UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2020
OR
☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For the transition period from
to
KENSINGTON CAPITAL ACQUISITION CORP
(Exact name of registrant as specified in its charter)
Delaware
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001-39345
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85-0796578
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(State or other jurisdiction of
incorporation or organization)
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(Commission File Number)
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(I.R.S. Employer Identification Number)
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1400 Old Country Road, Suite 301
Westbury, New York
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11590
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
(703) 674-6514
Not Applicable
(Former name or former address, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes ☒ No ☐ ¨
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated
filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange
Act.
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|
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☒
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Smaller reporting company
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☒
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Emerging growth company
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☒
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|
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes ☒ No ☐
Securities registered pursuant to Section 12(b) of the
Act:
Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Units, each consisting of one share of Class A common stock,
$0.0001 par value, and one-half of one redeemable warrant
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KCAC.U
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The New York Stock Exchange
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Class A common stock included as part of the units
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KCAC
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The New York Stock Exchange
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Redeemable warrants included as part of the units, each whole
warrant exercisable for one share of Class A common stock at an
exercise price of $11.50
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KCAC WS
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The New York Stock Exchange
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As of November 13,
2020, 23,000,000 shares of Class A common stock, par value
$0.0001 per share, and 5,750,000 shares of Class B common stock, par value $0.0001 per share, were
issued and outstanding.
KENSINGTON
CAPITAL ACQUISITION CORP.
Quarterly Report on Form 10-Q
Table of Contents
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Page No.
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PART I. FINANCIAL
INFORMATION
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2
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Item 1. Financial
Statements
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2
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|
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Unaudited Condensed Consolidated Balance Sheet as of September 30,
2020
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2
|
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Unaudited Condensed Consolidated Statement Of Operations for the
three months ended September 30, 2020, and for the period from
April 17, 2020 (inception) through September 30,
2020
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3
|
|
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Unaudited Condensed Consolidated Statement of Changes in
Stockholders’ Equity for the three months ended September 30, 2020,
and for the period from April 17, 2020 (inception) through
September 30, 2020
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4
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Unaudited Condensed Consolidated Statement of cash flows for the
period from April 17, 2020 (inception) through September 30,
2020
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5
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Notes To Unaudited Condensed Consolidated Financial
Statements
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6
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Item 2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
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23
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Item 3. Quantitative and Qualitative Disclosures About Market
Risk
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29
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Item 4. Controls and
Procedures
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29
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PART II - OTHER INFORMATION
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30
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Item 1. Legal
Proceedings
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30
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Item 1A. Risk
Factors
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30
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Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds
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30
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Item 3. Defaults upon Senior Securities
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30
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Item 4. Mine Safety Disclosures
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30
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Item 5. Other
Information
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30
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Item
6. Exhibits
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30
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SIGNATURE
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31
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i
PART I.
FINANCIAL
INFORMATION
Item
1. Financial
Statements
KENSINGTON CAPITAL ACQUISITION CORP.
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2020
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September 30, 2020
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Assets:
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Current assets:
|
|
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Cash
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$
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1,002,785
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Prepaid expenses
|
|
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285,083
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Total current assets
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1,287,868
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Investments held in Trust Account
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230,075,599
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Total Assets
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$
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231,363,467
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Liabilities and Stockholders' Equity:
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Current liabilities:
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Accounts payable
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$
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15,238
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Accrued expenses
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1,155,999
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Franchise tax payable
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90,548
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Notes payable - related party
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75,000
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Total current liabilities
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1,336,785
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Deferred underwriting commissions
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8,050,000
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Total liabilities
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9,386,785
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Commitments and Contingencies
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Class A common stock, $0.0001 par value; 21,697,668 shares subject
to possible
redemption at $10.00 per share
|
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216,976,680
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Stockholders' Equity:
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|
|
|
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Preferred stock, $0.0001 par value; 1,000,000 shares authorized;
none issued and
outstanding
|
|
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—
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Class A common stock, $0.0001 par value; 100,000,000 shares
authorized;
1,302,332 shares issued and outstanding (excluding
21,697,668 shares subject
to possible redemption)
|
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130
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Class B common stock, $0.0001 par value; 10,000,000 shares
authorized;
5,750,000 shares issued and outstanding
|
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|
575
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Additional paid-in capital
|
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6,524,748
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Accumulated deficit
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(1,525,451
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)
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Total stockholders' equity
|
|
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5,000,002
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Total Liabilities and Stockholders' Equity
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$
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231,363,467
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The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
2
KENSINGTON CAPITAL ACQUISITION CORP.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
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|
For The Three Months
Ended September 30, 2020
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|
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For The Period From April 17,
2020 (inception) through
September 30, 2020
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|
General and administrative expenses
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$
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1,428,188
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|
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$
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1,430,502
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Administrative expenses - related party
|
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60,000
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|
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80,000
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Franchise tax expense
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50,000
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|
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90,548
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Loss from operations
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(1,538,223
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)
|
|
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1,601,085
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Net gain from investments held in Trust Account
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75,599
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75,599
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Net loss
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$
|
(1,462,589
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)
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$
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(1,525,451
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)
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Weighted average shares outstanding of Class A
common stock (1)
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|
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7,053,922
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|
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6,248,452
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Basic and diluted net loss per share
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$
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(0.20
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)
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$
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(0.24
|
)
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(1)
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This number excludes an aggregate of up to 21,697,668 shares of
Class A common stock subject to possible redemption (Note 6).
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
3
KENSINGTON CAPITAL
ACQUISITION CORP.
UNAUDITED CONDENSED
CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
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Common Stock
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|
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Additional
|
|
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Total
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|
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Class A
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Class B
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Paid-In
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Accumulated
|
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Stockholders'
|
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Shares
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Amount
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Shares
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Amount
|
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Capital
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Deficit
|
|
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Equity
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Balance - April 17, 2020 (inception)
|
|
|
—
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|
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$
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—
|
|
|
|
—
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|
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$
|
—
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|
|
$
|
—
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|
|
$
|
—
|
|
|
$
|
—
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Issuance of Class B common stock to
Sponsor
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|
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—
|
|
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—
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|
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5,750,000
|
|
|
|
575
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|
|
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24,425
|
|
|
|
—
|
|
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25,000
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Sale of units in initial public offering, gross
|
|
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23,000,000
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|
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2,300
|
|
|
|
—
|
|
|
|
—
|
|
|
|
229,997,700
|
|
|
|
—
|
|
|
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230,000,000
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Offering costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(13,097,867
|
)
|
|
|
—
|
|
|
|
(13,097,867
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)
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Sale of private placement warrants to Sponsor
in private placement
|
|
|
—
|
|
|
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—
|
|
|
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—
|
|
|
|
—
|
|
|
|
6,575,000
|
|
|
|
—
|
|
|
|
6,575,000
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Common stock subject to possible
redemption
|
|
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(21,843,927
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)
|
|
|
(2,184
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(218,437,086
|
)
|
|
|
—
|
|
|
|
(218,439,270
|
)
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Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(62,862
|
)
|
|
|
(62,862
|
)
|
Balance - June 30, 2020 (unaudited)
|
|
|
1,156,073
|
|
|
$
|
116
|
|
|
|
5,750,000
|
|
|
$
|
575
|
|
|
$
|
5,062,172
|
|
|
$
|
(62,862
|
)
|
|
$
|
5,000,001
|
|
Common stock subject to possible
redemption
|
|
|
146,259
|
|
|
|
14
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,462,576
|
|
|
|
—
|
|
|
|
1,462,590
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,462,589
|
)
|
|
|
(1,462,589
|
)
|
Balance - September 30, 2020 (unaudited)
|
|
|
1,302,332
|
|
|
$
|
130
|
|
|
|
5,750,000
|
|
|
$
|
575
|
|
|
$
|
6,524,748
|
|
|
$
|
(1,525,451
|
)
|
|
$
|
5,000,002
|
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
4
KENSINGTON CAPITAL ACQUISITION CORP.
UNAUDITED
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM APRIL 17, 2020 (INCEPTION) THROUGH SEPTEMBER
30, 2020
Cash Flows from Operating Activities:
|
|
|
|
|
Net loss
|
|
$
|
1,525,451
|
|
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
|
|
|
|
|
Net gain from investments held in Trust Account
|
|
|
(75,599
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
Prepaid expenses
|
|
|
(285,083
|
)
|
Accounts payable
|
|
|
15,238
|
|
Accrued expenses
|
|
|
1,070,999
|
|
Franchise tax payable
|
|
|
90,548
|
|
Net cash used in operating activities
|
|
|
(709,348
|
)
|
Cash Flows from Investing Activities
|
|
|
|
|
Cash deposited in Trust Account
|
|
|
(230,000,000
|
)
|
Net cash used in investing activities
|
|
|
(230,000,000
|
)
|
Cash Flows from Financing Activities:
|
|
|
|
|
Proceeds from issuance of Class B common stock to Sponsor
|
|
|
25,000
|
|
Proceeds received from note payable to related party
|
|
|
75,000
|
|
Proceeds received from initial public offering, gross
|
|
|
230,000,000
|
|
Proceeds received from private placement
|
|
|
6,575,000
|
|
Offering costs paid
|
|
|
(4,962,867
|
)
|
Net cash provided by financing activities
|
|
|
231,712,133
|
|
Net change in cash
|
|
|
1,002,785
|
|
Cash - beginning of the period
|
|
|
—
|
|
Cash - end of the period
|
|
$
|
1,002,785
|
|
Supplemental disclosure of noncash activities:
|
|
|
|
|
Offering costs included in accrued expenses
|
|
$
|
85,000
|
|
Deferred underwriting commissions in connection with the initial
public offering
|
|
$
|
8,050,000
|
|
Initial value of common stock subject to possible redemption
|
|
$
|
216,976,680
|
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
5
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES
TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Note 1—Description of Organization and Business Operations
Kensington Capital Acquisition Corp. (the “Company”) was
incorporated in Delaware on April 17, 2020. The Company was formed
for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar
business combination with one or more businesses (the “Business
Combination”). Although the Company is not limited to a particular
industry or sector for purposes of consummating a Business
Combination, the Company has focused its search for a target
business in the automotive and automotive-related sector. The
Company is an “emerging growth company,” as defined in Section 2(a)
of the Securities Act of 1933, as amended (the “Securities Act”),
as modified by the Jumpstart Our Business Startups Act of 2012 (the
“JOBS Act”), and as such is subject to all of the risks associated
with emerging growth companies.
On September 2, 2020, the
Company entered into a business
combination agreement and plan of reorganization (as amended on
September 21, 2020 and as may be further amended from time to time,
the “QS Business Combination Agreement”), by and among the
Company, Kensington Merger Sub Inc., a
Delaware corporation and wholly owned subsidiary of the Company
(“Merger Sub”), and QuantumScape Corporation., a Delaware
corporation (“QuantumScape”). Merger Sub will merge with and into
QuantumScape, with QuantumScape surviving the merger and becoming a
wholly-owned direct subsidiary of the Company (collectively with
the other transactions described in the QS Business Combination
Agreement, the “QS Business Combination,” or the “Proposed
Transactions”). QuantumScape is
a leader in the development of next generation solid-state
lithium-metal batteries for use in electric vehicles. See the
Proposed Transactions described below.
As of September 30, 2020, the Company had not commenced any
operations. All activity for the period from April 17, 2020
(inception) through September 30, 2020 relates to the Company’s
formation and the initial public offering (the “Initial Public
Offering”) described below, the identification and evaluation of
prospective acquisition targets for an initial Business
Combination, including the Proposed Transactions (as defined
below), and ongoing administrative and compliance matters. The
Company will not generate any operating revenues until after the
completion of its initial Business Combination, at the earliest.
The Company will generate non-operating income in the form of
interest income on cash and cash equivalents from the proceeds
derived from the Initial Public Offering. The Company has selected
December 31 as its fiscal year end.
The Company’s sponsor is Kensington Capital Sponsor LLC, a Delaware
limited liability company (the “Sponsor”, or the “Original
Holder”). The registration
statement for the Company’s Initial Public Offering was declared
effective on June 25, 2020. On June 30, 2020, the Company
consummated its Initial Public Offering of 23,000,000 units (the
“Units” and, with respect to the Class A common stock included in
the Units sold, the “Public Shares”), including 3,000,000
additional Units to cover over-allotments (the “Over-Allotment
Units”), at $10.00 per Unit, generating gross proceeds of $230.0
million, and incurring offering costs of approximately $13.1
million, inclusive of approximately $8.1 million in deferred
underwriting commissions (Note 5).
Simultaneously with the
closing of the Initial Public Offering, the Company consummated the
private placement (“Private Placement”) of 6,575,000
warrants (each, a “Private
Placement Warrant” and collectively, the “Private Placement
Warrants”) at a price of $1.00 per Private Placement Warrant to the
Sponsor, generating proceeds of approximately $6.6 million (Note
4).
Upon the closing of the Initial Public Offering and the Private Placement,
$230.0 million ($10.00 per Unit) of the net proceeds of the Initial
Public Offering and certain of the proceeds of the Private
Placement was held in a trust account (“Trust Account”)
located in the United States with Continental Stock Transfer &
Trust Company acting as trustee, and invested only in U.S.
“government securities,” within the meaning set forth in Section
2(a)(16) of the Investment Company Act, with a maturity of 185 days
or less, or in money market funds meeting certain conditions under
Rule 2a-7 under the Investment Company Act, which invest only in
direct U.S. government treasury obligations, as determined by the
Company, until the earlier of: (i) the completion of a Business
Combination and (ii) the distribution of the Trust Account as
described below.
6
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The Company’s management has broad discretion with respect to the
specific application of the net proceeds of the Initial Public
Offering and the sale of the Private Placement Warrants, although
substantially all of the net proceeds are intended to be applied
generally toward consummating a Business Combination. The Company
must complete an initial Business Combination with one or more
operating businesses or assets with a fair market value equal to at
least 80% of the net assets held in the Trust Account (as defined
below) (net of amounts disbursed to management for working capital
purposes, if permitted, and excluding the amount of any deferred
underwriting discount). However, the Company will only complete a
Business Combination if the post-transaction company owns or
acquires 50% or more of the outstanding voting securities of the
target or otherwise acquires a controlling interest in the target
business sufficient for it not to be required to register as an
investment company under the Investment Company Act 1940, as
amended (the “Investment Company Act”).
There is no assurance that the Company will be able to complete a
Business Combination successfully. The Company will provide holders
of the Company’s outstanding shares of Class A common stock, par
value $0.0001 per share, sold in the Initial Public Offering (the
“Public Stockholders”) with the opportunity to redeem all or a
portion of their Public Shares upon the completion of a Business
Combination either (i) in connection with a stockholder meeting
called to approve the Business Combination or (ii) by means of a
tender offer. The decision as to whether the Company will seek
stockholder approval of a Business Combination or conduct a tender
offer will be made by the Company, solely in its discretion. The
Company will proceed with a Business Combination if a majority of
the shares voted are voted in favor of the Business Combination.
The Company will not redeem the Public Shares in an amount that
would cause its net tangible assets to be less than $5,000,001. If
a stockholder vote is not required by applicable law or stock
exchange rule and the Company does not decide to hold a stockholder
vote for business or other reasons, the Company will, pursuant to
its amended and restated certificate of incorporation (the
“Certificate of Incorporation”), conduct the redemptions pursuant
to the tender offer rules of the U.S. Securities and Exchange
Commission (“SEC”) and file tender offer documents with the SEC
prior to completing a Business Combination. If, however,
stockholder approval of the transaction is required by applicable
law or stock exchange rule, or the Company decides to obtain
stockholder approval for business or reasons, the Company will
offer to redeem shares in conjunction with a proxy solicitation
pursuant to the proxy rules and not pursuant to the tender offer
rules. Additionally, each Public Stockholder may elect to redeem
their Public Shares without voting, and if they do vote,
irrespective of whether they vote for or against the proposed
transaction. If the Company seeks stockholder approval in
connection with a Business Combination, the initial stockholders
(as defined below) have agreed to vote their Founder Shares (as
defined below in Note 4) and any Public Shares held by them in
favor of a Business Combination. In addition, the initial
stockholders have agreed to waive their redemption rights with
respect to any Founder Shares and any Public Shares held by them in
connection with the completion of a Business Combination.
If the Company holds a stockholder vote or there is a tender offer
for shares in connection with an initial Business Combination, the
Public Stockholders will be entitled to redeem their Public Shares
for a pro rata portion of the amount then held in the Trust Account
(initially $10.00 per Public Share), calculated as of two business
days prior to the initial Business Combination, including interest
earned on the funds held in the trust account and not previously
released to the Company to pay the Company’s taxes, net of taxes
payable. The per-share amount to be distributed to Public
Stockholders who redeem their Public Shares will not be reduced by
the deferred underwriting commissions the Company will pay to the
underwriters (as discussed in Note 5). As a result, such Public
Shares are recorded at a redemption value and classified as
temporary equity upon the completion of the Initial Public Offering
in accordance with the Financial Accounting Standards Board’s
(“FASB”) Accounting Standards Codification (“ASC”) Topic 480
“Distinguishing Liabilities from Equity.”
The Certificate of Incorporation provided that a Public
Stockholder, together with any affiliate of such stockholder or any
other person with whom such stockholder is acting in concert or as
a “group” (as defined under Section 13 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)), will be restricted
from redeeming its shares with respect to more than an aggregate of
15% or more of the Public Shares, without the prior consent of the
Company.
The Sponsor and the Company’s officers and directors (the “initial
stockholders”) agreed, pursuant to a letter agreement with the
Company, that they will not propose any amendment to the
Certificate of Incorporation (A) to
7
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
modify the substance or timing of the Company’s
obligation to allow redemption in connection with the initial
Business Combination or to redeem 100% of the Public Shares if the
Company does not complete a Business Combination within the
Combination
Period (as defined below) or (B) with respect to any other
provision relating to stockholders’
rights or
pre-initial
Business Combination activity, unless the Company provides the
Public Stockholders with the opportunity to redeem their Public
Shares upon
approval of any such amendment at a per-share price, payable in
cash, equal to the aggregate amount then on deposit in the Trust
Account, including interest (which interest shall be net of taxes
payable) divided by the number of then outstanding Public
Shares.
If the Company is unable to complete a Business Combination within
24 months from the closing of the Initial Public Offering, or June
30, 2022, (as such period may be extended pursuant to the
Certificate of Incorporation, the “Combination Period”), the
Company 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 the Company to pay the Company’s
taxes, net of taxes payable (less up to $100,000 of interest to pay
dissolution expenses), divided by the number of then outstanding
Public Shares, which redemption will completely extinguish Public
Stockholders’ rights as stockholders (including the right to
receive further liquidating distributions, if any), and (iii) as
promptly as reasonably possible following such redemption, subject
to the approval of the Company’s remaining stockholders and the
Company’s board of directors, dissolve and liquidate, subject in
each case to the Company’s obligations under Delaware law to
provide for claims of creditors and the requirements of other
applicable law. There will be
no redemption rights or liquidating distributions with respect to
the Company’s warrants, which will expire worthless if the Company
fails to complete its initial Business Combination within the
Combination Period.
The initial stockholders agreed to waive their rights to
liquidating distributions from the Trust Account with respect to
any Founder Shares held by them if the Company fails to complete a
Business Combination within the Combination Period. However, if the
initial stockholders acquire Public Shares in or after the Initial
Public Offering, they will be entitled to liquidating distributions
from the Trust Account with respect to such Public Shares if the
Company fails to complete a Business Combination within the
Combination Period. The underwriters have agreed to waive their
rights to the deferred underwriting commission (see Note 5) held in
the Trust Account in the event the Company does not complete a
Business Combination within in the Combination Period and, in such
event, such amounts will be included with the other funds held in
the Trust Account that will be available to fund the redemption of
the Public Shares. In the event of such distribution, it is
possible that the per share value of the residual assets remaining
available for distribution (including Trust Account assets) will be
only, or less than, $10.00. In order to protect the amounts held in
the Trust Account, the Sponsor has agreed to be liable to the
Company if and to the extent any claims by a third party (except
for the Company’s independent registered public accounting firm)
for services rendered or products sold to the Company, or a
prospective target business with which the Company has discussed
entering into a transaction agreement (a “Target”), reduce the
amount of funds in the Trust Account to below the lesser of (i)
$10.00 per Public Share and (ii) the actual amount per Public Share
held in the Trust Account as of the date of the liquidation of the
Trust Account, if less than $10.00 per Public Share due to
reductions in the value of the trust assets, less taxes payable,
provided that such liability will not apply to any claims by a
third party or Target that executed a waiver of any and all rights
to the monies held in the Trust Account nor will it apply to any
claims under the Company’s indemnity of the underwriters of the
Initial Public Offering against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the
“Securities Act”). Moreover, in the event that an executed waiver
is deemed to be unenforceable against a third party, then the
Sponsor will not be responsible to the extent of any liability for
such third-party claims. The Company will seek to reduce the
possibility that the Sponsor will have to indemnify the Trust
Account due to claims of creditors by endeavoring to have all
vendors, service providers, prospective target businesses and other
entities with which the Company does business, execute agreements
with the Company waiving any right, title, interest or claim of any
kind in or to monies held in the Trust Account.
Commencing August 17, 2020, holders of the Units were permitted to
elect to separately trade the shares of Class A common stock and
Warrants (as defined below) included in the Units. No fractional
shares will be issued upon separation of the Units and only whole
Warrants will trade.
8
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Proposed Business Combination and Related Transactions
On September 2, 2020, the Company, Kensington Merger Sub Inc.,
wholly owned subsidiary of the Company (“Merger Sub”), and
QuantumScape Corporation. (“QuantumScape”), entered into the QS
Business Combination Agreement, pursuant to which, among other
things, the Company and QuantumScape will enter into the QS
Business Combination. QuantumScape is a leader in
the development of next generation solid-state lithium-metal
batteries for use in electric vehicles.
At the closing of the QS
Business Combination (the “Closing”), each outstanding share of
QuantumScape Class A common stock, together with each share of
QuantumScape preferred stock that is outstanding immediately prior
to the Closing and convertible into a share of QuantumScape
Class A common stock pursuant to the provisions of
QuantumScape’s certificate of incorporation, and each outstanding
share of QuantumScape Class B common stock, together with each
share of QuantumScape preferred stock that is outstanding
immediately prior to the Closing and convertible into a share of
QuantumScape Class B common stock pursuant to the provisions
of QuantumScape’s certificate of incorporation, will be cancelled
and automatically converted into the right to receive a number of
shares of the Company’s Class A common stock or shares of the
Company’s Class B common stock, as applicable, determined in
each case by reference to an “Exchange Ratio,” calculated in
accordance with the QS Business Combination Agreement. As of the
date of the initial signing of the QS Business Combination
Agreement, the Exchange Ratio was 4.0032186234, and the Company
will file with the SEC a Current Report on
Form 8-K announcing the final Exchange Ratio no later
than four business days prior to a special meeting of its
stockholders.
As a result of the QS Business Combination, the Company currently
expects to issue with respect to QuantumScape Capital Stock (or
expects to reserve for issuance with respect to Exchanged Options,
Exchanged RSUs and Exchanged Warrants (each as defined below))
368,799,998 shares of the Company’s Common Stock in the aggregate.
The final aggregate amount of shares of the Company’s Common Stock
to be issued (or reserved for issuance) in connection with the
business combination will be calculated in accordance with the QS
Business Combination Agreement.
As promptly as practicable after the
Proxy statement, prospectus, and information statement becomes
effective, QuantumScape will seek an irrevocable written consent of
QuantumScape’s stockholders as required to approve and adopt the QS
Business Combination Agreement and the Proposed Transactions. Such
approval will be sought from and requires the affirmative vote of
the holders of at least (a) a majority of the outstanding
shares of QuantumScape capital stock, (b) a majority of the
outstanding shares of QuantumScape Class A common stock and
the outstanding shares of QuantumScape Class B common stock,
each voting separately as a class, (c) a majority of the
outstanding shares of QuantumScape Class A common stock and
shares of QuantumScape preferred stock that are convertible into
shares of QuantumScape Class A common stock, voting as a
single class, and (d) a majority of the outstanding shares of
QuantumScape Class B common stock and the outstanding shares
of QuantumScape preferred stock that are convertible into shares of
QuantumScape Class B common stock, voting together as a single
class. No additional approval or vote from any holders of any class
or series of stock of QuantumScape will be necessary to adopt and
approve the QS Business Combination Agreement, the QS Business
Combination and the Proposed Transactions.
The transaction is structured as a reverse triangular merger, which
includes the following: (a) Pursuant to the QS Business Combination
Agreement, on the Closing Date, Merger Sub will be merged with and
into QuantumScape (the “Merger”), with QuantumScape surviving the
Merger as a wholly-owned direct subsidiary of the Company (the
“Surviving Corporation”); (b) Contemporaneously with the execution
of the QS Business Combination Agreement, certain investors have
entered into certain subscription agreements, pursuant to which
such investors will purchase shares of the Company’s Common Stock
at a purchase price of $10.00 per share in a private placement to
be consummated immediately prior to the consummation of the
Proposed Transactions; (c) In addition, concurrently with the
execution of the QS Business Combination Agreement, (i) the
Company, QuantumScape and Volkswagen Group of America Investments
LLC (“Volkswagen”) entered into a stockholder support agreement
(the “Volkswagen Support Agreement”), pursuant to which, among
other things, Volkswagen agreed, among other things, to vote its
shares of QuantumScape Preferred Stock in favor of the QS Business
Combination Agreement and the Proposed Transactions, and (ii) the
Company, QuantumScape and certain stockholders of QuantumScape with
(together with Volkswagen) a sufficient number of votes to approve
the Merger and other transactions that require the approval of
QuantumScape’s stockholders entered into a stockholder support
agreement (the “Other Stockholder
9
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Support Agreement”; the Volkswagen Stockholder Support Agreement
and the Other Stockholder Support Agreement, the “Stockholder
Support Agreements”), pursuant
to which, among other things, the Key QuantumScape Stockholders
agreed, among other things, to vote their shares of QuantumScape
Common Stock and QuantumScape Preferred Stock in favor of the QS
Business Combination Agreement and the Proposed
Transactions;
and (iii) certain stockholders of QuantumScape and certain
stockholders of the Company entered into a registration rights and
lock-up agreement (the “Registration Rights and Lock-Up
Agreement”); (d) In addition, concurrently with the execution of
the QS Business
Combination Agreement, certain senior level employees of
QuantumScape entered into a lock-up agreement (the “Senior Employee
Lock-Up Agreement”) with the Company, pursuant to which, such
employees agreed to restrictions on the transferability of
the
Company’s securities for a period of up to four years following the
consummation of the Proposed Transactions, subject to certain
exceptions set forth therein; and (e) In addition, concurrently
with the execution of the QS Business Combination Agreement,
(i) the Company and QuantumScape entered into a letter agreement
with Volkswagen Group of America Investments, LLC (“VGA”), a
stockholder of QuantumScape, pursuant to which, consistent with the
rights of VGA with respect to the election of QuantumScape’s
directors
under the existing voting agreement between QuantumScape and
certain of its stockholders, VGA will be entitled, following the
Proposed Transactions, to nominate up to two designees to the
Company’s board of directors, subject to the satisfaction
of
certain conditions regarding funding and ownership of the Company’s
capital stock, (ii) The Company and QuantumScape entered into an
additional letter agreement with VGA, pursuant to which VGA will,
among other things, receive an opportunity to review
and
comment on filings with the SEC with respect to the Proposed
Transactions and be provided copies of notices provided between the
parties to the QS Business Combination Agreement and (iii) The
Company and QuantumScape entered into an additional letter
agreement
with VGA, pursuant to which QuantumScape will reserve proceeds from
its Series F Preferred Stock financing and capital received through
the Merger in a separate account to fund equity contributions to
QSV Operations LLC.
At the effective time of the Merger (the “Effective Time”), by
virtue of the Merger and without any action on the part of the
Company, Merger Sub, QuantumScape or the holders of any of
QuantumScape’s securities: (a) each share of QuantumScape’s Class A
Common Stock (which has one vote per share) and each share of
QuantumScape’s Preferred Stock that is convertible into
QuantumScape’s Class A Common Stock issued and outstanding
immediately prior to the Effective Time will be canceled and
converted into the right to receive the number of shares of the
Company’s Class A Common Stock that will be in effect after
completion of the Proposed Transactions (the “New Kensington Class
A Common Stock”) equal to the Exchange Ratio. “Exchange Ratio”
means the quotient obtained by dividing (x) the “Target Share
Amount”, which is to be calculated in accordance with the QS
Business Combination Agreement and is, as of the date of the QS
Business Combination Agreement, equal to 368,799,998, by (y) the
Fully-Diluted Company Shares.
The New Kensington Class A Common Stock will have one vote per
share; (b) each share of QuantumScape’s Class B Common Stock (which
has 10 votes per share) and each share of QuantumScape’s Preferred
Stock that is convertible into QuantumScape’s Class B Common Stock
issued and outstanding immediately prior to the Effective Time will
be canceled and converted into the right to receive the number of
shares of the Company’s Class B Common Stock that will be in effect
after completion of the Proposed Transactions (the “New Kensington
Class B Common Stock”; and together with the New Kensington Class A
Common Stock, the “New Kensington Common Stock”) equal to the
Exchange Ratio. The New Kensington Class B Common Stock will
have ten votes per share; (c) each share of QuantumScape’s Capital
Stock held in the treasury of QuantumScape will be cancelled
without any conversion thereof and no payment or distribution will
be made with respect thereto; (d) each share of Merger Sub Common
Stock issued and outstanding immediately prior to the Effective
Time will be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock of the Surviving
Corporation; (e) each QuantumScape Option that is outstanding
immediately prior to the Effective Time, whether vested or
unvested, will be converted into an option to purchase a number of
shares of the applicable class of New Kensington Common Stock that
the pre-conversion QuantumScape Option covers (such option, an
“Exchanged Option”) equal to the product (rounded down to the
nearest whole number) of (i) the number of shares of
QuantumScape’s Common Stock subject to such QuantumScape Option
immediately prior to the Effective Time and (ii) the Exchange
Ratio, at an exercise price per share (rounded up to the nearest
whole cent) equal to (A) the exercise price per share of such
Company Option immediately prior to the Effective Time divided by
(B) Exchange Ratio. Except as specifically provided in the QS
Business Combination Agreement, following the Effective Time, each
Exchanged Option will continue to be governed by the same terms and
conditions (including vesting and exercisability terms) as were
applicable to the corresponding former QuantumScape Option
immediately prior to the Effective Time; (f)
10
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
each share of QuantumScape’s
Restricted Stock that is outstanding immediately prior to the
Effective Time will be converted into restricted shares of the
applicable class of New Kensington Common Stock that the
pre-conversion QuantumScape’s Restricted Stock covers (such share
of restricted
Common Stock, an “Exchanged Restricted Common Stock”) equal to the
product (rounded down to the nearest whole number) of (i) the
number of shares of QuantumScape’s Restricted Stock immediately
prior to the Effective Time and (ii) the Exchange
Ratio. Except
as specifically provided above, following the Effective Time, each
Exchanged Restricted Stock shall continue to be governed by the
same terms and conditions (including transfer restrictions and
repurchase right terms) as were applicable to the
corresponding
former QuantumScape’s Restricted Stock immediately prior to the
Effective Time; (g) each QuantumScape RSU that is outstanding
immediately prior to the Effective Time shall be converted into
restricted stock units of the applicable class of New
Kensington
Common Stock that the pre-conversion Company RSU covers (such
restricted stock unit award covering Common Stock, an “Exchanged
RSU”) equal to the product (rounded down to the nearest whole
number) of (i) the number of shares subject to a
QuantumScape
RSU immediately prior to the Effective Time and (ii) the Exchange
Ratio. Except as specifically provided above, following the
Effective Time, each Exchanged RSU shall continue to be governed by
the same terms and conditions (including transfer
restrictions
and repurchase right terms) as were applicable to the corresponding
former QuantumScape RSU immediately prior to the Effective Time;
and (h) each QuantumScape Warrant that is outstanding immediately
prior to the Effective Time will be converted into
a warrant to purchase a number of shares of the applicable class of
New Kensington Common Stock that corresponded to the class for
which the pre-conversion QuantumScape Warrant was exercisable (such
warrant, an “Exchanged Warrant”) equal to the product
(rounded
down to the nearest whole number) of (i) the number of shares of
Company Common Stock subject to such QuantumScape Warrant
immediately prior to the Effective Time and (ii) the Exchange
Ratio, at an exercise price per share (rounded up to the
nearest
whole cent) equal to (A) the exercise price per share of such
QuantumScape Warrant immediately prior to the Effective Time
divided by (B) the Exchange Ratio. Except as specifically
provided above, following the Effective Time, each Exchanged
Warrant shall
continue to be governed by the same terms and conditions (including
vesting and exercisability terms) as were applicable to the
corresponding former QuantumScape Warrant immediately prior to the
Effective Time.
On September 2, 2020, the Company, Sponsor and certain stockholders
of QuantumScape (the “New Holders” and, collectively with the
Original Holder, the “Holders”) entered into the Registration
Rights and Lock-Up Agreement, which shall be effective at the
Closing. Pursuant to the terms of the Registration Rights and
Lock-Up Agreement, the Company will be obligated to file a
registration statement to register the resale of certain securities
of the Company held by the Holders. In addition, pursuant to the
terms of the Registration Rights and Lock-Up Agreement and subject
to certain requirements and customary conditions, including with
regard to the number of demand rights that may be exercised, the
Holders may demand at any time or from time to time, that the
Company file a registration statement on Form S-3 (or on
Form S-1 if Form S-3 is not available) to register the
securities of the Company held by such Holders. The Registration
Rights and Lock-Up Agreement also provides the Holders with
“piggy-back” registration rights, subject to certain requirements
and customary conditions.
The Registration Rights and Lock-Up Agreement further provides for
the securities of the Company held by the Holders to be locked-up
for a period of time following the Closing, as described below,
subject to certain exceptions. The securities held by the Original
Holder will be locked-up for one year following the Closing,
subject to earlier release if (i) the reported last sale price
of the Company’s common stock equals or exceeds $12.00 per share
(as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any
30-trading day period commencing at least 150 days after the
Closing or (ii) if the Company consummates a liquidation,
merger, stock exchange or other similar transaction after the
Closing which results in all of the Company’s stockholders having
the right to exchange their shares of common stock for cash,
securities or other property. The securities held by the New
Holders will be locked-up for 180 days after the Closing, subject
to earlier release if (i) the reported last sale price of the
Company’s common stock equals or exceeds $12.00 per share (as
adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any
30-trading day period commencing at least 150 days after the
Closing or (ii) if the Company consummates a liquidation,
merger, stock exchange or other similar transaction after the
Closing which results in all of the Company’s stockholders having
the right to exchange their shares of common stock for cash,
securities or other property.
11
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
In connection with the execution of the QS Business Combination
Agreement, effective as of September 2, 2020, the Company entered
into separate subscription
agreements (each, a “Subscription Agreement”) with a number of
investors (each a “Subscriber”), pursuant to which the Subscribers
agreed to purchase, and the Company agreed to sell to the
Subscribers, an aggregate of 50,000,000 shares of the Company’s
Class
A Common Stock (which will be New Kensington Class A Common Stock
upon completion of the Proposed Transactions) (the “PIPE Shares”),
for a purchase price of $10.00 per share and an aggregate purchase
price of $500 million, in a private placement (the
“PIPE”).
The closing of the sale of the PIPE Shares pursuant to the
Subscription Agreement is contingent upon, among other customary
closing conditions, the substantially concurrent consummation of
the Proposed Transactions. The purpose of the PIPE is to raise
additional capital for use by the combined company following the
Closing.
Pursuant to the Subscription Agreements, the Company agreed, among
other things, that, within 15 business days after the consummation
of the Proposed Transactions, it will file with the SEC (at the
Company’s sole cost and expense) a registration statement
registering the resale of the PIPE Shares (the “Resale Registration
Statement”), and the Company will use its commercially reasonable
efforts to have the Resale Registration Statement declared
effective as soon as practicable after the filing thereof.
On September 2, 2020, the Company entered into separate Senior
Employee Lock-Up Agreements with certain senior level employees of
QuantumScape (the “Senior Employees”), including QuantumScape’s
executive officers. The Senior Employee Lock-Up Agreements
provide that the securities of the Company owned of record or
beneficially by the Senior Employees (including certain securities
that may be granted or issued to a Senior Employee after the
Effective Time) (collectively, the “Lock-Up Shares”) may generally
not be transferred for at least 180 days after the Closing (the
“Initial Lock-Up Period”) and up to four years after the Closing,
subject to certain exceptions. Following the Initial Lock-Up
Period, Senior Employees may transfer Lock-Up Shares without
restriction as follows: (i) during the first year after the
Effective Time, up to 25% of the total number of Lock-Up Shares,
(ii) following the first anniversary of the Effective Time until
the earlier of four years after the Closing or the occurrence of an
event described below, up to 50% of the total number of Lock-Up
Shares, and (iii) up to an additional 50% of the total number of
Lock-Up Shares following satisfaction of agreed delivery
requirements between QuantumScape and VGA. These transfer
restrictions are subject to earlier release if (a) the Company
completes a liquidation, merger, stock exchange or other similar
transaction after the Closing that results in all of the Company’s
stockholders having the right to exchange their shares of common
stock for cash, securities or other property; (b) VGA terminates
for any reason the Amended and Restated Joint Venture Agreement,
dated as of May 14, 2020, by and among QuantumScape and VGA; (c)
VGA issues a critical or negative statement regarding the Company
and its technology unless such statement is required to be made by
VGA under applicable law and is truthful and accurate; or (d) VGA
transfers certain Company securities in excess of the amounts set
forth in the Senior Employee Lock-Up Agreements. The Senior
Employee Lock-Up Agreements also provide that, upon consummation of
the Merger, the Company or QuantumScape shall pay to each Senior
Employee a one-time cash bonus equal to 20% of the Senior
Employee’s then annual base salary.
Liquidity and Capital Resources
As indicated in the accompanying balance sheet, at September 30,
2020, the Company had approximately $1.0 million in cash, and
working capital of approximately $42,000 (not taken into
account tax obligations).
The Company’s liquidity needs prior to the consummation of the
Initial Public Offering were satisfied through the proceeds of
$25,000 from the sale of the Founders Shares (as defined in Note
4), and loan proceeds from the Sponsor of $75,000 (which is still
outstanding to date) ). Subsequent from the consummation
of the Initial Public Offering, the Company’s liquidity has been
satisfied through the net proceeds from the consummation of the
Initial Public Offering and the Private Placement held outside of
the Trust Account.
In addition, in order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the
Sponsor, or certain of the Company’s officers and directors may,
but are not obligated to, loan the Company funds as may be required
(“Working Capital Loans”). As of September 30, 2020, there were no
amounts outstanding under any Working Capital Loan.
12
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Management has determined that the Company has access to funds from
the Sponsor
that are sufficient to fund the working capital needs of the
Company until the consummation of an initial Business Combination
or for a minimum of one year from the date of issuance of these
unaudited condensed financial statements. However, in
connection
with the Company’s assessment of going concern considerations in
accordance with Financial Accounting Standards Board Accounting
Standards Update 2014-15, “Disclosure of Uncertainties about an
Entity’s Ability to Continue as a Going Concern,” management
has
determined that the Company’s mandatory liquidation and subsequent
dissolution raise substantial doubt about the Company’s ability to
continue as a going concern. No adjustments have been made to the
carrying amounts of assets or liabilities should the
Company be required to liquidate and dissolve
after June 30, 2022.
Management is currently evaluating the impact of the COVID-19
pandemic on the industry and effect on the Company’s financial
position, results of its operations and/or search for a target
company.
Note 2—Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of expenses during the
reporting period. Actual results could differ from those
estimates.
Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements are presented in U.S. dollars in conformity with
accounting principles generally accepted in the United States of
America (“GAAP”) for financial information and pursuant to the
rules and regulations of the SEC. Accordingly, they do not include
all of the information and footnotes required by GAAP. The
unaudited condensed consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary. All
significant inter-company transactions and balances have been
eliminated in consolidation. In the opinion of management, the
unaudited condensed consolidated financial statements reflect all
adjustments, which include only normal recurring adjustments
necessary for the fair statement of the balances and results for
the periods presented. Operating results for the period for the
period from April 17, 2020 (inception) through September 30, 2020
are not necessarily indicative of the results that may be expected
through December 31, 2020.
The accompanying unaudited condensed consolidated financial
statements should be read in conjunction with the audited financial
statements and notes thereto included in the Form 8-K and the final
prospectus filed by the Company with the SEC on July 7, 2020 and
June 26, 2020, respectively.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section
2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”), and it may take
advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging
growth companies including, but not limited to, not being required
to comply with the independent registered public accounting firm
attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in
its periodic reports and proxy statements, and exemptions from the
requirements of holding a nonbinding advisory vote on executive
compensation and stockholder approval of any golden parachute
payments not previously approved.
13
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Further, Section 102(b)(1) of the
JOBS Act exempts emerging growth companies from being required to
comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities
Act registration statement declared effective or do not have
a class of securities registered under the Exchange Act) are
required to comply with the new or revised financial accounting
standards. The JOBS Act provides that an emerging growth company
can elect to opt out of the extended transition period and
comply
with the requirements that apply to non-emerging growth companies
but any such an election to opt out is irrevocable. The Company has
elected not to opt out of such extended transition period, which
means that when a standard is issued or revised and it
has
different application dates for public or private companies, the
Company, as an emerging growth company, can adopt the new or
revised standard at the time private companies adopt the new or
revised standard.
This may make comparison of the Company’s financial statements with
another public company that is neither an emerging growth company
nor an emerging growth company that has opted out of using the
extended transition period difficult or impossible because of the
potential differences in accounting standards used.
Cash and Cash Equivalents
The Company considers all short-term investments with an original
maturity of three months or less when purchased to be cash
equivalents. The Company had no cash equivalents as of September
30, 2020.
Cash and marketable securities held in Trust Account
At September 30, 2020 the assets held in the Trust Account were
substantially held in U.S. Treasury Bills. During the period from
April 17, 20202 (inception) through September 30, 2020, no amounts
were withdrawn from the Trust Account to pay taxes.
Concentration of Credit Risk
Financial instruments that
potentially subject the Company to concentrations of credit risk
consist of cash accounts in a financial institution, which, at
times, may exceed the Federal Depository Insurance Coverage limit
of $250,000, and investments held in Trust Account.
The Company has not experienced losses on these accounts and
management believes the Company is not exposed to significant risks
on such accounts. The Company’s
investments held in the Trust Account as of September 30, 2020 is
comprised of investments in U.S. Treasury securities with an
original maturity of 185 days or less or investments in a money
market funds that comprise only U.S. treasury securities
money market funds.
Investments Held in the Trust Account
The Company’s portfolio of investments held in the Trust Account is
comprised of U.S. government securities, within the meaning set
forth in Section 2(a)(16) of the Investment Company Act, with a
maturity of 185 days or less, or investments in money market funds
that invest in U.S. government securities, or a combination
thereof. The Company’s investments held in the Trust Account are
classified as trading securities. Trading securities are presented
on the balance sheets at fair value at the end of each reporting
period. Gains and losses resulting from the change in fair value of
these securities is included in gain on marketable securities,
dividends and interest held in Trust Account in the accompanying
unaudited condensed statement of operations. The estimated fair
values of investments held in the Trust Account are determined
using available market information.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received for sale
of an asset or paid for transfer of a liability, in an orderly
transaction between market participants at the measurement date.
GAAP establishes a three-tier fair value hierarchy, which
prioritizes the inputs used in measuring fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1 measurements)
and the lowest priority to unobservable inputs (Level 3
measurements). These tiers include:
14
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
•
|
Level 1, defined as
observable inputs
such as quoted prices (unadjusted) 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.
|
In some circumstances, the inputs used to measure fair value might
be categorized within different levels of the fair value hierarchy.
In those instances, the fair value measurement is categorized in
its entirety in the fair value hierarchy based on the lowest level
input that is significant to the fair value measurement.
As of September 30, 2020,
the carrying values of cash, accounts payable,
accrued expenses, franchise tax payable and income tax payable
approximate their fair values due to the short-term nature of the
instruments. The Company’s
investments held in Trust Account are comprised of investments in
U.S. Treasury securities with an original maturity of 180 days or
less or investments in a money market funds that comprise only U.S.
treasury securities and are recognized at fair value. The fair
value of investments held in Trust Account is determined using
quoted prices in active markets.
Offering Costs Associated with the Initial Public Offering
Offering costs consist of legal, accounting, underwriting fees and
other costs incurred through the balance sheet date that are
directly related to the Initial Public Offering and that were
charged to additional paid-in capital upon the completion of the
Initial Public Offering.
Class A common stock subject to possible redemption
The Company accounts for its Class A common stock subject to
possible redemption in accordance with the guidance in ASC Topic
480 “Distinguishing Liabilities from Equity.” Class A common stock
subject to mandatory redemption (if any) is classified as liability
instruments and are measured at fair value. Conditionally
redeemable Class A common
stock (including Class A common stock that features redemption
rights that are either within the control of the holder or subject
to redemption upon the occurrence of uncertain events not solely
within the Company’s control) are classified as temporary equity.
At all other times, Class A common stock is classified as
stockholders’ equity. The Company’s Class A common stock feature
certain redemption rights that are considered to be outside of the
Company’s control and subject to the occurrence of uncertain future
events. Accordingly, at September 30, 2020, 21,697,668 shares of
Class A common stock subject to possible redemption is presented at
redemption value as temporary equity, outside of the stockholders’
equity section of the Company’s balance sheet.
Net Loss Per Common Share
The Company complies with accounting and disclosure requirements of
FASB ASC Topic 260, “Earnings Per Share.” Net loss per share is
computed by dividing net loss by the weighted average number of
shares of common stock outstanding during the period excluding
common stock subject to forfeiture. Through June 30, 2020, the date the
underwriters exercised in full their over-allotment option,
weighted average shares were
reduced for the effect of an aggregate of 750,000 shares of common
stock that were subject to forfeiture. An aggregate of 21,697,668 shares of
Class A common stock subject to possible redemption at September
30, 2020 has been excluded from the calculation of basic loss per
share of common stock, since such shares, if redeemed, only
participate in their pro rata share of the trust earnings. The
Company has not considered the effect of the warrants sold in the
Initial Public Offering (including the consummation of the
Over-Allotment Units) and Private Placement to purchase an
aggregate of 18,074,992 shares of the Company’s common stock in the
calculation of diluted loss per share, since the exercise of the
warrants are contingent upon the occurrence of future
events.
15
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Reconciliation of Net Loss per Common Share
The Company’s net loss is adjusted for the portion of income (loss)
that is attributable to Class A common stock subject to redemption,
as these shares only participate in the earnings of the Trust
Account and not the income or losses of the Company. Accordingly,
basic and diluted loss per common share is calculated as
follows:
|
|
For The Three Months Ended
September 30, 2020
|
|
|
For The Period From
April 17, 2020
(inception) through
September 30, 2020
|
|
Net loss
|
|
$
|
(1,462,589
|
)
|
|
$
|
(1,525,451
|
)
|
Less: Income attributable to Class A ordinary shares
subject to possible redemption
|
|
|
24,183
|
|
|
|
—
|
|
Adjusted net loss
|
|
$
|
(1,438,406
|
)
|
|
$
|
(1,525,451
|
)
|
Weighted average ordinary shares outstanding, basic
and diluted
|
|
|
7,053,922
|
|
|
|
6,248,452
|
|
Basic and diluted net loss per ordinary share
|
|
$
|
(0.20
|
)
|
|
$
|
(0.24
|
)
|
Income Taxes
The Company follows the asset and liability method of accounting
for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax
assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that included the enactment date. Valuation
allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized. Deferred tax assets
were deemed immaterial as of September 30, 2020.
FASB ASC 740 prescribes a recognition threshold and a measurement
attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return. For
those benefits to be recognized, a tax position must be more likely
than not to be sustained upon examination by taxing authorities.
There were no unrecognized tax benefits as of September 30, 2020.
The Company recognizes accrued interest and penalties related to
unrecognized tax benefits as income tax expense. No amounts were
accrued for the payment of interest and penalties as of September
30, 2020. The Company is currently not aware of any issues under
review that could result in significant payments, accruals or
material deviation from its position. The Company is subject to
income tax examinations by major taxing authorities since
inception.
On March 27, 2020, President Trump signed the Coronavirus Aid,
Relief, and Economic Security “CARES” Act into law. The CARES Act
includes several significant business tax provisions that, among
other things, would eliminate the taxable income limit for certain
net operating losses (“NOL”) and allow businesses to carry back
NOLs arising in 2018, 2019 and 2020 to the five prior years,
suspend the excess business loss rules, accelerate refunds of
previously generated corporate alternative minimum tax credits,
generally loosen the business interest limitation under IRC section
163(j) from 30 percent to 50 percent among other technical
corrections included in the Tax Cuts and Jobs Act tax provisions.
The Company does not believe that the CARES Act will have a
significant impact on Company's financial position or statement of
operations.
Recent Accounting Standards
The Company’s management does not believe that any recently issued,
but not yet effective, accounting standards updates, if currently
adopted would have a material effect on the accompanying
financial
statements.
16
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Note 3—Initial Public Offering
On June 30, 2020, the
Company sold 23,000,000 Units, including 3,000,000 Over-Allotment
Units, at a price of $10.00 per Unit, generating gross proceeds of
$230.0 million, and incurring offering costs of approximately $13.1
million, inclusive of approximately $8.1 million in deferred
underwriting commissions.
Each Unit consists of one share of Class A common stock and
one-half of one redeemable warrant (each, a “Public Warrant”). Each
whole Public Warrant entitles the holder to purchase one share of
Class A common stock at a price of $11.50 per share, subject to
adjustment (see Note 6).
Note 4—Related Party Transactions
Founder Shares
On April 17, 2020, the Sponsor subscribed to purchase 5,031,250
shares of the Company’s Class B common stock, par value $0.0001 per
share (the “Founder Shares”), and fully paid for those shares on
June 30, 2020. On June 25, 2020, the Company effected a stock
dividend with respect to the Class B common stock, resulting in the
Sponsor holding an aggregate of 5,750,000 founder shares. All
shares and associated amounts have been retroactively restated to
reflect the share capitalization. The initial stockholders agreed
to forfeit up to 750,000 Founder Shares to the extent that the
over-allotment option is not exercised in full by the underwriters
so that the Founder Shares represented 20.0% of the Company’s
issued and outstanding shares of common stock after the Initial
Public Offering. The underwriter exercised its
over-allotment option in full on June 30, 2020; thus, the 750,000
Founder Shares were no longer subject to forfeiture.
The initial stockholders agreed, subject to limited exceptions, not
to transfer, assign or sell any of the Founder Shares until the
earlier to occur of: (A) one year
after the completion of the initial Business Combination or (B)
subsequent to the initial Business Combination, (x) if the last
reported sale price of the Class A common stock equals or exceeds
$12.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading
days within any 30-trading day period commencing at least 150 days
after the initial Business Combination, or (y) the date on which
the Company completes a liquidation, merger, capital stock
exchange, reorganization or other similar transaction that results
in all of the Company’s stockholders having the right to exchange
their shares of common stock for cash, securities or other
property.
Private Placement Warrants
Simultaneously with the
closing of the Initial Public Offering, the Company sold
6,575,000 Private Placement
Warrants at a price of $1.00 per Private Placement Warrant to the
Sponsor, generating gross proceeds of approximately $6.6
million.
Each whole Private Placement Warrant is exercisable for one whole
share of Class A common stock at a price of $11.50 per share,
subject to adjustment. A portion of the proceeds from the sale of
the Private Placement Warrants to the Sponsor was added to the
proceeds from the Initial Public Offering held in the Trust
Account. If the Company does not complete a Business Combination
within the Combination Period, the Private Placement Warrants will
expire worthless. The Private Placement Warrants will be
non-redeemable for cash (except as described below) and exercisable
on a cashless basis so long as they are held by the Sponsor or its
permitted transferees.
The Sponsor agreed, subject to limited exceptions, not to transfer,
assign or sell the Private Placement Warrants until 30 days after
the completion of the initial Business Combination.
Related Party Loans
On April 17, 2020, the Sponsor agreed to loan the Company an
aggregate of up to $300,000 to cover expenses related to the
Initial Public Offering pursuant to a promissory note (the “Note”).
This loan is non-interest bearing and payable upon the completion
of the Initial Public Offering. As of September 30, 2020, the
Company has borrowed $75,000 under the Note. To date,
the balance of the Note remains outstanding.
17
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
In addition, in order to fund working capital deficiencies or
finance transaction costs in connection with a Business
Combination, the Sponsor or an affiliate of the Sponsor, or
certain of the Company’s
officers and directors may, but are not obligated to, loan the
Company funds as may be required (“Working
Capital Loans”).
If the Company completes a Business Combination, the Company may
repay the Working Capital Loans out of the
proceeds of the Trust Account released to the Company. Otherwise,
the Working Capital Loans could be repaid only out of funds held
outside the Trust Account. In the event that a Business Combination
does not close, the Company may use a portion of proceeds
held outside the Trust Account to repay the Working Capital Loans
but no proceeds held in the Trust Account would be used to repay
the Working Capital Loans. The Working Capital Loans would either
be repaid upon consummation of a Business Combination or,
at the lender’s
discretion, up to $1,500,000 of such Working Capital Loans may be
convertible into warrants of the post Business Combination entity
at a price of $1.00 per warrant. The warrants would be identical to
the Private Placement Warrants. Except for
the foregoing, the terms of such Working Capital Loans, if any,
have not been determined and no written agreements exist with
respect to such loans. To date, the Company had no borrowings under
the Working Capital Loans.
Service and Administrative Fees
The Company has agreed to pay service and administrative fees of
$20,000 per month to DEHC LLC, an affiliate of Daniel Huber, the
Company’s Chief Financial Officer, for up to 18 months commencing
on the date of consummation of the Initial Public Offering.
As of September 30, 2020,
the Company incurred $80,000 in general and administrative expenses
in the accompanying condensed consolidated statement of operations
and no amounts were payable in the accompanying balance sheet in
connection with such services.
The Sponsor, executive officers and directors, or any of their
respective affiliates, will be reimbursed for any out-of-pocket
expenses incurred in connection with activities on the Company’s
behalf such as identifying potential target businesses and
performing due diligence on suitable Business Combinations. The
Company’s audit committee will review on a quarterly basis all
payments that were made by the Company to the Sponsor, officers,
directors or their affiliates.
Note 5—Commitments & Contingencies
Registration Rights
The holders of Founder Shares, Private Placement Warrants and
warrants that may be issued upon conversion of Working Capital
Loans, if any, and any shares of Class A common stock issuable upon
the exercise of the Private Placement Warrants and warrants that
may be issued upon conversion of Working Capital Loans and upon
conversion of the Founder Shares will be entitled to registration
rights pursuant to a registration rights. These holders will be
entitled to certain demand and “piggyback” registration rights. The
Company will bear the expenses incurred in connection with the
filing of any such registration statements.
Underwriting Agreement
The underwriters were entitled to an underwriting discount of $0.20
per unit, or $4.6 million in the aggregate, paid upon the closing
of the Initial Public Offering. In addition, $0.35 per unit, or
approximately $8.1 million in the aggregate will be payable to the
underwriters for deferred underwriting commissions. The deferred
fee will become payable to the underwriters from the amounts held
in the Trust Account solely in the event that the Company completes
a Business Combination, subject to the terms of the underwriting
agreement.
Note 6—Stockholders’ Equity
Preferred Stock—The Company is authorized
to issue 1,000,000 shares of preferred stock, par value $0.0001 per
share, with such designations, voting and other rights and
preferences as may be determined from time to time by the Company’s
board of directors. As of September 30, 2020, there were no shares
of preferred stock issued or outstanding.
18
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Class
A Common Stock—The Company is authorized
to issue 100,000,000 shares of Class
A common stock
with a par value of $0.0001 per share. As of September
30,
2020, there
were 23,000,000 shares of Class A
common
stock issued or outstanding, including 21,697,668 shares
of Class A
common stock subject to possible redemption,
respectively.
Class B Common Stock—The Company is authorized
to issue 10,000,000 shares of Class B common stock with a par value
of $0.0001 per share. On April 17, 2020, the Sponsor subscribed to
purchase 5,031,250 shares of Class B common stock, which was fully
paid on June 30, 2020. On June 25, 2020, the Company effected a
stock dividend with respect to the Class B common stock, resulting
in the Sponsor holding an aggregate of 5,750,000 founder shares.
All shares and associated amounts have been retroactively restated
to reflect the share capitalization. Of these, an aggregate of up
to 750,000 shares of Class B common stock that were subject to
forfeiture to the Company by the initial stockholders for no
consideration to the extent that the underwriters’ over-allotment
option is not exercised in full or in part, so that the number of
Founder Shares equals 20% of the Company’s issued and outstanding
shares of common stock after the Initial Public
Offering. The
underwriter exercised its over-allotment option in full on June 30,
2020; thus, the 750,000 Founder Shares were no longer subject to
forfeiture. As a result, as of September 30, 2020, 5,750,000 Class
B common stock was issued and outstanding.
Stockholders of record are entitled to one vote for each share held
on all matters to be voted on by stockholders; provided that, prior
to the completion of the initial Business Combination, holders of
the Class B common stock will have the right to elect all of the
Company’s directors and remove members of the Company’s board of
directors for any reason. Prior to the completion of the initial
Business Combination, only holders of the Class B common stock will
have the right to vote on the Company’s election of directors.
Holders of the Public Shares will not be entitled to vote on the
Company’s election of directors during such time. In addition,
prior to the completion of the initial Business Combination,
holders of a majority of the outstanding shares of the Class B
common stock may remove a member of the Company’s board of
directors for any reason. These provisions of the Certificate of
Incorporation may only be amended by a resolution passed by the
holders of a majority of shares of the Class B common stock. With
respect to any other matter submitted to a vote of the Company’s
stockholders, including any vote in connection with the initial
Business Combination, holders of the Class A common stock and
holders of the Class B common stock will vote together as a single
class on all matters submitted to a vote of the Company’s
stockholders, except as required by law.
The Class B common stock will automatically convert into Class A
common stock at the time of the initial Business Combination, or
earlier at the option of the holders, on a one-for-one basis,
subject to adjustment for stock splits, stock dividends,
reorganizations, recapitalizations and the like, and subject to
further adjustment as described herein. In the case that additional
shares of Class A common stock, or equity-linked securities, are
issued or deemed issued in excess of the amounts issued in the
Proposed Offering and related to the closing of the initial
Business Combination, including pursuant to a specified future
issuance, the ratio at which shares of Class B common stock shall
convert into shares of Class A common stock will be adjusted
(unless the holders of a majority of the then-outstanding shares of
Class B common stock agree to waive such adjustment with respect to
any such issuance or deemed issuance, including a specified future
issuance) so that the number of shares of Class A common stock
issuable upon conversion of all shares of Class B common stock will
equal, in the aggregate, on an as-converted basis, 20% of the sum
of the total number of all shares of common stock outstanding upon
the completion of the Initial Public Offering plus all shares of
Class A common stock and equity-linked securities issued or deemed
issued in connection with the initial Business Combination
(excluding any shares or equity-linked securities issued or
issuable to any seller in the initial Business Combination).
Warrants—Public
Warrants may only be exercised for a whole number of shares. No
fractional Public Warrants will be issued upon separation of the
Units and only whole Public Warrants will trade. The Public
Warrants will become exercisable on the later of (a) 30 days after
the completion of a Business Combination and (b) 12 months from the
closing of the Initial Public Offering; provided in each case that
the Company has an effective registration statement under the
Securities Act covering the issuance of the shares of Class A
common stock issuable upon exercise of the Public Warrants and a
current prospectus relating to them is available and such shares
are registered, qualified or exempt from registration under the
securities, or blue sky, laws of the state of residence of the
holder (or the Company permits holders to exercise their Public
Warrants on a cashless basis under the circumstances specified in
the warrant agreement). The Company has agreed that as soon as
practicable, but in no event later than 20 business days after the
closing of the initial Business Combination, the Company will use
its commercially
19
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
reasonable
efforts to file, and within 60 business days following the initial
Business Combination to have declared effective, a registration
statement covering the issuance of the shares of Class A common
stock issuable upon exercise of the warrants and
to maintain a current prospectus relating to those shares of Class
A common stock until the warrants expire or are redeemed; provided,
that if the Class A common stock is at the time of any exercise of
a warrant not listed on a national securities
exchange such that it satisfies the definition of a
“covered
security” under Section 18(b)(1) of
the Securities Act, the Company may, at its option, require holders
of Public Warrants who exercise their warrants to do so on a
“cashless
basis”
in accordance
with Section 3(a)(9) of the Securities
Act and, in the event the Company so elects, it will not be
required to file or maintain in effect a registration statement,
but it will be required to use its best efforts to register or
qualify the shares under applicable
blue sky laws to the extent an exemption is not available.
The Public
Warrants will expire five years after the completion of a Business
Combination or earlier upon redemption or liquidation.
The warrants have an exercise price of $11.50 per share. If (x) the
Company issue additional shares or equity-linked securities for
capital raising purposes in connection with the closing of the
initial Business Combination at an issue price or effective issue
price of less than $9.20 per share (as adjusted for stock splits,
stock dividends, rights issuances, subdivisions, reorganizations,
recapitalizations and the like) (with such issue price or effective
issue price to be determined in good faith by the Company’s board
of directors, and in the case of any such issuance to the Sponsor,
initial stockholders or their affiliates, without taking into
account any Founder Shares held by them prior to such issuance)
(the “Newly Issued Price”), (y) the aggregate gross proceeds from
such issuances represent more than 60% of the total equity
proceeds, and interest thereon, available for the funding of the
initial Business Combination on the date of the consummation of the
Initial Business Combination (net of redemptions), and (z) the
volume weighted average trading price of the Company’s shares of
Class A common stock during the 20 trading day period starting on
the trading day prior to the day on which the Company consummates
the initial Business Combination (such price, the “Market Value”)
is below $9.20 per share, the exercise price of each warrant will
be adjusted (to the nearest cent) such that the effective exercise
price per full share will be equal to 115% of the higher of (i) the
Market Value and (ii) the Newly Issued Price, and the $18.00 per
share redemption trigger price described below will be adjusted (to
the nearest cent) to be equal to 180% of the higher of (i) the
Market Value and (ii) the Newly Issued Price.
The Private Placement Warrants are identical to the Public
Warrants, except that (1) the Private Placement Warrants and the
shares of Class A common stock issuable upon exercise of the
Private Placement Warrants are not transferable, assignable or
salable until 30 days after the completion of a Business
Combination, subject to certain limited exceptions, (2) the Private
Placement Warrants are be non-redeemable (except as described
below) so long as they are held by the Sponsor or its permitted
transferees, (3) the Private Placement Warrants may be exercised by
the holders on a cashless basis and (4) the holders of the Private
Placement Warrants (including with respect to the shares of common
stock issuable upon exercise of the Private Placement Warrants) are
entitled to registration rights. If the Private Placement Warrants
are held by someone other than the Sponsor or its permitted
transferees, the Private Placement Warrants will be redeemable by
the Company in all redemption scenarios and exercisable by such
holders on the same basis as the Public Warrants.
The Company may call the Public Warrants for redemption:
|
•
|
in whole
and not in part;
|
|
•
|
at a price
of $0.01 per warrant;
|
|
•
|
upon a
minimum of 30 days’ prior written notice of redemption;
and
|
|
•
|
if, and
only if, the last reported sale price of the Class A common stock
equals or exceeds $18.00 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like)
for any 20 trading days within the 30-trading day period ending on
the third business day prior to the date on which the Company sends
the notice of redemption to the warrant holders.
|
If the Company calls the Public Warrants for redemption, management
will have the option to require all holders that wish to exercise
the Public Warrants to do so on a “cashless basis,” as described in
the warrant agreement.
20
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
In addition, commencing ninety days after the warrants become
exercisable, the Company may redeem the outstanding
warrants:
|
•
|
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 of Class A common stock to be determined by reference to a
table in the warrant agreement;
|
|
•
|
if, and only if, the
last reported sale price of the Company’s Class A common stock
equals or exceeds $10.00 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like)
on the trading day prior to the date on which the Company sends the
notice of redemption to the warrant holders;
|
|
•
|
if, and only if, the
Private Placement Warrants are also concurrently called for
redemption at the same price (equal to a number of shares of Class
A common stock) as the outstanding Public Warrants, as described
above; and
|
|
•
|
if, and only if, there
is an effective registration statement covering the shares of Class
A common stock (or a security other than the Class A common stock
into which the Class A common stock has been converted or exchanged
for in the event the Company is not the surviving company in the
initial Business Combination) issuable upon exercise of the
warrants and a current prospectus relating thereto available
throughout the 30-day period after written notice of redemption is
given.
|
In no event will the Company be required to net cash settle any
warrant. If the Company is unable to complete a Business
Combination within the Combination Period and the Company
liquidates the funds held in the Trust Account, holders of warrants
will not receive any of such funds with respect to their warrants,
nor will they receive any distribution from the Company’s assets
held outside of the Trust Account with the respect to such
warrants. Accordingly, the warrants may expire worthless.
Note 7—Fair Value Measurements
The Company follows the guidance in ASC 820 for its financial
assets and liabilities that are re-measured and reported at fair
value at each reporting period, and non-financial assets and
liabilities that are re-measured and reported at fair value at
least annually.
The fair value of the Company’s financial assets and liabilities
reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in
connection with the transfer of the liabilities in an orderly
transaction between market participants at the measurement date. In
connection with measuring the fair value of its assets and
liabilities, the Company seeks to maximize the use of observable
inputs (market data obtained from independent sources) and to
minimize the use of unobservable inputs (internal assumptions about
how market participants would price assets and liabilities). The
following fair value hierarchy is used to classify assets and
liabilities based on the observable inputs and unobservable inputs
used in order to value the assets and liabilities:
|
|
|
|
•
|
Level 1: Quoted prices in active markets for identical assets or
liabilities. An active market for an asset or liability is a market
in which transactions for the asset or liability occur with
sufficient frequency and volume to provide pricing information on
an ongoing basis.
|
|
|
|
|
•
|
Level 2: Observable inputs other than Level 1 inputs. Examples of
Level 2 inputs include quoted prices in active markets for similar
assets or liabilities and quoted prices for identical assets or
liabilities in markets that are not active.
|
|
|
|
|
•
|
Level 3: Unobservable inputs based on the Company’s assessment of
the assumptions that market participants would use in pricing the
asset or liability.
|
Description
|
|
Level
|
|
September 30, 2020
|
|
Assets:
|
|
|
|
|
|
|
Investments held in Trust Account
|
|
1
|
|
$
|
230,075,599
|
|
21
KENSINGTON CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Transfers to/from Levels 1, 2 and 3 are recognized at the end of
the reporting period. There were no
transfers between levels for the three months ended September 30,
2020 and for the period from May 19, 2020 (inception) through
September 30, 2020.
Note 8—Subsequent Events
On October 2, 2020, a putative class action lawsuit was filed
against the Company. The complaint names the Company and certain
members of the Company’s board as defendants. The complaint
alleges, among other things, breach of fiduciary duty claims in
connection with the proposed business combination with QuantumScape
Corporation. Management with its legal counsel are currently
evaluating the merits of the complaint and as of September 30,
2020, the Company had not accrued any amounts for this
contingency.
The special meeting of the Company’s stockholders to approve the
Business Combination with QuantumScape is scheduled to occur on
November 25, 2020.
22
Item
2. Management’s
Discussion and Analysis of
Financial Condition and Results of Operations.
References to the “Company,” “Kensington Capital Acquisition Corp.”
“our,” “us” or “we” refer to Kensington Capital Acquisition Corp.
The following discussion and analysis of the Company’s financial
condition and results of operations should be read in conjunction
with the unaudited condensed consolidated financial statements and
the notes thereto contained elsewhere in this report. Certain
information contained in the discussion and analysis set forth
below includes forward-looking statements that involve risks and
uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). We have based these
forward-looking statements on our current expectations and
projections about future events. These forward-looking statements
are subject to known and unknown risks, uncertainties and
assumptions about us that may cause our actual results, levels of
activity, performance or achievements to be materially different
from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking
statements. In some cases, you can identify forward-looking
statements by terminology such as “may,” “should,” “could,”
“would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”
“continue,” or the negative of such terms or other similar
expressions. Such statements include, but are not limited to,
possible business combinations and the financing thereof, and
related matters, as well as all other statements other than
statements of historical fact included in this Form 10-Q. Factors
that might cause or contribute to such a discrepancy include, but
are not limited to, those described in our other U.S. Securities
and Exchange Commission filings.
Overview
We are a blank check
company incorporated in Delaware on April 17, 2020 for the
purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business
combination with one or more businesses (the “Business
Combination”). We are an emerging growth company and, as such, we
are subject to all of the risks associated with emerging growth
companies. Our
sponsor Kensington Capital Sponsor LLC, a Delaware limited liability company
(the “Sponsor”, or the “Original Holder”).
The registration statement
for our Initial Public Offering was declared effective on June 25,
2020. On June 30, 2020, we consummated its Initial Public Offering
of 23,000,000 Units, including 3,000,000 Over-Allotment Units to
cover over-allotments, at $10.00 per Unit, generating gross
proceeds of $230.0 million, and incurring offering costs of
approximately $13.1 million, inclusive of approximately $8.1
million in deferred underwriting commissions.
Simultaneously with the
closing of the Initial Public Offering, we consummated the Private
Placement of 6,575,000 Private Placement Warrants at a price
of $1.00 per Private Placement Warrant to our Sponsor, generating
proceeds of approximately $6.6 million.
Upon the closing of the Initial Public Offering and the Private Placement,
$230.0 million ($10.00 per Unit) of the net proceeds of the Initial
Public Offering and certain of the proceeds of the Private
Placement was held in a Trust Account located in the United
States with Continental Stock Transfer & Trust Company acting
as trustee, and invested only in U.S. “government securities,”
within the meaning set forth in Section 2(a)(16) of the Investment
Company Act, with a maturity of 185 days or less, or in money
market funds meeting certain conditions under Rule 2a-7 under the
Investment Company Act, which invest only in direct U.S. government
treasury obligations, as determined by the Company, until the
earlier of: (i) the completion of a Business Combination and (ii)
the distribution of the Trust Account as described below.
Our management has broad discretion with respect to the specific
application of the net proceeds of the Initial Public Offering and
the sale of the Private Placement Warrants, although substantially
all of the net proceeds are intended to be applied generally toward
consummating a Business Combination.
23
If
we are
unable to complete a Business Combination within
the Combination Period, which is
24
months from the closing of the Initial Public Offering, or June 30,
2022,
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 taxes, net
of taxes payable (less up to
$100,000 of interest to pay dissolution expenses), divided by the
number of then outstanding Public Shares, which redemption will
completely extinguish Public Stockholders’ rights as
stockholders (including the right to receive further liquidating
distributions, if any), and
(iii) as promptly as reasonably
possible following such redemption, subject to the approval
of our remaining stockholders and our board of
directors, dissolve and liquidate, subject in each case to
our obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law. There will be no redemption rights or liquidating
distributions with respect to our warrants,
which will expire worthless if we fail to
complete its initial Business Combination within the Combination Period.
Proposed
Transactions
Business Combination
Agreement
As more fully described in Note 1 to the unaudited condensed
consolidated financial statements herein, on September 2, 2020, the
Company entered into a business combination agreement and plan of
reorganization (as amended on September 21, 2020 and as may be
further amended from time to time, the “QS Business Combination
Agreement”), by and among the Company, Kensington Merger Sub Inc.,
a Delaware corporation and wholly owned subsidiary of the Company
(“Merger Sub”), and QuantumScape Corporation., a Delaware
corporation (“QuantumScape”). Merger Sub will merge with and into
QuantumScape, with QuantumScape surviving the merger and becoming a
wholly-owned direct subsidiary of the Company (collectively with
the other transactions described in the QS Business Combination
Agreement, the “QS Business Combination,” or the “Proposed
Transactions”). QuantumScape is a leader in the development
of next generation solid-state lithium-metal batteries for use in
electric vehicles.
Registration Rights and Lock-Up Agreement
In connection with the QS Business Combination and the other
Proposed Transactions, on September 2, 2020, the Company, Sponsor
and certain stockholders of QuantumScape (collectively with the
Original Holder, the “Holders”) entered into a registration rights
and lock-up agreement (the “Registration Rights and Lock-Up
Agreement”), which shall be effective at the Closing. Pursuant to
the terms of the Registration Rights and Lock-Up Agreement, we will
be obligated to file a registration statement to register the
resale of certain securities of the Company held by the Holders. In
addition, pursuant to the terms of the Registration Rights and
Lock-Up Agreement and subject to certain requirements and customary
conditions, including with regard to the number of demand rights
that may be exercised, the Holders may demand at any time or from
time to time, that we file a registration statement on
Form S-3 (or on Form S-1 if Form S-3 is not
available) to register the securities of the Company held by such
Holders. The Registration Rights and Lock-Up Agreement also
provides the Holders with “piggy-back” registration rights, subject
to certain requirements and customary conditions.
Subscription Agreements
Also, in connection with the execution of the QS Business
Combination Agreement, effective as of September 2, 2020, we
entered into separate subscription agreements (each, a
“Subscription Agreement”) with a number of investors (each a
“Subscriber”), pursuant to which the Subscribers agreed to
purchase, and we agreed to sell to the Subscribers, an aggregate of
50,000,000 shares of our Class A Common Stock (which will be New
Kensington Class A Common Stock upon completion of the Proposed
Transactions) (the “PIPE Shares”), for a purchase price of $10.00
per share and an aggregate purchase price of $500 million, in a
private placement (the “PIPE”).
The closing of the sale of the PIPE Shares pursuant to the
Subscription Agreement is contingent upon, among other customary
closing conditions, the substantially concurrent consummation of
the Proposed Transactions. The purpose of the PIPE is to raise
additional capital for use by the combined company following the
Closing.
24
Pursuant to the Subscription
Agreements,
we
agreed, among other things, that, within 15 business days after the
consummation of the Proposed Transactions,
we
will file with the SEC (at the Company’s sole cost and expense) a
registration statement registering the resale of
the
PIPE Shares (the “Resale
Registration Statement”),
and the Company will use its commercially reasonable efforts to
have the Resale Registration Statement declared effective as soon
as practicable after the filing thereof.
Senior Employee Lock-Up Agreements
On September 2, 2020, we entered into separate Senior Employee
Lock-Up Agreements with certain senior level employees of
QuantumScape (the “Senior Employees”), including QuantumScape’s
executive officers. The Senior Employee Lock-Up Agreements
provide that the securities of QuantumScape owned of record or
beneficially by the Senior Employees (including certain securities
that may be granted or issued to a Senior Employee after the
Effective Time) (collectively, the “Lock-Up Shares”) may generally
not be transferred for at least 180 days after the Closing (the
“Initial Lock-Up Period”) and up to four years after the Closing,
subject to certain exceptions. Following the Initial Lock-Up
Period, Senior Employees may transfer Lock-Up Shares without
restriction as follows: (i) during the first year after the
Effective Time, up to 25% of the total number of Lock-Up Shares,
(ii) following the first anniversary of the Effective Time until
the earlier of four years after the Closing or the occurrence of an
event described below, up to 50% of the total number of Lock-Up
Shares, and (iii) up to an additional 50% of the total number of
Lock-Up Shares following satisfaction of agreed delivery
requirements between QuantumScape and VGA. These transfer
restrictions are subject to earlier release if (a) the Company
completes a liquidation, merger, stock exchange or other similar
transaction after the Closing that results in all of our
stockholders having the right to exchange their shares of common
stock for cash, securities or other property; (b) VGA terminates
for any reason the Amended and Restated Joint Venture Agreement,
dated as of May 14, 2020, by and among QuantumScape and VGA; (c)
VGA issues a critical or negative statement regarding the Company
and its technology unless such statement is required to be made by
VGA under applicable law and is truthful and accurate; or (d) VGA
transfers certain Company securities in excess of the amounts set
forth in the Senior Employee Lock-Up Agreements. The Senior
Employee Lock-Up Agreements also provide that, upon consummation of
the Merger, the Company or QuantumScape shall pay to each Senior
Employee a one-time cash bonus equal to 20% of the Senior
Employee’s then annual base salary.
The foregoing descriptions of the QS Business Combination Agreement
and ancillary agreements are qualified in their entirety by
reference to the full text of the Agreements, copies of which were
filed with the SEC as Current Reports on Form 8-K on September
3, 2020 and September 21, 2020 and which are incorporated herein by
reference.
Liquidity and Capital
Resources
As of September 30, 2020, we had approximately $1.0 million in our
operating bank account, working capital of approximately $42,000
(not taken into account tax obligations), and approximately $76,000
in investment income in the Trust Account available to pay
franchise and income taxes (less up to $100,000 of such net
interest to pay dissolution expenses). Through September 30, 2020,
our liquidity needs have been satisfied through a $25,000 capital
contribution from the sale of the Founders Shares (as defined in
Note 4), loan proceeds from the Sponsor of $75,000 (which is still
outstanding to date), and the net proceeds from the consummation of
the Private Placement not held in Trust Account.
In addition, in order to finance transaction costs in connection
with a Business Combination, our Sponsor or an affiliate of the
Sponsor, or certain of our officers and directors may, but are not
obligated to, loan us funds as may be required (“Working Capital
Loans”). As of September 30, 2020, there were no amounts
outstanding under any Working Capital Loan.
25
Management has determined that we have access to funds from our
Sponsor that are sufficient to fund our working capital needs until
the consummation
of an initial Business Combination or for a minimum of one year
from the date of issuance of these unaudited condensed financial
statements. However, in connection with our assessment of going
concern considerations in accordance with Financial
Accounting Standards Board Accounting Standards Update 2014-15,
“Disclosure of Uncertainties about an Entity’s Ability to Continue
as a Going Concern,” we have determined that our mandatory
liquidation and subsequent dissolution raise substantial doubt
about
the our ability to continue as a going concern. No adjustments have
been made to the carrying amounts of assets or liabilities should
we be required to liquidate and dissolve
after June 30, 2022.
Management is currently evaluating the impact of the COVID-19
pandemic on the industry and effect on our financial position,
results of its operations and/or search for a target company.
Results of Operations
Our entire activity since inception up to September 30, 2020 was in
preparation for our formation and the Initial Public Offering, and
since the closing of our Initial Public Offering, a search for
business combination candidates including expenses related to the
Proposed Transactions. We will not be generating any operating
revenues until the closing and completion of our initial Business
Combination.
For the period from April 17, 2020 (inception) through September
30, 2020, we had net loss of approximately $1,525,000, which
consisted of approximately $1,511,000 in general and administrative
expenses and approximately $91,000 in franchise tax expense.
Related Party
Transactions
Founder Shares
On April 17, 2020, we issued 5,031,250 shares of the Company’s
Class B common stock to our Sponsor (the “Founder Shares”), which
were fully paid for on June 30, 2020. On June 25, 2020, we effected
a stock dividend with respect to the Class B common stock,
resulting in the Sponsor holding an aggregate of 5,750,000 founder
shares. All shares and associated amounts have been retroactively
restated to reflect the share capitalization. The initial
stockholders agreed to forfeit up to 750,000 Founder Shares to the
extent that the over-allotment option is not exercised in full by
the underwriters so that the Founder Shares represented 20.0% of
our issued and outstanding shares of common stock after the Initial
Public Offering. The
underwriter exercised its over-allotment option in full on June 30,
2020; thus, the 750,000 Founder Shares were no longer subject to
forfeiture.
The initial stockholders agreed, subject to limited exceptions, not
to transfer, assign or sell any of the Founder Shares until the
earlier to occur of: (A) one year
after the completion of the initial Business Combination or (B)
subsequent to the initial Business Combination, (x) if the last
reported sale price of the Class A common stock equals or exceeds
$12.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading
days within any 30-trading day period commencing at least 150 days
after the initial Business Combination, or (y) the date on which we
complete a liquidation, merger, capital stock exchange,
reorganization or other similar transaction that results in all of
our stockholders having the right to exchange their shares of
common stock for cash, securities or other property.
Related Party Loans
On April 17, 2020, the Sponsor agreed to loan us an aggregate of up
to $300,000 to cover expenses related to the Initial Public
Offering pursuant to a promissory note (the “Note”). This loan is
non-interest bearing and payable upon the completion of the Initial
Public Offering. As of September 30, 2020, we had borrowed $75,000
under the Note. To date, the balance of the Note remains
outstanding.
26
In addition, in order
to fund working capital deficiencies or finance transaction costs
in connection with a Business Combination, the Sponsor or an
affiliate of the Sponsor, or certain of
our
officers and directors may, but are not obligated to, loan
us
funds as may be required
(“Working Capital Loans”). If the
we
complete a Business Combination,
we
may repay the Working Capital Loans out of the proceeds of the
Trust Account released to
us.
Otherwise, the Working Capital Loans could be repaid only out of
funds held outside the Trust Account. In the event that a Business
Combination does not close,
we
may use a portion of proceeds held outside the Trust Account to
repay the Working Capital Loans
but no proceeds held in the Trust Account would be used to repay
the Working Capital Loans. The Working Capital Loans would either
be repaid upon consummation of a Business Combination or, at the
lender’s discretion, up to $1,500,000 of such Working
Capital
Loans may be convertible into warrants of the post Business
Combination entity at a price of $1.00 per warrant. The warrants
would be identical to the Private Placement Warrants. Except for
the foregoing, the terms of such Working Capital Loans, if
any, have not been determined and no written agreements exist with
respect to such loans.
To date, we had no borrowings under the Working Capital
Loans.
Contractual
Obligations
Service and Administrative Fees
We agreed to pay service and administrative fees of $20,000 per
month to DEHC LLC, an affiliate of Daniel Huber, the Company’s
Chief Financial Officer, for up to 18 months commencing on the date
of consummation of the Initial Public Offering. As of September 30, 2020, we incurred
$80,000 in general and administrative expenses in the accompanying
condensed consolidated statement of operations.
Our Sponsor, executive officers and directors, or any of their
respective affiliates, will be reimbursed for any out-of-pocket
expenses incurred in connection with activities on our behalf such
as identifying potential target businesses and performing due
diligence on suitable Business Combinations. Our audit committee
will review on a quarterly basis all payments that were made by us
to our Sponsor, officers, directors or their affiliates.
Registration Rights
The holders of Founder Shares, Private Placement Warrants and
warrants that may be issued upon conversion of Working Capital
Loans, if any, and any shares of Class A common stock issuable upon
the exercise of the Private Placement Warrants and warrants that
may be issued upon conversion of Working Capital Loans and upon
conversion of the Founder Shares will be entitled to registration
rights pursuant to a registration rights. These holders will be
entitled to certain demand and “piggyback” registration rights. We
will bear the expenses incurred in connection with the filing of
any such registration statements.
Underwriting Agreement
The underwriters were entitled to an underwriting discount of $0.20
per unit, or $4.6 million in the aggregate, paid upon the closing
of the Initial Public Offering. In addition, $0.35 per unit, or
approximately $8.1 million in the aggregate will be payable to the
underwriters for deferred underwriting commissions. The deferred
fee will become payable to the underwriters from the amounts held
in the Trust Account solely in the event that we complete a
Business Combination, subject to the terms of the underwriting
agreement.
Critical Accounting Policies
Class A common stock subject to possible redemption
We account for our Class A common stock subject to possible
redemption in accordance with the guidance in ASC Topic 480
“Distinguishing Liabilities from Equity.” Class A common stock
subject to mandatory redemption (if any) is classified as liability
instruments and are measured at fair value. Conditionally
redeemable Class A common
stock (including Class A common stock that features redemption
rights that are either within the control of the holder or subject
to redemption upon the occurrence of uncertain events not solely
within the Company’s control) are classified as temporary equity.
At all other times, Class A common stock is classified as
stockholders’ equity.
27
Our Class A common stock feature certain redemption rights
that are considered to be outside of our control and subject to the occurrence
of uncertain future events. Accordingly, at September 30, 2020, 21,697,668 shares of Class A common stock subject to possible
redemption is
presented at redemption value as temporary equity, outside of the
stockholders’
equity section of the
Company’s balance sheet.
Net Loss Per Common Share
We comply with accounting and disclosure requirements of FASB ASC
Topic 260, “Earnings Per Share.” Net loss per share is computed by
dividing net loss by the weighted average number of shares of
common stock outstanding during the period excluding common stock
subject to forfeiture. Through June 30, 2020, the date the
underwriters exercised in full their over-allotment option,
weighted average shares were reduced for the effect of an aggregate
of 750,000 shares of common stock that were subject to forfeiture.
An aggregate of 21,697,668 shares of Class A common stock subject
to possible redemption at September 30, 2020 has been excluded from
the calculation of basic loss per share of common stock, since such
shares, if redeemed, only participate in their pro rata share of
the trust earnings. We have not considered the effect of the
warrants sold in the Initial Public Offering (including the
consummation of the Over-Allotment Units) and Private Placement to
purchase an aggregate of 18,074,992 shares of our common stock in
the calculation of diluted loss per share, since the exercise of
the warrants are contingent upon the occurrence of future events.
As a result, diluted net loss per common share is the same as basic
net loss per common share for the period presented.
Recent Accounting
Standards
Our management does not believe that any recently issued, but not
yet effective, accounting standards updates, if currently adopted
would have a material effect on the accompanying financial statements.
Off-Balance Sheet Arrangements
As of September 30, 2020, we did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”)
contains provisions that, among other things, relax certain
reporting requirements for qualifying public companies. We qualify
as an “emerging growth company” and under the JOBS Act are allowed
to comply with new or revised accounting pronouncements based on
the effective date for private (not publicly traded) companies. We
are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised
accounting standards on the relevant dates on which adoption of
such standards is required for non-emerging growth companies. As a
result, our financial statements may not be comparable to companies
that comply with new or revised accounting pronouncements as of
public company effective dates.
Additionally, we are in the process of evaluating the benefits of
relying on the other reduced reporting requirements provided by the
JOBS Act. Subject to certain conditions set forth in the JOBS Act,
if, as an “emerging growth company,” we choose to rely on such
exemptions we may not be required to, among other things, (i)
provide an auditor’s attestation report on our system of internal
controls over financial reporting pursuant to Section 404, (ii)
provide all of the compensation disclosure that may be required of
non-emerging growth public companies under the Dodd-Frank Wall
Street Reform and Consumer Protection Act, (iii) comply with any
requirement that may be adopted by the PCAOB regarding mandatory
audit firm rotation or a supplement to the auditor’s report
providing additional information about the audit and the financial
statements (auditor discussion and analysis) and (iv) disclose
certain executive compensation related items such as the
correlation between executive compensation and performance and
comparisons of the CEO’s compensation to median employee
compensation. These exemptions will apply for a period of five
years following the completion of our Initial Public Offering or
until we are no longer an “emerging growth company,” whichever is
earlier.
28
Item
3. Quantitative and Qualitative
Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the
Exchange Act and are not required to provide the information
otherwise required under this item. As of September 30, 2020,
we were not subject to any market or interest rate risk. The net
proceeds of the Initial Public Offering, including amounts in the
Trust Account, will be invested in U.S. government securities with
a maturity of 185 days or less or in money market funds that meet
certain conditions under Rule 2a-7 under the Investment Company Act
of 1940, as amended, that invest only in direct U.S. government
treasury obligations. Due to the short-term nature of these
investments, we believe there will be no associated material
exposure to interest rate risk.
We have not engaged in any hedging activities since our inception
and we do not expect to engage in any hedging activities with
respect to the market risk to which we are exposed.
Item
4. Controls
and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management,
including our principal executive officer and principal financial
officer, we conducted an evaluation of the effectiveness of our
disclosure controls and procedures as of the end of the fiscal
quarter ended September 30, 2020, as such term is defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act. Based on this
evaluation, our principal executive officer and principal financial
officer has concluded that during the period covered by this
report, our disclosure controls and procedures were effective.
Disclosure controls and procedures are designed to ensure that
information required to be disclosed by us in our Exchange Act
reports is recorded, processed, summarized, and reported within the
time periods specified in the SEC’s rules and forms, and that such
information is accumulated and communicated to our management,
including our principal executive officer and principal financial
officer or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial
reporting that occurred during the period from April 17, 2020
(inception) through September 30, 2020 covered by this Quarterly
Report on Form 10-Q that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.
29
PART
II -
OTHER
INFORMATION
Item 1.
Legal
Proceedings.
None.
Item 1A. Risk Factors.
As of the date of this Quarterly Report on Form 10-Q, there have
been no material changes to the risk factors disclosed in our final
prospectus filed with the SEC on June 26, 2020.
Item 2.
Unregistered Sales of Equity Securities and Use of
Proceeds.
None.
Item
3. Defaults
upon Senior Securities.
None.
Item 4.
Mine
Safety Disclosures.
Not applicable.
Item 5. Other
Information.
None.
Item 6. Exhibits.
*
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These certifications are furnished to the SEC pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, nor shall they be deemed incorporated by reference in any
filing under the Securities Act of 1933, except as shall be
expressly set forth by specific reference in such filing.
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30
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
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Date: November 16, 2020
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By:
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/s/ Justin Mirro
|
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Name:
|
Justin Mirro
|
|
Title:
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Chief Executive Officer and Chairman (Principal Executive Officer)
|
|
|
|
Date: November16, 2020
|
By:
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/s/ Daniel Huber
|
|
Name:
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Daniel Huber
|
|
Title:
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Chief Financial Officer (Principal
Financial and Accounting officer)
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