From time to time, we may be involved in litigation, regulatory actions or government investigations
and inquiries, which could have an adverse impact on our profitability and consolidated financial position.
We may be involved in
a variety of litigation, other claims, suits, regulatory actions or government investigations and inquiries and commercial or contractual disputes that, from time to time, are significant.
For example, on October 2, 2020, a putative class action lawsuit was filed in the Supreme Court of the State of New York by a purported
Kensington stockholder in connection with the Business Combination: Sanchez v. Kensington Capital Acquisition Corp., et al., Index No. 654941/2020 (Sup. Ct. N.Y. Cnty.). The complaint names Kensington and certain current and former
members of Kensingtons board of directors as defendants. The complaint alleges, among other things, breach of fiduciary duty claims against Kensingtons board of directors in connection with the Business Combination. Legacy QuantumScape
as the surviving company of the Business Combination inherited this litigation as a result of the Closing.
Additionally, on
December 11, 2020, a putative class action lawsuit was filed in the Supreme Court of the State of New York by a purported QuantumScape warrantholder: Jeffrey Jakubiak v. QuantumScape Corporation and Continental Stock Transfer &
Trust Company, Index No.656963/2020 (Sup. Ct. N.Y. Cnty.). The complaint names QuantumScape and Continental Stock Transfer & Trust Company as defendants. The complaint alleges, among other things, that the plaintiff is entitled to
exercise warrants within 30 days of Closing. The complaint also alleges that the proxy statement/prospectus/information statement dated September 21, 2020 and November 12, 2020 is misleading and/or omits material information concerning the
exercise of the warrants. The complaint generally seeks, among other things, the ability to exercise the warrants within 30 days of Closing.
On December 18, 2020, the plaintiff filed a motion for injunctive relief, seeking to require us to allow the warrants to be exercised
when our current Registration Statement filed with the SEC becomes effective. On December 22, 2020, we removed the case to the United States District Court for the Southern District of New York.
Also, on December 24, 2020, a lawsuit was filed in the Supreme Court of the State of New York by three purported QuantumScape
warrantholders, Michael Assante, John Wilschke, and Headwaters Holdings LLC: Assante et al. v. QuantumScape Corporation, Index No. 657256/2020 (Sup. Ct. N.Y. Cnty.). The complaint names QuantumScape as the defendant. The complaint
alleges, among other things, that the plaintiffs are entitled to exercise warrants within 30 days of Closing. The complaint also alleges that the proxy statement/prospectus/information statement dated September 21, 2020 and November 12,
2020 is misleading and/or omits material information concerning the exercise of the warrants. The complaint generally seeks, among other things, the ability to exercise the warrants within 30 days of Closing.
On December 24, 2020, the plaintiffs filed a motion for injunctive relief, seeking to require us to allow the warrants to be exercised
when the our current Registration Statement filed with the SEC becomes effective.
In addition, from time to time, we may also be involved
in legal proceedings and investigations arising in the normal course of business including, without limitation, commercial or contractual disputes, including warranty claims and other disputes with potential customers and suppliers; intellectual
property matters; personal injury claims; environmental issues; tax matters; and employment matters.
It is difficult to predict the
outcome or ultimate financial exposure, if any, represented by these matters, and there can be no assurance that any such exposure will not be material. Such claims may also negatively affect our reputation.
We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or
insure against such claims.
We may become subject to product liability claims, even those without merit, which could harm our
business, prospects, operating results, and financial condition. We face inherent risk of exposure to claims in the
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