annum) as may be agreed upon between the Shareholder paying the sum in advance and the Directors. |
37. | If a Shareholder fails to pay any call or instalment of a call in respect of any Shares on the day appointed for payment, the Directors may, at any time thereafter during such time as any part of such call or instalment remains unpaid, serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued. |
38. | The notice shall name a further day (not earlier than the expiration of fourteen days from the date of the notice) on or before which the payment required by the notice is to be made, and shall state that in the event of non-payment at or before the time appointed the Shares in respect of which the call was made will be liable to be forfeited. |
39. | If the requirements of any such notice as aforesaid are not complied with, any Share in respect of which the notice has been given may at any time thereafter, before the payment required by notice has been made, be forfeited by a resolution of the Directors to that effect. |
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40. | A forfeited Share may be sold or otherwise disposed of on such terms and in such manner as the Directors think fit, and at any time before a sale or disposition the forfeiture may be cancelled on such terms as the Directors think fit. |
41. | A Person whose Shares have been forfeited shall cease to be a Shareholder in respect of the forfeited Shares, but shall, notwithstanding, remain liable to pay to the Company all moneys which at the date of forfeiture were payable by him to the Company in respect of the Shares forfeited, but his liability shall cease if and when the Company receives payment in full of the amount unpaid on the Shares forfeited. |
42. | A statutory declaration in writing that the declarant is a Director, and that a Share has been duly forfeited on a date stated in the declaration, shall be conclusive evidence of the facts in the declaration as against all Persons claiming to be entitled to the Share. |
43. | The Company may receive the consideration, if any, given for a Share on any sale or disposition thereof pursuant to the provisions of these Articles as to forfeiture and may execute a transfer of the Share in favour of the Person to whom the Share is sold or disposed of and that Person shall be registered as the holder of the Share, and shall not be bound to see to the application of the purchase money, if any, nor shall his title to the Shares be affected by any irregularity or invalidity in the proceedings in reference to the disposition or sale. |
44. | The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any sum which by the terms of issue of a Share becomes due and payable, whether on account of the amount of the Share, or by way of premium, as if the same had been payable by virtue of a call duly made and notified. |
45. | Subject to these Articles and the rules or regulations of the Designated Stock Exchange or any relevant rules of the SEC or securities laws (including, but not limited to the Exchange Act), a Shareholder may transfer all or any of his or her Shares. |
46. | The instrument of transfer of any Share shall be in (i) any usual or common form; (ii) such form as is prescribed by the Designated Stock Exchange; or (iii) in any other form as the Directors may determine and shall be executed by or on behalf of the transferor and if in respect of a nil or partly paid up Share, or if so required by the Directors, shall also be executed on behalf of the transferee and shall be accompanied by the certificate (if any) of the Shares to which it relates and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. The transferor shall be deemed to remain a Shareholder until the name of the transferee is entered in the Register in respect of the relevant Shares. |
47. | Subject to the terms of issue thereof and the rules or regulations of the Designated Stock Exchange or any relevant rules of the SEC or securities laws (including, but not limited to the Exchange Act), the Directors may determine to decline to register any transfer of Shares without assigning any reason therefor. |
48. | The registration of transfers may be suspended at such times and for such periods as the Directors may from time to time determine. |
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49. | All instruments of transfer that are registered shall be retained by the Company, but any instrument of transfer that the Directors decline to register shall (except in any case of fraud) be returned to the Person depositing the same. |
50. | The legal personal representative of a deceased sole holder of a Share shall be the only Person recognised by the Company as having any title to the Share. In the case of a Share registered in the name of two or more holders, the survivors or survivor, or the legal personal representatives of the deceased holder of the Share, shall be the only Person recognised by the Company as having any title to the Share. |
51. | Any Person becoming entitled to a Share in consequence of the death or bankruptcy of a Shareholder shall upon such evidence being produced as may from time to time be required by the Directors, have the right either to be registered as a Shareholder in respect of the Share or, instead of being registered himself, to make such transfer of the Share as the deceased or bankrupt Person could have made; but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the deceased or bankrupt Person before the death or bankruptcy. |
52. | A Person becoming entitled to a Share by reason of the death or bankruptcy of a Shareholder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered Shareholder, except that he shall not, before being registered as a Shareholder in respect of the Share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company. |
53. | The Company may from time to time by Ordinary Resolution increase the share capital by such sum, to be divided into Shares of such Classes and amount, as the resolution shall prescribe. |
54. | The Company may by Ordinary Resolution: |
(a) | consolidate and divide all or any of its share capital into Shares of a larger amount than its existing Shares; |
(b) | convert all or any of its paid up Shares into stock and reconvert that stock into paid up Shares of any denomination; |
(c) | subdivide its existing Shares, or any of them into Shares of a smaller amount provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced Share shall be the same as it was in case of the Share from which the reduced Share is derived; and |
(d) | cancel any Shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any Person and diminish the amount of its share capital by the amount of the Shares so cancelled. |
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55. | The Company may by Special Resolution reduce its share capital and any capital redemption reserve in any manner authorised by law. |
56. | Subject to the Companies Law and the rules of the Designated Stock Exchange, the Company may: |
(a) | issue Shares on terms that they are to be redeemed or are liable to be redeemed at the option of the Company or the Shareholder on such terms and in such manner as the Directors may determine; |
(b) | purchase its own Shares (including any redeemable Shares) on such terms and in such manner as the Directors may determine and agree with the Shareholder; |
(c) | make a payment in respect of the redemption or purchase of its own Shares in any manner authorised by the Companies Law, including out of its capital; and |
(d) | accept the surrender for no consideration of any paid up Share (including any redeemable Share) on such terms and in such manner as the Directors may determine. |
57. | With respect to redeeming or repurchasing the Shares: |
(a) | Members who hold Public Shares are entitled to request the redemption of such Shares in the circumstances described in Article 168; |
(b) | Shares held by the Founders shall be surrendered by the Founders on a pro rata basis for no consideration to the extent that the Over-Allotment Option is not exercised in full so that the Founders will own 20% of the Company’s issued Shares after the IPO (exclusive of any securities purchased in a private placement simultaneously with the IPO); and |
(c) | Public Shares shall be repurchased by way of tender offer in the circumstances set out in Article 164(b). |
58. | Any Share in respect of which notice of redemption has been given shall not be entitled to participate in the profits of the Company in respect of the period after the date specified as the date of redemption in the notice of redemption. |
59. | The redemption, purchase or surrender of any Share shall not be deemed to give rise to the redemption, purchase or surrender of any other Share. |
60. | The Directors may when making payments in respect of redemption or purchase of Shares, if authorised by the terms of issue of the Shares being redeemed or purchased or with the agreement of the holder of such Shares, make such payment either in cash or in specie including, without limitation, interests in a special purpose vehicle holding assets of the Company or holding entitlement to the proceeds of assets held by the Company or in a liquidating structure. |
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61. | Shares that the Company purchases, redeems or acquires (by way of surrender or otherwise) may, at the option of the Company, be cancelled immediately or held as Treasury Shares in accordance with the Companies Law. In the event that the Directors do not specify that the relevant Shares are to be held as Treasury Shares, such Shares shall be cancelled. |
62. | No dividend may be declared or paid, and no other distribution (whether in cash or otherwise) of the Company’s assets (including any distribution of assets to members on a winding up) may be declared or paid in respect of a Treasury Share. |
63. | The Company shall be entered in the Register as the holder of the Treasury Shares provided that: |
(a) | the Company shall not be treated as a member for any purpose and shall not exercise any right in respect of the Treasury Shares, and any purported exercise of such a right shall be void; |
(b) | a Treasury Share shall not be voted, directly or indirectly, at any meeting of the Company and shall not be counted in determining the total number of issued shares at any given time, whether for the purposes of these Articles or the Companies Law, save that an allotment of Shares as fully paid bonus shares in respect of a Treasury Share is permitted and Shares allotted as fully paid bonus shares in respect of a treasury share shall be treated as Treasury Shares. |
64. | Treasury Shares may be disposed of by the Company on such terms and conditions as determined by the Directors. |
65. | The Directors may, whenever they think fit, convene a general meeting of the Company. |
66. | Subject to Article 99, for so long as the Company’s Shares are traded on a Designated |
67. | The Directors may cancel or postpone any duly convened general meeting at any time prior to such meeting, except for general meetings requisitioned by the Shareholders in accordance with these Articles, for any reason or for no reason at any time prior to the time for holding such meeting or, if the meeting is adjourned, the time for holding such adjourned meeting. The Directors shall give Shareholders notice in writing of any cancellation or postponement. A postponement may be for a stated period of any length or indefinitely as the Directors may determine. |
68. | General meetings shall also be convened on the requisition in writing of any Shareholder or Shareholders entitled to attend and vote at general meetings of the Company holding at least thirty percent of the paid up |
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voting share capital of the Company deposited at the Office specifying the objects of the meeting by notice given no later than 21 days from the date of deposit of the requisition signed by the requisitionists, and if the Directors do not convene such meeting for a date not later than 45 days after the date of such deposit, the requisitionists themselves may convene the general meeting in the same manner, as nearly as possible, as that in which general meetings may be convened by the Directors, and all reasonable expenses incurred by the requisitionists as a result of the failure of the Directors to convene the general meeting shall be reimbursed to them by the Company. |
69. | If at any time there are no Directors, any two Shareholders (or if there is only one Shareholder then that Shareholder) entitled to vote at general meetings of the Company may convene a general meeting in the same manner as nearly as possible as that in which general meetings may be convened by the Directors. |
70. | At least five days’ notice in writing counting from the date service is deemed to take place as provided in these Articles specifying the place, the day and the hour of the meeting and the general nature of the business, shall be given in the manner hereinafter provided or in such other manner (if any) as may be prescribed by the Company by Ordinary Resolution to such Persons as are, under these Articles, entitled to receive such notices from the Company, but with the consent of all the Shareholders entitled to receive notice of some particular meeting and attend and vote thereat, that meeting may be convened by such shorter notice or without notice and in such manner as those Shareholders may think fit. |
71. | The accidental omission to give notice of a meeting to or the non-receipt of a notice of a meeting by any Shareholder shall not invalidate the proceedings at any meeting. |
72. | All business carried out at a general meeting shall be deemed special with the exception of sanctioning a dividend, the consideration of the accounts, balance sheets, any report of the Directors or of the Company’s auditors, and the fixing of the remuneration of the Company’s auditors. No special business shall be transacted at any general meeting without the consent of all Shareholders entitled to receive notice of that meeting unless notice of such special business has been given in the notice convening that meeting. |
73. | No business shall be transacted at any general meeting unless a quorum of Shareholders is present at the time when the meeting proceeds to business. Save as otherwise provided by these Articles, one or more Shareholders holding at least a majority of the paid up voting share capital of the Company present in person or by proxy and entitled to vote at that meeting shall form a quorum. |
74. | If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of Shareholders, shall be dissolved. In any other case it shall stand adjourned to the same day in the next week, at the same time and place, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting the Shareholder or Shareholders present and entitled to vote shall form a quorum. |
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75. | If the Directors wish to make this facility available for a specific general meeting or all general meetings of the Company, participation in any general meeting of the Company may be by means of a telephone or similar communication equipment by way of which all Persons participating in such meeting can communicate with each other and such participation shall be deemed to constitute presence in person at the meeting. |
76. | The chairman, if any, of the Directors shall preside as chairman at every general meeting of the Company. |
77. | If there is no such chairman, or if at any general meeting he is not present within fifteen minutes after the time appointed for holding the meeting or is unwilling to act as chairman, any Director or Person nominated by the Directors shall preside as chairman, failing which the Shareholders present in person or by proxy shall choose any Person present to be chairman of that meeting. |
78. | The chairman may adjourn a meeting from time to time and from place to place either: |
(a) | with the consent of any general meeting at which a quorum is present (and shall if so directed by the meeting); or |
(b) | without the consent of such meeting if, in his sole opinion, he considers it necessary to do so to: |
(i) | secure the orderly conduct or proceedings of the meeting; or |
(ii) | give all persons present in person or by proxy and having the right to speak and / or vote at such meeting, the ability to do so, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a meeting, or adjourned meeting, is adjourned for fourteen days or more, notice of the adjourned meeting shall be given in the manner provided for the original meeting. Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting. |
79. | A resolution put to the vote of the meeting shall be decided on a poll. |
80. | A poll shall be taken in such manner as the chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. |
81. | In the case of an equality of votes the chairman of the meeting shall be entitled to a second or casting vote. |
82. | A poll demanded on the election of a chairman of the meeting or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time as the chairman of the meeting directs. |
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83. | Subject to any rights and restrictions for the time being attached to any Share, every Shareholder present in person and every Person representing a Shareholder by proxy shall, at a general meeting of the Company, shall have one vote for each Share of which he or the Person represented by proxy is the holder. |
84. | In the case of joint holders the vote of the senior who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register. |
85. | A Shareholder of unsound mind, or in respect of whom an order has been made by any court having jurisdiction in lunacy, may vote in respect of Shares carrying the right to vote held by him, by his committee, or other Person in the nature of a committee appointed by that court, and any such committee or other Person, may vote in respect of such Shares by proxy. |
86. | No Shareholder shall be entitled to vote at any general meeting of the Company unless all calls, if any, or other sums presently payable by him in respect of Shares carrying the right to vote held by him have been paid. |
87. | On a poll votes may be given either personally or by proxy. |
88. | The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under Seal or under the hand of an Officer or attorney duly authorised. A proxy need not be a Shareholder. |
89. | An instrument appointing a proxy may be in any usual or common form or such other form as the Directors may approve. |
90. | The instrument appointing a proxy shall be deposited at the Office or at such other place as is specified for that purpose in the notice convening the meeting no later than the time for holding the meeting or, if the meeting is adjourned, the time for holding such adjourned meeting. |
91. | The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll. |
92. | A resolution in writing signed by all the Shareholders for the time being entitled to receive notice of and to attend and vote at general meetings of the Company (or being corporations by their duly authorised representatives) shall be as valid and effective as if the same had been passed at a general meeting of the Company duly convened and held. |
93. | Any corporation which is a Shareholder or a Director may by resolution of its directors or other governing body authorise such Person as it thinks fit to act as its representative at any meeting of the Company or of any meeting of holders of a Class or of the Directors or of a committee of Directors, and the Person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual Shareholder or Director. |
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94. | If a clearing house (or its nominee) is a Member of the Company it may, by resolution of its directors or other governing body or by power of attorney, authorise such person or persons as it thinks fit to act as its representative or representatives at any general meeting of the Company or at any general meeting of any class of Members of the Company provided that, if more than one person is so authorised, the authorisation shall specify the number and class of Shares in respect of which each such person is so authorised. A person so authorised pursuant to this Article shall be entitled to exercise the same powers on behalf of the clearing house (or its nominee) which he represents as that clearing house (or its nominee) could exercise if it were an individual Member holding the number and Class of Shares specified in such authorisation. |
95. | Subject to Article 98, the Company may by Ordinary Resolution appoint any Person to be a Director. |
96. | Subject to Article 98, the Company may by Ordinary Resolution from time to time fix the maximum and minimum number of Directors to be appointed but unless such numbers are fixed as aforesaid the minimum number of Directors shall be one and the maximum number of Directors shall be unlimited. |
97. | There shall be no shareholding qualification for Directors. |
98. | For so long as the Company’s Shares are traded on a Designated Stock Exchange, the |
99. | Prior to an initial Business Combination, only holders of Class B Shares will have the right to vote on the election of Directors pursuant to Article 98 or the removal of Directors pursuant to Article 117. |
100. | For so long as the Company’s Shares are traded on a Designated Stock Exchange, any and all vacancies in the board of Directors, however occurring, including, without limitation, by reason of an increase in the size of the board of Directors, or the death, resignation, disqualification or removal of a Director, shall be filled solely and exclusively by the affirmative vote of a majority of the remaining Directors then in office, |
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even if less than a quorum of the board of Directors, and not by the Members. Any Director appointed in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of Directors in which the new directorship was created or the vacancy occurred and until such Director’s successor shall have been duly elected and qualified or until his or her earlier resignation, death or removal. When the number of Directors is increased or decreased, the board of Directors shall, subject to Article 98 above, determine the class or classes to which the increased or decreased number of Directors shall be apportioned; provided, however, that no decrease in the number of Directors shall shorten the term of any incumbent Director. In the event of a vacancy in the board of Directors, the remaining Directors, except as otherwise provided by law, shall exercise the powers of the full board of Directors until the vacancy is filled. |
101. | Any Director may in writing appoint another Person to be his alternate and, save to the extent provided otherwise in the form of appointment, such alternate shall have authority to sign written resolutions on behalf of the appointing Director, but shall not be authorised to sign such written resolutions where they have been signed by the appointing Director, and to act in such Director’s place at any meeting of the Directors. Every such alternate shall be entitled to attend and vote at meetings of the Directors as the alternate of the Director appointing him and where he is a Director to have a separate vote in addition to his own vote. A Director may at any time in writing revoke the appointment of an alternate appointed by him. Such alternate shall not be an Officer solely as a result of his appointment as an alternate other than in respect of such times as the alternate acts as a Director. The remuneration of such alternate shall be payable out of the remuneration of the Director appointing him and the proportion thereof shall be agreed between them. |
102. | Subject to the Companies Law, these Articles and to any resolutions passed in a general meeting, the business of the Company shall be managed by the Directors, who may pay all expenses incurred in setting up and registering the Company and may exercise all powers of the Company. No resolution passed by the Company in general meeting shall invalidate any prior act of the Directors that would have been valid if that resolution had not been passed. |
103. | The Directors may from time to time appoint any Person, whether or not a Director to hold such office in the Company as the Directors may think necessary for the administration of the Company (including, for the avoidance of doubt and without limitation, any chairman (or co-chairman) of the board of Directors, vice chairman of the board of Directors, one or more chief executive officers, presidents, a chief financial officer, a secretary, a treasurer, vice-presidents, one or more assistant vice presidents, one or more assistant treasurers, one or more assistant secretaries or any other officers as may be determined by the Directors), for such term and at such remuneration (whether by way of salary or commission or participation in profits |
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or partly in one way and partly in another), and with such powers and duties as the Directors may think fit. Any Person so appointed by the Directors may be removed by the Directors or by the Company by Ordinary Resolution. The Directors may also appoint one or more of their number to the office of managing director upon like terms, but any such appointment shall ipso facto terminate if any managing director ceases from any cause to be a Director, or if the Company by Ordinary Resolution resolves that his tenure of office be terminated. |
104. | The Directors may appoint any Person to be a Secretary (and if need be an assistant Secretary or assistant Secretaries) who shall hold office for such term, at such remuneration and upon such conditions and with such powers as they think fit. Any Secretary or assistant Secretary so appointed by the Directors may be removed by the Directors or by the Company by Ordinary Resolution. |
105. | The Directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the Directors. |
106. | The Directors may from time to time and at any time by power of attorney (whether under Seal or under hand) or otherwise appoint any company, firm or Person or body of Persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys or authorised signatory (any such person being an “ Attorney Authorised Signatory |
107. | The Directors may from time to time provide for the management of the affairs of the Company in such manner as they shall think fit and the provisions contained in the three next following Articles shall not limit the general powers conferred by this Article. |
108. | The Directors from time to time and at any time may establish any committees, local boards or agencies for managing any of the affairs of the Company and may appoint any Person to be a member of such committees or local boards and may appoint any managers or agents of the Company and may fix the remuneration of any such Person. |
109. | The Directors from time to time and at any time may delegate to any such committee, local board, manager or agent any of the powers, authorities and discretions for the time being vested in the Directors and may authorise the members for the time being of any such local board, or any of them to fill any vacancies therein and to act notwithstanding vacancies and any such appointment or delegation may be made on such terms and subject to such conditions as the Directors may think fit and the Directors may at any time remove any Person so appointed and may annul or vary any such delegation, but no Person dealing in good faith and without notice of any such annulment or variation shall be affected thereby. |
110. | Any such delegates as aforesaid may be authorised by the Directors to sub-delegate all or any of the powers, authorities, and discretion for the time being vested in them. |
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111. | The Directors may agree with a Shareholder to waive or modify the terms applicable to such Shareholder’s subscription for Shares without obtaining the consent of any other Shareholder; provided that such waiver or modification does not amount to a variation or abrogation of the rights attaching to the Shares of such other Shareholders. |
112. | The Directors shall have the authority to present a winding up petition on behalf of the Company without the sanction of a resolution passed by the Company in general meeting. |
113. | The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof, or to otherwise provide for a security interest to be taken in such undertaking, property or uncalled capital, and to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party. |
114. | The Seal shall not be affixed to any instrument except by the authority of a resolution of the Directors provided always that such authority may be given prior to or after the affixing of the Seal and if given after may be in general form confirming a number of affixings of the Seal. The Seal shall be affixed in the presence of a Director or a Secretary (or an assistant Secretary) or in the presence of any one or more Persons as the Directors may appoint for the purpose and every Person as aforesaid shall sign every instrument to which the Seal is so affixed in their presence. |
115. | The Company may maintain a facsimile of the Seal in such countries or places as the Directors may appoint and such facsimile Seal shall not be affixed to any instrument except by the authority of a resolution of the Directors provided always that such authority may be given prior to or after the affixing of such facsimile Seal and if given after may be in general form confirming a number of affixings of such facsimile Seal. The facsimile Seal shall be affixed in the presence of such Person or Persons as the Directors shall for this purpose appoint and such Person or Persons as aforesaid shall sign every instrument to which the facsimile Seal is so affixed in their presence and such affixing of the facsimile Seal and signing as aforesaid shall have the same meaning and effect as if the Seal had been affixed in the presence of and the instrument signed by a Director or a Secretary (or an assistant Secretary) or in the presence of any one or more Persons as the Directors may appoint for the purpose. |
116. | Notwithstanding the foregoing, a Secretary or any assistant Secretary shall have the authority to affix the Seal, or the facsimile Seal, to any instrument for the purposes of attesting authenticity of the matter contained therein but which does not create any obligation binding on the Company. |
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117. | The office of Director shall be vacated, if the Director: |
(a) | becomes bankrupt or makes any arrangement or composition with his creditors; |
(b) | dies or is found to be or becomes of unsound mind; |
(c) | resigns his office by notice in writing to the Company; |
(d) | is removed from office by Ordinary Resolution; or |
(e) | is removed from office pursuant to any other provision of these Articles. |
118. | The Directors may meet together (either within or outside the Cayman Islands) for the dispatch of business, adjourn, and otherwise regulate their meetings and proceedings as they think fit. Questions arising at any meeting shall be decided by a majority of votes. In case of an equality of votes the chairman shall have a second or casting vote. A Director may, and a Secretary or assistant Secretary on the requisition of a Director shall, at any time summon a meeting of the Directors. |
119. | A Director may participate in any meeting of the Directors, or of any committee appointed by the Directors of which such Director is a member, by means of telephone or similar communication equipment by way of which all Persons participating in such meeting can communicate with each other and such participation shall be deemed to constitute presence in person at the meeting. |
120. | The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors, and unless so fixed, if there be two or more Directors the quorum shall be two, and if there be one Director the quorum shall be one. A Director represented by an alternate Director at any meeting shall be deemed to be present for the purposes of determining whether or not a quorum is present. |
121. | A Director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the Company shall declare the nature of his interest at a meeting of the Directors. A general notice given to the Directors by any Director to the effect that he is to be regarded as interested in any contract or other arrangement which may thereafter be made with that company or firm shall be deemed a sufficient declaration of interest in regard to any contract so made. A Director may vote in respect of any contract or proposed contract or arrangement notwithstanding that he may be interested therein and if he does so his vote shall be counted and he may be counted in the quorum at any meeting of the Directors at which any such contract or proposed contract or arrangement shall come before the meeting for consideration. |
122. | A Director may hold any other office or place of profit under the Company (other than the office of auditor) in conjunction with his office of Director for such period and on such terms (as to remuneration and otherwise) as the Directors may determine and no Director or intending Director shall be disqualified by his office from contracting with the Company either with regard to his tenure of any such other office or |
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place of profit or as vendor, purchaser or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any Director is in any way interested, be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement by reason of such Director holding that office or of the fiduciary relation thereby established. A Director, notwithstanding his interest, may be counted in the quorum present at any meeting of the Directors whereat he or any other Director is appointed to hold any such office or place of profit under the Company or whereat the terms of any such appointment are arranged and he may vote on any such appointment or arrangement. |
123. | Any Director may act by himself or his firm in a professional capacity for the Company, and he or his firm shall be entitled to remuneration for professional services as if he were not a Director; provided that nothing herein contained shall authorise a Director or his firm to act as auditor to the Company. |
124. | The Directors shall cause minutes to be made in books or loose-leaf folders provided for the purpose of recording: |
(a) | all appointments of Officers made by the Directors; |
(b) | the names of the Directors present at each meeting of the Directors and of any committee of the Directors; and |
(c) | all resolutions and proceedings at all meetings of the Company, and of the Directors and of committees of Directors. |
125. | When the chairman of a meeting of the Directors signs the minutes of such meeting the same shall be deemed to have been duly held notwithstanding that all the Directors have not actually come together or that there may have been a technical defect in the proceedings. |
126. | A resolution in writing signed by all the Directors or all the members of a committee of Directors entitled to receive notice of a meeting of Directors or committee of Directors, as the case may be (an alternate Director, subject as provided otherwise in the terms of appointment of the alternate Director, being entitled to sign such a resolution on behalf of his appointer), shall be as valid and effectual as if it had been passed at a duly called and constituted meeting of Directors or committee of Directors, as the case may be. When signed a resolution may consist of several documents each signed by one or more of the Directors or his duly appointed alternate. |
127. | The continuing Directors may act notwithstanding any vacancy in their body but if and for so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of Directors, the continuing Directors may act for the purpose of increasing the number, or of summoning a general meeting of the Company, but for no other purpose. |
128. | The Directors may elect a chairman of their meetings and determine the period for which he is to hold office but if no such chairman is elected, or if at any meeting the chairman is not present within fifteen minutes after the time appointed for holding the meeting, the Directors present may choose one of their number to be chairman of the meeting. |
129. | Subject to any regulations imposed on it by the Directors, a committee appointed by the Directors may elect a chairman of its meetings. If no such chairman is elected, or if at any meeting the chairman is not |
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present within fifteen minutes after the time appointed for holding the meeting, the committee members present may choose one of their number to be chairman of the meeting. |
130. | A committee appointed by the Directors may meet and adjourn as it thinks proper. Subject to any regulations imposed on it by the Directors, questions arising at any meeting shall be determined by a majority of votes of the committee members present and in case of an equality of votes the chairman shall have a second or casting vote. |
131. | All acts done by any meeting of the Directors or of a committee of Directors, or by any Person acting as a Director, shall notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such Director or Person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such Person had been duly appointed and was qualified to be a Director. |
132. | Subject to any rights and restrictions for the time being attached to any Shares, or as otherwise provided for in the Companies Law and these Articles, the Directors may from time to time declare dividends (including interim dividends) and other distributions on Shares in issue and authorise payment of the same out of the funds of the Company lawfully available therefor. |
133. | Subject to any rights and restrictions for the time being attached to any Shares, the Company by Ordinary Resolution may declare dividends, but no dividend shall exceed the amount recommended by the Directors. |
134. | The Directors may determine, before recommending or declaring any dividend, to set aside out of the funds legally available for distribution such sums as they think proper as a reserve or reserves which shall be applicable for meeting contingencies, or for equalising dividends or for any other purpose to which those funds may be properly applied and pending such application may, at the determination of the Directors, either be employed in the business of the Company or be invested in such investments as the Directors may from time to time think fit. |
135. | Any dividend may be paid in any manner as the Directors may determine. If paid by cheque it will be sent through the post to the registered address of the Shareholder or Person entitled thereto, or in the case of joint holders, to any one of such joint holders at his registered address or to such Person and such address as the Shareholder or Person entitled, or such joint holders as the case may be, may direct. Every such cheque shall be made payable to the order of the Person to whom it is sent or to the order of such other Person as the Shareholder or Person entitled, or such joint holders as the case may be, may direct. |
136. | The Directors when paying dividends to the Shareholders in accordance with the foregoing provisions of these Articles may make such payment either in cash or in specie and may determine the extent to which amounts may be withheld therefrom (including, without limitation, any taxes, fees, expenses or other liabilities for which a Shareholder (or the Company, as a result of any action or inaction of the Shareholder) is liable). |
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137. | Subject to any rights and restrictions for the time being attached to any Shares, all dividends shall be declared and paid according to the amounts paid up on the Shares, but if and for so long as nothing is paid up on any of the Shares dividends may be declared and paid according to the par value of the Shares. |
138. | If several Persons are registered as joint holders of any Share, any of them may give effectual receipts for any dividend or other moneys payable on or in respect of the Share. |
139. | No dividend shall bear interest against the Company. |
140. | The books of account relating to the Company’s affairs shall be kept in such manner as may be determined from time to time by the Directors. |
141. | The books of account shall be kept at the Office, or at such other place or places as the Directors think fit, and shall always be open to the inspection of the Directors. |
142. | The Directors may from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Shareholders not being Directors, and no Shareholder (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by law or authorised by the Directors or by Ordinary Resolution. |
143. | The accounts relating to the Company’s affairs shall only be audited if the Directors so determine, in which case the financial year end and the accounting principles will be determined by the Directors. The financial year of the Company shall end on 31 December of each year or such other date as the Directors may determine. |
144. | Without prejudice to the freedom of the Directors to establish any other committee, if the Shares are listed or quoted on the Designated Stock Exchange, and if required by the Designated Stock Exchange, the Directors shall establish and maintain an audit committee (the “ Audit Committee |
145. | The Directors in each year shall prepare, or cause to be prepared, an annual return and declaration setting forth the particulars required by the Companies Law and deliver a copy thereof to the Registrar of Companies in the Cayman Islands. |
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146. | Subject to the Companies Law and these Articles, the Directors may: |
(a) | resolve to capitalise an amount standing to the credit of reserves (including a Share Premium Account, capital redemption reserve and profit and loss account), whether or not available for distribution; |
(b) | appropriate the sum resolved to be capitalised to the Shareholders in proportion to the nominal amount of Shares (whether or not fully paid) held by them respectively and apply that sum on their behalf in or towards: |
(i) | paying up the amounts (if any) for the time being unpaid on Shares held by them respectively, or |
(ii) | paying up in full unissued Shares or debentures of a nominal amount equal to that sum, and allot the Shares or debentures, credited as fully paid, to the Shareholders (or as they may direct) in those proportions, or partly in one way and partly in the other, but the Share Premium Account, the capital redemption reserve and profits which are not available for distribution may, for the purposes of this Article, only be applied in paying up unissued Shares to be allotted to Shareholders credited as fully paid; |
(c) | make any arrangements they think fit to resolve a difficulty arising in the distribution of a capitalised reserve and in particular, without limitation, where Shares or debentures become distributable in fractions the Directors may deal with the fractions as they think fit; |
(d) | authorise a Person to enter (on behalf of all the Shareholders concerned) into an agreement with the Company providing for either: |
(i) | the allotment to the Shareholders respectively, credited as fully paid, of Shares or debentures to which they may be entitled on the capitalisation, or |
(ii) | the payment by the Company on behalf of the Shareholders (by the application of their respective proportions of the reserves resolved to be capitalised) of the amounts or part of the amounts remaining unpaid on their existing Shares, and any such agreement made under this authority being effective and binding on all those Shareholders; and |
(e) | generally do all acts and things required to give effect to any of the actions contemplated by this Article. |
147. | The Directors shall in accordance with the Companies Law establish a Share Premium Account and shall carry to the credit of such account from time to time a sum equal to the amount or value of the premium paid on the issue of any Share. |
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148. | There shall be debited to any Share Premium Account on the redemption or purchase of a Share the difference between the nominal value of such Share and the redemption or purchase price provided always that at the determination of the Directors such sum may be paid out of the profits of the Company or, if permitted by the Companies Law, out of capital. |
149. | The Directors may establish separate accounts on the books and records of the Company |
(a) | the proceeds from the allotment and issue of Shares of any Class or Series may be applied in the books of the Company to the Investment Account established for the Shares of such Class or Series; |
(b) | the assets and liabilities and income and expenditures attributable to the Shares of any Class or Series may be applied or allocated for accounting purposes to the relevant Investment Account established for such Shares subject to these Articles; |
(c) | where any asset is derived from another asset (whether cash or otherwise), such derivative asset may be applied in the books of the Company to the Investment Account from which the related asset was derived and on each revaluation of an investment the increase or diminution in the value thereof (or the relevant portion of such increase or diminution in value) may be applied to the relevant Investment Account; |
(d) | in the case of any asset of the Company which the Directors do not consider is attributable to a particular Investment Account, the Directors may determine the basis upon which any such asset shall be allocated among Investment Accounts and the Directors shall have power at any time and from time to time to vary such allocation; |
(e) | where the assets of the Company not attributable to any Investment Accounts give rise to any net profits, the Directors may allocate the assets representing such net profits to the Investment Accounts as they may determine; |
(f) | the Directors may determine the basis upon which any liability including expenses shall be allocated among Investment Accounts (including conditions as to subsequent re-allocation thereof if circumstances so permit or require) and shall have power at any time and from time to time to vary such basis and charge expenses of the Company against either revenue or the capital of the Investment Accounts; and |
(g) | the Directors may in the books of the Company transfer any assets to and from Investment Accounts if, as a result of a creditor proceeding against certain of the assets of the Company or otherwise, a liability would be borne in a different manner from that in which it would have been borne under this Article, or in any similar circumstances. |
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150. | Subject to any applicable law and except as otherwise provided in these Articles the assets held in each Investment Account shall be applied solely in respect of Shares of the Class or Series to which such Investment Account relates and no holder of Shares of a Class or Series shall have any claim or right to any asset allocated to any other Class or Series. |
151. | Any notice or document may be served by the Company or by the Person entitled to give notice to any Shareholder either personally, or by posting it airmail or air courier service in a prepaid letter addressed to such Shareholder at his address as appearing in the Register, or by electronic mail to any electronic mail address such Shareholder may have specified in writing for the purpose of such service of notices, or by facsimile should the Directors deem it appropriate. In the case of joint holders of a Share, all notices shall be given to that one of the joint holders whose name stands first in the Register in respect of the joint holding, and notice so given shall be sufficient notice to all the joint holders. |
152. | Any Shareholder present, either personally or by proxy, at any meeting of the Company shall for all purposes be deemed to have received due notice of such meeting and, where requisite, of the purposes for which such meeting was convened. |
153. | Any notice or other document, if served by: |
(a) | post, shall be deemed to have been served five clear days after the time when the letter containing the same is posted; |
(b) | facsimile, shall be deemed to have been served upon production by the transmitting facsimile machine of a report confirming transmission of the facsimile in full to the facsimile number of the recipient; |
(c) | recognised courier service, shall be deemed to have been served 48 hours after the time when the letter containing the same is delivered to the courier service; or |
(d) | electronic mail, shall be deemed to have been served immediately upon the time of the transmission by electronic mail. |
154. | Any notice or document delivered or sent in accordance with the terms of these Articles shall notwithstanding that such Shareholder be then dead or bankrupt, and whether or not the Company has notice of his death or bankruptcy, be deemed to have been duly served in respect of any Share registered in the name of such Shareholder as sole or joint holder, unless his name shall at the time of the service of the notice or document, have been removed from the Register as the holder of the Share, and such service shall for all purposes be deemed a sufficient service of such notice or document on all Persons interested (whether jointly with or as claiming through or under him) in the Share. |
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155. | Notice of every general meeting of the Company shall be given to: |
(a) | all Shareholders holding Shares with the right to receive notice and who have supplied to the Company an address for the giving of notices to them; and |
(b) | every Person entitled to a Share in consequence of the death or bankruptcy of a Shareholder, who but for his death or bankruptcy would be entitled to receive notice of the meeting. |
156. | To the fullest extent permitted by law, every Director (including for the purposes of this Article any alternate Director appointed pursuant to the provisions of these Articles), Secretary, assistant Secretary, or other Officer (but not including the Company’s auditors) and the personal representatives of the same (each an “ Indemnified Person Proceeding |
157. | No Indemnified Person shall be liable: |
(a) | for the acts, receipts, neglects, defaults or omissions of any other Director or Officer or agent of the Company; or |
(b) | for any loss on account of defect of title to any property of the Company; or |
(c) | on account of the insufficiency of any security in or upon which any money of the Company shall be invested; or |
(d) | for any loss incurred through any bank, broker or other similar Person; or |
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(e) | for any loss occasioned by any negligence, default, breach of duty, breach of trust, error of judgement or oversight on such Indemnified Person’s part; or |
(f) | for any loss, damage or misfortune whatsoever which may happen in or arise from the execution or discharge of the duties, powers, authorities, or discretions of such |
158. | The Company will pay the expenses (including attorneys’ fees) incurred by a Indemnified Person in defending any Proceeding in advance of its final disposition, provided, however, that, to the extent required by applicable law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the Indemnified Person to repay all amounts advanced if it should be ultimately determined that the Indemnified Person is not entitled to be indemnified under this Article or otherwise. |
159. | The Directors, on behalf of the Company, may purchase and maintain insurance for the benefit of any Director or officer of the Company against any liability which, by virtue of any rule of law, would otherwise attach to such person in respect of any negligence, default, breach of duty or breach of trust of which such person may be guilty in relation to the Company. |
160. | The rights to indemnification and advancement of expenses conferred on any indemnitee as set out above will not be exclusive of any other rights that any indemnitee may have or hereafter acquire. The rights to indemnification and advancement of expenses set out above will be contract rights and such rights will continue as to an Indemnified Person who has ceased to be a Director or officer and shall inure to the benefit of his or her heirs, executors and administrators. |
161. | Subject to the proviso hereto, no Person shall be recognised by the Company as holding any Share upon any trust and the Company shall not, unless required by law, be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any Share or (except only as otherwise provided by these Articles or as the Companies Law requires) any other right in respect of any Share except an absolute right to the entirety thereof in each Shareholder registered in the Register, provided that, notwithstanding the foregoing, the Company shall be entitled to recognise any such interests as shall be determined by the Directors. |
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162. | Notwithstanding any other provision of the Articles, the Articles under this heading |
163. | Article 170(b) may not be amended prior to the consummation of a Business Combination without a Special Resolution, the approval threshold for which is unanimity (100%) of all votes cast at a meeting of the Shareholders. |
164. | Prior to the consummation of any Business Combination, the Company shall either: |
(a) | submit such Business Combination to its Members for approval; or |
(b) | provide Members with the opportunity to have their Shares repurchased by means of a tender offer for a per-Share repurchase price payable in cash, equal to the aggregate amount then on deposit in the Trust Fund, calculated as of two business days prior to the consummation of a Business Combination, including interest earned on the Trust Fund and not previously released to the Company to fund Regulatory Withdrawals, subject to an annual limit of $325,000, for a maximum of 24 months and/or to pay income taxes, if any, (less up to $100,000 of interest to pay dissolution expenses), divided by the number of Public Shares then in issue, provided that the Company shall not repurchase Public Shares in an amount that would cause the Company’s net tangible assets to be less than US$5,000,001. |
165. | If the Company initiates any tender offer in accordance with Rule 13e-4 and Regulation 14E of the Exchange Act in connection with a Business Combination, it shall file tender offer documents with the SEC prior to completing a Business Combination which contain substantially the same financial and other information about such Business Combination and the redemption rights as is required under Regulation 14A of the Exchange Act. |
166. | If, alternatively, the Company holds a Member vote to approve a proposed Business Combination, the Company will conduct any compulsory redemption in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act and not pursuant to the tender offer rules and file proxy materials with the SEC. |
167. | At a general meeting called for the purposes of approving a Business Combination pursuant to these Articles, in the event that a majority of the Shares voted are voted for the approval of a Business Combination, the Company shall be authorised to consummate a Business Combination. |
168. | Any Member holding Public Shares who is not a Founder, officer or Director may, contemporaneously with any vote on a Business Combination, elect to have their Public |
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169. | The Redemption Price shall be paid promptly following the consummation of the relevant Business Combination. If the proposed Business Combination is not approved or completed for any reason then such redemptions shall be cancelled and share certificates (if any) returned to the relevant Members as appropriate. |
170. | In the event that: |
(a) | either the Company does not consummate a Business Combination by twenty-four months after the closing of the IPO, or such later time as the Members of the Company may approve in accordance with the Articles or per-Share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Fund, including interest earned on the Trust Fund and not previously released to the Company to fund Regulatory Withdrawals, subject to an annual limit of $325,000, for a maximum of 24 months and/or to pay income taxes, if any, (less up to $100,000 of interest to pay dissolution expenses), divided by the number of Public Shares then in issue, which redemption will completely extinguish public Members’ rights as Members (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining Members and the Directors, liquidate and dissolve, subject in the case of sub-articles (ii) and (iii), to its obligations |
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under Cayman Islands law to provide for claims of creditors and in all cases subject to the other requirements of applicable law; and |
(b) | any amendment is made to Article 170(a) that would affect the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company has not consummated an initial Business Combination within twenty-four months after the date of the closing of the IPO, or any amendment is made with respect to any other provisions of these Articles relating to the rights of holders of Class A Shares, each holder of Public Shares who is not a Founder, officer or Director shall be provided with the opportunity to redeem their Public Shares upon the approval of any such amendment at a per-Share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Fund, including interest earned on the Trust Fund and not previously released to the Company to fund Regulatory Withdrawals, subject to an annual limit of $325,000, for a maximum of 24 months and/or to pay our income taxes, if any, (less up to $100,000 of interest to pay dissolution expenses), divided by the number of Public Shares then in issue. |
171. | Except for the withdrawal of interest to pay income taxes and for Regulatory Withdrawals, if any, none of the funds held in the Trust Fund shall be released from the Trust Fund until the earlier of an IPO Redemption pursuant to Article 168, a repurchase of Shares by means of a tender offer pursuant to Article 164(b), a distribution of the Trust Fund pursuant to Article 170(a) or an amendment under Article 170(b). In no other circumstance shall a holder of Public Shares have any right or interest of any kind in the Trust Fund. |
172. | After the issue of Public Shares, and prior to the consummation of a Business Combination, the Directors shall not issue additional Shares or any other securities that would entitle the holders thereof to: |
(a) | receive funds from the Trust Fund; or |
(b) | vote on: |
(i) | any Business Combination or any other proposal presented to the Shareholders prior to or in connection with the completion of a Business Combination; or |
(ii) | a proposed amendment to these Articles to extend the time the Company has to consummate a Business Combination beyond twenty-four months after the closing of the IPO, or otherwise amend this Article 172. |
173. | The Company must complete one or more Business Combinations having an aggregate fair market value of at least 80% of the assets held in the Trust Fund (net of amounts previously disbursed to the Company’s management for working capital purposes and excluding the amount of deferred underwriting discounts held in the Trust Fund and taxes payable on the income earned on the Trust Fund) at the time of the Company’s signing a definitive agreement in connection with a Business Combination. An initial Business Combination must not be effectuated with another blank cheque company or a similar company with nominal operations. In the event the Company enters into a Business Combination with an entity that is affiliated with the Sponsor, officers or Directors, the Company, or a committee of independent directors (as defined pursuant to the rules and regulations of the Designated Stock Exchange), will obtain an opinion |
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that our initial Business Combination is fair to the Company from a financial point of view from either an independent investment banking firm that is a member of the Financial Industry Regulatory |
174. | Any payment made to members of the Audit Committee (if one exists) shall require the review and approval of the Directors, with any Director interested in such payment abstaining from such review and approval. |
175. | A Director may vote in respect of any Business Combination in which such Director has a conflict of interest with respect to the evaluation of such Business Combination. Such Director must disclose such interest or conflict to the other Directors. |
176. | The Audit Committee shall monitor compliance with the terms of the IPO and, if any non-compliance is identified, the Audit Committee shall be charged with the responsibility to take all action necessary to rectify such non-compliance or otherwise cause compliance with the terms of the IPO. |
177. | The Company may enter into a Business Combination with a target business that is affiliated with the Sponsor, the Directors or officers of the Company if such transaction were approved by a majority of the independent directors (as defined in Article 173) and the directors that did not have an interest in such transaction. In the event the Company enters into a Business Combination with an entity that is affiliated with the Sponsor, the Directors or officers, the Company, or a committee of independent directors (as defined in Article 173), will obtain an opinion that the Business Combination is fair to the Company |
178. | In recognition and anticipation of the facts that: (a) directors, managers, officers, members, partners, managing members, employees and/or agents of one or more members of the |
179. | To the fullest extent permitted by applicable law, the Investor Group and the Investor Group Related Persons shall have no duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Company. |
180. | To the fullest extent permitted by applicable law, the Company renounces any interest or expectancy of the Company in, or in being offered an opportunity to participate in, any potential transaction or matter which |
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may be a corporate opportunity for either the Investor Group or the Investor Group Related Persons, on the one hand, and the Company, on the other, unless such opportunity is expressly offered to such Investor Group Related Person in their capacity as an Officer or Director of the Company and the opportunity is one the Company is permitted to complete on a reasonable basis. |
181. | Except to the extent expressly assumed by contract, to the fullest extent permitted by applicable law, the Investor Group and the Investor Group Related Persons shall have no duty to communicate or offer any such corporate opportunity to the Company and shall not be liable to the Company or its Members for breach of any fiduciary duty as a Member, Director and/or officer of the Company solely by reason of the fact that such party pursues or acquires such corporate opportunity for itself, himself or herself, directs such corporate opportunity to another person, or does not communicate information regarding such corporate opportunity to the Company, unless such opportunity is expressly offered to such Investor Group Related Person in their capacity as an Officer or Director of the Company and the opportunity is one the Company is permitted to complete on a reasonable basis. |
182. | Except as provided elsewhere in these Articles, the Company hereby renounces any interest or expectancy of the Company in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for both the Company and the Investor Group, about which a Director and/or officer of the Company who is also an Investor Group Related Person acquires knowledge. The Company shall, to the fullest extent permitted by applicable law, waive and interest in any corporate opportunity offered to any Director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a Director or officer and such opportunity is one the Company is legally and contractually permitted to undertake and would otherwise be reasonable for the Company to pursue. |
183. | To the extent a court might hold that the conduct of any activity related to a corporate opportunity that is renounced in this Article to be a breach of duty to the Company or its Members, the Company and (if applicable) each Member hereby waives, to the fullest extent permitted by applicable law, waive any and all claims and causes of action that the Company may have for such activities described in Articles 178 to 182 above. To the fullest extent permitted by applicable law, the provisions of Articles 178 to 182 apply equally to activities conducted in the future and that have been conducted in the past. |
184. | If the Company shall be wound up the liquidator shall apply the assets of the Company in such manner and order as he thinks fit in satisfaction of creditors’ claims. |
185. | If the Company shall be wound up, the liquidator may, with the sanction of an Ordinary Resolution divide amongst the Shareholders in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Shareholders or different Classes. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Shareholders as |
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www.verify.gov.ky File#: 364437 |
Filed: 14-Sep-2020 08:00 EST Auth Code: E52693592472 |
the liquidator, with the like sanction shall think fit, but so that no Shareholder shall be compelled to accept any assets whereon there is any liability. |
186. | Subject to the Companies Law and the rights attaching to the various Classes, the Company may at any time and from time to time by Special Resolution alter or amend these Articles in whole or in part. |
187. | For the purpose of determining those Shareholders that are entitled to receive notice of, attend or vote at any meeting of Shareholders or any adjournment thereof, or those Shareholders that are entitled to receive payment of any dividend, or in order to make a determination as to who is a Shareholder for any other purpose, the Directors may, by any means in accordance with the requirements of any Designated Stock Exchange, provide that the Register shall be closed for transfers for a stated period which shall not exceed in any case 40 days. If the Register shall be so closed for the purpose of determining those Shareholders that are entitled to receive notice of, attend or vote at a meeting of Shareholders the Register shall be so closed for at least ten days immediately preceding such meeting and the record date for such determination shall be the date of the closure of the Register. |
188. | In lieu of or apart from closing the Register, the Directors may fix in advance a date as the record date for any such determination of those Shareholders that are entitled to receive notice of, attend or vote at a meeting of the Shareholders and for the purpose of determining those Shareholders that are entitled to receive payment of any dividend the Directors may, at or within 90 days prior to the date of declaration of such dividend, fix a subsequent date as the record date for such determination. |
189. | If the Register is not so closed and no record date is fixed for the determination of those Shareholders entitled to receive notice of, attend or vote at a meeting of Shareholders or those Shareholders that are entitled to receive payment of a dividend, the date on which notice of the meeting is posted or the date on which the resolution of the Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Shareholders. When a determination of those Shareholders that are entitled to receive notice of, attend or vote at a meeting of Shareholders has been made as provided in this Article, such determination shall apply to any adjournment thereof. |
190. | The Company may by Special Resolution resolve to be registered by way of continuation in a jurisdiction outside the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing. In furtherance of a resolution adopted pursuant to this Article, the Directors may cause an application to be made to the Registrar of Companies to deregister the Company in the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing and |
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www.verify.gov.ky File#: 364437 |
Filed: 14-Sep-2020 08:00 EST Auth Code: E52693592472 |
may cause all such further steps as they consider appropriate to be taken to effect the transfer by way of continuation of the Company. |
191. | The Company may merge or consolidate in accordance with the Companies Law. |
192. | To the extent required by the Companies Law, the Company may by Special Resolution resolve to merge or consolidate the Company. |
193. | The Directors, or any authorised service providers (including the Officers, the Secretary and the registered office agent of the Company), shall be entitled to disclose to any regulatory or judicial authority, or to any stock exchange on which the Shares may from time to time be listed, any information regarding the affairs of the Company including, without limitation, information contained in the Register and books of the Company. |
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www.verify.gov.ky File#: 364437 |
Filed: 14-Sep-2020 08:00 EST Auth Code: E52693592472 |
† | Indicates management contract or compensatory plan or arrangement. |
# | Portions of this exhibit have been omitted in accordance with Item 601 of Regulation S-K. |
* | To be filed by amendment. |
** | Previously filed. |
(A) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) | To include any prospectus required by section 10(a)(3) of the Securities Act; |
(ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
(iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
(B) | That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(C) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(D) | That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
(E) | That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
(i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
(ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
(iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
(iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(F) | That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. |
(G) | That every prospectus (i) that is filed pursuant to paragraph (F) immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act , each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(H) | Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
(I) | The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. |
(J) | To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. |
ACON S2 ACQUISITION CORP. | ||
By: |
/s/ Adam Kriger | |
Name: Adam Kriger | ||
Title: Chief Executive Officer |
Signature |
Title |
Date | ||
/s/ Adam Kriger Adam Kriger |
Chief Executive Officer and Director (Principal Executive Officer) |
August 26, 2021 | ||
* John Roush |
Chief Financial Officer, Chairman and Director (Principal Financial and Accounting Officer |
August 26, 2021 | ||
* Jonathan Ginns |
Director | August 26, 2021 | ||
* Daniel Jinich |
Director | August 26, 2021 | ||
* Sarah Kirshbaum Levy |
Director | August 26, 2021 | ||
* Ryan Shadrick Wilson |
Director | August 26, 2021 | ||
* Janie Goddard |
Director | August 26, 2021 |
By: | /s/ Adam Kriger |
Attorney-in-fact |
August 26, 2021 | |||
Adam Kriger |