NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
NOTE
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
DiamondPeak
Holdings Corp. (the “Company”) was incorporated in Delaware on November 13, 2018. 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”).
The Company is an early stage and emerging growth company
and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As
of June 30, 2020, the Company had not commenced any operations. All activity through June 30, 2020 relates to the Company’s
formation, the initial public offering (“Initial Public Offering”), which is described below, and its efforts to identify
a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of
its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from
the investment of the net proceeds derived from the Initial Public Offering, the exercise of the over-allotment option and the
sale of the Private Placement Warrants.
The
registration statement for the Company’s Initial Public Offering was declared effective on February 27, 2019. On March 4,
2019, the Company consummated the Initial Public Offering of 25,000,000 units (“Units” and, with respect to the shares
of Class A common stock included in the Units sold, the “Public Shares”) at $10.00 per Unit, generating gross proceeds
of $250,000,000, which is described in Note 3.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 4,666,667 warrants (the “Private Placement
Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to the Company’s sponsor, DiamondPeak
Sponsor LLC, a Delaware limited liability company (the “Sponsor”) and certain funds and accounts managed by subsidiaries
of BlackRock, Inc. (collectively, the “Anchor Investor”; and together with the Sponsor, the “initial stockholders”),
generating gross proceeds of $7,000,000, which is described in Note 4.
Following
the closing of the Initial Public Offering on March 4, 2019, an amount of $250,000,000 ($10.00 per Unit) from the net proceeds
of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account
(“Trust Account”) to be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of
the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less
or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the
Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination or (ii)
the distribution of the Trust Account, as described below.
On
March 18, 2019, in connection with the underwriters’ election to partially exercise their over-allotment option, the Company
sold an additional 3,000,000 Units at $10.00 per Unit and sold an additional 400,000 Private Placement Warrants at $1.50 per Private
Placement Warrant, generating total gross proceeds of $30,600,000. Following such closing, an additional $30,000,000 of net proceeds
($10.00 per Unit) was deposited in the Trust Account, resulting in $280,000,000 ($10.00 per Unit) in aggregate deposited into
the Trust Account.
Transaction
costs amounted to $15,930,162, consisting of $5,600,000 of underwriting fees, $9,800,000 of deferred underwriting fees and $530,162
of other offering costs. In addition, as of June 30, 2020, cash of $857,071 was held outside of the Trust Account and is available
for working capital purposes.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public
Offering, the exercise of the over-allotment option and the sale of Private Placement Warrants, although substantially all of
the net proceeds are intended to be applied generally toward consummating a Business Combination. The Company’s initial
Business Combination must be with one or more target businesses that together have an aggregate fair market value of at least
80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on interest earned
on the Trust Account) at the time of the agreement to enter into a Business Combination. 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 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.
DIAMONDPEAK HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
The
Company will provide its holders of the outstanding Public Shares (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 public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount
then in the Trust Account (initially approximately $10.00 per Public Share, plus any pro rata interest earned on the funds
held in the Trust Account and not previously released to the Company to pay its tax obligations). 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 6). There will be no redemption rights upon the completion of a Business Combination
with respect to the Company’s warrants.
The
Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation
of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of
the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote
for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the
“Amended and Restated 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 transactions is required by law, or the Company decides to obtain
stockholder approval for business or legal 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. If the Company seeks stockholder approval in connection
with a Business Combination, the Company’s Sponsor, officers and directors have agreed to vote their Founder Shares (as
defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business
Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for
or against the proposed transaction.
Notwithstanding
the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant
to the tender offer rules, the Amended and Restated Certificate of Incorporation provides 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 has agreed (a) to waive its redemption rights with respect to any Founder Shares and Public Shares held by it in connection
with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation
that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company
does not complete a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their
Public Shares in conjunction with any such amendment.
The
Company will have until March 4, 2021 to complete a Business Combination (the “Combination Period”). However, if the
Company is unable to complete a Business Combination within 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 its tax obligations
(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), subject to applicable law, 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 a Business Combination within the Combination Period.
DIAMONDPEAK HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
The
initial stockholders have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to
complete a Business Combination within the Combination Period. However, if the initial stockholders or any of their respective
affiliates acquire Public Shares after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions
from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters
have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event
the Company does not complete a Business Combination within 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 assets remaining available for distribution will be less
than the Initial Public Offering price per Unit ($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 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, reduce the amount of funds in the Trust Account to below (i)
$10.00 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation
of the Trust Account due to reductions in the value of the trust assets. This liability will not apply with respect to any claims
by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as 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, 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 (except for the independent registered public accounting firm),
service providers, prospective target businesses or 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.
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions
to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial
statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for
interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation
of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed
financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation
of the financial position, operating results and cash flows for the periods presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on
Form 10-K for the year ended December 31, 2019 as filed with the SEC on March 25, 2020, which contains the audited financial statements
and notes thereto. The financial information as of December 31, 2019 is derived from the audited financial statements presented
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The interim results for the three and
six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020
or for any future interim periods.
Going
Concern
In
connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard
Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s
Ability to Continue as a Going Concern,” management has determined that the mandatory liquidation and subsequent dissolution
raises 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 after March 4, 2021.
DIAMONDPEAK HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
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.
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 a 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 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 which is neither an emerging growth company nor an emerging growth company which
has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Use
of Estimates
The
preparation of the condensed 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.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect
of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered
in formulating its estimate, could change in the near term due to one or more future events. Accordingly, the actual results could
differ significantly from those estimates.
Cash
and Marketable Securities Held in Trust Account
At
June 30, 2020 and December 31, 2019, the assets held in the Trust Account were invested in money market funds.
Common
Stock Subject to Possible Redemption
The
Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption
is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common
stock that feature redemption rights that is either within the control of the holder or subject to redemption upon the occurrence
of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common
stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are
considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at
June 30, 2020 and December 31, 2019, common stock subject to possible redemption is presented as temporary equity, outside of
the stockholders’ equity section of the Company’s condensed balance sheets.
Offering
Costs
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. Offering costs amounting to $15,930,162 were charged to stockholders’ equity upon
the completion of the Initial Public Offering.
DIAMONDPEAK HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under ASC Topic 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 within the condensed financial statements 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. As of June 30, 2020 and
December 31, 2019, the Company had a deferred tax asset of approximately $203,000 and $88,000, respectively, which had a full
valuation allowance recorded against it of approximately $203,000 and $88,000, respectively.
The Company’s currently
taxable income primarily consists of interest income earned on the funds in the Trust Account. The Company’s general and
administrative costs (net of applicable franchise taxes) are generally considered start-up costs and are not currently deductible.
During the three and six months ended June 30, 2020, the Company recorded income tax expense of approximately $14,000 and $196,000,
respectively, primarily related to interest income earned on the Trust Account. During the three and six months ended June 30,
2019, the Company recorded income tax expense of approximately $321,000 and $401,000, respectively, primarily related to interest
income earned on the Trust Account. The Company’s effective tax rates for the three and six months ended June 30, 2020 were
approximately (3.7)% and 50.7%, and for the three and six months ended June 30, 2019 were approximately 22.5% and 22.7%, respectively,
which differs from the expected income tax rate due to the start-up costs (discussed above) which are not currently deductible.
ASC
Topic 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. The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for
interest and penalties as of June 30, 2020 and December 31, 2019. 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.
Net
Income (Loss) Per Common Share
Net
income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding
for the period. The calculation of diluted income (loss) per share does not consider the effect of the warrants issued in connection
with the (i) Initial Public Offering, (ii) exercise of the over-allotment option and (iii) Private Placement Warrants since the
exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.
The warrants are exercisable to purchase 14,400,000 shares of Class A common stock in the aggregate.
The Company’s condensed
statements of operations include a presentation of income (loss) per share for common shares subject to possible redemption in
a manner similar to the two-class method of income (loss) per share. Net income per common share, basic and diluted, for Class A
redeemable common stock is calculated by dividing the interest income earned on the Trust Account of $115,042 and $1,033,199 for
the three and six months ended June 30, 2020, respectively, net of applicable franchise and income taxes of $63,664 and $295,977
for the three and six months ended June 30, 2020, respectively, by the weighted average number of Class A redeemable common
stock outstanding of 28,000,000 shares for the three and six months ended June 30, 2020. Net income per common share, basic and
diluted, for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account of
$1,577,282 and $2,008,496 for the three and six months ended June 30, 2019, respectively, net of applicable franchise and income
taxes of $370,729 and $500,784 for the three and six months ended June 30, 2019, respectively, by the weighted average number
of Class A redeemable common stock outstanding of 28,000,000 shares and 27,644,068 shares for the three and six months ended
June 30, 2020 and 2019, respectively. Net income (loss) per common share, basic and diluted, for Class B non-redeemable common
stock is calculated by dividing net income (loss), adjusted for income attributable to Class A redeemable common stock of
$51,378 and $737,222 for the three and six months ended June 30, 2020 and $1,206,553 and $1,507,712 for the three and six months
ended June 30, 2019, respectively, by the weighted average number of shares of Class B non-redeemable common stock outstanding
of 7,000,000 shares for each of the three and six months ended June 30, 2020 and 2019. Class B non-redeemable common stock includes
the Founder Shares as these shares do not have any redemption features and do not participate in the income earned on the Trust
Account.
DIAMONDPEAK HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution,
which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. At June 30, 2020 and December 31, 2019, the
Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on
such account.
Financial
Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair
Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily
due to their short-term nature.
Recent
Accounting Standards
Management
does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on the Company’s condensed financial statements.
NOTE
3. INITIAL PUBLIC OFFERING
Pursuant
to the Initial Public Offering, the Company sold 28,000,000 Units, inclusive of 3,000,000 Units sold to the underwriters on March
18, 2019 upon the underwriters’ election to partially exercise their over-allotment option at a price of $10.00 per Unit.
Each Unit consists of one share of Class A common stock and one-third of one redeemable warrant (“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 7).
NOTE
4. PRIVATE PLACEMENT
Simultaneously
with the closing of the Initial Public Offering, the Sponsor and the Anchor Investor purchased an aggregate of 4,666,667 Private
Placement Warrants at a price of $1.50 per Private Placement Warrant, for an aggregate purchase price of $7,000,000. On March
18, 2019, in connection with the underwriters’ election to partially exercise their over-allotment option, the Company sold
an additional 400,000 Private Placement Warrants to the Sponsor, at a price of $1.50 per Private Placement Warrant, generating
gross proceeds of $600,000. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price
of $11.50 per share. A portion of the proceeds from the Private Placement Warrants were added to the proceeds from the Initial
Public Offering and the exercise of the over-allotment option held in the Trust Account. If the Company does not complete a Business
Combination within the Combination Period, the proceeds of the sale of the Private Placement Warrants will be used to fund the
redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Warrants will expire
worthless. There will be no redemption rights or liquidating distributions from the Trust Account with respect to the Placement
Warrants.
NOTE
5. RELATED PARTY TRANSACTIONS
Founder
Shares
On
November 13, 2018, the Sponsor purchased 7,187,500 shares (the “Founder Shares”) of the Company’s Class B common
stock for an aggregate price of $25,000. In February 2019, the Sponsor forfeited 812,500 Founder Shares and the Anchor Investor
purchased 812,500 Founder Shares for an aggregate purchase price of approximately $3,000, or approximately $0.003 per share. The
Founder Shares will automatically convert into Class A common stock upon consummation of a Business Combination on a one-for-one
basis, subject to certain adjustments, as described in Note 7.
The
Founder Shares included an aggregate of up to 937,500 shares subject to forfeiture to the extent that the underwriters’
over-allotment option was not exercised in full or in part, so that the initial stockholders would own, on an as-converted basis,
20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the initial stockholders
did not purchase any Public Shares in the Initial Public Offering). As a result of the underwriters’ election to partially
exercise their over-allotment option, 187,500 Founder Shares were forfeited and 750,000 Founder Shares are no longer subject to
forfeiture.
DIAMONDPEAK HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
The
initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until
the earlier to occur of: (A) one year after the completion of a Business Combination or (B) subsequent to a Business Combination,
(x) if the last 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 a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital
stock exchange 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.
Promissory
Note – Related Party
On
November 13, 2018, Company issued the Sponsor a promissory note, pursuant to which the Sponsor agreed to loan the Company up to
an aggregate of $300,000 to cover expenses related to the Initial Public Offering (the “Promissory Note”). The Promissory
Note was non-interest bearing and payable on the earlier of March 31, 2019 or the completion of the Initial Public Offering. The
borrowings outstanding under the Promissory Note of $223,470 were repaid upon the consummation of the Initial Public Offering
on March 4, 2019.
Related
Party Loans
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”). If the Company completes a Business Combination, the Company would repay the
Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would
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. 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. The Working Capital Loans would either
be repaid upon consummation of a Business Combination, without interest, 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 $1.50 per
warrant. The warrants would be identical to the Private Placement Warrants. There are no outstanding Working Capital Loan balances
as of June 30, 2020 and December 31, 2019.
Administrative
Support Agreement
The Company entered into
an agreement, commencing on the February 27, 2019 through the earlier of the Company’s consummation of a Business Combination
and its liquidation, to pay the Sponsor a total of $10,000 per month for office space, utilities, secretarial and administrative
support. For each of the three months ended June 30, 2020 and 2019, the Company incurred $30,000 in fees for these services. For
the six months ended June 30, 2020 and 2019, the Company incurred $60,000 and $40,000, of which $10,000 of such fees are included
in accounts payable and accrued expenses in the accompanying condensed balance sheet as of June 30, 2019, respectively, in fees
for these services. As of June 30, 2020 and December 31, 2019, all such fees were paid and no such fees were included in accounts
payable and accrued expenses in the accompanying condensed balance sheets.
NOTE
6. COMMITMENTS AND CONTINGENCIES
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible
that the coronavirus could have a negative effect on the Company’s financial position, results of its operations and/or
search for a target company, the specific impact is not readily determinable as of the date of these condensed financial statements.
The condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
DIAMONDPEAK HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
Registration
Rights
Pursuant
to a registration rights agreement entered into on February 27, 2019, the holders of the Founder Shares, Private Placement Warrants
and warrants that may be issued upon conversion of Working Capital Loans (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) are entitled to registration rights requiring the Company to register such securities for resale
(in the case of the Founder Shares, only after conversion to Class A common stock). The holders of the majority of these securities
are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition,
the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent
to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant
to Rule 415 under the Securities Act. The Company will bear the expenses incurred in connection with the filing of any such registration
statements.
Underwriting
Agreement
The
Company granted the underwriters a 45-day option from the date of Initial Public Offering to purchase up to 3,750,000 additional
Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions.
On March 18, 2019, the underwriters elected to partially exercise their over-allotment option to purchase 3,000,000 Units at a
purchase price of $10.00 per Unit.
In
connection with the closing of the Initial Public Offering and the over-allotment option, the underwriters were paid a cash underwriting
discount of $0.20 per Unit, or $5,600,000. In addition, the underwriters are entitled to a deferred fee of $0.35 per Unit, or
$9,800,000 in the aggregate. 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. A portion
of the deferred fees may be paid to third parties who did not participate in the Initial Public Offering (but who are members
of FINRA) that assist the Company in consummating its Business Combination. The election to make such payments to third parties
will be solely at the discretion of the Company’s management team, and such third parties will be selected by the management
team in their sole and absolute discretion; provided, that no single third party (together with its affiliates) may be paid an
amount in excess of the portion of the aggregate deferred underwriting commission paid to the underwriter unless the parties otherwise
agree.
NOTE
7. STOCKHOLDERS’ EQUITY
Preferred
Stock —The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $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. At June 30, 2020 and December 31, 2019, there were no shares of preferred stock issued or outstanding.
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. Holders of Class A common stock are entitled to one vote for each share. At June 30, 2020 and December 31, 2019, there
were 1,009,745 and 1,028,779 shares of Class A common stock issued and outstanding, excluding 29,990,255 and 26,971,221 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. Holders of Class B common stock are entitled to one vote for each share. At June 30, 2020 and December 31, 2019, there
were 7,000,000 shares of Class B common stock issued and outstanding.
Holders
of Class A common stock and Class B common stock will vote together as a single class on all matters submitted to a vote of stockholders,
except as required by law.
DIAMONDPEAK HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
The
shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination
on a one-for-one basis, subject to adjustment. 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 offered in the Initial Public Offering and related to the closing of a Business
Combination, 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 outstanding shares of Class B common stock agree to waive such adjustment with respect
to any such issuance or deemed 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 a Business Combination (excluding any shares or equity-linked
securities issued, or to be issued, to any seller in a Business Combination). Holders of Founder Shares may also elect to convert
their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided
above, at any time.
Warrants
—Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon
separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30
days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering. The Public
Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The
Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have
no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares
of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the
Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated
to issue any shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant
exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered
holder of the warrants.
The
Company has agreed that as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination,
the Company will use its best efforts to file, and within 60 business days following a Business Combination to have declared effective,
a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise
of the warrants. The Company will use its reasonable best efforts to maintain the effectiveness of such registration statement,
and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant
agreement. Notwithstanding the above, 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,
the Company will not be required to file or maintain in effect a registration statement, but 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.
Redemptions
of Warrants for Cash — Once the warrants become exercisable, the Company may redeem the Public Warrants:
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●
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in
whole and not in part;
|
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●
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at
a price of $0.01 per warrant;
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●
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upon
not less than 30 days’ prior written notice of redemption to each warrant holder; and
|
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●
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if,
and only if, the reported last sale price of the Company’s Class A common stock equals or exceeds $18.00 per share for
any 20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption
to each warrant holder.
|
If
and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to
register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption
of Warrants for Shares of Class A Common Stock — Commencing ninety days after the warrants become exercisable, the Company
may redeem the outstanding warrants:
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●
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in
whole and not in part;
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●
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at
a price equal to a number of shares of Class A common stock to be determined, based on the redemption date and the fair market
value of the Company’s Class A common stock;
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●
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upon
a minimum of 30 days’ prior written notice of redemption;
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DIAMONDPEAK HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
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●
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if,
and only if, the last reported sale price of the Company’s Class A common stock equals or exceeds $10.00 per share on
the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders;
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●
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if,
and only if, the Private Placement Warrants are also concurrently exchanged at the same price (equal to a number of shares
of the Company’s Class A common stock) as the Company’s outstanding Public Warrants, as described above; and
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●
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if,
and only if, there is an effective registration statement covering the shares of Class A common stock issuable upon exercise
of the warrants and a current prospectus relating thereto is available throughout the 30-day period after the written notice
of redemption is given.
|
If
the Company calls the Public Warrants for redemption for cash, 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. The exercise
price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances
including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants
will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in no event will
the Company be required to net cash settle the warrants. 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.
In
addition, if the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in
connection with the closing of a Business Combination at a newly issued price of less than $9.20 per share of common stock (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 our initial stockholders or their respective affiliates, without taking into account any Founder
Shares held by them, as applicable, prior to such issuance), the exercise price of the warrants will be adjusted (to the nearest
cent) to be equal to 115% of the newly issued price.
The
Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except
that the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants
will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain
limited exceptions. Additionally, the Placement Warrants will be exercisable on a cashless basis and be non-redeemable for cash
so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held
by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable
by the Company and exercisable by such holders on the same basis as the Public Warrants.
NOTE
8. FAIR VALUE MEASUREMENTS
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.
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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 our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
DIAMONDPEAK HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
The
following table presents information about the Company’s assets that are measured at fair value on a recurring basis at
June 30, 2020 and December 31, 2019 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine
such fair value:
Description
|
|
Level
|
|
June 30,
2020
|
|
|
December 31,
2019
|
|
Assets:
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account – U.S. Treasury Securities Money Market Fund
|
|
1
|
|
$
|
284,335,009
|
|
|
$
|
283,581,860
|
|
NOTE
9. SUBSEQUENT EVENTS
The Company evaluated
subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed financial statements
were issued. Except as noted below, the Company did not identify any subsequent events that would have required adjustment or
disclosure in the condensed financial statements.
On August 1, 2020, the
Company, entered into an agreement and plan of merger (the “Merger Agreement”) with Lordstown Motors
Corp., a Delaware corporation (“LMC”) and DPL Merger Sub Corp., a Delaware corporation and a wholly-owned subsidiary
of the Company (“Merger Sub”), pursuant to which Merger Sub will merge with and into LMC with LMC surviving
the merger (the “Merger”). Upon consummation of the Merger, LMC will become a wholly owned subsidiary of the
Company.
Upon the terms and subject
to the conditions set forth in the Merger Agreement, at the effective time of the Merger, each share of common stock, par value
$0.0001 per share, of LMC (“LMC Common Stock”) issued and outstanding at the effective time shall be converted
into, and become exchangeable for the number of shares of Class A common stock of the Company equal to the quotient obtained
by dividing (A) the Purchase Price (as defined in the Merger Agreement) by (B) $10.00 by (C) the Fully Diluted
Share Number (as defined in the Merger Agreement) (such number of shares of the Company’s Class A common stock, the “Stock
Merger Consideration”) (except for (i) holders of LMC Common Stock that are not accredited investors, who will receive
an amount per share in cash equal to the Stock Merger Consideration multiplied by $10.00 and (ii) holders of Dissenting
Shares (as defined in the Merger Agreement), who shall, by virtue of the Merger and without any action on the part of the holder
of such Dissenting Share, cease to be outstanding, be cancelled without payment of any consideration therefor and shall cease to
exist, subject to any rights the holder thereof may have under Section 2.14 of the Merger Agreement). Additionally, each outstanding
option to purchase shares of LMC Common Stock will be converted into an option to purchase shares of the Company’s Class
A common stock.
The Merger will be consummated
subject to the deliverables and provisions as further described in the Merger Agreement. For additional information about LMC,
the Merger Agreement and the Merger, see the Form 8-K filed by the Company on August 3, 2020.