Item 8.01
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Other Information.
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Risks
Related to the Acquisition and the Investment in CVH
There
are a number of significant risks related to the Acquisition and the investment in CVH, including the risk factors enumerated
below. Unless otherwise stated or the context otherwise requires under this Item 8.01, the terms “we,” “us ”
and “our” refer collectively to the Company and its subsidiaries.
Risks
Related to the Nanotron Acquisition
There
are a number of significant risks related to the Purchase Agreement, including the risk factors enumerated below.
We
may not be able to close the Acquisition and if we do close the Acquisition, we may not be able to successfully integrate Nanotron’s
business, or retain the existing customer base, which may result in our inability to fully realize the intended benefits of the
Acquisition. In addition the integration of Nanotron into our business operation may disrupt our current operations, which could
have a material adverse effect on our business, financial position and/or results of operations.
On
October 5, 2020, we agreed to acquire Nanotron. The closing of the Acquisition is subject to certain conditions to closing and
there are no assurances that the Acquisition will be consummated. Furthermore, integration of Nanotron’s business involves
a number of risks, including, but not limited to:
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difficulties
or complications in combining the acquired technologies, equipment and personnel into our operations;
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differences
in controls, procedures and policies, regulatory standards and business cultures between the acquired personnel and our current
personnel;
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the
diversion of management’s attention from our ongoing core business operations;
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the
potential loss of key personnel;
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the
potential loss of key customers or suppliers who choose not to do business with us;
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difficulties or delays in
consolidating the acquired technologies; and/or
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unanticipated costs and other
assumed contingent liabilities.
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These
factors could cause us to not fully realize the anticipated financial and/or strategic benefits of the Acquisition, which could
have a material adverse effect on our business, financial condition and/or results of operations.
We
may not realize the full benefit of the Acquisition if the acquired products and services have less market appeal than expected.
In
addition to designing and developing our own products and services, we evaluate various strategic transactions and acquisitions
of companies with technologies and intellectual property that complement our products and services by adding technology, differentiation,
customers and/or revenue. We believe these complementary technologies will add value to the Company and allow us to provide a
comprehensive indoor intelligence platform, offering a one-stop shop to our customers. We anticipate that the products and services
that we will receive upon the closing of the Acquisition will result in an increase in our revenues; however, there can be no
assurance that we will be able to retain the existing customer base or expand the technologies and products acquired from Nanotron
with existing customers and finding new customers to sell our products and services to. This may require increasingly sophisticated
and costly sales efforts and may not result in additional sales. In addition, the rate at which our customers purchase additional
products and services, and our ability to attract new customers, depends on a number of factors, including the perceived need
for indoor mapping products and services, as well as general economic conditions. If our efforts to sell additional products and
services are not successful, our business may suffer.
If
we do not adequately protect our intellectual property rights acquired in connection with the Acquisition, we may experience a
loss of revenue and our operations and growth prospects may be materially harmed.
The
Seller has represented to us that Nanotron’s intellectual property is legally and beneficially owned or licensed by them.
Although we are not aware of any infringement claims, it is possible that such claims are made during the Term. While the Seller
have agreed to indemnify us in connection with any losses or claims relating to any infringement of the licensed intellectual
property, any loss of the intellectual property rights could result in a loss of revenue and our operations and growth prospects
may be materially harmed.
In
addition, our success depends, in part, on our ability to protect our intellectual property against infringement and misappropriation
by defending our intellectual property rights, including those that we will acquire in connection with the Acquisition. To protect
these rights, we rely on intellectual property laws as well as contractual and other legal rights. We seek to acquire the rights
to intellectual property necessary for our operations. However, our measures may not be successful in any given instance, particularly
in countries outside the U.S. We endeavor to protect our rights; however, third parties may infringe upon our intellectual property
rights. We may be forced to take steps to protect our rights, including through litigation, which could result in a diversion
of resources.
Our
acquisition of Nanotron may expose us to additional liabilities, and insurance and indemnification coverage may not fully protect
us from these liabilities.
Upon
completion of our acquisition of Nanotron, we may be exposed to unknown or contingent liabilities associated with the Nanotron.
While we have certain indemnification protections set forth in the Purchase Agreement, if these liabilities exceed such limitations
or we are not entitled to seek indemnification provisions in connection with such liabilities, our results of operations and financial
condition may be materially and negatively affected.
Nanotron
relies on a key customer, the importance of which may vary dramatically from year to year, and a loss of this key customer may
adversely affect our operating results.
Prior
to the Acquisition, Nanotron has relied on certain key customers for a significant part of its revenues. The loss of a significant
amount of business from these key customers or other major customers would materially and adversely affect our results of operations
until such time, if ever, as we are able to replace the lost business. Significant customers or projects in any one period may
not continue to be significant customers or projects in other periods. To the extent that we are dependent on any single customer,
we are subject to the risks faced by that customer to the extent that such risks impede the customer’s ability to stay in
business and make timely payments to us.
If
Nanotron’s products fail to provide accurate and timely location information, we could have liability to customers, which
could adversely affect our results of operations.
Nanotron
is a provider of electronic location awareness solutions, which are intended to deliver precise position data augmented by context
information in real-time. Nanotron has historically focused and sold its products to companies related to manufacturing, mine
safety and productivity, healthcare and livestock health.
If
Nanotron’s solutions fail to provide accurate and timely information or are associated with errors or malfunctions, then
its customers and users could assert claims against us that could result in substantial costs to us, harm our reputation in the
industry and cause demand for our services to decline.
We
maintain general liability and insurance coverage, but this coverage may not continue to be available on acceptable terms or may
not be available in sufficient amounts to cover one or more large claims against us. In addition, the insurer might disclaim coverage
as to any future claim. One or more large claims could exceed our available insurance coverage.
The
assertion of such claims and ensuing litigation, regardless of its outcome could result in substantial cost to us, divert management’s
attention from operations, damage our reputation and decrease market acceptance of our products and services.
Risks
Related to Our Investment in CVH
Nadir
Ali, our Chief Executive Officer and a director, is an interested party in our investment in CVH by virtue of his prior investment
and relationship with CVH. These interrelationships may create, or appear to create, conflicts of interest.
Nadir
Ali, our Chief Executive Officer and director, is also a member in CVH through 3AM, which may, in certain circumstances, be entitled
to manage the affairs of CVH. Mr. Ali’s relationship may create conflicts of interest between Mr. Ali’s obligations
to our company and its shareholders and his economic interests and possible fiduciary obligations in CVH through 3AM. For example,
Mr. Ali may be in a position to influence or manage the affairs of CVH in a manner that may be viewed as contrary to the best
interests of either the Company or CVH and their respective stakeholders.
Because
of its limited resources and the significant competition for business combination opportunities, it may be more difficult for
the SPAC to complete its initial business combination. If the SPAC is unable to complete an initial business combination, then
we may not realize any benefit in our investment in CVH.
It
is anticipated that the Contribution will be used by the Sponsor to fund the purchase of private placement warrants it has committed
to purchase at the closing of the initial public offering of the SPAC. If the SPAC does not complete an initial business combination
within the allocated time period, then such warrants will be worthless. As a result, we could lose our entire investment.