On October 28, 2020, Spartan Energy Acquisition Corp. (“Spartan”), the predecessor to Fisker Inc. (the “Company”), held a special meeting of stockholders (the “Spartan Special Meeting”) to approve certain matters relating to the business combination between Spartan and then privately held Fisker Inc. (“Private Fisker”). One of these matters was a proposal to increase the total number of authorized shares of Spartan’s Class A common stock, par value $0.0001 per share (the “Class A common stock”), from 200,000,000 shares to 750,000,000 shares (the “2020 Share Authorization Proposal”). The 2020 Share Authorization Proposal was approved by a majority of the shares of Class A and Class B common stock of Spartan, voting together as a single class, that were outstanding as of the record date for the Spartan Special Meeting. After the Spartan Special Meeting, Spartan and Private Fisker closed the business combination, and Spartan changed its name to Fisker Inc.
A recent ruling by the Court of Chancery introduces uncertainty as to whether Section 242(b)(2) of the Delaware General Corporation Law (the “DGCL”) would have required the 2020 Share Authorization Proposal to be approved by a separate vote of the majority of Spartan’s then-outstanding shares of Class A common stock.
In light of the recent Court of Chancery decision, the Company filed a petition in the Court of Chancery pursuant to Section 205 of the DGCL seeking validation of the 2020 Share Authorization Proposal and the shares issued pursuant thereto to resolve any uncertainty with respect to those matters. Section 205 of the DGCL permits the Court of Chancery, in its discretion, to ratify and validate potentially defective corporate acts after considering a variety of factors.
If the Company is not successful in the Section 205 proceeding, the uncertainty with respect to the Company’s capitalization resulting from the Court of Chancery’s ruling referenced above could have a material adverse impact on the Company, including on the Company’s ability to complete equity or debt financing transactions or issue stock-based compensation to its employees, directors and officers until the underlying issues are definitively resolved. This uncertainty could impair the Company’s ability to execute its business plan, attract and retain employees, management and directors and adversely affect its commercial relationships.
Forward-Looking Statements
This report includes forward looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by words such as “feel,” “believes,” expects,” “estimates,” “projects,” “intends,” “should,” “is to be,” or the negative of such terms, or other comparable terminology. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements contained herein due to many factors.
In particular, no assurances can be made regarding the outcome or the timing of the Section 205 proceeding described above. If the Company is unsuccessful in the Section 205 proceeding, the uncertainty with respect to the Company’s capitalization could limit its ability to complete equity or debt financing transactions or issue stock-based compensation to its employees, directors and officers until the underlying issues are definitively resolved. As described above, this uncertainty could have a material adverse impact on the Company.