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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
For the quarterly period ended June 30, 2021
OR
 
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
                    
to
                    
 
 
BERKSHIRE GREY, INC.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
001-39768
 
85-2994421
(State or other jurisdiction of
incorporation or organization)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification Number)
140 South Road
Bedford, MA
 
01730
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (833)
848-9900
Not Applicable
(Former name or former address, if changed since last report)
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
  
Trading
Symbol(s)
  
Name of Each Exchange
on Which Registered
Class A common stock, par value of $0.0001 per share
 
BGRY
 
The NASDAQ Stock Market LLC
Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 per share
 
BGRYW
 
The NASDAQ Stock Market LLC
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, if any, 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, a 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.
 
Large accelerated filer
 
☐
  
Accelerated filer
 
☐
       
Non-accelerated filer
 
☒
  
Smaller reporting company
 
☒
       
 
 
 
  
Emerging growth company
 
☒
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  
☒ 
As of August 13, 2021, there
were
 222,597,413
shares of Class A common stock, par value $0.0001 per share,
and 5,750,000 shares of Class C common stock, par value $0.0001 per share, issued and outstanding.
 
 
 
EXPLANATORY NOTE
On July 21, 2021 (the “Closing Date”), subsequent to the fiscal quarter ended June 30, 2021, the fiscal quarter to which this Quarterly Report on Form
10-Q
(this “Report”) relates, the Company closed the previously announced business combination pursuant to that certain Agreement and Plan of Merger, dated as of February 23, 2021 (the “Merger Agreement”), by and among Revolution Acceleration Acquisition Corp (“RAAC”), Pickup Merger Corp, a Delaware corporation and a direct, wholly owned subsidiary of RAAC (“Merger Sub”), and Legacy Berkshire Grey, which provided for, among other things, the merger of Merger Sub with and into Legacy Berkshire Grey (the “Merger”), with Legacy Berkshire Grey being the surviving corporation of the Merger and having become a direct, wholly owned subsidiary of the Company as a consequence of the Merger (together with the other transactions contemplated by the Merger Agreement, the “Business Combination”). In connection with the consummation of the Business Combination, RAAC changed its name to Berkshire Grey, Inc. and Legacy Berkshire Grey changed its name to Berkshire Grey Operating Company, Inc. Berkshire Grey Inc.’s Class A common stock and public warrants commenced trading on The Nasdaq Stock Market LLC under the ticker symbols “BGRY” and “BGRYW,” respectively, on July 22, 2021.
Unless stated otherwise, this report contains information about RAAC before the Business Combination. This Report covers a period prior to the closing of the Business Combination. As a result, references in this report to “we,” “us,” “our,” or the “Company” refer to the registrant prior to the closing of the Business Combination, unless the context requires otherwise.
Except as otherwise expressly provided herein, the information in this Report does not reflect the consummation of the Business Combination, which, as discussed above, occurred subsequent to the period covered hereunder.
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
Form
10-Q
Table of Contents
 
        
Page
 
  
Item 1.
  Financial Statements      1  
  Condensed Consolidated Balance Sheets as of June 30, 2021 (Unaudited) and December 31, 2020      1  
  Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 (Unaudited)      2  
  Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2021 (Unaudited)      3  
  Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2021 (Unaudited)      4  
  Notes to Condensed Consolidated Financial Statements (Unaudited)      5  
Item 2.
  Management’s Discussion and Analysis of Financial Condition and Results of Operations      18  
Item 3.
  Quantitative and Qualitative Disclosures About Market Risk      22  
Item 4.
  Controls and Procedures      22  
  
Item 1.
  Legal Proceedings      24  
Item 1A.
  Risk Factors      24  
Item 2.
  Unregistered Sales of Equity Securities and Use of Proceeds      24  
Item 3.
  Defaults Upon Senior Securities      25  
Item 4.
  Mine Safety Disclosures      25  
Item 5.
  Other Information      25  
Item 6.
  Exhibits      26  
 
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
CONDENSED CONSOLIDATED BALANCE SHEETS
 
    
June 30,

2021
   
December 31,
2020
 
    
(Unaudited)
       
ASSETS
    
Current Assets
    
Cash and cash equivalents
   $ 123,871     $ 780,292  
Prepaid expenses
     365,366       747,842  
  
 
 
   
 
 
 
Total Current Assets
     489,237       1,528,134  
Cash and marketable securities held in Trust Account
     287,538,614       287,491,254  
  
 
 
   
 
 
 
TOTAL ASSETS
  
$
288,027,851
 
 
$
289,019,388
 
  
 
 
   
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
    
Accounts payable and accrued expenses
   $ 3,053,408     $ 106,477  
Promissory note - related party
     500,000       —    
  
 
 
   
 
 
 
Total Current Liabilities
     3,553,408       106,477  
Warrant liability
     29,603,334       22,862,501  
Deferred underwriting fee payable
     10,062,500       10,062,500  
  
 
 
   
 
 
 
Total Liabilities
  
 
43,219,242
 
 
 
33,031,478
 
  
 
 
   
 
 
 
Commitments
Class A common stock subject to possible redemption 28,750,000 and 25,098,791 shares at redemption value at June 30, 2021 and December 31, 2020, respectively
     287,500,000       250,987,908  
Stockholders’ Equity (Deficit)
    
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding
     —       —    
Class A common stock, $0.0001 par value; 75,000,000 shares authorized; 0 and 3,651,209 issued and outstanding (excluding 28,750,000 and 25,098,791 shares subject to possible redemption) at June 30, 2021 and December 31, 2020, respectively
     —         365  
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 3,833,333 shares issued and outstanding
     383       383  
Class C common stock, $0.0001 par value; 15,000,000 shares authorized; 5,750,000 shares issued and outstanding
     575       575  
Additional
paid-in
capital
     24,138       6,650,386  
Accumulated deficit
     (42,716,487 )      (1,651,707 ) 
  
 
 
   
 
 
 
Total Stockholders’ Equity (Deficit)
  
 
(42,691,391
) 
 
 
5,000,002
 
  
 
 
   
 
 
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
  
$
288,027,851
 
 
$
289,019,388
 
  
 
 
   
 
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
1
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
    
Three Months
Ended

June 30,

2021
   
Six Months
Ended

June 30,

2021
 
Formation and operating costs
   $ 1,157,655     $ 4,485,844  
    
 
 
   
 
 
 
Loss from operations
  
 
(1,157,655
) 
 
 
(4,485,844
) 
Other expense:
                
Change in fair value of derivative liabilities
     (398,333 )      (6,740,833 ) 
Interest income - bank
     2       16  
Interest earned on marketable securities held in Trust Account
     4,614       47,360  
Unrealized loss on marketable securities held in Trust Account
     (744 )      —    
    
 
 
   
 
 
 
Other expense, net
     (394,461 )      (6,693,457 ) 
    
 
 
   
 
 
 
Loss before income taxes
     (1,552,116 )      (11,179,301 ) 
Provision for income taxes
     —         —    
    
 
 
   
 
 
 
Net loss
  
$
(1,552,116
) 
 
$
(11,179,301
)
    
 
 
   
 
 
 
Basic and diluted weighted average shares outstanding, Class A common stock subject to redemption
     28,750,000       27,674,922  
    
 
 
   
 
 
 
Basic and diluted net income per share, Class A common stock subject to redemption
  
$
0.00
 
 
$
0.00
 
    
 
 
   
 
 
 
Basic and diluted weighted average shares outstanding,
Non-redeemable
common stock
     9,583,333       10,658,411  
    
 
 
   
 
 
 
Basic and diluted net loss per share,
Non-redeemable
common stock
  
$
(0.16
) 
 
$
(1.05
) 
    
 
 
   
 
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
2
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
THREE AND SIX MONTHS ENDED JUNE 30, 2021
(Unaudited)
 
    
Class A
Common Stock
   
Class B
Common Stock
    
Class C
Common Stock
    
Additional
Paid-in
   
Accumulated
   
Total
Stockholders’
 
    
Shares
   
Amount
   
Shares
    
Amount
    
Shares
    
Amount
    
Capital
   
Deficit
   
Equity (Deficit)
 
Balance – December 31, 2020
  
 
3,651,209
 
 
$
365
 
 
 
3,833,333
 
  
$
383
 
  
 
5,750,000
 
  
$
575
 
  
$
6,650,386
 
 
$
(1,651,707
) 
 
$
5,000,002
 
Change in fair value of common stock subject to possible redemption
     (3,651,209 )      (365 )      —          —          —          —          (6,626,248 )      (29,885,479 )      (36,512,092 ) 
Net loss
     —         —         —          —          —          —          —         (9,627,185 )      (9,627,185 ) 
  
 
 
   
 
 
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
Balance – March 31, 2021
     —       $ —      
 
3,833,333
 
  
$
383
 
  
 
5,750,000
 
  
$
575
 
  
$
24,138
 
 
$
(41,164,371
) 
 
$
(41,139,275
) 
Net loss
     —         —         —          —          —          —          —         (1,552,116 )      (1,552,116 ) 
  
 
 
   
 
 
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
Balance – June 30, 2021
     —       $ —      
 
3,833,333
 
  
$
383
 
  
 
5,750,000
 
  
$
575
 
  
$
24,138
 
 
$
(42,716,487
) 
 
$
(42,691,391
) 
  
 
 
   
 
 
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
3
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2021
(Unaudited)
 
Cash Flows from Operating Activities:
  
Net loss
   $ (11,179,301 ) 
Adjustments to reconcile net income to net cash used in operating activities:
  
Interest earned on marketable securities held in Trust Account
     (47,360 ) 
Change in fair value of derivative liabilities
     6,740,833  
Changes in operating assets and liabilities:
  
Prepaid expenses
     382,476  
Accounts payable and accrued expenses
     2,946,931  
  
 
 
 
Net cash used in operating activities
  
 
(1,156,421
) 
  
 
 
 
Cash Flows from Financing Activities:
  
Proceeds from promissory note—related party
     500,000  
  
 
 
 
Net cash provided by financing activities
  
 
500,000
 
  
 
 
 
Net Change in Cash and Cash Equivalents
  
 
(656,421
) 
Cash and Cash Equivalents – Beginning of period
     780,292  
  
 
 
 
Cash and Cash Equivalents – End of period
  
$
123,871
 
  
 
 
 
Non-Cash
investing and financing activities:
  
Change in value of Class A common stock subject to possible redemption
   $ 36,512,092  
  
 
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
4
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Berkshire Grey, Inc., formally known as Revolution Acceleration Acquisition Corp (formerly known as Acceleration Acquisition Corporation) (the “Company”) is a blank check company incorporated in Delaware on September 10, 2020. The Company was formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses.
Business Combination
On July 21, 2021, the Company closed the previously announced business combination pursuant to that certain Agreement and Plan of Merger, dated as of February 23, 2021 (the “Merger Agreement”), by and among RAAC, Pickup Merger Corp, a Delaware corporation and a direct, wholly owned subsidiary of RAAC (“Merger Sub”), and Legacy Berkshire Grey, which provided for, among other things, the merger of Merger Sub with and into Legacy Berkshire Grey (the “Merger”), with Legacy Berkshire Grey being the surviving corporation of the Merger and having become a direct, wholly owned subsidiary of the Company as a consequence of the Merger (together with the other transactions contemplated by the Merger Agreement, the “Business Combination”). In connection with the consummation of the Business Combination, RAAC changed its name to Berkshire Grey, Inc. and Legacy Berkshire Grey changed its name to Berkshire Grey Operating Company, Inc. 
Holders of 23,251,823 shares of RAAC’s Class A common stock (the “public shares”) properly exercised their right to have such shares redeemed for a full pro rata portion of the trust account holding the proceeds from RAAC’s initial public offering, calculated as of two business days prior to the consummation of the business combination, which was approximately $10.00 per share, or $232,551,292 in the aggregate.
As a result of the Business Combination, each share of Legacy Berkshire Grey preferred stock was converted into Legacy Berkshire Grey common stock, and each share of Legacy Berkshire Grey common stock was converted into the right to receive approximately 5.87585 shares of the Company’s Class A Common Stock.
Pursuant to subscription agreements entered into in connection with the Merger Agreement (collectively, the “Subscription Agreements”), certain investors (the “PIPE Investors”) agreed to subscribe for an aggregate of 16,500,000 newly-issued shares of Class A Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of $165,000,000 (the “PIPE Investment”). At the Closing, the Company consummated the PIPE Investment.
After giving effect to the Transactions and the consummation of the PIPE Investment there are currently 222,597,413 shares of the Company’s Class A Common Stock issued and outstanding.
The Company’s Class A Common Stock and warrants commenced trading on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “BGRY” and “BGRYW,” respectively, on July 22, 2021, subject to ongoing review of the Company’s satisfaction of all listing criteria following the Business Combination.
As noted above, an aggregate of $232,551,292 was paid from the Company’s trust account to holders that properly exercised their right to have public shares redeemed, and the remaining balance of approximately $54,989,588 was used to fund the Business Combination.
Business Prior to the Business Combination
Prior to the Business Combination, the Company had one subsidiary, Pickup Merger Corp, a direct, wholly-owned subsidiary of the Company incorporated in Delaware on February 19, 2021 (“Merger Sub”) (see Note 10).
All activity through June 30, 2021 related to the Company’s formation, the initial public offering (the “Initial Public Offering”), which is described below, and identifying a target company for an initial business combination and consummating the acquisition of Berkshire Grey, Inc.
The registration statement for the Company’s Initial Public Offering was declared effective on December 7, 2020. On December 10, 2020, the Company consummated the Initial Public Offering of 28,750,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), which includes the full exercise by the underwriter of its over-allotment option in the amount of 3,750,000 Units, at $10.00 per Unit, generating gross proceeds of $
287,500,000
, which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 5,166,667 warrants (each, a “Private Placement Warrant” and, collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to RAAC Management LLC (the “Sponsor”), generating gross proceeds of $7,750,000, which is described in Note 4.
Transaction costs amounted to $16,242,914, consisting of $5,750,000 of underwriting fees, $10,062,500 of deferred underwriting fees and $430,414 of other offering costs.
Following the closing of the Initial Public Offering on December 10, 2020, an amount of $287,500,000 ($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 (the “Trust Account”), and invested 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 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 of 1940, as amended (the “Investment Company Act”), as determined by the Company.
Liquidity
As of June 30, 2021, the Company had approximately $123,871 in its operating bank account and $287,538,614 in securities held in the Trust Account to be used for a Business Combination or to repurchase or redeem its common stock in connection therewith.
Until the consummation of the Business Combination, the Company used the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination. In addition, the Sponsor, an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans of up to $1,500,000 (See Note
Related Party Loans
for more information).
On July 21, 2021, the Company completed the Business Combination with RAAC pursuant to the Merger Agreement. Upon closing of the business combination transaction, the combined company was renamed Berkshire Grey, Inc. Closing occurred on July 21, 2021 (the “Closing Date”). The transaction was accounted for as a reverse recapitalization. The Company received gross proceeds of $220.0 million and incurred closing costs of $27.4 million. As of June 30, 2021, $1.8 million of deferred transaction costs were recorded, which consisted of legal, accounting, and other professional services directly related to the Merger. These costs were offset against proceeds upon accounting for the Closing.
Based on the foregoing, the Company had sufficient working capital and borrowing capacity from the Sponsor to meet its needs through the consummation of the Business Combination. Over this time period, the Company used these funds for paying existing accounts payable, identifying and evaluating prospective initial business combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
 
5
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
 
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated 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 consolidated 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 consolidated financial statements should be read in conjunction with Amendment No. 1 to the Company’s Annual Report on Form
10-K/A
for the period ended December 31, 2020, as filed with the SEC on May 13, 2021. The interim results for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future periods.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.
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 of 2002 (“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 statement 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.
 
6
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
 
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires the Company’s 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 condensed consolidated financial statements and the reported amounts of revenues and 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 confirming events. Accordingly, the actual results could differ significantly from those estimates.
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 did not have any cash equivalents as of June 30, 2021 and December 31, 2020.
Cash and Marketable Securities Held in Trust Account
At June 30, 2021 and December 31, 2020, substantially all of the assets held in the Trust Account were held in money market funds that invest in U.S. Treasury Bills.
Warrant Liability
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional
paid-in
capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a
non-cash
gain or loss on the statements of operations.
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 Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A 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 features 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 Class A 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, 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 condensed consolidated balance sheets.
Income Taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
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, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2021 and December 31, 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.
 
7
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
 
The Company may be subject to potential examination by federal, state and city taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal, state and city tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
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 statements of operations.
Net Income (Loss) Per Share
Net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered the effect of the warrants sold in the Public Offering and Private Placement to purchase an aggregate of 14,750,000 shares in the calculation of diluted income (loss) per share, 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 Company’s statements of operations includes a presentation of income (loss) per share for common stock subject to possible redemption in a manner similar to the
two-class
method of income (loss) per share. Net income (loss) per share, basic and diluted, for stock subject to possible redemption is calculated by dividing the proportionate share of income (loss) on marketable securities held by the Trust Account by the weighted average number of stock subject to possible redemption outstanding since original issuance.
Net loss per share, basic and diluted, for
non-redeemable
common stock is calculated by dividing the net loss, adjusted for loss on marketable securities attributable to Class A common stock subject to possible redemption, by the weighted average number of
non-redeemable
common stock outstanding for the period.
Non-redeemable
common stock includes Founder Shares, alignment sh
a
res and
non-redeemable
Class A common stock as these shares do not have any redemption features.
Non-redeemable
common stock participates in the loss on marketable securities based on
non-redeemable
Class A common stock’s proportionate interest.
The following table reflects the calculation of basic and diluted net income (loss) per share (in dollars, except per share amounts):
 
    
Three Months

Ended

June 30,

2021
    
Six Months

Ended

June 30,

2021
 
Class A common stock subject to possible redemption
                 
Numerator: Earnings allocable to Common stock subject to possible redemption
                 
Interest earned on marketable securities held in Trust Account
   $ 4,614      $ (47,360 ) 
Unrealized loss on marketable securities held in Trust Account
     (744 )       —  
Less: Company’s portion available to pay taxes
     (3,870 )       (47,360 ) 
    
 
 
    
 
 
 
Net Income allocable to shares subject to redemption
  
$
—
 
  
$
—
 
    
 
 
    
 
 
 
Denominator: Weighted Average Class A common stock subject to possible redemption
                 
Basic and diluted weighted average shares outstanding
  
 
28,750,000
 
  
 
27,674,922
 
    
 
 
    
 
 
 
Basic and diluted net income per share
  
$
0.00
 
  
$
0.00
 
    
 
 
    
 
 
 
Non-Redeemable
Common Stock
                 
Numerator: Net Loss minus Net Earnings
                 
Net loss
   $ (1,552,116 )     $ (11,179,301 ) 
    
 
 
    
 
 
 
Non-Redeemable
Net Loss
  
$
(1,552,116
) 
  
$
(11,179,301
) 
    
 
 
    
 
 
 
Denominator: Weighted Average
Non-redeemable
Common stock
                 
Basic and diluted weighted average shares outstanding
  
 
9,583,333
 
  
 
10,658,411
 
    
 
 
    
 
 
 
Basic and diluted net loss per share
  
$
(0.16
) 
  
$
(1.05
) 
    
 
 
    
 
 
 
 
8
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(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 Corporation coverage of $250,000. The Company has not experienced losses on this account.
Fair value of 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 consolidated balance sheet, primarily due to their short-term nature.
Fair Value Measurements
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:
 
  •  
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.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then
re-valued
at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or
non-current
based on whether or not
net-cash
settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2020-06,
Debt — Debt with Conversion and Other Options (Subtopic
470-20)
and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic
815-40)
(“ASU
2020-06”)
to simplify accounting for certain financial instruments. ASU
2020-06
eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU
2020-06
amends the diluted earnings per share guidance, including the requirement to use the
if-converted
method for all convertible instruments. ASU
2020-06
is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU
2020-06
as of January 1, 2021 and the adoption did not have an impact on its financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.
 
 
9
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
 
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering on December 10, 2020, the Company sold 28,750,000 Units, which includes a full exercise by the underwriter of the over-allotment option in the amount of 3,750,000 Units, at a purchase 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 Public Warrant entitles the holder to purchase one share of Class A common stock at an exercise price of $11.50 per whole share, subject to adjustment (see Note 8).
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 5,166,667 Private Placement Warrants at a price of $1.50 per warrant ($7,750,000 in the aggregate), each exercisable to purchase one share of Class A common stock at a price of $11.50 per share, in a private placement. The proceeds from the sale of the Private Placement Warrants were added to the net 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 proceeds from 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.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On September 15, 2020, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 8,625,000 shares of Class B common stock (the “Founder Shares”). On November 20, 2020, the Sponsor exchanged 4,791,667 Founder Shares, which were cancelled by the Company, for 5,750,000 alignment shares. On November 20, 2020, the Sponsor transferred 16,000 Founder Shares and 24,000 alignment shares to each of Mr. Museles, Ms. Caldwell and Mr. Fish, the Company’s independent directors, and 50,000 Founder Shares and 50,000 alignment shares to Andrew Wallace, who will serve as an advisor to the Sponsor and provide it with services in connection with the sourcing and completion of a Business Combination. Up to 500,000 Founder Shares and 750,000 alignment shares are subject to forfeiture by the Sponsor to the extent that the underwriter’s over-allotment is not exercised in full or in part so that the Founder Shares and alignment shares will represent 10% and 15%, respectively, of the Company’s issued and outstanding shares of common stock after the Initial Public Offering. The alignment shares are reflected as Class C common stock, have the same rights and conditions are Class B common stock and are more fully described in Note 7. As a result of the underwriter’s election to fully exercise the over-allotment option on December 10, 2020, no Founder Shares or alignment shares are currently subject to forfeiture.
The Sponsor and other holders of Founder Shares and alignment shares have agreed, subject to certain 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 a Business Combination or (B) subsequent to a 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 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.
The Sponsor and other holders of Founder Shares and alignment shares have agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the alignment shares until the earlier of: (A) their conversion into shares of Class A common stock; and (B) subsequent to the initial Business Combination, the date on which the Company completes a merger, stock exchange, reorganization or other similar transaction that results in both a change of control and all of the Company’s public stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property.
 
 
10
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
 
Administrative Support Agreement
The Company entered into an agreement, commencing on December 7, 2020, pursuant to which it will agree to pay the Sponsor a total of $10,000 per month for office space, administrative and support services. Upon completion of the Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. For the three and six months ended June 30, 2021, the Company incurred and paid $30,000 and $60,000 in fees for these services, respectively.
Related Party Loans
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds on a non-interest basis 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. The Working Capital Loans will 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 at a price of $1.50
per warrant. The warrants would be identical to the Private Placement
Warrants. The Company did not have an outstanding balance related to Working Capital Loans on June 30, 2021.
On April 12, 2021 the Company and RAAC Management LLC executed a Promissory Note (“Promissory Note”) which provided the Company with the option to withdraw up to $500,000 at an interest rate of 1.60% per annum. All unpaid principle was due in full upon completion of a Business Combination. On June 30, 2021 the Company had an outstanding Promissory Note balance of $500,000, which was paid in full plus accrued interest in connections with the consummation of the Business Combination on Closing Date.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
Pursuant to a registration rights agreement entered into on December 7, 2020, the holders of the Founder Shares, alignment shares, Private Placement Warrants and any warrants that may be issued upon conversion of the 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 and alignment shares) will be entitled to registration rights requiring the Company to register such securities for resale (in the case of the Founder Shares and alignment shares, only after conversion to shares of our Class A common stock). The holders of these securities will be entitled to make up to three demands, excluding short form registration 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. However, the registration rights agreement provides that the Company will not be required to effect or permit any registration or cause any registration statement to become effective until termination of the applicable
lock-up
period. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
In connection with the Closing, on July 21, 2021, the Company entered into an Amended and Restated Registration Rights Agreement (the “A&R Registration Rights Agreement”) with RAAC Management LLC, a Delaware limited liability company (the “Sponsor”) and certain other investors party thereto (collectively, with each other person who has executed and delivered a joinder thereto, the “RRA Parties”), including certain former holders of Legacy Berkshire Grey securities (the “BG RRA Parties”), pursuant to which the RRA Parties will be entitled to registration rights in respect of certain shares of our Class A common stock, par value $0.0001 per share (the “Class A Common Stock”) and certain other of our equity securities that are held by the RRA Parties from time to time. The A&R Registration Rights Agreement provides that we will, (i) within 30 calendar days after the consummation of the Business Combination, submit to or file with the SEC (at our sole cost and expense) a registration statement registering the resale of certain shares of the Class A Common Stock and certain other of our equity securities held by the RRA Parties (the “Resale Registration Statement”), and (ii) use our reasonable best efforts to have the Resale Registration Statement declared effective by the SEC as soon as practicable after the filing thereof, but no later than the earlier of (x) the 90th calendar day following the filing date if the SEC notifies us that it will “review” the Resale Registration Statement and (y) the 10th business day after the date we are notified by the SEC that the Resale Registration Statement will not be “reviewed” or will not be subject to further review.
The A&R Registration Rights Agreement grants each of the RRA Parties and their respective permitted transferees certain demand registration rights in connection with an underwritten shelf takedown offering, in each case subject to certain offering thresholds, issuer suspension periods and certain other conditions. In addition, the A&R Registration Rights Agreement grants the RRA Parties “piggyback” registration rights, subject to customary underwriter cutbacks, issuer suspension periods and certain other conditions.
These registration rights are subject to certain customary limitations, including the right of the underwriters to limit the number of securities to be included in an underwritten offering and our right to delay or withdraw a registration statement under certain circumstances. The A&R Registration Rights Agreement includes customary indemnification provisions. The Company will bear the expenses incurred in connection with the filing of any registration statements filed pursuant to the terms of the A&R Registration Rights Agreement, including the fees of legal counsel selected by the
majority-in-interest
of RRA Parties initiating a demand registration right (not to exceed $75,000 without our consent). The A&R Registration Rights Agreement also provides for a
lock-up
on registrable securities held by the BG RRA Parties so that such BG RRA Parties may not transfer such shares, except to certain permitted transferees, for 180 days following the Closing.
 
11
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
 
Underwriting Agreement
The underwriter is entitled to a deferred fee of $0.35 per Unit, or $10,062,500 in the aggregate. Of such amount, at the Company’s sole and absolute discretion, up to $0.175 per Unit, or up to $5,031,250, may be paid to third parties not participating in the Initial Public Offering that assist the Company in consummating its initial Business Combination.
The deferred fee was paid to the underwriter from the amounts held in the Trust Account at the Closing Date, subject to the terms of the underwriting agreement. 
Sponsor Support Agreement
On February 23, 2021, in connection with and concurrently with the execution of the Merger Agreement, RAAC and Legacy Berkshire Grey entered into an amended and restated letter agreement (the “Sponsor Support Agreement”) with each of the Sponsor, RAAC’s officers and directors and holders of RAAC’s Class B common stock and Class C common stock, which amended and restated the prior letter agreement between such parties (other than Legacy Berkshire Grey), dated December 7, 2020. Pursuant to the Sponsor Support Agreement, among other things, the parties thereto agreed to (i) vote all of the shares of RAAC common stock beneficially owned or held by such parties in favor of the Business Combination and certain related matters, (ii) vote all of the shares of RAAC common stock beneficially owned or held by such parties against certain other actions, including (A) any action reasonably expected to impede or result in the breach of any provision of the Merger Agreement and (B) any business combination or change in capitalization other than with respect to the Business Combination, (iii) waive anti-dilution rights provided in the RAAC charter with respect to their founder shares and alignment shares and waive their right to convert working capital loans to RAAC into warrants and (iv) not redeem or tender any of their shares of RAAC common stock in connection with any such vote as described in clauses (i) or (ii) or in connection with any vote to amend the RAAC charter.
Berkshire Grey Stockholders Support Agreement
In connection with and concurrently with the execution of the Merger Agreement, RAAC entered into a support agreement with Legacy Berkshire Grey and certain stockholders of Legacy Berkshire Grey (the “Legacy Berkshire Grey Stockholders”), representing, in aggregate, 91.9% of the voting power of the outstanding Berkshire Grey capital stock, voting as a single class and on an
as-converted
basis, as of February 23, 2021 (the “Legacy Berkshire Grey Stockholders Support Agreement”). Pursuant to the Legacy Berkshire Grey Stockholders Support Agreement, Legacy Berkshire Grey Stockholders agreed to, among other things and subject to certain conditions, vote to approve and adopt the Merger Agreement and all other ancillary agreements and transactions contemplated thereby.
Pursuant to the Legacy Berkshire Grey Stockholders Support Agreement, the requisite Legacy Berkshire Grey Stockholders also agreed to, among other things, terminate all affiliate agreements other than those set forth on the Legacy Berkshire Grey’s disclosure letter accompanying the Merger Agreement and to deliver a duly executed copy of the A&R Registration Rights Agreement at the Closing.
Indemnification Agreement
On July 21, 2021, we entered into indemnification agreements with each of our directors and executive officers. Each indemnification agreement provides for indemnification and advancements by the Company of certain expenses and costs relating to claims, suits or proceedings arising from his or her service to the Company or, at our request, service to other entities, as officers or directors to the maximum extent permitted by applicable law.
 
 
12
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
 
Merger Agreement
On February 23, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Pickup Merger Corp, a Delaware corporation and a direct, wholly owned subsidiary of the Company (“Merger Sub”), and Berkshire Grey, Inc., a Delaware corporation (“Berkshire Grey”), relating to a proposed business combination with Berkshire Grey (the “Berkshire Grey Business Combination”). Pursuant to the Merger Agreement, Merger Sub will merge with and into Berkshire Grey, with Berkshire Grey being the surviving corporation of the merger and a direct, wholly owned subsidiary of the Company.
Subject to the terms and conditions of the Merger Agreement, the consideration to be paid in respect of each share of common stock, par value $0.001 per share, of Berkshire Grey (“Berkshire Grey Common Stock”) issued and outstanding immediately prior to the effective time of the Merger was a number of shares of newly-issued Class A common stock of the Company (with each share valued at $10.00), par value $0.0001 per share (“RAAC Class A Common Stock”), equal to (x) $2,250,000,000.00 divided by (y) the number of shares of Aggregate Fully Diluted Company Stock (as defined in the Merger Agreement). Immediately prior to the closing of the Business Combination (the “Closing”), all of the outstanding shares of each series of preferred stock of Berkshire Grey was converted into shares of Berkshire Grey Common Stock.
At the Closing, each outstanding option to acquire Berkshire Grey Common Stock and each award of restricted Berkshire Grey Common Stock was converted into the right to receive an option relating to shares of Class A Stock and an award of restricted shares of Class A Stock, as applicable, upon substantially the same terms and conditions, including with respect to vesting and termination-related provisions, as existed prior to the Closing, except that the number of shares underlying such option and the exercise price and the number of shares subject to restricted stock awards, in each case, shall be determined as set forth in the Merger Agreement.
The Merger Agreement contained customary representations, warranties and covenants by the parties thereto and the closing was subject to certain conditions as further described in the Merger Agreement.
Concurrently with the execution of the Merger Agreement, the Company entered into subscription agreements (the “Subscription Agreements”) with certain investors (the “PIPE Investors”), pursuant to which the PIPE Investors have committed to purchase an aggregate amount of $165,000,000 in shares of Class A Stock at a purchase price of $10.00 per share, substantially concurrent with, and contingent upon, the Closing (the “PIPE Investment”).
The Subscription Agreements for the PIPE Investors provide for certain registration rights. In particular, the Company is required to, within 30 calendar days following the Closing, file with the SEC a registration statement registering the resale of the securities issued pursuant to the Subscription Agreements. Additionally, the Company is required to use its commercially reasonable efforts to have such registration statement declared effective as soon as practicable after the filing thereof, but no later than the earlier of (i) the 90th calendar day following the filing date thereof and (ii) the 10th business day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that the registration statement will not be “reviewed” or will not be subject to further review.
Each Subscription Agreement will terminate with no further force and effect upon the earliest to occur of: (a) such date and time as the Merger Agreement is terminated in accordance with its terms; (b) the mutual written agreement of the parties to such Subscription Agreement; (c) if any of the conditions to closing set forth in the Subscription Agreements are not satisfied on or prior to the closing of the PIPE Investment and, as a result thereof, the transactions contemplated by such Subscription Agreement fail to occur; and (d) if the consummation of the Berkshire Grey Business Combination has not occurred by the Outside Date.
In connection with the Berkshire Grey Business Combination, the Company engaged J.P. Morgan Securities LLC as its financial advisor and Credit Suisse Securities (USA) LLC as its placement agent for the PIPE Investment, each of which will be entitled to customary fees in such capacity, with payment due at, and conditioned upon, the closing of the Business Combination and the PIPE Investment, respectively.
NOTE 7. STOCKHOLDERS’ EQUITY
Preferred Stock
 — The Company is authorized to issue up to 1,000,000 shares of $0.0001 par value preferred stock. At June 30, 2021 and December 31, 2020, 2020, there were no shares of preferred stock issued or outstanding.
Class
 A Common Stock
 — On November 19, 2020, the Company amended its Certificate of Incorporation such that it is now authorized to issue up to 75,000,000 shares of Class A, $0.0001 par value common stock. Holders of the Company’s common stock are entitled to one vote for each share. At June 30, 2021, there were 0 shares of Class A common stock issued and outstanding, excluding 28,750,000 shares of Class A common stock subject to possible redemption. At December 31, 2020, there were 3,651,209 shares of Class A common stock issued and outstanding, excluding 25,098,791 shares of Class A common stock subject to possible redemption.
The Company determined the common stock subject to redemption to be equal to the redemption value of approximately $10.00 per share of common stock while also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001. Upon considering the impact of the PIPE Investment and associated PIPE Subscription Agreements, it was concluded that the redemption value should include all the Public Shares resulting in the common stock subject to possible redemption being equal to $287,500,000. This resulted in a measurement adjustment to the initial carrying value of the common stock subject to redemption with the offset recorded to additional
paid-in
capital and accumulated deficit.
 
13
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
 
Class
 B Common Stock
 — On November 19, 2020, the Company amended its Certificate of Incorporation such that it is now authorized to issue up to 10,000,000 shares of Class B, $0.0001 par value common stock. Holders of the Company’s Class B common stock are entitled to one vote for each share. At June 30, 2021 and December 31, 2020, there were 3,833,333 shares of Class B common stock issued and outstanding.
Class
 C Common Stock
 — On November 19, 2020, the Company amended its Certificate of Incorporation such that it is now authorized to issue up to 15,000,000 shares of Class C, $0.0001 par value common stock. Holders of the Company’s Class C common stock are entitled to one vote for each share. At June 30, 2021 and December 31, 2020, there were 5,750,000 shares of Class C common stock issued or outstanding.
The Class C common stock will automatically convert into shares of Class A common stock at the earlier of (i) a time after the completion of a Business Combination in which the sale price of shares of the Class A common stock equals or exceeds $15.25 if occurring before the third anniversary of a Business Combination, $23.00 if occurring before the sixth anniversary of a Business Combination or $35.00 if occurring before the ninth anniversary of a Business Combination, and (ii) subsequent to the completion of the Business Combination, the date on which the Company completes a merger, stock exchange, reorganization or other similar transaction that results in both a change of control and all of its public stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property, in each case, on a
one-for-one
basis, subject to adjustment. The Class C common stock shares will be returned to the Company for cancellation in the event that they have not converted into shares of Class A common stock nine years after a Business Combination.
Holders of Class A common stock, Class B common stock and Class C common stock will vote together as a single class on all other matters submitted to a vote of stockholders, except as required by law.
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. The shares of Class C common stock will automatically convert into shares of Class A common stock if the Company meets certain stock price performance thresholds following the completion 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 issued in this offering and related to the closing of a Business Combination, the ratio at which the shares of Class B common stock and Class C common stock will convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the issued and outstanding shares of Class B common stock and Class C common stock agree to waive such anti-dilution 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 and Class C common stock will equal, in the aggregate, on an
as-converted
basis, 25% of the sum of all common stock issued and 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.
NOTE 8. WARRANT LIABILITY
Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) 30 days after the consummation of a Business Combination or (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any Class A common stock pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A common stock issuable upon exercise of the Public 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 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, it will use its commercially reasonable efforts to file with the SEC a registration statement covering the issuance, under the Securities Act, of the Class A common stock issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of a Business Combination and 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 shares of Class A common stock are, at the time of any exercise of a warrant, not listed on a national securities exchange such that they satisfy 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 use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
 
 
14
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
 
Redemption of Warrants When the Price per share of Class
 A common stock Equals or Exceeds $18.00
 — Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants:
 
  •  
in whole and not in part;
 
  •  
at a price of $0.01 per Public Warrant;
 
  •  
upon not less than 30 days’ prior written notice of redemption to each warrant holder; and
 
  •  
if, and only if, the last reported sale price of the Class A common stock for any
20-trading
days within a
30-trading
day period ending on the third trading day prior to the date on which the Company send the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted).
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 When the Price per share of Class
 A common stock Equals or Exceeds $10.00
 — Once 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 based on the redemption date and the “fair market value” of our Class A common stock;
 
  •  
if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted); and
 
  •  
if the Reference Value is less than $18.00 per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.
The exercise price and number of Class A common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances 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 Public 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 Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A 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 the Sponsor or its affiliates, without taking into account any Founder Shares and alignment shares held by the Sponsor or such affiliates, as applicable, 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 Company’s initial Business Combination on the date of the consummation of such initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price and the $
18.00
and $
10.00
per share redemption trigger prices described above will be adjusted (to the nearest cent) to be equal to 180% and 100%, respectively, of the higher of the Market Value and the Newly Issued Price.
 
 
15
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
 
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 will and the common shares 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 Private Placement Warrants will be exercisable on a cashless basis and will be
non-redeemable
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 9. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC Topic 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 our assessment of the assumptions that market participants would use in pricing the asset or liability.
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2021 and December 31, 2020, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
 
Description
  
Level
    
June 30,

2021
    
December 31,
2020
 
Assets:
                          
Marketable securities held in Trust Account
     1      $ 287,538,614      $ 287,491,254  
Liabilities:
                          
Warrant Liability – Public Warrants
     1      $ 19,166,666      $ 14,854,167  
Warrant Liability – Private Placement Warrants
     2      $ 10,436,667      $ 8,008,334  
The Warrants were accounted for as liabilities in accordance with ASC
815-40
and are presented within warrant liabilities on our balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the statements of operations.
The Public Warrants and Private Placement Warrants were initially valued using a binomial Monte Carlo simulation model, which is considered to be a Level 3 fair value measurement. The Monte Carlo model’s primary unobservable input utilized in determining the fair value of the Private Warrants is the expected volatility of the common stock. The expected volatility as of the Initial Public Offering date was derived from observable public warrant pricing on comparable ‘blank-check’ companies without an identified target. The expected volatility as of subsequent valuation dates was implied from the Company’s own public warrant pricing.
 
 
16
BERKSHIRE GREY, INC.
(successor to REVOLUTION ACCELERATION ACQUISITION CORP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
 
A Monte Carlo simulation methodology was used in estimating the fair value of the public warrants for periods where no observable traded price was available, using the same expected volatility as was used in measuring the fair value of the Private Warrants. For periods subsequent to the detachment of the warrants from the Units, the close price of the Public Warrant price was used as the fair value of the Public Warrants and Private Placement Warrants as of each relevant date.
The key inputs into the Monte Carlo simulation model for the Private Placement Warrants and Public Warrants were as follows at December 31, 2020:
 
Input
  
June 30, 2021
   
December 31, 2020
 
Risk-free interest rate
     0.87 %      0.36 % 
Trading days per year
             252  
Expected volatility
     27.50 %      29.0 % 
Expected Term (in years)
     5       5  
Exercise price
   $  11.50     $ 11.50  
Stock Price
   $ 9.97     $ 10.41  
The following table presents the changes in the fair value of warrant liabilities:
 
    
Private
Placement
    
Public
    
Warrant
Liabilities
 
Fair value as of December 31, 2020
   $ 8,008,334      $ 14,854,166      $ 22,862,500  
Change in valuation inputs or other assumptions
     2,428,333        4,312,500        6,740,833  
    
 
 
    
 
 
    
 
 
 
Fair value as of June 30, 2021
   $ 10,436,667      $ 19,166,666      $ 29,603,333  
    
 
 
    
 
 
    
 
 
 
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed consolidated financial statements were issued. Based upon this review, other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.
On July 21, 2021, the Company and Berkshire Grey, Inc. consummated the closing of the transactions contemplated by Merger Agreements. (see Note 6).
 
 
17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This Quarterly Report on Form
10-Q
(the “Quarterly Report”) covers a period prior to the closing of the Business Combination (defined below). As a result, references in this Quarterly Report to “we,” “us” or the “Company” refer to Revolution Acceleration Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to RAAC Management LLC.
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Capitalized terms used but not otherwise defined herein have the meaning set forth in the financial statements and Explanatory Note. 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 contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements regarding our financial position, business strategy and the plans and objectives of management for future operations, including with respect to the Business Combination . These statements constitute projections, forecasts and forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements contained in this Quarterly Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. The following is a summary of the principal risk factors that make investing in our securities risky and may materially adversely affect our business, financial condition, results of operations and cash flows. This summary should be read in conjunction with the more complete discussion of the risk factors we face, which are set forth in Item 1A. “Risk Factors” of Amendment No. 1 to our Annual Report on Form
10-K/A
for the fiscal year ended December 31, 2020 (our “Annual Report”) that we filed with the Securities and Exchange Commission (the “SEC”) and our other filings with the SEC, including in our prospectus/proxy statement relating to the Business Combination. The Company’s filings with the SEC can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. These risk factors and uncertainties include, but are not limited to:
 
  •  
the expected benefits from the Business Combination;
 
  •  
Berkshire Grey’s plans to develop and commercialize its product candidates;
 
  •  
Berkshire Grey’s ability to continue to develop new innovations to meet constantly evolving customer demands;
 
  •  
Berkshire Grey’s expectations regarding the impact of the ongoing
COVID-19
pandemic on its business, industry, and the economy;
 
  •  
Berkshire Grey’s estimates regarding future expenses, revenue, earnings, margin, capital requirements, and needs for additional financing after the Business Combination;
 
  •  
Berkshire Grey’s expectations regarding the growth of its business, including the potential size of the total addressable market;
 
  •  
Berkshire Grey’s ability to maintain and establish collaborations or obtain additional funding;
 
  •  
Berkshire Grey’s ability, subsequent to the consummation of the PIPE Investment and the Business Combination, to obtain funding for its future operations and working capital requirements and expectations regarding the sufficiency of its capital resources;
 
  •  
the implementation of Berkshire Grey’s business model and strategic plans for its business following the Business Combination;
 
  •  
Berkshire Grey’s intellectual property position and the duration of its patent rights;
 
  •  
developments or disputes concerning Berkshire Grey’s intellectual property or other proprietary rights;
 
18
  •  
Berkshire Grey’s ability to compete in the markets it serves;
 
  •  
Berkshire Grey’s expectations regarding its entry into new markets;
 
  •  
competition in Berkshire Grey’s industry, advantages of Berkshire Grey’s solutions and technology over competing products and technology existing in the market and competitive factors including with respect to technological capabilities, cost, and scalability;
 
  •  
The impact of government laws and regulations and liabilities thereunder;
 
  •  
Berkshire Grey’s need to hire additional personnel and our ability to attract and retain such personnel;
 
  •  
Berkshire Grey’s ability to raise financing in the future;
 
  •  
the anticipated use of New Berkshire Grey’s cash and cash equivalents; and
 
  •  
the other risks and uncertainties discussed in “Item 1A. Risk Factors” in our Annual Report and our other filings with the SEC, including in our prospectus/proxy statement relating to the Business Combination.
Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Overview
As of June 30, 2021 we were a blank check company formed under the laws of the State of Delaware on September 10, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses.
On July 21, 2021 (the “Closing Date”), we consummated our previously announced Business Combination pursuant to the terms of the Merger Agreement by and among RAAC, Merger Sub, and Berkshire Grey, Inc. (
Business Combination
below for more information). Pursuant to the Merger Agreement, RAAC amended and restated its second amended and restated certificate of incorporation and its bylaws such that RAAC changed its name to “Berkshire Grey, Inc.”.
Business Combination
On February 23, 2021, RAAC entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Pickup Merger Corp, a Delaware corporation and a wholly owned subsidiary of the RAAC (“Merger Sub”), and Berkshire Grey, relating to a proposed business combination transaction between RAAC and Berkshire Grey.
Subsequent to June 30, 2021, on July 21, 2021, pursuant to the Merger Agreement, Merger Sub merged with and into Berkshire Grey, with Berkshire Grey being the surviving corporation of the merger and a direct, wholly owned subsidiary of RAAC. Pursuant to the Merger Agreement, RAAC amended and restated its second amended and restated certificate of incorporation and its bylaws such that RAAC changed its name to “Berkshire Grey, Inc.”
Subject to the terms and conditions of the Merger Agreement, the consideration paid in respect of each share of Berkshire Grey Common Stock issued and outstanding immediately prior to the effective time of the Merger was a number of shares of our newly-issued Class A Stock, equal to (x) $2,250,000,000 divided by (y) the number of shares of Aggregate Fully Diluted Company Stock (as defined in the Merger Agreement). Immediately prior to the Closing, all of the outstanding shares of each series of Berkshire Grey Preferred Stock (as defined in the Merger Agreement) were converted into shares of Berkshire Grey Common Stock.
At the Closing, each outstanding option to acquire Berkshire Grey Common Stock and each award of restricted Berkshire Grey Common Stock was converted into the right to receive an option relating to shares of Class A Stock and an award of restricted shares of Class A Stock, as applicable, upon substantially the same terms and conditions, including with respect to vesting and termination-related provisions, as existed prior to the Closing, except that the number of shares underlying such option and the exercise price and the number of shares subject to restricted stock awards, in each case, was determined as set forth in the Merger Agreement.
The Merger Agreement contains customary representations, warranties and covenants by the parties thereto and the closing was subject to certain conditions as further described in the Merger Agreement.
Additional information regarding Berkshire Grey and the business combination is available in our prospectus/proxy statement relating to the Business Combination, as well as in our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 27, 2021.
 
19
Results of Operations
We neither engaged in any operations nor generated any revenues through June 30, 2021. Our only activities through June 30, 2021 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, identifying a target for our business combination and activities in connection with the acquisition of Berkshire Grey. We generated
non-operating
income in the form of interest income on marketable securities that were held in the Trust Account. We also incurred expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended June 30, 2021, we had a net loss of $1,722,377, which consisted primarily of formation and operating costs of $1,157,655, change in fair value of warrant liability of $568,594, and an unrealized loss on marketable securities of $744, offset by interest income in bank of $2 and an interest earned on marketable securities of $4,614.
For the six months ended June 30, 2021, we had a net loss of $11,349,562, which consisted primarily of formation and operating costs of $4,485,844, change in fair value of warrant liability of $6,911,094, offset by interest income in bank of $16 and an interest earned on marketable securities of $47,360.
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, our only source of liquidity was an initial purchase of common stock by the Sponsor and loans from our Sponsor.
On December 10, 2020, we consummated the Initial Public Offering of 28,750,000 Units, which included the full exercise by the underwriters of their over-allotment option in the amount of 3,750,000 Units, at $10.00 per unit, generating gross proceeds of $287,500,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 5,166,667 Private Placement Warrants to the Sponsor at a price of $1.50 per warrant, generating gross proceeds of $7,750,000.
Following the Initial Public Offering, the full exercise of the over-allotment option, and the sale of the Private Placement Warrants, a total of $287,500,000 was placed in the Trust Account. We incurred $16,242,914 in transaction costs, including $5,750,000 of underwriting fees, $10,062,500 of deferred underwriting fees and $430,414 of other costs.
For the six months ended June 30, 2021, cash used in operating activities was $1,326,682. Net loss of $11,349,562 was affected by change in fair value of warrant liability of $6,740,833 and interest earned on marketable securities held in the Trust Account of $47,360. Changes in operating assets and liabilities provided $3,329,407 of cash for operating activities.
As of June 30, 2021, we had cash and marketable securities held in the Trust Account of $287,538,614.
On July 21, 2021, the Company completed the Business Combination with RAAC pursuant to the Merger Agreement. Upon closing of the business combination transaction, the combined company was renamed Berkshire Grey, Inc. Closing occurred on July 21, 2021 (the “Closing Date”). The transaction was accounted for as a reverse recapitalization. The Company received gross proceeds of $220.0 million and incurred closing costs of $27.4 million. As of June 30, 2021, $1.8 million of deferred transaction costs were recorded, which consisted of legal, accounting, and other professional services directly related to the Merger. These costs were offset against proceeds upon accounting for the Closing.
Based on the foregoing, the Company had sufficient working capital and borrowing capacity from the Sponsor to meet its needs through the consummation of the Business Combination. Over this time period, the Company used these funds for paying existing accounts payable, identifying and evaluating prospective initial business combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
 
20
Off-Balance
Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance
sheet arrangements as of June 30, 2021. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating
off-balance
sheet arrangements. We have not entered into any
off-balance
sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any
non-financial
assets.
Contractual Obligations
As of June 30, 2021 we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the Sponsor a monthly fee of $10,000 for office space, administrative and support services. We began incurring these fees on December 7, 2020 and continued to incur these fees monthly until the completion of the business combination.
The underwriter is entitled to a deferred fee of $0.35 per Unit, or approximately $10,062,500 in the aggregate. The deferred fee was paid to the underwriter from the amounts held in the Trust Account upon completion of the Business Combination.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Warrant Liability
We account for the warrants issued in connection with our Initial Public Offering in accordance with the guidance contained in ASC
815-40-15-7D
under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. This liability is subject to
re-measurement
at each balance sheet date until exercised, and any change in fair value is recognized in our statements of operations. For periods subsequent to the detachment of the warrants from the Units, the close price of the Public Warrant price was used as the fair value of the Public Warrants and Private Placement Warrants as of each relevant date.
 
21
Class A Common Stock Subject to Possible Redemption
We account for our shares of Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A 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 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 our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, the Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of our balance sheet.
Net Loss 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. The Company has not considered the effect of the warrants sold in its Initial Public Offering and Private Placement Warrants to purchase an aggregate of 14,750,000 shares in the calculation of diluted loss per share, 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 Company’s statements of operations includes a presentation of loss per share for common stock subject to possible redemption in a manner similar to the
two-class
method of loss per share. Net loss per share, basic and diluted, for common stock subject to possible redemption is calculated by dividing the proportionate share of loss on marketable securities held by the Trust Account by the weighted average number of shares of common stock subject to possible redemption outstanding since original issuance.
Net loss per share, basic and diluted, for
non-redeemable
common stock is calculated by dividing the net loss, adjusted for loss on marketable securities attributable to Class A common stock subject to possible redemption, by the weighted average number of
non-redeemable
common stock outstanding for the period.
Non-redeemable
common stock includes founder shares, alignment shares and
non-redeemable
Class A common stock as these shares do not have any redemption features.
Non-redeemable
common stock participates in the loss on marketable securities based on
non-redeemable
Class A common stock’s proportionate interest.
Recent Accounting Standards
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Following the consummation of our Initial Public Offering and through June 30, 2021, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in U.S. government treasury bills, notes or bonds with a maturity of 185 days or less or in certain money market funds that invest solely in US treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure.
 
22
As required by Rules
13a-15
and
15d-15
under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2021. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules
13a-15(e)
and
15d-15(e)
under the Exchange Act) were not effective, due solely to the material weakness in our internal control over financial reporting described below in “
Changes in Internal Control Over Financial Reporting
.” In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Quarterly Report present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Restatement of Previously Issued Financial Statements
On April 29, 2021, we revised our prior position on accounting for warrants and concluded that our previously issued audited balance sheet dated as of December 10, 2020 and previously issued audited financial statements as of December 31, 2020 and for the period from September 10, 2020 (inception) through December 31, 2020 should not be relied on because of a misapplication in the guidance on warrant accounting. As of the date of this Quarterly Report, we also revised our position related to the classification of our shares of common stock between temporary and permanent equity in connection with the guidance within “ASC 480: Distinguishing Liabilities from Equity” as it specifically relates to the impact of the PIPE Investment. However, the
non-cash
adjustments to the financial statements do not impact the amounts previously reported for our cash and cash equivalents, total assets, revenue or cash flows
Changes in Internal Control Over Financial Reporting
Due to the events that led to our restatement of our financial statements in our Annual Report and inappropriate application of “ASC 480: Distinguishing Liabilities from Equity” for Company’s common stock as permanent, rather than temporary, equity in our financial statements in the Original Report, management has identified a material weakness in internal controls related to the accounting for warrants issued in connection with our initial public offering, as more fully described in Note 2 to the Notes to Financial Statements included in our Annual Report and a material weakness in internal controls related to the application of “ASC 480: Distinguishing Liabilities from Equity,” as more fully described in Note 2 of the Notes to Financial Statements included in the March 31, 2021 Amended Quarterly Report.
Remediation Plan
Management has implemented remediation steps to address the material weakness and to improve our internal control over financial reporting. Specifically, we expanded and improved our review process for complex securities and related accounting standards. We plan to further improve this process by enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.
 
23
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us or any of our officers or directors in their corporate capacity.
Item 1A. Risk Factors
Except to the extent previously updated in our periodic or current reports (including, without limitation, our Quarterly Report on Form 10-Q for the three months ended March 31, 2021) or to the extent additional factual information disclosed elsewhere in this Quarterly Report on Form
10-Q
relates to such risk factors (including, without limitation, the matters discussed in Part I, “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations”), there were no material changes to the risk factors disclosed in Part I, Item 1A, Risk Factors, of Amendment No. 1 to our Annual Report on Form
10-K/A
for the fiscal year ended December 31, 2020.
[We have identified material weaknesses in our internal control over financial reporting as of December 31, 2020 and March 31, 2021. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
Following the issuance of the statement dated April 12, 2021 of the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (‘SPACs’)” (the “SEC Statement”), on April 29, 2021, after consultation with our Independent Accountants, management and the Audit Committee concluded that, in light of the SEC Statement, it was appropriate to restate (i) certain items on the Company’s previously issued audited balance sheet dated as of December 10, 2020, which was related to our initial public offering, and (ii) the Company’s previously issued audited financial statements as of December 31, 2020 and for the period from September 10, 2020 (inception) to December 31, 2020. As of the date of this Quarterly Report, after consultation with our Independent Accountants, management and the Audit Committee revised our position related to the classification of our shares of common stock between temporary and permanent equity in connection with the guidance within “ASC 480: Distinguishing Liabilities from Equity” as it specifically relates to the impact of the PIPE Investment and concluded that it was appropriate to restate the Company’s previously issued interim condensed financial statements as of and for the three months ended March 31, 2021. As part of such processes, we identified a material weaknesses in our internal controls over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly, and there is no assurance that these initiatives will ultimately have the intended effects.
If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
We may face litigation and other risks and uncertainties as a result of the material weaknesses in our internal control over financial reporting and the restatement of our financial statements.
Following this issuance of the SEC Statement, on April 29, 2021, after consultation with our Independent Accountants, management and the Audit Committee concluded that it was appropriate to restate (i) certain items on the Company’s previously issued audited balance sheet dated as of December 10, 2020, which was related to our initial public offering, and (ii) the Company’s previously issued audited financial statements as of December 31, 2020 and for the period from September 10, 2020 (inception) to December 31, 2020. As of the date of this Quarterly Report, after consultation with our Independent Accountants, management and the Audit Committee revised our position related to the classification of our shares of common stock between temporary and permanent equity in connection with the guidance within “ASC 480: Distinguishing Liabilities from Equity” as it specifically relates to the impact of the PIPE Investment and concluded that it was appropriate to restate the Company’s previously issued interim condensed financial statements as of and for the three months ended March 31, 2021.
As a result of such material weaknesses, the restatement of previously issued financials of the Company, the change in accounting for the warrants and other matters raised or that may in the future be raised by the SEC, we face potential for litigation, inquiries from the SEC and other regulatory bodies, other disputes or proceedings which may include, among other things, monetary judgments, penalties or other sanctions, claims invoking the federal and state securities laws and contractual claims. As of the date of this Quarterly Report, we have no knowledge of any such litigation, inquires, disputes or proceedings. However, we can provide no assurance that such litigation, inquiries, disputes or proceedings will not arise in the future. Any such litigation, inquiries, disputes or proceedings, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition or our ability to complete our initial business combination.]
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Use of Proceeds from the Initial Public Offering
On December 10, 2020, the Company completed the Initial Public Offering of 28,750,000 Units, including the issuance of 3,750,000 Units as a result of the underwriter’s exercise of its option to purchase additional Units in full. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $287,500,000. Credit Suisse Securities (USA) LLC acted as the book-running manager for the Initial Public Offering. The securities sold in the Initial Public Offering were registered under the Securities Act on a registration statement on Form
S-1
(No.
333-250850).
The SEC declared the registration statements effective on December 7, 2020.
 
24
Substantially concurrently with the closing of the Initial Public Offering, the Company consummated the sale of 5,166,667 Private Placement Warrants, at a price of $1.50 per Private Placement Warrant to the Sponsor, generating gross proceeds of $7,750,000.
In connection with the Initial Public Offering, we incurred offering costs of $16,242,914, inclusive of $10,062,500 in deferred underwriting commissions. Other incurred offering costs consisted principally of preparation fees related to the Initial Public Offering. After deducting the underwriting discounts and commissions (excluding the deferred portion, which amount will be payable upon consummation of the initial business combination, if consummated) and the Initial Public Offering expenses, $287,500,000 of the net proceeds from our Initial Public Offering and certain of the proceeds from the sale of the Private Placement Warrants (or $10.00 per Unit sold in the Initial Public Offering) was placed in the Trust Account. The net proceeds of the Initial Public Offering and certain proceeds from the sale of the Private Placement Warrants are held in the Trust Account and invested by the trustee only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions under
Rule 2a-7 under
the Investment Company Act.
There has been no material change in the planned use of the proceeds from the Initial Public Offering and sale of the Private Placement Warrants as is described in the Company’s final prospectus related to the Initial Public Offering.
As of June 30, 2021, $123,871 was held outside the Trust Account and will be used to fund the Company’s operating expenses.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosure
Not applicable.
Item 5. Other Information
None.
 
25
Item 6. Exhibits
 
Exhibit
Number
  
Description
31.1    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**
32.2    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**
101.SCH    Inline XBRL Taxonomy Extension Schema*
101.CAL    Inline XBRL Taxonomy Calculation Linkbase*
101.LAB    Inline XBRL Taxonomy Label Linkbase*
101.PRE    Inline XBRL Definition Linkbase Document*
101.DEF    Inline XBRL Definition Linkbase Document*
104    Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.)*
 
*
Filed herewith.
**
Furnished herewith.
 
26
SIGNATURES
In accordance with 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 thereunto duly authorized.
 
   
Berkshire Grey, Inc.
Dated: August 16, 2021    
/s/ Thomas Wagner
    Name:   Thomas Wagner
    Title:   Chief Executive Officer
Dated: August 16, 2021    
/s/ Mark Fidler
    Name:   Mark Fidler
    Title:   Chief Financial Officer
 
27
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