10-K/A10-K
(Amendment No. 1)
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2023
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Delaware | 84-1747686 | |||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
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240 East Hacienda Avenue Campbell, CA | 95008 | |||||||
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s
code
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||
Common Stock, par value $0.0001 | CHPT | |||||||||
New York Stock Exchange |
None
Act:
Common Shares | ||
(Title of class) |
Large accelerated filer | ☒ | Accelerated filer | ☐ | ||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | ||||||||||
Emerging growth company | ☐ |
As
As of April 30, 2021, 305,073,200necessarily a conclusive determination for other purposes.
Documents Incorporatedas of March 28, 2023.
EXPLANATORY NOTE
ChargePoint Holdings, Inc. (the “Company”) is filingreference into Part III of this Amendment No. 1 on Form 10-K/A (this “Form 10-K/A” or “Report”) to amend the Annual Report on Form 10-K as of and for the year ended December 31, 2020, originallywhere indicated. The 2023 Proxy Statement will be filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 10, 2021 (“Original Filing”), to restate the consolidated financial statements and related footnote disclosures as of December 31, 2020 and 2019, for the year ended December 31, 2020 and the period from May 10, 2019 (inception) through December 31, 2019 included in the Original Filing. This Form 10-K/A also amends certain other Items in the Original Filing, as listed in “Items Amended in this Form 10-K/A” below.
Restatement Background
On February 26, 2021, ChargePoint, Inc. and Switchback Energy Acquisition Corporation (“Switchback”), a special purpose acquisition company (“SPAC”), closed their merger. Immediately following the merger, Switchback changed its name to ChargePoint Holdings, Inc.
On April 12, 2021, the Staff of SEC issued the “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “Staff Statement”). The Staff Statement clarified guidance for all SPAC-related companies regarding the accounting and reporting for their warrants that could result in the warrants issued by SPACs being classified as a liability measured at fair value, with non-cash fair value adjustments recorded in the consolidated statement of operations atwithin 120 days after the end of each reporting period. The Company has evaluated the applicability and potential impact of the Staff Statement on the Company’s consolidated financial statements.
On May 4, 2021, the audit committee of the board of directors of the Company (the “Board”), in consultation with management of the Company, concluded that the following financial statements could no longer be relied upon, based on the facts below: (i) the audited consolidated financial statements of Switchback as of December 31, 2020 and 2019, for thefiscal year ended December 31, 2020 and for the period from May 10, 2019 (inception) through December 31, 2019 included in the Original Filing, (ii) certain items on the Company’s previously issued audited balance sheet dated as of July 30, 2019, which was included in the Company’s Current Report on Form 8-K filed with the SEC on August 5, 2019 (the “IPO Closing 8-K”), and (iii) the condensed consolidated unaudited financial statements of Switchback included in Switchback’s Quarterly Reports on Form 10-Q for (a) the three months ended September 30, 2019 and for the period from May 10, 2019 (inception) through September 30, 2019 (b) the three months ended March 31, 2020, (c) the three and six months ended June 30, 2020, and (d) the three and nine months ended September 30, 2020, (collectively, the “Non-Reliance Periods”).
Based on the Staff Statement, the Company re-evaluated the accounting treatment of the public and private placement warrants (collectively, the “Warrants”) issued in connection with the initial public offering of Switchback, a SPAC, and recorded on its consolidated financial statements. Based on its re-evaluation of the Warrants, Company management concluded that the Warrants should have been accounted for as liabilities measured at fair value, with non-cash fair value adjustments recorded in earnings at each reporting period, rather than equity. The historical financial statements of ChargePoint, Inc. were not affected by the Staff Statement, as the business combination pursuant to which ChargePoint, Inc. merged with a wholly-owned subsidiarythis report relates.
Effect of Restatement and Revisions
As discussed in further detail in Note 2 to the accompanying consolidated financial statements, the restatement is the result of a clarification of the guidance on accounting for the Warrants by the Staff Statement. Based on Accounting Standards Codification 815-40, Contracts in Entity’s Own Equity (“ASC 815-40”), warrant instruments that do not meet the criteria to be considered indexed to an entity’s own stock or equity classification criteria shall be initially classified as derivative liabilities at their estimated fair values. In periods subsequent to issuance, changes in the estimated fair value of the warrant instruments should be reported in the consolidated statement of operations. Also, in accordance with ASC 825-10, Financial Instruments (“ASC 825-10”), the Company has concluded that a portion of the transaction costs which directly related to Switchback’s initial public offering, which were previously charged to shareholders’ equity, should be allocated to the Warrants based on their relative fair value against total proceeds, and recognized as transaction costs in the consolidated statement of operations.
All amounts in this Form 10-K/A affected by the restatement adjustments reflect such amounts as restated. These restatements result in noncash financial statement corrections and will have no impact on the Company’s historical liquidity, or revenues. The restatement will also have no impact on the historical financial statements of ChargePoint, Inc.
As all material restatement information will be included in this Form 10-K/A, investors, analysts and other readers should rely only on the financial information and other disclosures regarding the Non-Reliance Periods in this Form 10-K/A and in future filings with the SEC (as applicable) and should not rely on any previously issued or filed related press releases, earnings releases and investor communications describing the financial statements for Non-Reliance Periods.
Internal Controls Considerations
In connection with the restatement, management has re-evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020 based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (2013 framework). Management has concluded that the Company’s internal controls over financial reporting were not effective as of December 31, 2020 due to a material weakness in internal control over financial reporting related to the accounting for the Warrants. Our Chief Executive Officer and Chief Financial Officer have also concluded that the Company’s disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2020. For a discussion of management’s consideration of the Company’s disclosure controls and procedures, internal controls over financial reporting, and the material weakness identified, see Part II, Item 9A, “Controls and Procedures” of this Form 10-K/A.
Items Amended in this Form 10-K/A
This Form 10-K/A presents the Original Filing, in its entirety, as amended and restated with modifications as necessary to reflect the restatement described above. The following items have been amended as a result of, and to reflect, the restatement:
Part I, Item 1A. Risk Factors
Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part II, Item 8. Financial Statements
Part II, Item 9A. Controls and Procedures
In addition, the Company’s Chief Executive Officer and Chief Financial Officer have provided new certifications dated as of the date of this filing in connection with this Form 10-K/A (Exhibits 31.1, 31.2, 32.1 and 32.2).
Except as described above, this Form 10-K/A does not amend, update or change any other items or disclosures in the Original Filing, and does not purport to reflect any information or events subsequent to the filing thereof. As such, this Form 10-K/A speaks only as of the date the Original Filing was filed, and was not amended, supplemented or updated to give effect to any subsequent events. Accordingly, this Form 10-K/A should be read in conjunction with our filings made with the SEC subsequent to the filing of the Original Filing and any other amendments to our SEC filings.
CERTAIN TERMS
References to the “Company,” “Switchback,” “our,” “us” or “we” refer to Switchback Energy Acquisition Corporation, a blank check company incorporated on May 10, 2019 as a Delaware corporation, prior to its name change to ChargePoint Holdings, Inc., a Delaware corporation, in connection with the closing
our•ChargePoint’s ability to select an appropriate targetexpand its business or businesses;
our•ChargePoint’s ability to completeintegrate newly acquired assets and businesses into ChargePoint’s own business and the expected benefits from newly acquired assets to ChargePoint, its customers and its market position;
our expectations around the performance of the prospective target business•data security breaches or businesses;
our•ChargePoint’s ability to remediate its material weaknesses in internal control over financial reporting;
our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business•changes in applicable laws or in approving our initial business combination;
our potential•ChargePoint’s ability to obtain additional financingmaintain a strong balance sheet and to complete our initialraise capital as needed to support its business combination;
our pool
our ability to consummate our initial business combination due to •the uncertainty resulting frompossibility that ChargePoint may be adversely affected by other economic factors including macroeconomic conditions such as inflation, rising interest rates, foreign exchange volatility, adverse developments in the ongoing COVID-19 pandemic and other events (such as terrorist attacks, natural disastersfinancial service industry, slower growth or recession or other significant outbreaksbusiness factors or other competitive factors.
important factors should not be construed as exhaustive and should be read in conjunction with the ability of our officersother risk factors included herein. Forward-looking statements reflect current views about ChargePoint’s plans, strategies and directors to generate a number of potential acquisition opportunities;
our public securities’ potential liquidity and trading;
the lack of a market for our securities;
the use of proceeds not held in the trust account or available to us from interest income on the trust account balance;
the trust account not being subject to claims of third parties; or
our financial performance in the future.
The forward-looking statements contained in this Form 10-K/Aprospects, which 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. Factors that may cause or contribute to such discrepancy include, but are not limited to, any further changes to our financial statements or this Report that may be required due to SEC comments on this Report or further guidance regarding the accounting treatmentinformation available as of the Warrants,date of this Annual Report. Except to the restatement’s quantitative effects, and those factors described under “Part I, Item 1A. Risk Factors.” Should one or more of these risks or uncertainties materialize, or shouldextent required by applicable law, ChargePoint undertakes no obligation (and expressly disclaims any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligationsuch obligation) to update or revise anythe forward-looking statements whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
ii
IntroductionWe areblank check company incorporatedleading electric vehicle (“EV”) charging technology solutions provider. ChargePoint is broadly driving the shift to electric mobility by providing networked charging solutions in North America and Europe across commercial (e.g., retail, workplace, hospitality, parking, recreation, municipal, education and highway fast charge), fleet (e.g., delivery, take home, logistics, motor pool, transit and shared mobility) and residential (e.g., single family homes and multi-family apartments and condominiums) verticals. As of January 31, 2023, ChargePoint has activated approximately 225,000 ports on May 10, 2019 asits network, including approximately 18,900 direct current, or “DC,” “fast charging” ports, excluding single family home ports. ChargePoint’s roaming integrations enable EV drivers to access more than 465,000 additional third-party ports in North America and Europe through ChargePoint’s mobile and in-dash applications.Delaware corporationstrong network of channel partners and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganizationdistributors to support its growth. ChargePoint does not sell networked charging hardware without its software, typically does not own or similar business combination with one or more businesses.Prior to our Public Offering, on May 16, 2019, our Sponsor purchased an aggregate of 8,625,000 shares of our Class B common stock, par value $0.0001 per share (the “Founder Shares”), for an aggregate purchase price of $25,000, or approximately $0.003 per share. Our Sponsor agreed to forfeit up to 1,125,000 Founder Shares to the extent that the overallotment option for the Public Offering wasoperate EV charging assets, does not exercised in full by the underwriters. In July 2019, our Sponsor transferred 40,000 Founder Shares to each of our independent director nominees at their original purchase price. In September 2019, the underwriters purchased 1,411,763 of the Over-allotment Units (as defined below),monetize drivers, and the remaining overallotment option subsequently expired. As a result, our Sponsor forfeited an aggregate of 772,059 Founder Shares. The holders of our Founder Shares (including our Sponsor and our independent directors) are referred to herein as our “initial stockholders.”On the IPO Closing Date, we consummated our Public Offering of 30,000,000 units at a price of $10.00 per unit, generating gross proceeds to us of $300.0 million. Each unit (“Unit”) consists of one share of our Class A common stock, par value $0.0001 per share, and one-third of one warrant (the “Public Warrants”). Each whole Warrant entitles the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment. Simultaneously with the consummation of the Public Offering, we completed the private sale of 5,333,333 private placement warrants (the “Private Placement Warrants” and together with the Private Placement Warrants, the “Warrants”) at a purchase price of $1.50 per warrant to our Sponsor, generating gross proceeds to us of approximately $8.0 million. Each Private Placement Warrant entitles the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment.In connection with the Public Offering, the underwriters of the Public Offering were granted an option to purchase up to an additional 4,500,000 units (the “Over-allotment Units”). On September 4, 2019, the underwriters partially exercised their overallotment option and, on September 6, 2019, the underwriters purchased 1,411,763 of the Over-allotment Units at an offering price of $10.00 per unit, generating gross proceeds to us of approximately $14.1 million. Simultaneously withdoes not rely upon profits from the sale of these Over-allotment Units, we completed a private placement with our Sponsorelectricity. By pursuing this “capital light” business model, ChargePoint has been able to focus its investments on research and development of its diverse portfolio of networked Level 2, or alternating current (“AC”), and Level 3 DC fast charging hardware, and its software solutions for an additional 188,235 Private Placement Warrants at a purchase price of $1.50 per warrant, generating gross proceeds of approximately $282,000.We received gross proceeds fromdrivers, hosts and fleet operators, while simultaneously scaling active networked ports more cost efficiently as compared to other models in the Public OfferingEV industry, where the charging station operator, or “CPO,” owns and operates the charging station and depends upon profits on the sale of electricity. Finally, ChargePoint believes its go-to-market strategy of ensuring site owners or CPOs have full control over branding, access, pricing and policies, enables them to provide their employees and customers a better charging experience.Private Placement Warrantsbroad trend in vehicle electrification because the breadth of approximately $314.1 million and $8.3 million, respectively, forits solutions means it does not need to identify which vehicles will come to market first nor which segments or manufacturers will be successful. For example, as an aggregate of approximately $322.4 million. Approximately $314.1 million of the gross proceeds were deposited into a U.S. based trust account (the “Trust Account”), with Continental Stock Transfer & Trust Company acting as trustee. The approximately $314.1 million of net proceeds heldearly entrant in the Trust Account includes approximately $10.9 millionEV charging industry, ChargePoint has seen a correlation between new passenger EV sales in North America and its charging port growth in North America, which gives ChargePoint confidence in its growth prospects going forward as its verticals and geographic markets continue to go electric.deferred underwriting discountsofferings and commissionsincreasing scale are also supported by significant positive trends in the industry. In the last several years, most major manufacturers of passenger cars, trucks of all sizes, buses and industrial vehicles have committed to electrification, and governments have made it clear from both policy and funding perspectives that will be releasedthe future of transportation is electric. For example, passenger EV sales are expected to increase from 2% of new vehicles sold in 2019 to 44% in 2030 in the United States and 3% of new vehicles sold in 2019 to 60% in 2030 in Europe according to the underwriters of the Public Offering upon completion of our initial business combination. Of the gross proceeds from the Public Offering and the sale of the Private Placement Warrants that were not deposited in the Trust Account, approximately $6.2 million was used to pay underwriting discounts and commissions in the Public Offering, $251,000 was used to repay loans and advances from our Sponsor, and the balance was reserved to pay accrued offering and formation costs, business, legal and accounting due diligence expenses on prospective acquisitions and continuing general and administrative expenses.The shares of our Class B common stock will automatically convert into shares of our Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment for stock splits,
stock dividends, reorganizations, recapitalizations and the like. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemedBloomberg New Energy Finance Electric Vehicle Outlook (the “BNEF Report” issued in excess ofFebruary 2023). Additional factors propelling this shift to vehicle electrification include existing and proposed fossil fuel bans or restrictions, transit electrification mandates and utility and government incentive programs. With these trends, the amounts sold in our Public Offering and related to the closing of the initial business combination, the ratio at which the shares of our Class B common stock will convert into shares of our Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of our Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) soBNEF Report projects that the number of shares of Class A common stock issuable upon conversion of all issuedcumulative EV charging infrastructure investment in North America and outstanding shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of our Public Offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the business combination (excluding any securities issued or issuable to any seller in the initial business combination).
The Units began trading on the New York Stock Exchange (“NYSE”) under the Symbol “SBE.U” on July 26, 2019. Commencing on September 16, 2019, we announced that holders of the Units sold in our Public Offering may elect to separately trade the shares of Class A common stock and Public Warrants included in the Units. The shares of Class A common stock and Public Warrants that are separated trade on the NYSE under the symbols “SBE” and “SBE WS,” respectively. Those units not separated continue to trade on the NYSE under the symbol “SBE.U.”
We are 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”). As such, we are eligible to 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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier of (a) the last day of the fiscal year (i) following the fifth anniversary of the completion of our Public Offering, (ii) in which we have total annual gross revenue of at least $1.07 billion (as adjusted for inflation pursuant to SEC rules from time to time), or (iii) in which we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of the last day of our most recently completed fiscal quarter, and (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
Proposed Business Combination
On September 23, 2020, Lightning Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), ChargePoint, Inc., a Delaware corporation (“ChargePoint”), and Switchback entered into a business combination agreement and plan of reorganization (the “Business Combination Agreement”), pursuant to which, among other things, Merger Sub will be merged with and into ChargePoint (the “Merger,” together with the other transactions related thereto, the “Business Combination”), with ChargePoint surviving the Merger as a wholly owned subsidiary of Switchback.
ChargePoint has delivered to us a Stockholder Support Agreement (the “Support Agreement”), pursuant to which, among other things, certain ChargePoint stockholders (the “Written Consent Parties”), whose ownership interests collectively represent outstanding shares of ChargePoint’s common stock (“ChargePoint Common Stock”) and ChargePoint’s preferred stock (voting on an as-converted basis) sufficient to approve the Merger on behalf of ChargePoint, will agree to support the approval and adoption of the transactions contemplated by the Business Combination Agreement, including agreeing to execute a written consent approving the Business Combination Agreement, the Merger and all other transactions contemplated by the Business Combination Agreement within 48 hours of a registration statement on Form S-4 becoming effective. The Support Agreement will terminate upon the earlier to occur of: (i) the effective time of the Merger (the “Effective Time”), (ii) the date of the termination of the Business Combination Agreement in accordance with its terms and (iii) the effective date of a written agreement of Switchback and the Written Consent Parties terminating the Support Agreement.
In connection with the closing of the Merger (the “Closing”), that certain Registration Rights Agreement (as defined below) dated July 25, 2019 (the “IPO Registration Rights Agreement”) will be amended and restated and Switchback, certain persons and entities holding securities of the Company prior to the Closing (the “Initial Holders”) and certain persons and entities receiving our Class A common stock or instruments exercisable for the our Class A common stock in connection with the Merger (the “New Holders” and together with the Initial Holders, the “Registration Rights Holders”) will enter into that amended and restated IPO Registration Rights Agreement attached as an exhibit to the Business Combination Agreement (the “A&R Registration Rights Agreement”). Pursuant to the A&R Registration Rights Agreement, we will agree that, within 15 business days after the Closing, Switchback will file with the SEC (at the Company’s sole cost and expense) a registration statement registering the resale of certain securities held by or issuable to the Initial Holders and the New Holders (the “Resale Registration Statement”), and Switchback will use its commercially reasonable efforts to have the Resale Registration Statement become effective as soon as reasonably practicable after the filing thereof. In certain circumstances, the Registration Rights Holders can demand up to four underwritten offerings and will be entitled to customary piggyback registration rights.
Concurrently with ChargePoint entering into the Business Combination Agreement, certain stockholders of ChargePoint, whose ownership interests represent 92.2% of the outstanding ChargePoint Common Stock (voting on an as-converted basis) in the aggregate, have agreed, subject to certain customary exceptions, not to effect any (a) direct or indirect sale, assignment, encumbrance, pledge, hypothecation, disposition, loan or other transfer, or entry into any agreement with respect to any sale, assignment, encumbrance, pledge, hypothecation, disposition, loan or other transfer, with respect to any shares of our Class A common stock held by them immediately after the Effective Time, including any shares of our Class A common stock issuable upon the exercise of options or warrants to purchase shares of the Company’s Class A common stock held by them immediately following the Closing or (b) publicly announce any intention to effect any transaction specified in clause (a), in each case, for six months after the Closing.
In connection with the execution of the Business Combination Agreement, the initial stockholders entered into a letter agreement (the “Founders Stock Letter”) with Switchback pursuant to which, among other things, the initial stockholders will, (i) subject to the satisfaction of the conditions to Closing set forth in the Business Combination Agreement, immediately prior to the Closing, surrender to us, for no consideration and as a capital contribution to Switchback, 984,706 Founder Shares held by them (on a pro rata basis), whereupon such Founder Shares will be immediately canceled and (ii) upon and subject to the Closing, subject 900,000 Founder Shares (including any shares of our Class A common stock issued in exchange therefor in the Merger, the “Founder Earn Back Shares”) held by them (on a pro rata basis) to potential forfeiture, if the volume-weighted average closing sale price (the “Closing VWAP”) of one share of our Class A common stock quoted on the NYSE (or the exchange on which the shares of our Class A common stock are then listed) is greater than or equal to $12.00 for any ten trading days within any twenty consecutive trading day period within the five-year period following the Closing. The Founders Stock Letter also provides that the Sponsor will bear any transaction costs in excess of
$20,000,000 that are allocable to Switchback in accordance with the Business Combination Agreement, excluding any costs associated with the PIPE Financing (as defined below).
In connection with the execution of the Business Combination Agreement, on September 23, 2020, the Company entered into separate subscription agreements (collectively, the “Subscription Agreements”) with a number of investors (collectively, the “Subscribers”), pursuant to which the Subscribers agreed to purchase, and the Company agreed to sell to the Subscribers, an aggregate of 22,500,000 shares of the Company’s Class A common stock for a purchase price of $10.00 per share and an aggregate purchase price of $225,000,000, in a private placement (the “PIPE Financing”).
On October 19, 2020, we filed a registration statement on Form S-4 (File No: 333-249549) (as amended, the “Registration Statement”) relating to the Business Combination. On January 8, 2021, the SEC declared the Registration Statement effective. We have mailed the definitive proxy statement/prospectus/consent solicitation statement relating to the special meeting of the Company’s stockholders in connection with the Business Combination. The proxy statement/prospectus/consent solicitation statement was mailed to the Company’s stockholders of record as of the close of business on December 16, 2020. The Business Combination is expected to close in February 2021, subject to approval by the Company’s stockholders and other customary closing conditions.
As noted above, our Class A common stock is currently traded on the NYSE under the symbol “SBE.” Upon closing of the Business Combination, the post-combination company (“New ChargePoint”)Europe is expected to be renamed “ChargePoint Holdings, Inc.,”approximately $178 billion by 2030 and increase to approximately $505 billion by 2040.
Employees
We currently have three officers. These individuals are not obligated to devote any specific number of hours to our matters but they intend to devote as muchcurrent “gas station” model for fueling traditional gas-powered vehicles. Passenger vehicles spend 95% of their time parked, and most fleet vehicles also have substantial “dwell time.” Unlike gasoline, electricity is pervasively and safely distributed, so fueling can shift to a model where vehicles charge where they are parked and while their drivers—individual or fleet—are engaged in other activities.
Website
Our website addresssimilar to the CCPA and CPRA, but aspects of these state privacy statutes remain unclear, resulting in further legal uncertainty. The United States federal government is www.switchback-energy.com. Information containedalso considering legislation governing privacy and security issues, including the possibility of private rights of action. This creates legal uncertainty with respect to federal law as well as the impact such laws will have on our websitestate statutes. Additionally, the Federal Trade Commission (“FTC”) engages in regulatory investigations of privacy and security practices that may violate Section 5(a) of the Federal Trade Commission Act, which prohibits unfair methods of competition, and unfair or deceptive acts or practices affecting commerce. These regulatory investigations can lead to consent decrees or litigation with the FTC and the Department of Justice. FTC consent decrees often mandate detailed privacy and security programs with annual audits for up to twenty years. Furthermore, state attorneys general may also join together to file lawsuits based on violations of applicable state privacy acts. In the event ChargePoint is notsubject to litigation, penalties, or enforcement actions pursuant to the GDPR, CCPA, CPRA, the FTC or applicable state laws, ChargePoint may be subject to fines and penalties, remediation measures which will divert management’s time and attention, as well as harm to its reputation.
Ourethical business practices, and employee safety and wellness.
Factors.
Risk Factor
of Principal Risks Related to ChargePoint
•ChargePoint is an early stage company withoperates in the early-stage market of electric vehicle (“EV”) adoption and has a history of losses, and expects to incur significant expenses and continuing losses for the near term.
•ChargePoint has experienced rapid growth and expects to invest in growth for the foreseeable future. If ChargePointit fails to manage growth effectively, its business, operating results and financial condition could be adversely affected.
•ChargePoint currently faces competition from a number of companies, particularly in Europe, and expects to face significant competition in the future as the market for electric vehicle (“EV”)EV charging develops.
•ChargePoint relies on a third-party channel partner network of distributors and resellers to generate a substantial amount of its revenue, and failure on the part of ChargePoint to continue to develop and expand this network may have an adverse impact on its business and prospects for growth.
Changes•ChargePoint’s future revenue growth will depend in significant part on its ability to fuel economy standardsincrease sales of its products and services to fleet operators.
•ChargePoint has never paid cash dividends on its capital stock and does not anticipate paying dividends in the foreseeable future.
•The reduction, modification, or eliminationEV market currently benefits from the availability of rebates, tax credits and other financial incentives from governments, utilities and others to offset the purchase or operating costcosts of EVs and EV charging stations. In particular, ChargePoint’s marketing efforts have historically promoted federal tax credits available to purchasers of its EV charging stations that effectively provide purchasers with a significantly discounted purchase price. The reduction, modification, or elimination of such benefits could cause reduced demand for EVs and EV charging stations, which would adversely affect ChargePoint’s financial results.
The EV charging market is characterized by rapid technological change, which requires ChargePoint to continue to develop new products and product innovations. Any delays in such developments could adversely affect market adoption of its products and ChargePoint’s financial results.
•ChargePoint’s business may be adversely affected if it is unable to protect its technology and intellectual property from unauthorized use by third parties.
ChargePoint’s business will depend upon customers renewing their services subscriptions. If customers do not continue to use its subscription offerings or if they fail to add more stations, its business•ChargePoint has identified, and operating results will be adversely affected.
ChargePoint’s financial condition and results of operation are likely to fluctuate on a quarterly basis in future periods, which could cause its results for a particular period to fall below expectations, resulting in a decline in the price of the post-combination company’s common stock.
New ChargePoint will incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on its business, financial condition and results of operations.
ChargePoint has previously identified, material weaknesses in its internal control over financial reporting. If ChargePoint is unable to remediate these material weaknesses, or if ChargePoint identifies additional material weaknesses in the future or otherwise fails to maintain an effective system of internal control over financial reporting, this may result in material misstatements ofcontained within ChargePoint’s consolidated financial statements or cause ChargePoint to fail to meet its periodic reporting obligations.
Risks Related to Switchback
We are a newly incorporated company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
Past performance by our management team and NGP may not be indicative of future performance of an investment in us.
We identified a material weakness in our internal control over financial reporting. If we do not adequately address this material weakness or if other material weaknesses or significant deficiencies in our internal control over financial reporting are discovered, this could adversely affect our business and if we fail to maintain effective internal control over financial reporting, the market price of our Class A Common Stock may be adversely affected.
Our public stockholders may not be afforded an opportunity to vote on an alternate business combination, which means we may complete an initial business combination even though a majority of our public stockholders do not support such combination.
Your only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash.
If we seek stockholder approval of an initial business combination, as we plan to do for the proposed Business Combination, our initial stockholders and management team have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
The ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with a target.
The ability of our public stockholders to exercise redemption rights with respect to a larger number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
The requirement that we complete our initial business combination within the prescribed timeframe may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to complete our business combination on terms that would produce value for our stockholders.
Any target with which we ultimately consummate a business combination, including ChargePoint as contemplated by the proposed Business Combination, may be materially adversely affected by the recent coronavirus (“COVID-19”) outbreak and the status of debt and equity markets.
If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
Shareholders have no rights or interests in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially for a loss.
If we are unable to complete the Business Combination or an alternate initial business combination, our public stockholders may receive only their pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our Warrants will expire without value to the holder.
The other risks and uncertainties discussed in “Risk Factors” and elsewhere in this Annual Report on Form 10-K.
Risks Related to ChargePoint’s Business
Further, ChargePoint’s current or potential competitors may be acquired by third partiesthird-parties with greater available resources. In addition, certain of ChargePoint’s competitors are engaging in or have completed transactions to become publicly traded companies and may have ready access to the capital markets for additional funding. As a result, competitors may be able to respond more quickly and effectively than ChargePoint to new or changing opportunities, technologies, standards or customer requirements and may have the ability to initiate or withstand substantial price competition. In addition, competitors may in the future establish cooperative relationships with vendors of complementary products, technologies or services to increase the availability of their solutions in the marketplace. This competition may also materialize in the form of costly intellectual property disputes or litigation.
litigation involving ChargePoint.
The impact Finally, even if ChargePoint is successful in establishing and maintaining relationships with channel partners, these relationships may not result in greater customer usage of COVID-19, including changesChargePoint’s solutions and professional services or increased revenue.
The pandemic has resultedindustry. Ongoing supply chain challenges, component shortages and heightened logistics costs have adversely affected ChargePoint’s gross margins in government authorities implementing numerous measuresrecent quarters and ChargePoint expects that gross margins will continue to try to contain the virus, such as travel bans and restrictions, quarantines, stay-at-home orshelter-in-place orders and business shutdowns. These measures maybe adversely impact ChargePoint’s employees and operations and the operations of its customers, suppliers, vendors and business partners, and may negatively impact demand for EV charging stations, particularly at workplaces. These measuresaffected by government authorities may remain in place for a significant period of time and may adversely affect manufacturing and building plans, sales and marketing activities, business and results of operations.
ChargePoint has modified its business practices by recommending that all non-essential personnel work from home and cancelling or reducing physical participation in sales activities, meetings, events and conferences. ChargePoint has also implemented additional safety protocols for essential workers, has implemented cost cutting measures in order to reduce its operatingincreased material costs and may take further actions as may be required by government authorities or that it determines are infreight and logistic expenses for the best interestsforeseeable future. Costs incurred to expedite delivery of its employees, customers, suppliers, vendors and business partners. There is no certainty that such actions will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities. If significant portions of ChargePoint’s workforce are unable to work effectively, including due to illness, quarantines, social distancing, government actions or other restrictions in connection with the COVID-19 pandemic, its operations will be negatively impacted. Furthermore, if significant portions of its customers’ or potential customers’ workforces are subject to stay at home orders or otherwise have substantial numbers of their employees working remotely for sustained periods of time, user demand for charging stations and services will decline.
The extent to which the COVID-19 pandemic impacts ChargePoint’s business, prospects and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the actions to contain the virus or treat its impact, and when and to what extent normal economic and operating activities can resume. The COVID-19
pandemic could limit the ability of customers, suppliers, vendors and business partners to perform, including third-party suppliers’ ability to provide components and materialsreplacement parts used in charging stations or in providing installation or maintenance services. Even after the COVID-19 pandemic has subsided, services or to proactively increase inventory could cause ChargePoint to raise its prices, impose surcharges or other fees or refuse to negotiate discounts. Further, any sustained downturn in demand for EVs would also harm ChargePoint’s business.
operations.
In addition, ChargePoint’s suppliers may face supply chain risks and constraints of their own, which may impact the availability and pricing of its products. For example, supply chain challenges related to global chip shortages have impacted companies worldwide both within and outside of ChargePoint’s industry and may continue to have adverse effects on ChargePoint’s suppliers and, as a result, ChargePoint.
In addition, the proper preparation, configuration and installation of charging stations requires specialized electrical certifications and skills. If ChargePoint is unable to identify sufficient partners and contractors to satisfy its customers’ installation needs, specifically electricians and construction partners
While ChargePoint to date has not made material acquisitions, should it pursue acquisitions in the future, itoffers and ChargePoint’s overall reputation would be subjectharmed.
identify and integrate, divert the attention of key management personnel, disrupt ChargePoint’s business, dilute stockholder value and adversely affect its results of operations and financial condition.
business or investment. ChargePoint may also incur costs and management time on transactions that are ultimately not completed. In addition, ChargePoint’s due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business, product, technology or investment, including issues related to intellectual property, product quality or product architecture, regulatory compliance practices, revenue recognition or other accounting practices or issues with employees or customers.
For example, in fiscal year 2023, ChargePoint’s Chief Marketing Officer and Chief Technology Officer resigned and ChargePoint hired a new Chief Operating Officer. ChargePoint’s future performance depends on the continued services and continuing contributions of its senior management to execute on its business plan and to identify and pursue new opportunities and product innovations. The loss of services of senior management, or the ineffective management of any leadership transitions, especially within ChargePoint’s sales organization, could significantly delay or prevent the achievement of its development and strategic objectives, which could adversely affect its business, financial condition and operating results.
•cost of alternative power sources, which could vary meaningfully outside the United States;
•lack of availability of government incentives and subsidies;
•challenges in arranging, and availability of, financing for customers;
•potential changes to its established business model;
cost of alternative power sources, which could vary meaningfully outside the United States;
•difficulties in staffing and managing foreign operations in an environment of diverse culture, laws, and customers, and the increased travel, infrastructure, and legal and compliance costs associated with international operations;
•installation challenges;
•differing driving habits and transportation modalities in other markets;
•different levels of demand among commercial, fleet and residential customers;
•compliance with multiple, potentially conflicting and changing governmental laws, regulations, certifications, and permitting processes including environmental, banking, employment, tax, information security, privacy, and data protection laws and regulations such as the California Consumer Privacy Act (“CCPA”) and newer state privacy laws in the United States, the European Union (the “EU”) General Data Protection Regulation (“GDPR”), national legislation implementing the same, the United Kingdom Data Protection Act 2018 (“UK GDPR”), and certain other changing requirements for legally transferring data out of the European Economic Area;
•compliance with U.S. and foreign anti-bribery laws including the Foreign Corrupt Practices Act (“FCPA”) and the United KingdomU.K. Anti-Bribery Act;
•conforming products to various international regulatory and safety requirements as well as charging and other electric infrastructures;
•difficulty in establishing, staffing and managing foreign operations;
•difficulties in collecting payments in foreign currencies and associated foreign currency exposure;
•restrictions on repatriation of earnings;
•compliance with potentially conflicting and changing laws of taxing jurisdictions and compliance with applicable U.S. tax laws as they relate to international operations, the complexity and adverse consequences of such tax laws, and potentially adverse tax consequences due to changes in such tax laws; and
•regional economic and political conditions.
ChargePoint may need to raise additional funds and these funds may not be available when needed.
ChargePoint may need to raise additional capital in the future to further scale its business and expand to additional markets. ChargePoint may raise additional funds through the issuance of equity, equity-related or debt securities, or through obtaining credit from government or financial institutions. ChargePoint cannot be certain that additional funds will be available on favorable terms when required, or at all. If ChargePoint cannot raise additional funds when needed, its financial condition, results of operations, business and prospects could be materially and adversely affected. If ChargePoint raises funds through the issuance of debt securities or through loan arrangements, the terms of which could require significant interest payments, contain covenants that restrict ChargePoint’s business, or other unfavorable terms. In addition, to the extent ChargePoint raises funds through the sale of additional equity securities, ChargePoint stockholders would experience additional dilution.
ChargePoint’s headquarters and other facilities are located in an active earthquake zone; an earthquake or other types of natural disasters or resource shortages, including public safety power shut-offs that have occurred and will continue to occur in California, could disrupt and harm its operations and those of ChargePoint’s customers.
ChargePoint conducts a majority of its operations in the San Francisco Bay area in an active earthquake zone. The occurrence of a natural disaster such as an earthquake, drought, flood, fire (such as the recent extensive
wildfires in California), localized extended outages of critical utilities (such as California’s public safety power shut-offs) or transportation systems, or any critical resource shortages could cause a significant interruption in its business, damage or destroy its facilities or inventory, and cause it to incur significant costs, any of which could harm its business, financial condition and results of operations. The insurance ChargePoint maintains against fires, earthquakes and other natural disasters may not be adequate to cover losses in any particular case.
In addition, rolling public safety power shut offs in California or other states can affect user acceptance of EVs, as charging may be unavailable at the desired times, or at all during these events. These shut offs could also affect the ability of fleet operators to charge their EVs, which, for example, could adversely affect transportation schedules or any service level agreements to which either ChargePoint or the fleet operator may be a party. If these events persist, the demand for EVs could decline, which would result in reduced demand for charging solutions.
ChargePoint’s future revenue growth will depend in significant part on its ability to increase sales of its products and services to fleet operators.
efficacy of such processes and procedures, including by lengthening the time services are partially or fully unavailable to customers and users. It may be difficult or impossible to perform some or all recovery steps and continue normal business operations due to the nature of a particular disaster or catastrophe, especially during peak periods, which could cause additional reputational damages, or loss of revenues,revenue, any of which could adversely affect its business and financial results.
ChargePoint’s future growth and success is highly correlated with and thus dependent upon the continuing rapid adoption of EVs for passenger and fleet applications.
ChargePoint’s future growth is highly dependent upon the adoption of EVs by businesses and consumers. The market for EVs is still rapidly evolving, characterized by rapidly changing technologies, competitive pricing and competitive factors, evolving government regulation and industry standards and changing consumer demands and behaviors, changing levels of concern related to environmental issues and governmental initiatives related to climate change and the environment generally. Although demand for EVs has grown in recent years, there is no guarantee of continuing future demand. If the market for EVs develops more slowly than expected, or if demand for EVs decreases, ChargePoint’s business, prospects, financial condition and operating results would be harmed. The market for EVs could be affected by numerous factors, such as:
perceptions about EV features, quality, safety, performance and cost;
perceptions about the limited range over which EVs may be driven on a single battery charge;
competition, including from other types of alternative fuel vehicles, plug-in hybrid electric vehicles and high fuel-economy internal combustion engine vehicles;
volatility in the cost of oil and gasoline;
concerns regarding the stability of the electrical grid;
the decline of an EV battery’s ability to hold a charge over time;
availability of service for EVs;
consumers’ perception about the convenience and cost of charging EVs;
increases in fuel efficiency;
government regulations and economic incentives, including adverse changes in, or expiration of, favorable tax incentives related to EVs, EV charging stations or decarbonization generally;
relaxation of government mandates or quotas regarding the sale of EVs; and
concerns about the future viability of EV manufacturers.
In addition, sales of vehicles in the automotive industry can be cyclical, which may affect growth in acceptance of EVs. It is uncertain how macroeconomic factors will impact demand for EVs, particularly since they can be more expensive than traditional gasoline-powered vehicles, when the automotive industry globally has been experiencing a recent decline in sales. Furthermore, because fleet operators often make large purchases of EVs, this cyclicality and volatility in the automotive industry may be more pronounced with commercial purchasers, and any significant decline in demand from these customers could reduce demand for EV charging and ChargePoint’s products and services in particular.
Demand for EVs may also be affected by factors directly impacting automobile prices or the cost of purchasing and operating automobiles, such as sales and financing incentives, prices of raw materials and parts and components, cost of fuel and governmental regulations, including tariffs, import regulation and other taxes. Volatility in demand may lead to lower vehicle unit sales, which may result in reduced demand for EV charging solutions and therefore adversely affect ChargePoint’s business, financial condition and operating results.
The EV market currently benefits from the availability of rebates, tax credits and other financial incentives from governments, utilities and others to offset the purchase or operating cost of EVs and EV charging stations. In particular, ChargePoint’s marketing efforts have heavily relied upon federal tax credits available to purchasers of its EV charging stations that effectively provide purchasers with a significantly discounted purchase price. The reduction, modification, or elimination of such benefits could cause reduced demand for EVs and EV charging stations, which would adversely affect ChargePoint’s financial results.
The U.S. federal government, foreign governments and some state and local governments provide incentives to end users and purchasers of EVs and EV charging stations in the form of rebates, tax credits and other financial incentives, such as payments for regulatory credits. The EV market relies on these governmental rebates, tax credits and other financial incentives to significantly lower the effective price of EVs and EV charging stations to customers. However, these incentives may expire on a particular date, end when the allocated funding is exhausted, or be reduced or terminated as a matter of regulatory or legislative policy. In particular, ChargePoint has heavily relied upon the availability of federal tax credits to purchasers under Section 30C of the Code (as defined below) to market its EV charging stations, which can effectively provide such purchasers with up to a 30% discount off the purchase price of ChargePoint’s EV charging stations. The credits under Section 30C of the Code are set to expire on December 31, 2020 and thus would not be available to ChargePoint’s customers unless extended. There can be no assurance that the credits under Section 30C of the Code will be extended, or if extended, will not be otherwise reduced. Any reduction in rebates, tax credits or other financial incentives, including the credit under Section 30C of the Code, could materially reduce the demand for EVs and ChargePoint’s solutions and, as a result, may adversely impact ChargePoint’s business and expansion potential.
ChargePoint also derives other revenue from regulatory credits. If government support of these credits declines, ChargePoint’s ability to generate this other revenue in the future would be adversely affected. Recently, ChargePoint has derived a slight majority of its other revenue from regulatory credits, and ChargePoint expects revenue from this source will decline as a percentage of other and total revenue over time. Further, the availability of such credits may decline even with general governmental support of the transition to EV infrastructure. For example, in September 2020, California Governor Gavin Newsom issued Executive Order
N-79-20 (the “EO”), announcing a target for all in-state sales of new passenger cars and trucks to be zero-emission by 2035. While the EO calls for the support of EV infrastructure, the form of this support is unclear. If California or other jurisdictions choose to adopt regulatory mandates instead of establishing or continuing green energy credit regimes for EV infrastructure, ChargePoint’s revenue from these credits would be adversely impacted.
The EV charging market is characterized by rapid technological change,changes often due to technical improvements, regulatory requirements and customer requirements, which requires ChargePoint to continue to develop new products and product innovations. Any delays in such development could adversely affect market adoption of its products and ChargePoint’s financial results.
ChargePoint may also incur additional costs and expenses related to new product transitions such as adverse impacts due to supply chain failures to procure sufficient new product components, purchase price variances, or inventory obsolescence costs related to new product transitions, including as the result of any failure on the part of ChargePoint to meet its own estimates and projections. ChargePoint cannot guarantee that any new products will be released in a timely manner, or at all, or achieve market acceptance. Delays in delivering new products that meet customer requirements could damage ChargePoint’s relationships with customers and lead them to seek alternative providers. Delays in introducing products and innovations or the failure to offer innovative products or services at competitive prices may cause existing and potential customers to purchase ChargePoint’s competitors’ products or services.
Finally, new or changing state or federal regulations may result in delays related to the development of new products or modifications to existing products in order to come into compliance and any such delays may result in customer’s selecting alternative providers or result in delays related to ChargePoint’s ability to install, sell or distribute its charging station technology.
ChargePoint may need to defend against intellectual property infringement or misappropriation claims, which may be time-consuming and expensive.
From time to time, the holders of intellectual property rights may assert their rights and urge ChargePoint to take licenses, and/or may bring suits alleging infringement or misappropriation of such rights. There can be no assurance that ChargePoint will be able to mitigate the risk of potential suits or other legal demands by competitors or other third parties. Accordingly, ChargePoint may consider entering into licensing agreements with respect to such rights, although no assurance can be given that such licenses can be obtained on acceptable terms or that litigation will not occur, and such licenses and associated litigation could significantly increase ChargePoint’s operating expenses. In addition, if ChargePoint is determined to have or believes there is a high likelihood that it has infringed upon or misappropriated a third party’s intellectual property rights, it may be required to cease making, selling or incorporating certain key components or intellectual property into the products and services it offers, to pay substantial damages and/or royalties, to redesign its products and services, and/or to establish and maintain alternative branding. In addition, to the extent that ChargePoint’s customers and business partners become the subject of any allegation or claim regarding the infringement or misappropriation
of intellectual property rights related to ChargePoint’s products and services, ChargePoint may be required to indemnify such customers and business partners. If ChargePoint were required to take one or more such actions, its business, prospects, operating results and financial condition could be materially and adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention.
ChargePoint’s business may be adversely affected if it is unable to protect its technology and intellectual property from unauthorized use by third parties.
•any patent applications ChargePoint submits may not result in the issuance of patents;
•the scope of issued patents may not be broad enough to protect its inventions and proprietary rights;
•any issued patents may be challenged by competitors and/or invalidated by courts or governmental authorities;
•ChargePoint may not be the first inventor of the subject matter to which it has filed a particular patent application, and it may not be the first party to file such a patent application;
•current and future competitors may circumvent patents or independently develop similar trade secrets or works of authorship, such as software;
•know-how and other proprietary information ChargePoint purports to hold as a trade secret may not qualify as a trade secret under applicable laws;
•proprietary designs and technology embodied in ChargePoint’s products may be discoverable by third-parties through means that do not constitute violations of applicable laws.
It is ChargePoint’s policy to enter into confidentiality and invention assignment agreements with its employees and contractors that have developed material intellectual property for ChargePoint, but these agreements may not be self-executing and may not
Across ChargePoint’s product line, ChargePoint develops equipment solutions based on preferred second source or common off-the-shelf vendors. However, due to its designs, ChargePoint does rely on some single source vendors, the unavailability or failure of which can pose risks to supply chain or product shipping situations.
•expenditure of significant financial and product development resources, including recalls, in efforts to analyze, correct, eliminate or work around errors or defects;
•loss of existing or potential customers or partners;
•interruptions or delays in sales;
•delayed or lost revenue;
•delay or failure to attain market acceptance;
•delay in the development or release of new functionality or improvements;
•negative publicity and reputational harm;
•sales credits or refunds;
•exposure of confidential or proprietary information;
•diversion of development and customer service resources;
•breach of warranty claims;
•legal claims under applicable laws, rules and regulations; and
•an increase in collection cycles for accounts receivable or the expense and risk of litigation.
ChargePoint expects to incur research and development costs and devote significant resources to developing new products, which could significantly reduce its profitability and may never result in revenue to ChargePoint.
ChargePoint’s future growth depends on penetrating new markets, adapting existing products to new applications and customer requirements, and introducing new products that achieve market acceptance. ChargePoint plans to incur significant research and development costs in the future as part of its efforts to design, develop, manufacture and introduce new products and enhance existing products. ChargePoint’s research and development expenses were $69.5 million, $50.5 million, $42.7 million and $54.1 million during the fiscal years ended January 31, 2020, 2019 and 2018 and the nine months ended October 31, 2020, respectively, and are likely to grow in the future. Further, ChargePoint’s research and development program may not produce successful results, and its new products may not achieve market acceptance, create additional revenue or become profitable.
Customer-Related Risks
If
Once a customer has installed ChargePointnetwork of EV charging stations, and subscribed to ChargePoint’s services, station owners and drivers will rely on ChargePoint to provideincluding customer support services and mobile services. ChargePoint’s support organization faces additional challenges associated with its international operations, including those associated with delivering support, training, and documentation in languages other than English. Failure to resolve any issues that might arise in the future. Rapid andmaintain high-quality customer support could adversely affect ChargePoint’s reputation, business, results of operations, and financial condition.
as a result, ChargePoint”).
deferred revenue relating to subscriptions entered into during previous quarters. Consequently, a decline in new or renewed subscriptions in any single quarter will likely have only a small impact on revenue for that quarter. However, such a decline will negatively affect revenue in future quarters. In addition, the severity and duration of events may not be predictable, and their effects could extend beyond a single quarter. Accordingly, the effect of significant downturns in sales and market acceptance of subscription services, and potential changes in pricing policies or rate of renewals, may not be fully apparent until future periods.
Failure
ChargePoint’s ability to grow its customer base, achieve broader market acceptance, grow revenue, and achieve and sustain profitability will depend, to a significant extent, on its ability to effectively expand its sales and marketing operations and activities. Sales and marketing expenses represent a significant percentageSection 404(a) and/or Section 404(b) of its total revenue, and its operating results will suffer if sales and marketing expenditures do not contribute significantly to increasing revenue.
Sarbanes-Oxley. If ChargePoint is substantially dependent on its direct sales forcenot able to obtain new customers. ChargePoint plans to continue to expand its direct sales force both domestically and internationally butimplement these additional requirements in a timely manner or with adequate compliance, it may not be able to recruitassess whether its internal control over financial reporting is effective, which may subject it to adverse regulatory consequences and hirecould harm investor confidence.
Financial, Tax and Accounting-Related Risks
financial statements.
its Common Stock.
•the timing and volume of new sales;
•fluctuations in service costs, particularly due to unexpected costs of servicing and maintaining charging stations;
•the timing of new product introductions, which can initially have lower gross margins;
•the introduction of new products by competitors, changes in pricing or other factors impacting competition;
•fluctuations in sales and marketing or research and development expenses;
•supply chain interruptions, volatility in raw material prices and manufacturing or delivery delays;
•the timing and availability of newproducts relative to customers’ and investors’ expectations;
•the length of the sales and installation cycle for a particular customer;
the impact of COVID-19 on ChargePoint’s workforce, or those of its customers, suppliers, vendors or business partners;
•disruptions in sales, production, service or other business activities or ChargePoint’s inability to attract and retain qualified personnel; and
•unanticipated changes in federal, state, local or foreign government incentive programs, which can affect demand for EVs.
Common Stock.
New
In addition to For example, the impactCoronavirus Aid, Relief and Economic Security Act (the “CARES Act”) modified certain provisions of the Tax Act on New ChargePoint’s federal taxes,Act.
could be affected by operating losses in
New
carrybacks of net operating losses. Under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, which modified the Tax Act, U.S. federal net operating loss carryforwards generated in taxable periods beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such net operating loss carryforwards in taxable years beginning after December 31, 2020, is limited to 80% of taxable income. It is possible that New ChargePoint will not generate taxable income in time to utilize thethese net operating loss carryforwards.
New
New ChargePoint will be an emerging growth company as defined in the JOBS Act, and it intends to take advantage of certain exemptions from various reporting requirements that are applicable to other public
companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in 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. Investors may find the common stock less attractive because New ChargePoint will continue to rely on these exemptions. If some investors find the common stock less attractive as a result, there may be a less active trading market for their common stock, and the stock price may be more volatile.
An emerging growth company may elect to delay the adoption of new or revised accounting standards. With Switchback making this election, Section 102(b)(2) of the JOBS Act allows New ChargePoint to delay adoption of new or revised accounting standards until those standards apply to non-public business entities. As a result, the financial statements contained in the proxy statement/prospectus/consent solicitation statement related to the Business Combination and those that New ChargePoint will file in the future may not be comparable to companies that comply with public business entities revised accounting standards effective dates.
New ChargePoint will incurincurs significant increased expenses and administrative burdens as a public company, which could have an adverse effect on its business, financial condition and results of operations.
New
ChargePoint haspreviously identified, material weaknesses in its internal control over financial reporting. If ChargePoint is unable to remediate these material weaknesses, or if ChargePoint identifies additional material weaknesses in the future or otherwise fails to maintain an effective system of internal control over financial reporting, this may result in material misstatements ofcontained within ChargePoint’s consolidated financial statements or cause ChargePoint to fail to meet its periodic reporting obligations.
Asobligations,” and “Risks Related to Legal Matters and Regulations—ChargePoint may face litigation and other risks as a public company, New ChargePoint will be required to provide management’s attestation on internal control over financial reporting. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable after the Business Combination. If ChargePoint is not able to implement the additional
requirements of Section 404(a)result of the Sarbanes-Oxley Actmaterial weaknesses in a timely manner or with adequate compliance, it may not be able to assess whether its internal control over financial reporting is effective, which may subject it to adverse regulatory consequencesand the restatement of its financial statements,” for more detail). ChargePoint has incurred and could harm investor confidence.
In connection withincur additional costs to rectify those or new issues, and the preparation and audit of ChargePoint’s consolidated financial statements as of January 31, 2020 and 2019 and for the years ended January 31, 2020, 2019 and 2018, material weaknesses were identified in its internal control 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 ChargePoint’s annual or interim financial statements will not be prevented or detected on a timely basis.
ChargePoint did not design or maintain an effective control environment commensurate with its financial reporting requirements. Specifically, ChargePoint did not maintain a sufficient complement of personnel with an appropriate degree of accounting knowledge, experience and training to appropriately analyze, record and disclose accounting matters commensurate with its accounting and reporting requirements. This material weakness contributed to the following additional two material weaknesses:
ChargePoint did not design and maintain formal accounting policies, procedures and controls over significant accounts and disclosures to achieve complete, accurate and timely financial accounting, reporting and disclosures, including segregation of duties and adequate controls related to the preparation and review of journal entries; and
ChargePoint did not design and maintain effective controls over certain information technology (“IT”) general controls for information systems that are relevant to the preparation of its consolidated financial statements. Specifically, ChargePoint did not design and maintain (a) program change management controls to ensure that information technology program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately and (b) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to its financial applications and data to appropriate company personnel.
The material weakness related to formal accounting policies, procedures and controls resulted in adjustments to several accounts and disclosures. The IT deficiencies did not result in a material misstatement to the consolidated financial statements, however, the deficiencies, when aggregated, could impact maintaining effective segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected. Eachexistence of these material weaknesses could result in a misstatement of account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.
ChargePoint has begun implementation of a plan to remediate these material weaknesses. These remediation measures are ongoing and include hiring additional accounting and financial reporting personnel and implementing additional policies, procedures and controls.
In order to maintain and improve the effectiveness of its internal control over financial reporting, ChargePoint has expended, and anticipates that New ChargePoint will continue to expend, significant resources, including accounting-related costs and significant management oversight. New ChargePoint’s independent registered public accounting firm is not required to formally attest to the effectiveness of its internal control over financial reporting until after it is no longer an “emerging growth company” as defined in the JOBS Act. At such time, New ChargePoint’s independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which its internal control over financial reporting is documented,
designed or operating. Any failure to maintain effective disclosure controls and internal control over financial reportingissues could adversely affect its reputation or investor perceptions. In addition, as a public company, ChargePoint maintains director and officer liability insurance, for which it must pay substantial premiums. The additional reporting and other obligations imposed by rules and regulations applicable to public companies increase legal and financial compliance costs and the businesscosts of related legal, accounting and operating results after the Business Combinationadministrative activities. Advocacy efforts by stockholders and third-parties may also prompt additional changes in governance and reporting requirements, which could cause a decline in the price of New ChargePoint Class A common stock.
further increase costs.
Although ChargePoint initiated a compliance program designed to ensure CCPA compliance after consulting with outside privacy counsel, ChargePoint may remain exposed to ongoing legal risks and compliance costs related to CCPA and the new California Privacy Rights Act (“CPRA”), which became effective in most material respects on January 1, 2023. Similar state privacy laws, including those in Virginia, Colorado, Connecticut and Utah create further compliance obligations and risks of fines and penalties in the event of non-compliance. Furthermore, state attorneys general may also join together to file lawsuits based on violations of applicable state privacy acts. In the event ChargePoint is subject to litigation, penalties, or enforcement actions pursuant to the GDPR, CCPA, CPRA or applicable state laws, ChargePoint may be subject to fines and penalties, remediation measures which will divert management’s time and attention, as well as harm to its reputation.
Further, the new standard contractual clauses impose obligations regarding previously executed agreements containing the prior version of the standard contractual clauses. Updating agreements to comply with the revised standard contractual clauses is an increased burden and expense on ChargePoint, and not doing so may create the risk of damage to customer relationships or lead to regulatory scrutiny.
certifications or adhere to other standards established by them or third parties.third-parties. If ChargePoint is unable to maintain these certifications or meet these standards, it could reduce demand for its solutions and adversely affect its business.
Failure to comply with laws relating to employment could subject ChargePoint to penalties and other adverse consequences.
harm its reputation.
operations.
laws, rules, regulations and permits may be unpredictable and may have material effects on ChargePoint’s business. Future legislation and regulations or changes in existing legislation and regulations, or interpretations thereof, including those relating to hardware manufacturing, electronic waste or batteries, could cause additional expenditures, restrictions and delays in connection with ChargePoint’s operations as well as other future projects, the extent of which cannot be predicted.
2027 Convertible Notes will, and any additional capital raised through the sale of equity or any future convertible securities ChargePoint may issue could, dilute existing stockholders’ ownership.
After giving effect to
After the closing of the Business Combination, thewide fluctuations.
•actual or anticipated fluctuations in operating results;
•failure to meet or exceed financial estimates and projections of the investment community or that New ChargePoint provides to the public;
•issuance of new or updated research or reports by securities analysts or changed recommendations for the industry in general;
•announcements of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;
•changes in competitive factors;
•sales of shares of ChargePoint’s Common Stock into the market pursuant to the exercise of registration rights;
•actual or anticipated changes in laws and regulations;
•additions or departures of key management or other personnel;
•increased labor costs;
•disputes or other developments related to intellectual property or other proprietary rights, including litigation;
•the ability to market new and enhanced solutions on a timely basis;
•changes in capital structure, including future issuances of securities or the incurrence of debt; and
•general economic, political and market conditions.
Upon the closing of the Business Combination, New
The post-Closing certificate of incorporation will provide,Common Stock. ChargePoint’s Charter provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit stockholders’ ability to obtain a more favorable judicial forum for disputes with New ChargePoint or its directors, officers, employees or stockholders.
In March 2020, the Delaware Supreme Court issued a decision in Salzburg et al. v. Sciabacucchi, which found that an exclusive forum provision providing for claims under the Securities Act to be brought in federal court is facially valid under Delaware law. It is unclear whether this decision will be appealed, or what the final outcome of this case will be. New ChargePoint intends to enforce this provision, but it does not know whether courts in other jurisdictions will agree with this decision or enforce it.
ThisThe choice of forum provision in ChargePoint’s Charter may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with New ChargePoint or any of its directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in the certificate of incorporation to be inapplicable or unenforceable in an action, New ChargePoint may incur additional costs associated with resolving such action in other jurisdictions, which could harm its business, operating results and financial condition.
Risks Related to Switchback
Risks Related to Our Business, Operations and Industry
The risks discussed herein have been identified by our management based on an evaluation of
The loss of senior management or technical personnel could adversely affect our ability to successfully effect the Business Combination and successfully operate the business thereafter.
Our ability to successfully effect the Business Combination and successfully operate the business is dependent upon the services of our senior management and technical personnel. While we have scrutinized the individuals who will stay with us following the Business Combination, our assessment of these individuals may not prove to be correct. We do not plan to obtain any insurance against the loss of any of these individuals. The loss of the services of our senior management or technical personnel could have a material adverse effect on our business, financial condition and results of operations. Switchback will also be dependent, in part, upon ChargePoint’s technical personnel in connection with operating the business following the Business Combination. A loss by ChargePoint of its technical personnel could seriously harm Switchback’s business and results of operations.
There are inherent limitations in all control systems, and misstatements due to error or fraud that could seriously harm Switchback’s business may occur and not be detected.
Our management does not expect that our internal and disclosure controls will prevent all possible error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints and the benefit of controls must be relative to their costs. Because of the inherent limitations in all control systems, an evaluation of controls can only provide reasonable assurance that all material control issues and instances of fraud, if any, in Switchback have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Further, controls can be circumvented by the individual acts of some persons or by collusion of two or more persons. The design of any system of controls is based in part upon certain assumptions about the likelihoodperception of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Becausesales, of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Switchback will also be dependent, in part, upon ChargePoint’s internal control. A failure of Switchback’s or ChargePoint’s controls and procedures to detect error or fraud could seriously harm Switchback’s business and results of operations.
Switchback’s business could be adversely affected by security threats, including cybersecurity threats and related disruptions.
We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and deliberate attacks by cyberattackers on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business, lead to financial loss and negative publicity. Switchback will also be dependent, in part, upon ChargePoint’s information. A failure in the security of ChargePoint’s information systems could seriously harm Switchback’s business and results of operations.
We have not registered the shares of Class A common stock issuable upon exercise of the Warrants under the Securities Act or any state securities laws, and such registration may not be in place when an investor desires to exercise Warrants, thus precluding such investor from being able to exercise its Warrants except on a cashless basis and potentially causing such Warrants to expire worthless.
We have not registered the shares of Class A common stock issuable upon exercise of the Warrants under the Securities Act or any state securities laws. However, under the terms of the warrant agreement governing the terms of our Warrants, we have agreed that as soon as practicable, but in no event later than 15 business days, after the closing of an initial business combination, we will use our best efforts to file a registration statement under the Securities Act covering such shares. We will use our best efforts to cause the same to become effective, but in no event later than 60 business days after the Closing, 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. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of the Warrants are not registered under the Securities Act, we will be required to permit holders to exercise their Warrants on a cashless basis. However, no Warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding the above, if our Class A common stock is at the time of any exercise of a Warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our 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 we so elect, we will not be required to file or maintain in effect a registration statement, but we will be required to use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In no event will we be required to net cash settle any Warrant, or issue securities or other compensation in exchange for the Warrants in the event that we are unable to register or qualify the shares underlying the Warrants under the Securities Act or applicable state securities laws. If the issuance of the shares upon exercise of the Warrants is not so registered or qualified or exempt from registration or qualification, the holder of such Warrant shall not be entitled to exercise such Warrant and such Warrant may have no value and expire worthless. In such event, holders who acquired their Warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of Class A common stock included in the units. If and when the Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying shares of Class A common stock for sale under all applicable state securities laws.
Risks Related to Switchback and the Business Combination
Following the consummation of the Business Combination, our sole material asset will be our direct equity interest in ChargePoint and we will be accordingly dependent upon distributions from ChargePoint to pay taxes and cover our corporate and other overhead expenses and pay dividends, if any, on our common stock.
We are a holding company and, subsequent to the completion of the Business Combination, will have no material assets other than our direct equity interest in ChargePoint. We will have no independent means of generating revenue. To the extent ChargePoint has available cash, we will cause ChargePoint to make distributions of cash to us to pay taxes, cover our corporate and other overhead expenses and pay dividends, if any, on our common stock. To the extent that we need funds and ChargePoint fails to generate sufficient cash flow to distribute funds to us or is restricted from making such distributions or payments under applicable law or regulation or under the terms of its financing arrangements, or is otherwise unable to provide such funds, our liquidity and financial condition could be materially adversely affected.
Subsequent to the consummation of the Business Combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.
Although we have conducted due diligence on ChargePoint, we cannot assure you that this diligence revealed all material issues that may be present in ChargePoint, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of our control will not later arise. As a result, we may be forced to later write-down or write-off assets, restructure our operations or incur impairment or other charges that could result in losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and may not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us following the completion of the Business Combination or our securities. In addition, charges of this nature may cause us to be unable to obtain future financing on favorable terms or at all.
Our initial stockholders have agreed to vote in favor of the business combination, regardless of how our public stockholders vote.
Unlike many other blank check companies in which the founders agree to vote their founder shares in accordance with the majority of the votes cast by public stockholders in connection with an initial business combination, our initial stockholders have agreed to vote any shares of Class A common stock and Class B common stock owned by them in favor of the Business Combination. As of the date hereof, our initial stockholders own shares equal to approximately 20.5% of our issued and outstanding shares of Class A common stock and Class B common stock in the aggregate. Accordingly, it is more likely that the necessary stockholder approval will be received for the Business Combination than would be the case if the initial stockholders agreed to vote any shares of Class A common stock and Class B common stock owned by them in accordance with the majority of the votes cast by our public stockholders.
Our Sponsor, certain members of our board of directors and our officers have interests in the Business Combination that are different from or are in addition to other stockholders in recommending that stockholders vote in favor of approval of the Business Combination proposal.
Our board of directors has unanimously approved the Business Combination Agreement and related transactions and the other proposals described in the proxy statement/prospectus/consent solicitation statement related to the Business Combination. Further, our board of directors has determined that it is advisable to consummate the Business Combination and has recommended that our stockholders vote “FOR” the approval of the Business Combination Agreement. When considering our board’s recommendation that our stockholders vote
in favor of the approval of the Business Combination proposal, our stockholders should be aware that our directors and officers have interests in the Business Combination that may be different from, or in addition to, the interests of our stockholders. These interests include:
the fact that our Sponsor holds 5,521,568 Private Placement Warrants that would expire worthless if a Business Combination is not consummated;
the fact that our Sponsor, officers and directors have agreed not to redeem any of the shares of our common stock held by them in connection with a stockholder vote to approve the Business Combination;
the fact that our Sponsor paid an aggregate of $25,000 for the Founder Shares, including 120,000 Founder Shares which were subsequently transferred to our independent directors, and that such securities will have a significantly higher value at the time of the Business Combination, which if unrestricted and freely tradable would be valued at approximately $240,044,813, based on the closing price of our Class A common stock of $34.95 per share on December 16, 2020 (after giving effect to the forfeiture of Founder Shares contemplated by the Founders Stock Letter and not taking into account the Founder Earn Back Shares);
if the Trust Account is liquidated, including in the event we are unable to complete an initial business combination within the required time period, our Sponsor has agreed to indemnify us to ensure that the proceeds in the Trust Account are not reduced below $10.00 per public share, or such lesser amount per public share as is in the Trust Account on the liquidation date, by the claims of (a) any third party (other than our independent registered public accounting firm) for services rendered or products sold to us or (b) a prospective target business with which we have entered into a letter of intent, confidentiality or other similar agreement or business combination agreement, but only if such a third party or target business has not executed a waiver of all rights to seek access to the Trust Account;
the fact that our independent directors own an aggregate of 120,000 Founder Shares that were transferred from our Sponsor, which if unrestricted and freely tradeable would be valued at approximately $4,194,000, based on the closing price of our Class A common stock of $34.95 per share on December 16, 2020 (after giving effect to the forfeiture of Founder Shares contemplated by the Founders Stock Letter);
the fact that our Sponsor, officers and directors will be reimbursed for out-of-pocket expenses incurred in connection with activities on our behalf, such as identifying potential target businesses and performing due diligence on suitable business combinations; and
the fact that our Sponsor, officers and directors will lose their entire investment in us if an initial business combination is not completed.
Our board of directors was aware of and considered these interests, among other matters, in reaching the determination to approve the Business Combination and the Business Combination Agreement and in recommending that the holders of our common stock vote to approve the Business Combination and adopt the Business Combination Agreement.
Our initial stockholders hold a significant number of shares of our common stock and our Sponsor holds a significant number of our Warrants. They will lose their entire investment in us if we do not complete an initial business combination.
Our Sponsor and our independent directors hold all of our 7,852,941 Founder Shares, representing 20% of the total outstanding shares upon completion of our Public Offering. The Founder Shares will be worthless if we do not complete an initial business combination by July 30, 2021. In addition, our Sponsor holds an aggregate of 5,521,568 Private Placement Warrants that will also be worthless if we do not complete an initial business combination by July 30, 2021.
The Founder Shares are identical to the shares of Class A common stock included in the units, except that (a) the Founder Shares and the shares of Class A common stock into which the Founder Shares convert upon an initial business combination are subject to certain transfer restrictions, (b) our Sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed (i) to waive their redemption rights with respect to their Founder Shares and any public shares they own in connection with the completion of an initial business combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if we fail to complete an initial business combination by July 30, 2021 (although they will be entitled to liquidating distributions from the Trust Account with respect to any public shares they hold if we fail to complete an initial business combination by July 30, 2021) and (c) the Founder Shares are automatically convertible into shares of our Class A common stock at the time of an initial business combination.
The personal and financial interests of our Sponsor, officers and directors may have influenced their motivation in identifying and selecting the business combination, completing the business combination and influencing our operation following the business combination.
We will incur significant transaction costs in connection with the Business Combination.
We have and expect to incur significant, non-recurring costs in connection with consummating the Business Combination. All expenses incurred in connection with the Business Combination Agreement and the Business Combination, including all legal, accounting, consulting, investment banking and other fees, expenses and costs, will be for the account of the party incurring such fees, expenses and costs; provided, that, our Sponsor has agreed to pay any Switchback Transaction Costs (as defined in the Registration Statement) (excluding any PIPE Financing Transaction Costs (as defined in the Registration Statement)) in excess of the Switchback Transaction Costs Cap (as defined in the Registration Statement), and all other Switchback Transaction Costs will be borne by us. Our transaction expenses as a result of the Business Combination are currently estimated at approximately $29.5 million, including approximately $10.9 million in deferred underwriting discounts and commissions to the underwriters of our Public Offering.
We may be subject to business uncertainties while the Business Combination is pending.
Uncertainty about the effect of the Business Combination on employees and third parties may have an adverse effect on ChargePoint and consequently, on Switchback. These uncertainties may impair ChargePoint’s ability to attract, retain and motivate key personnel and could cause third parties that deal with ChargePoint to defer entering into contracts or making other decisions or seek to change existing business relationships. If key employees depart because of issues relating to such uncertainty or a desire not to remain with the business, ChargePoint’s business following the Business Combination could be negatively impacted. In addition, the Business Combination Agreement restricts ChargePoint from making certain expenditures and taking other specified actions without the consent of Switchback until the Business Combination occurs. These restrictions may prevent ChargePoint from pursuing attractive business opportunities that may arise prior to the Closing.
Our Warrants are being accounted for as a warrant liability and are being recorded at fair value upon issuance with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our Class A common stock.
Under U.S. GAAP, we are required to evaluate the Warrants to determine whether they should be accounted for as a warrant liability or as equity. We have concluded that the Warrants contain provisions requiring liability classification. Therefore, as described in our financial statements included in Part II, Item 8, of this Form 10-K/A, we are accounting for the Warrants as a warrant liability and are recording that liability at fair value upon issuance. We will record any subsequent changes in fair value as of the end of each period for which earnings are reported. The impact of changes in fair value on earnings may have an adverse effect on the market price of our Class A common stock and may cause fluctuations in our results of operations based on factors that are outside of our control.
We identified a material weakness in our internal control over financial reporting. If we do not adequately address this material weakness or if other material weaknesses or significant deficiencies in our internal control over financial reporting are discovered, this could adversely affect our business and the market price of our Class A common stock.
We identified a material weakness in our internal control over financial reporting as of December 31, 2020, the disclosure of which may have an adverse impact on the price of our common stock (please refer to Part II, Item 9A of this Form 10-K/A for further discussion). 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 financial statements will not be prevented or detected on a timely basis. As a result of this material weakness, our management concluded that our internal control over financial reporting was not effective as of December 31, 2020, and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2020. The material weakness resulted in a reclassification of our Warrants from equity to liabilities and the recognition of the related gain or loss as a result of the change in the fair value of the warrant liabilities, and related restatement of (i) the audited consolidated financial statements of Switchback as of December 31, 2020 and 2019, for the year ended December 31, 2020 and for the period from May 10, 2019 (inception) through December 31, 2019 included in the Original Filing, (ii) certain items on the Company’s previously issued audited balance sheet dated as of July 30, 2019, which was included in the IPO Closing 8-K, and (iii) the condensed consolidated unaudited financial statements of Switchback included in Switchback’s Quarterly Reports on Form 10-Q for (a) the three months ended September 30, 2019 and for the period from May 10, 2019 (inception) through September 30, 2019 (b) the three months ended March 31, 2020, (c) the three and six months ended June 30, 2020, and (d) the three and nine months ended September 30, 2020.
We are required to restate the consolidated financial statements of the Company. We have taken, and intend to continue to take, certain remedial actions intended to address the identified material weakness in our internal control over financial reporting. However, we can give no assurance that such measures will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future. Additionally, significant costs and resources may be needed to remediate any material weakness (including the material weakness identified) or any internal control deficiencies that may arise in the future.
If we cannot produce reliable and timely financial reports, investors may lose confidence in our financial reporting and we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Moreover, if we are unable to remediate, evaluate, and test our internal controls on a timely basis in the future, management will be unable to conclude that our internal controls are effective and our independent registered public accounting firm will be unable to express an unqualified opinion on the effectiveness of our internal control over financial reporting. Any actual or perceived weaknesses or deficiencies that need to be addressed in our internal control over financial reporting, or disclosure of management’s assessment of our internal control over financial reporting, could have an adverse impact on our business and the market price of our Class A Common Stock.
The consummation of the Business Combination is subject to a number of conditions and if those conditions are not satisfied or waived, the Business Combination Agreement may be terminated in accordance with its terms and the Business Combination may not be completed.
The Business Combination Agreement is subject to a number of conditions which must be fulfilled in order to complete the Business Combination. Those conditions include: (a) approval by our stockholders and ChargePoint’s stockholders, (b) Switchback having at least $5,000,001 of net tangible assets as of the effective time of the consummation of the Business Combination, (c) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (d) the listing of the shares of Class A common stock to be issued in connection with the Closing and the PIPE Financing on the NYSE (or another
national securities exchange mutually agreed by the parties to the Business Combination Agreement) and the effectiveness of the Registration Statement and (e) the amount of Switchback Cash (as defined in the Registration Statement) minus (x) the aggregate amount of cash proceeds that will be required to satisfy redemptions of public shares by our public stockholders in accordance with our organizational documents, if any, minus (y) the amount of Switchback Transaction Costs that remain unpaid immediately prior to the Closing (excluding, for the avoidance of doubt, any Switchback Transaction Costs payable by our Sponsor in accordance with the Business Combination Agreement), equaling at least $300,000,000. In addition, the parties can mutually decide to terminate the Business Combination Agreement at any time, before or after stockholder approval, or Switchback or ChargePoint may elect to terminate the Business Combination Agreement in certain other circumstances.
We may waive one or more of the conditions to the Business Combination.
We may agree to waive, in whole or in part, one or more of the conditions to our obligations to complete the Business Combination, to the extent permitted by our Charter, bylaws and applicable laws. For example, it is a condition to our obligation to close the Business Combination that certain of ChargePoint’s representations and warranties be true and correct in all material respects as of the date of the Business Combination Agreement and the Effective Time. However, if our board of directors determines that it is in the best interests of Switchback to proceed with the Business Combination, then our board of directors may elect to waive that condition and close the Business Combination.
If we are unable to complete an initial business combination on or prior to July 30, 2021, our public stockholders may receive only approximately $10.00 per share on the liquidation of our Trust Account (or less than $10.00 per share in certain circumstances where a third party brings a claim against us that our Sponsor is unable to indemnify), and our Warrants will expire worthless.
If we are unable to complete an initial business combination on or prior to July 30, 2021, our public stockholders may receive only approximately $10.00 per share on the liquidation of our Trust Account (or less than $10.00 per share in certain circumstances where a third party brings a claim against us that our Sponsor is unable to indemnify (as described below)), and our Warrants will expire worthless.
If third parties bring claims against us, the proceeds held in our Trust Account could be reduced and the per share redemption amount received by stockholders may be less than $10.00 per share.
Our placing of funds in the Trust Account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements, they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account. Although no third parties have refused to execute an agreement waiving such claims to the monies held in the Trust Account to date, if any third party refuses to execute such an agreement in the future, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Making such a request of potential target businesses may make our acquisition proposal less attractive to them and, to the extent prospective target businesses refuse to execute such a waiver, it may limit the field of potential target businesses that we might pursue.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be
significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our public shares, if we are unable to complete our Business Combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our Business Combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the ten years following redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per public share initially held in the Trust Account, due to claims of such creditors. Our Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent registered public accounting firm) for services rendered or products sold to us, or a prospective target business with which we have entered into a letter of intent, confidentiality or other similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (a) $10.00 per public share and (b) the actual amount per public share held in the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets as of the date of the liquidation of the Trust Account, in each case including interest earned on the funds held in the Trust Account and not previously released to us to pay our franchise and income taxes, less franchise and income taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of the Public Offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked our Sponsor to reserve for such indemnification obligations, nor have we independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations and we believe that our Sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for an initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete an initial business combination, and you would receive such lesser amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Legal proceedings in connection with the Business Combination, the outcomes of which are uncertain, could delay or prevent the completion of the Business Combination.
On October 29, 2020, a putative class action lawsuit was filed in the Supreme Court of the State of New York by a purported Switchback stockholder in connection with the Business Combination: Bulsa v. Switchback Energy Acquisition Corporation, et al., Index No. 655800/2020 (Sup. Ct. N.Y. Cnty.). Separately, on November 6, 2020, a putative class action lawsuit was filed in the Supreme Court of the State of New York by a different purported Switchback stockholder in connection with the Business Combination: Bushansky v. Switchback Energy Acquisition Corporation, et al., Index No. 656119/2020 (Sup. Ct. N.Y. Cnty.). Additionally, on December 15, 2020, a complaint was filed in the United States District Court for the Southern District of New York by a purported Switchback stockholder in connection with the Business Combination: Ward v. Switchback Energy Acquisition Corporation, et al., Case No. 1:20-cv-10577 (S.D.N.Y.). On December 16, 2020, a separate complaint was filed in the Supreme Court of the State of New York by a purported Switchback stockholder in connection with the Business Combination: Baker v. Switchback Energy Acquisition Corporation, et al., Index No. 657063/2020 (Sup. Ct. N.Y. Cnty.) (collectively, the “Complaints”). The Complaints name Switchback and current members of our board as defendants. The Complaints allege, among other things, breach of fiduciary duty claims against our board in connection with the Business Combination. The Complaints also allege that the proxy statement/prospectus/consent solicitation statement related to the Business Combination is materially misleading and/or omits material information concerning the Business Combination, including, with respect to the Federal Complaint (as defined below), in violation of Sections 14(a) and 20(a) of the Exchange Act. The Complaints generally seek injunctive relief, unspecified damages and awards of attorneys’ and experts’ fees, among other remedies.
Additional lawsuits may be filed against Switchback or our directors and officers in connection with the Business Combination. Defending such additional lawsuits could require Switchback to incur significant costs and draw the attention of our management team away from the Business Combination. Further, the defense or settlement of any lawsuit or claim that remains unresolved at the time the Business Combination is consummated may adversely affect New ChargePoint’s business, financial condition, results of operations and cash flows. Such legal proceedings could also delay or prevent the Business Combination from becoming effective within the completed timeframe.
We may face litigation and other risks as a result of the material weakness in our internal control over financial reporting and the restatement of our financial statements.
Following the issuance of the Staff Statement, the audit committee of our Board, after considering the recommendations of management, determined that it was appropriate to restate our previously filed financial statements for the Non-Reliance Periods. See “—Our Warrants are being accounted for as a warrant liability and are being recorded at fair value upon issuance with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our Class A Common Stock.” As part of this restatement, we identified a material weakness in our internal control over financial reporting.
As a result of such material weakness, such restatement, 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 or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the restatement and material weaknesses in our internal control over financial reporting and the preparation of our financial statements. As of the date of this Form 10-K/A, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition.
Our directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to our public stockholders.
In the event that the proceeds in the Trust Account are reduced below the lesser of (a) $10.00 per public share and (b) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, in each case including interest earned on the funds held in the Trust Account and not previously released to us to pay our franchise and income taxes, less franchise and income taxes payable, and our Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our Sponsor to enforce its indemnification obligations.
While we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to our public stockholders may be reduced below $10.00 per share.
We may not have sufficient funds to satisfy indemnification claims of our directors and officers.
We have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed, and any persons who may become officers or directors prior to an initial business combination will agree, to waive any right, title, interest or claim of any kind in or to any monies in the Trust Account and to not seek recourse against the Trust Account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (a) we have sufficient funds outside of the
Trust Account or (b) we consummate an initial business combination. Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
If, after we distribute the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.
If, after we distribute the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. In addition, our board may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders from the Trust Account prior to addressing the claims of creditors.
If, before distributing the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the Trust Account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
Even if we consummate the Business Combination, there is no guarantee that the Public Warrants will be in the money at the time they become exercisable, and they may expire worthless.
The exercise price for our Warrants is $11.50 per share of Class A common stock. There is no guarantee that the Public Warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the warrants may expire worthless.
We may amend the terms of the Warrants in a manner that may be adverse to holders of Public Warrants with the approval by the holders of at least 50% of the then-outstanding Public Warrants. As a result, the exercise price of the Warrants could be increased, the exercise period could be shortened and the number of shares of our Class A common stock purchasable upon exercise of a Warrant could be decreased, all without a holder’s approval.
Our Warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then-outstanding Public Warrants to make any change that adversely affects the interests of the registered holders of Public Warrants. Accordingly, we may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least 50% of the
then-outstanding Public Warrants approve of such amendment. Although our ability to amend the terms of the Public Warrants with the consent of at least 50% of the then-outstanding Public Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Warrants, convert the Warrants into cash or stock (at a ratio different than initially provided), shorten the exercise period or decrease the number of shares of our Class A common stock purchasable upon exercise of a Warrant.
We may redeem unexpired Warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making their Warrants worthless.
We have the ability to redeem outstanding Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per Warrant, provided that the last reported sales price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions are met. If and when the Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding Warrants could force you (a) to exercise your Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (b) to sell your Warrants at the then-current market price when you might otherwise wish to hold your Warrants or (c) to accept the nominal redemption price which, at the time the outstanding Warrants are called for redemption, is likely to be substantially less than the market value of your Warrants. None of the Private Placement Warrants will be redeemable by us for cash so long as they are held by our Sponsor or its permitted transferees.
In addition, we may redeem your Warrants after they become exercisable for a number of shares of Class A common stock determined based on the redemption date and the fair market value of our Class A common stock. Any such redemption may have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when the Warrants are “out-of-the-money,” in which case you would lose any potential embedded value from a subsequent increase in the value of the Class A common stock had your Warrants remained outstanding.
Because certain of our shares of Class A common stock and Warrants currently trade as units consisting of one share of Class A common stock and one-third of one Warrant, the units may be worth less than units of other blank check companies.
Each unit contains one-third of one Warrant. Pursuant to the warrant agreement, no fractional Warrants will be issued upon separation of the units, and only whole Warrants will trade. This is different from other blank check companies similar to ours whose units include one share of common stock and one Warrant to purchase one whole share. This unit structure may cause our units to be worth less than if it included a Warrant to purchase one whole share. We have established the components of the units in this way in order to reduce the dilutive effect of the Warrants upon completion of an initial business combination since the Warrants will be exercisable in the aggregate for one-third of the number of shares compared to units that each contain a whole Warrant to purchase one share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless, this unit structure may cause our units to be worth less than if they included a Warrant to purchase one whole share.
We may issue additional common stock or preferred stock to complete the Business Combination or under an employee incentive plan after completion of the Business Combination. Any such issuances would dilute the interest of our stockholders and likely present other risks.
We may issue a substantial number of additional shares of common or preferred stock to complete the Business Combination or under an employee incentive plan after completion of the Business Combination. The issuance of additional shares of common or preferred stock:
may significantly dilute the equity interests of our investors;
may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;
could cause a change in control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
may adversely affect prevailing market prices for our units, Class A common stock and/or Public Warrants.
The NYSE may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
We cannot assure you that our securities will continue to be listed on the NYSE after the Business Combination. In connection with the Business Combination, we will be required to demonstrate compliance with the NYSE’s initial listing requirements, which are more rigorous than the NYSE’s continued listing requirements, in order to continue to maintain the listing of our securities on the NYSE. For instance, our stock price would generally be required to be at least $4.00 per share, our aggregate market value would be required to be at least $150 million, and the market value of our publicly held shares would be required to be at least $40 million. We cannot assure you that we will be able to meet those initial listing requirements at that time. Our continued eligibility for listing may depend on, among other things, the number of our shares that are redeemed.
If the NYSE delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
a limited availability of market quotations for our securities;
reduced liquidity for our securities;
a determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
a limited amount of news and analyst coverage; and
a decreased ability to issue additional securities or obtain additional financing in the future.
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or pre-empts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our units, Class A common stock and Public Warrants are listed on the NYSE, our units, Class A common stock and Public Warrants qualify as covered securities. Although the states are pre-empted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issuedCommon Stock by blank check companies, other than the state of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on the NYSE, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities.
Our board of directors did not obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination.
Our board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. Our officers and directors have substantial experience in
evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of our advisors, enabled them to make the necessary analyses and determinations regarding the Business Combination. Accordingly, investors will be relying solely on the judgment of our board of directors in valuing ChargePoint and assuming the risk that our board of directors may not have properly valued the business. The lack of a third-party valuation or fairness opinion may also lead an increased number ofChargePoint’s existing stockholders to vote against the proposed Business Combination or demand redemption of their shares for cash, which could potentially impact our ability to consummate the Business Combination.
A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our Class A common stockChargePoint’s Common Stock to drop significantly, even if our business is doing well.
decline.
Further, pursuant to the Subscription Agreements, the Company agreed that, within 15 business days after Also, in connection with the consummation of the Business Combination, Newacquisition of HTB, ChargePoint will fileentered into a registration rights agreement with the former shareholders of HTB providing for the filing of a resale registration statement as more completely described below.
If the Business Combination’s benefits do not meet the expectations of investors, stockholders or financial analysts,public market could adversely affect the market price of our securities may decline.
If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of our securities prior to the Closing may decline. The market values of our securities at the time of the Business Combination may vary significantly from their prices on the date the Business Combination Agreement was executed or the date on which our stockholders vote on the Business Combination.
In addition, following the Business Combination, fluctuations in the price of our securities could contribute to the loss of all or part of your investment. Prior to the Business Combination, trading in the shares of our Class A common stock has not been active. Accordingly, the valuation ascribed to our Class A common stock in the Business Combination may not be indicative of the price that will prevail in the trading market following the Business Combination. If an active market for our securities develops and continues, the trading price of our securities following the Business Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.
Factors affecting the trading price of our securities following the Business Combination may include:
actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
changes in the market’s expectations about our operating results;
success of competitors;
our operating results failing to meet the expectation of securities analysts or investors in a particular period;
changes in financial estimates and recommendations by securities analysts concerning New ChargePoint or the market in general;
operating and stock price performance of other companies that investors deem comparable to us;
our ability to market new and enhanced products and technologies on a timely basis;
changes in laws and regulations affecting our business;
our ability to meet compliance requirements;
commencement of, or involvement in, litigation involving New ChargePoint;
changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;
the volume of shares of our Class A common stock available for public sale;
any major change in our board of directors or management;
sales of substantial amounts of Class A common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and
general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general and the NYSE have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to New ChargePoint following the Business Combination could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.
Following the Business Combination, if securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our Class A common stock adversely, the price and trading volume of our Class A common stock could decline.
The trading market for our Class A common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If any of the analysts who may cover New ChargePoint following the Business Combination change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, the price of our Class A common stock would likely decline. If any analyst who may cover New ChargePoint following the Business Combination were to cease their coverage or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.
Our Sponsor, directors, officers, advisors or any of their respective affiliates may elect to purchase public shares from public stockholders, which may influence the vote on the Business Combination proposal and reduce the public “float” of our Class A common stock.
Our Sponsor, directors, officers, advisors or any of their respective affiliates may purchase public shares in privately negotiated transactions or in the open market either prior to or following the completion of the Business Combination, although they are under no obligation to do so. There is no limit on the number of public shares our Sponsor, directors, officers, advisors or any of their respective affiliates may purchase in such transactions, subject to compliance with applicable law and the rules of the NYSE. Any such privately negotiated purchases may be effected at purchase prices that are in excess of the per share pro rata portion of the Trust Account. However, our Sponsor, directors, officers, advisors and their respective affiliates have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the Trust Account will be used to purchase public shares in such transactions. None of our Sponsor, directors, officers, advisors or any of their respective affiliates will make any such purchases when they are in possession of any material non-public information not disclosed to the seller of such public shares or during a restricted period under Regulation M under the Exchange Act. Such a purchase could include a contractual acknowledgement that such stockholder, although still the record holder of such public shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights, and could include a contractual provision that directs such stockholder to vote such shares in a manner directed by the purchaser.
In the event that our Sponsor, directors, officers, advisors or any of their respective affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares.
The purpose of any such purchases of public shares could be to vote such shares in favor of the Business Combination and thereby increase the likelihood of obtaining stockholder approval of the Business Combination or to satisfy a closing condition in the Business Combination Agreement, where it appears that such requirement would otherwise not be met. Any such purchases of our public shares may result in the completion of the Business Combination that may not otherwise have been possible. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent the purchasers are subject to such reporting requirements.
In addition, if such purchases are made, the public “float” of our Class A common stock may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Changes in laws or regulations, or a failure to comply with any laws or regulations, may adversely affect our business, investments and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete the Business Combination, and results of operations.
The JOBS Act permits “emerging growth companies” like us to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies.
We qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act. As such, we take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including (a) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, (b) the exemptions from say-on-pay,say-on-frequency andsay-on-golden parachute voting requirements and (c) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. As a result, our stockholders may not have access to certain information they deem important. We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year (i) following July 30, 2024, the fifth anniversary of our Public Offering, (ii) in which we have total annual gross revenue of at least $1.07 billion (as adjusted for inflation pursuant to SEC rules from time to time) or (iii) in which we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three year period.
In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as we are an emerging growth company. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. 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. We have 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, we, 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 our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
We cannot predict if investors will find our Class A common stock less attractive because we will rely on these exemptions. If some investors find our Class A common stock less attractive as a result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.
Our Warrants and Founder Shares may have an adverse effect on the market price of our Class A common stock and make it more difficult to effectuate our Business Combination.
We issued Public Warrants to purchase 10,470,587 shares of Class A common stock as part of the units. We also issued 5,521,568 Private Placement Warrants, each exercisable to purchase one share of Class A common stock at $11.50 per share.
Our initial stockholders currently own an aggregate of 7,852,941 Founder Shares. Immediately prior to the Closing, the initial stockholders will forfeit an aggregate of 984,706 Founder Shares in accordance with the terms of the Founders Stock Letter. The Founder Shares are convertible into shares of Class A common stock on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like and subject to further adjustment as set forth herein. In addition, if our Sponsor makes any Working Capital Loans (as defined below), it may convert those loans into up to an additional 1,000,000 Private Placement Warrants, at the price of $1.50 per warrant. Any issuance of a substantial number of additional shares of Class A common stock upon exercise of these Warrants and conversion rights will increase the number of issued and outstanding shares of Class A common stock and reduce the value of the Class A common stock issued to complete the Business Combination. Therefore, our Warrants and Founder Shares may make it more difficult to effectuate the Business Combination or increase the cost of acquiring ChargePoint.
We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete the Business Combination even if a substantial majority of our stockholders do not agree.
Our Charter does not provide a specified maximum redemption threshold, except that in no event will we redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (such that we are not subject to the SEC’s “penny stock” rules). As a result, we may be able to complete the Business Combination even though a substantial majority of our public stockholders do not agree with the transaction and have redeemed their shares or have entered into privately negotiated agreements to sell their shares to our Sponsor, officers, directors, advisors or any of their respective affiliates. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed Business Combination exceed the aggregate amount of cash available to us, we will not complete the Business Combination or redeem any shares, all shares of Class A common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate Business Combination.
Our stockholders will have a reduced ownership and voting interests after the Business Combination and will exercise less influence over management.
Upon the issuance of the shares of Class A common stock to the ChargePoint stockholders and the investors in the PIPE Financing, current holders of our common stock will be diluted. Following the consummation of the Business Combination and the PIPE Financing, current holders of our common stock would own 13.7% of New ChargePoint.
The market price of shares of Class A common stock after the Business Combination may be affected by factors different from those currently affecting the price of shares of Class A common stock.
Upon completion of the Business Combination, ChargePoint stockholders will become holders of Class A common stock. Prior to the Business Combination, Switchback has limited operations. Upon completion of the Business Combination, Switchback’s results of operations will depend upon the performance of the ChargePoint business, which is affected by factors that are different from those currently affecting the results of operations of Switchback.
The Business Combination or post-combination company may be materially adversely affected by the recent COVID-19 outbreak.
In December 2019, COVID-19 was reported to have surfaced in Wuhan, China. COVID-19 has and is continuing to spread throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization (“WHO”) declared the outbreak of COVID-19 a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II
declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020, the WHO characterized the outbreak as a “pandemic.” The COVID-19 outbreak has resulted, and a significant outbreak of other infectious diseases could result, in a widespread health crisis that could adversely affect the economies and financial markets worldwide. Additionally, our ability to consummate the Business Combination may be materially adversely affected due to significant governmental measures being implemented to contain the outbreak of COVID-19 or its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit our ability to have meetings with potential investors or affect the ability of ChargePoint’s personnel, vendors and service providers to negotiate and consummate the Business Combination in a timely manner. The extent to which COVID-19 impacts the Business Combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, our ability to consummate the Business Combination may be materially adversely affected.
Not applicable.
Our executive offices areat 5949 Sherry Lane, Suite 1010, Dallas, TX 75225. The cost for our usein Campbell, California, and consists of approximately 72,000 square feet of office space under leases that expire on August 31, 2029. ChargePoint believes this space is includedsufficient to meet its needs for the foreseeable future and that any additional space ChargePoint may require will be available on commercially reasonable terms. ChargePoint also leases facilities in Amsterdam, the Netherlands; Gurgaon, India; Radstadt, Austria and Reading, United Kingdom; Scottsdale, Arizona and San Jose, California; as well as smaller sales offices in the $10,000 per month fee we pay to our Sponsor for office space, utilities, secretarial supportUnited States and administrative services. We consider our current office space adequate for our current operations.Europe.
On October 29, 2020, a putative class action lawsuit was filed in the Supreme Court of the State of New York by a purported Switchback stockholder in connection with the Business Combination: Bulsa v. Switchback Energy Acquisition Corporation, et al., Index No. 655800/2020 (Sup. Ct. N.Y. Cnty.) (the “Bulsa Complaint”). Separately, on November 6, 2020, a putative class action lawsuit was filed in the Supreme Court of the State of New York by a different purported Switchback stockholder in connection with the Business Combination: Bushansky v. Switchback Energy Acquisition Corporation, et al., Index No. 656119/2020 (Sup. Ct. N.Y. Cnty.) (together with the Bulsa Complaint, the “Putative Class Action Complaints”). Additionally, on December 15, 2020, a complaint was filed in the United States District Court for the Southern District of New York by a purported Switchback stockholder in connection with the Business Combination: Ward v. Switchback Energy Acquisition Corporation, et al., Case No. 1:20-cv-10577 (S.D.N.Y.) (the “Federal Complaint”). On December 16, 2020, a separate complaint was filed in the Supreme Court of the State of New York by a purported Switchback stockholder in connection with the Business Combination: Baker v. Switchback Energy Acquisition Corporation, et al., Index No. 657063/2020 (Sup. Ct. N.Y. Cnty.) (together with the Federal Complaint and the Putative Class Action Complaints, the “Complaints”). The Complaints name Switchback and current members of our board of directors as defendants. The Complaints allege, among other things, breach of fiduciary duty claims against our board of directors in connection with the Business Combination. The Complaints also allege that the proxy statement/prospectus/consent solicitation statement related to the Business Combination is materially misleading and/or omits material information concerning the Business Combination, including,Federal Complaint,accompanying notes to the consolidated financial statements included in violationPart II, Item 8, “Financial Statements and Supplementary Data” of Sections 14(a) and 20(a)this Annual Report on Form 10-K, under “Legal Proceedings” which is incorporated herein by reference.
Our Units began trading on the NYSE for Common Stock“SBE.U”“CHPT” and is listed on July 26, 2019. Commencingthe New York Stock Exchange (NYSE).September 16, 2019, holders of the Units could electits Common Stock and has no plans to separately trade the shares of Class A common stock and Public Warrants includeddo so in the Units. The sharesforeseeable future.Class A common stock and Public Warrants that are separated trade on the NYSE under the symbols “SBE” and “SBE WS,” respectively. Those Units not separated continue to trade on the NYSE under the symbol “SBE.U.”HoldersAt February 3, 2021,Common Stockholderstwoapproximately 318 holders of record of our Units, one holderChargePoint’s Common Stock. The actual number of stockholders is greater than this number of record of our Class A common stock, four holders of record of our Class B common stock, one holder of record of our Public Warrants and one holder of record of our Private Placement Warrants.Securities Authorized for Issuance Under Equity Compensation PlansNone.Recent includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.Securities;Equity Securities and Use of Proceeds from Registered OfferingsUnregistered SalesOn May 16, 2019, our Sponsor purchased an aggregate8,625,000 Founder Shares for $25,000, or approximately $0.003 per share. The Founder Shares will automatically convert into shares of our Class A common stock at the time of our initial business combination. On July 25, 2019, our Sponsor transferred an aggregate of 80,000 Founder Shares to our independent directors at their original purchase price. In September 2019, our Sponsor forfeited an aggregate of 772,059 Founder Shares. The Founder Shares were issued in connection with our organization pursuant to the exemption from registration contained in Section 4(a)(2)18 of the Securities Act.Simultaneously withExchange Act, or incorporated by reference into any of ChargePoint Holdings, Inc.'s other filings under the consummation of our Public Offering, our Sponsor purchased from the Company an aggregate of 5,333,333 Private Placement Warrants at a price of $1.50 per Private Placement Warrant (for a purchase price of approximately $8.0 million). In addition, simultaneously with the closing of the sale of the Over-allotment Units, we consummated the sale of an additional 188,235 Private Placement Warrants in a private placement to our Sponsor, generating gross proceeds of approximately $282,000. Each Private Placement Warrant entitles the holder thereof to purchase one share of our Class A common stock at an exercise price of $11.50 per share. The sales of the Private Placement Warrants were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.Use of ProceedsOn July 30, 2019, we consummated the Public Offering of 30,000,000 Units. The Units were sold at a price of $10.00 per Unit, generating gross proceeds of $300.0 million. Certain of our officers and directors purchased 200,000 of the 30,000,000 Units sold in the Public Offering for an aggregate purchase price of $2.0 million. The underwriters were granted a 45-day option from the date of the final prospectus relating to the Public Offering to purchase up to 4,500,000 additional Units to cover over-allotments, if any, at $10.00 per Unit, less underwriting discounts and commissions. On September 4, 2019, the underwriters partially exercised the over-allotment option and, on September 6, 2019, the underwriters purchased 1,411,763 of the Over-allotment Units, generating gross proceeds of approximately $14.1 million. The over-allotment option subsequently expired.
On July 30, 2019, simultaneously with the closing of the Public Offering, we completed the private sale of 5,333,333 Private Placement Warrants at a purchase price of $1.50 per Private Placement Warrant to our Sponsor, generating gross proceeds of approximately $8.0 million. Simultaneously with the closing of the sale of the Over-allotment Units, we completed the private sale of an additional 188,235 Private Placement Warrants at a purchase price of $1.50 per Private Placement Warrant to our Sponsor, generating gross proceeds of approximately $282,000.
Goldman Sachs & Co. LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, RBC Capital Markets, LLC and Tudor, Pickering, Holt & Co. Securities, Inc. served as underwriters for the Public Offering. The securities sold in the Public Offering were registered underExchange Act or the Securities Act on a registration statement on Form S-1 (File No. 333-232501) (the “IPO Registration Statement”). The SEC declared the IPO Registration Statement effective on July 25, 2019.
From May 10, 2019 (inception) through December 31, 2019, we incurred approximately $17.7 million for costs and expenses relatedof 1933, as amended, except to the Public Offering, including an up-front fee of approximately $6.24 million in underwriting discounts and commissions and approximately $10.9 million in deferred underwriting discounts and commissions, which amount will be payable upon consummation of our initial business combination. Prior toextent ChargePoint specifically incorporates it by reference into such filing.
After deducting the underwriting discounts and commissions (excluding the deferred portion of approximately $10.9 million, which amount will be payable upon consummation of our initial business combination) and offering expenses, the total net proceeds from the Public OfferingS&P Application Software index, and the saleS&P 500 Technology Hardware, Storage & Peripherals index. The graph tracks the performance of a $100 investment in ChargePoint's Common Stock and in each index (with the Private Placement Warrants were approximately $315.1 million,reinvestment of which approximately $314.1 million (or $10.00 per share soldall dividends) from September 16, 2019 to January 31, 2023.
this graph is not necessarily indicative of future price performance.
Company/Index | September 16, 2019 | January 31, 2020 | January 31, 2021 | January 31, 2022 | January 31, 2023 | ||||||||||||
ChargePoint Holdings, Inc. | $ | 100.00 | $ | 102.46 | $ | 389.96 | $ | 141.91 | $ | 124.39 | |||||||
S&P Midcap 400 | $ | 100.00 | $ | 107.46 | $ | 127.30 | $ | 145.19 | $ | 148.59 | |||||||
S&P Application Software | $ | 100.00 | $ | 117.05 | $ | 154.77 | $ | 174.16 | $ | 137.81 | |||||||
S&P 500 Technology Hardware, Storage & Peripherals | $ | 100.00 | $ | 137.68 | $ | 230.27 | $ | 307.62 | $ | 269.95 |
We are a smaller reporting company as defined in Rule 12b-2 under the Exchange Act. As a result, pursuant to Item 301(c) of Regulation S-K, we are not required to provide the information required by this Item.
Operations.
Overview
We are a blank check company incorporatedAnnual Report on Form 10-K. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. ChargePoint’s actual results may differ materially from those anticipated in Delaware on May 10, 2019 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Although we are not limited to a particular industry or sector for purposes of consummating our initial business combination, we intend to focus our search for a target business in the energy industry in North America. Our sponsor is NGP Switchback, LLC, a Delaware limited liability company.
The Registration Statement for the Public Offering was declared effective on July 25, 2019. On July 30, 2019, we consummated the Public Offering of 30,000,000 units at $10.00 per Unit, generating gross proceeds of $300.0 million, and incurring offering costs of approximately $17.7 million, inclusive of $10.9 million in deferred underwriting commissions. Certain of our officers and directors purchased 200,000 (the “Affiliated Units”) of the 30,000,000 Units sold in the Public Offering for an aggregate purchase price of $2.0 million. The
underwriters were granted a 45-day option from the date of the final prospectus relating to the Public Offering to purchase up to 4,500,000 additional Units to cover over-allotments, if any, at $10.00 per Unit, less underwriting discounts and commissions. On September 4, 2019, the underwriters partially exercised the over-allotment option and, on September 6, 2019, the underwriters purchased an additional 1,411,763 units, generating gross proceeds of approximately $14.1 million. The remaining over-allotment option subsequently expired.
Simultaneously with the closing of the Public Offering, we consummated the Private Placement of 5,333,333 Private Placement Warrants at a price of $1.50 per Private Placement Warrant in a private placement to our Sponsor, generating gross proceeds of approximately $8.0 million. Simultaneously with the closing of the sale of the Over-allotment Units, our Sponsor purchased an additional 188,235 Private Placement Warrants at a price of $1.50 per Private Placement Warrant, generating gross proceeds of approximately $282,000.
Approximately $314.1 million ($10.00 per Unit) of the net proceeds of the Public Offering (including the Over-allotment Units) and certain of the proceeds of the Private Placement was placed in the Trust Account located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government securities,” within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in money market funds meeting the conditions of paragraphs (d)(1), (d)(2), (d)(3) and (d)(4) of Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of our initial business combination and (ii) the distribution of the Trust Account as described below.
If we are unable to complete an initial business combination within 24 months from the closing of the Public Offering, or July 30, 2021, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then-outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and its board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
Results of Operations
Our only activities from inception through December 31, 2020 related to our formation and the Public Offering, and, since the closing of the Public Offering, the search for a prospective initial business combination. We expect to incur increased expensesthese forward-looking statements as a result of beingvarious factors, including those set forth under “Risk Factors” included under Part I, Item 1 A.
For the Year Ended January 31, | Change | ||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2021 | 2023 vs 2022 | 2022 vs 2021 | |||||||||||||||||||||||||||||||||||||
(dollar amounts in thousands, except percentages) | Change ($) | Change (%) | Change ($) | Change (%) | |||||||||||||||||||||||||||||||||||||
Networked Charging Systems | $ | 363,622 | $ | 173,850 | $ | 91,893 | $ | 189,772 | 109.2 | % | $ | 81,957 | 89.2 | % | |||||||||||||||||||||||||||
Percentage of total revenue | 77.7 | % | 72.1 | % | 62.7 | % |
For the Year Ended January 31, | Change | ||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2021 | 2023 vs 2022 | 2022 vs 2021 | |||||||||||||||||||||||||||||||||||||
(dollar amounts in thousands, except percentages) | Change ($) | Change (%) | Change ($) | Change (%) | |||||||||||||||||||||||||||||||||||||
Subscriptions | $ | 85,296 | $ | 53,512 | $ | 40,563 | $ | 31,784 | 59.4 | % | $ | 12,949 | 31.9 | % | |||||||||||||||||||||||||||
Percentage of total revenue | 18.2 | % | 22.2 | % | 27.7 | % |
For the Year Ended January 31, | Change | ||||||||||||||||||||||||||||||||||||||||
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(dollar amounts in thousands, except percentages) | Change ($) | Change (%) | Change ($) | Change (%) | |||||||||||||||||||||||||||||||||||||
Other revenue | $ | 19,176 | $ | 13,644 | $ | 14,034 | $ | 5,532 | 40.5 | % | $ | (390) | (2.8) | % | |||||||||||||||||||||||||||
Percentage of total revenue | 4.1 | % | 5.7 | % | 9.6 | % |
For the Year Ended January 31, | Change | ||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2021 | 2023 vs 2022 | 2022 vs 2021 | |||||||||||||||||||||||||||||||||||||
(dollar amounts in thousands, except percentages) | Change ($) | Change (%) | Change ($) | Change (%) | |||||||||||||||||||||||||||||||||||||
Cost of Networked Charging Systems revenue | $ | 318,628 | $ | 147,313 | $ | 87,083 | $ | 171,315 | 116.3 | % | $ | 60,230 | 69.2 | % | |||||||||||||||||||||||||||
Percentage of total revenue | 68.1 | % | 61.1 | % | 59.4 | % |
For theNetworked Charging Systems delivered.
For the Year Ended January 31, | Change | ||||||||||||||||||||||||||||||||||||||||
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(dollar amounts in thousands, except percentages) | Change ($) | Change (%) | Change ($) | Change (%) | |||||||||||||||||||||||||||||||||||||
Cost of Subscriptions revenue | $ | 51,416 | $ | 31,190 | $ | 20,385 | $ | 20,226 | 64.8 | % | $ | 10,805 | 53.0 | % | |||||||||||||||||||||||||||
Percentage of total revenue | 11.0 | % | 12.9 | % | 13.9 | % |
For the Year Ended January 31, | Change | ||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2021 | 2023 vs 2022 | 2022 vs 2021 | |||||||||||||||||||||||||||||||||||||
(dollar amounts in thousands, except percentages) | Change ($) | Change (%) | Change ($) | Change (%) | |||||||||||||||||||||||||||||||||||||
Cost of Other Revenue | $ | 12,117 | $ | 8,970 | $ | 6,073 | $ | 3,147 | 35.1 | % | $ | 2,897 | 47.7 | % | |||||||||||||||||||||||||||
Percentage of total revenue | 2.6 | % | 3.7 | % | 4.1 | % |
For the Year Ended January 31, | Change | ||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2021 | 2023 vs 2022 | 2022 vs 2021 | |||||||||||||||||||||||||||||||||||||
(dollar amounts in thousands, except percentages) | Change ($) | Change (%) | Change ($) | Change (%) | |||||||||||||||||||||||||||||||||||||
Gross Profit | $ | 85,933 | $ | 53,533 | $ | 32,949 | $ | 32,400 | 60.5 | % | $ | 20,584 | 62.5 | % | |||||||||||||||||||||||||||
Gross Margin | 18.4 | % | 22.2 | % | 22.5 | % |
For the Year Ended January 31, | Change | ||||||||||||||||||||||||||||||||||||||||
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(dollar amounts in thousands, except percentages) | Change ($) | Change (%) | Change ($) | Change (%) | |||||||||||||||||||||||||||||||||||||
Research and Development Expenses | $ | 194,957 | $ | 145,043 | $ | 75,017 | $ | 49,914 | 34.4 | % | $ | 70,026 | 93.3 | % | |||||||||||||||||||||||||||
Percentage of total revenue | 41.6 | % | 60.2 | % | 51.2 | % |
For the Year Ended January 31, | Change | ||||||||||||||||||||||||||||||||||||||||
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(dollar amounts in thousands, except percentages) | Change ($) | Change (%) | Change ($) | Change (%) | |||||||||||||||||||||||||||||||||||||
Sales and marketing expenses | $ | 142,392 | $ | 92,550 | $ | 53,002 | $ | 49,842 | 53.9 | % | $ | 39,548 | 74.6 | % | |||||||||||||||||||||||||||
Percentage of total revenue | 30.4 | % | 38.4 | % | 36.2 | % |
For the Year Ended January 31, | Change | ||||||||||||||||||||||||||||||||||||||||
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(dollar amounts in thousands, except percentages) | Change ($) | Change (%) | Change ($) | Change (%) | |||||||||||||||||||||||||||||||||||||
General and administrative expenses | $ | 90,366 | $ | 81,380 | $ | 25,922 | $ | 8,986 | 11.0 | % | $ | 55,458 | 213.9 | % | |||||||||||||||||||||||||||
Percentage of total revenue | 19.3 | % | 33.8 | % | 17.7 | % |
For the Year Ended January 31, | Change | ||||||||||||||||||||||||||||||||||||||||
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(dollar amounts in thousands, except percentages) | Change ($) | Change (%) | Change ($) | Change (%) | |||||||||||||||||||||||||||||||||||||
Interest income | $ | 5,534 | $ | 98 | $ | 315 | $ | 5,436 | 5546.9 | % | $ | (217) | (68.9) | % | |||||||||||||||||||||||||||
Percentage of total revenue | 1.2 | % | — | % | 0.2 | % |
For the Year Ended January 31, | Change | ||||||||||||||||||||||||||||||||||||||||
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(dollar amounts in thousands, except percentages) | Change ($) | Change (%) | Change ($) | Change (%) | |||||||||||||||||||||||||||||||||||||
Interest expense | $ | (9,434) | $ | (1,502) | $ | (3,253) | $ | (7,932) | 528.1 | % | $ | 1,751 | (53.8) | % | |||||||||||||||||||||||||||
Percentage of total revenue | (2.0) | % | (0.6) | % | (2.2) | % |
For the period from May 10, 2019 (inception) through December 31, 2019, we had net loss of approximately $499,000, which consisted of approximately $935,000 in general and administrative expenses, $88,000 in franchise tax expense, approximately $319,000 in allocated expense for warrant issuance cost, approximately $960,000 of change in fair value of warrant liability, and approximately $479,000 in income tax expense, partially offset by approximately $2.3 million of gain, dividends and interest on marketable securities held in Trust Account.
Proposed Business Combination
On September 23, 2020, we entered into the Business Combination Agreement with Merger Sub and ChargePoint. Pursuant to the Business Combination Agreement, among other things, Merger Sub will be merged with and into ChargePoint, with ChargePoint surviving the Merger as a wholly owned subsidiary of the Company. For more information regarding the Proposed Transactions, please refer to our proxy statement, prospectus and consent solicitation statement filed with the Securities and Exchange Commission on January 8, 2021.
Contractual Obligations
Registration Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any, and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares will be entitled to registration rights pursuant to a registration rights agreement. These holders will be entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. We will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
Except for the Affiliated Units, the underwriters were entitled to an underwriting discount of $0.20 per unit, or $5.96 million in the aggregate, paid upon closing of the Public Offering. An additional fee of approximately $282,000 in the aggregate was due in connection with the closing of the sale of the Over-allotment Units.
In addition, $0.35 per unit (but not including the Affiliated Units), or approximately $10.9 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a business combination, subject to the terms of the underwriting agreement.
Administrative Services Agreement
Commencing on the date that our securities were first listed on the NYSE and continuing until the earlier of our consummation of an initial business combination or our liquidation, we have agreed to pay our Sponsor a total of $10,000 per month for office space, utilities, secretarial support and administrative services. We recorded an aggregate of $120,000 and $50,000 for the year ended December 31, 2020 and for the period from May 10, 2019 (inception) through December 31, 2019, respectively, in general and administrative expenses in connection with the related agreement in the accompanying consolidated statements of operations.
As of December 31, 2020, there were an aggregate of approximately $76,000 in related party accrued expenses.
Critical Accounting Policies
Shares of Class A Common Stock Subject to Possible Redemption
Shares of our Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable shares of our Class A common stock (including shares of our Class A common stock that feature 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) are classified as temporary equity. At all other times, shares of our Class A common stock are classified as stockholders’ equity. Shares of our Class A common stock feature certain redemption rights that are considered
to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, as of December 31, 2020 and 2019, 0 and 29,088,452 shares of our Class A common stock subject to possible redemption, respectively, are presented as temporary equity, outside of the stockholders’ equity (deficit) section of the Company’s consolidated balance sheets.
Net Income (Loss) Per Share of Common Stock
Net income (loss) per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the periods.
We have not considered the effect of the Public Warrants sold in the Public Offering (including the consummation of the over-allotment) and Private Placement to purchase an aggregate of 15,992,155 shares of our Class A common stock in the calculation of diluted income per share, since their inclusion would be anti-dilutive under the treasury stock method.
Our consolidated statements of operations include a presentation of income per share for common stock subject to redemption in a manner similar to the two-class method of income per share. Net income per share, basic and diluted for our Class A common stock for year ended December 31, 2020 is calculated by dividing (i) the gain on marketable securities, dividends and interest held in Trust Account of approximately $1.2 million, net of applicable taxes and funds available to be withdrawn from the Trust Account for franchise and income tax obligations of approximately $401,000, resulting in an aggregate of approximately $758,000, by (ii) the weighted average number of shares of our Class A common stock outstanding for the period of 31,411,763 shares. Net loss per share, basic and diluted for our Class B common stock for the year ended December 31, 2020 is calculated by dividing (i) the net loss of approximately $315.3 million, less income attributable to public shares of approximately $758,000, resulting in a net loss of approximately $316.1 million, by (ii) the weighted average number of shares of our Class B common stock outstanding for the period of 7,852,941 shares.
Net income per share, basic and diluted for our Class A common stock for the period from May 10, 2019 (inception) through December 31, 2019 is calculated by dividing (i) the gain on marketable securities, dividends and interest held in Trust Account of approximately $2.3 million, net of applicable taxes and funds available to be withdrawn from the Trust Account for franchise and income tax obligations of approximately $567,000, resulting in an aggregate of approximately $1.7 million, by (ii) the weighted average number of shares of our Class A common stock outstanding for the period of 31,092,978 shares. Net loss per share, basic and diluted for our Class B common stock for the period from May 10, 2019 (inception) through December 31, 2019 is calculated by dividing (i) the net loss of approximately $499,000, less income attributable to public shares of approximately $1.7 million, resulting in a net loss of approximately $2.2 million, by (ii) the weighted average number of shares of our Class B common stock outstanding for the period of 7,852,941 shares.
Warrant Liability
We account for liability-classified warrants as derivative instruments. Liability-classified warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a change in fair value of warrant liabilities expense on the statement of operations. The Company will continue to adjust ChargePoint adjusts the liability for changes in fair value until the earlier of the exercise or expiration of the warrants. Upon settlement,warrants and conversion of redeemable convertible preferred stock into Common Stock. Common stock warrant liabilities consisted of Public Warrants and private placement warrants issued to NGP Switchback, LLC (“Private Placement Warrants”) which ChargePoint assumed in connection with the warrant liability will be reclassifiedMerger and which were subject to additional paid-in capital.remeasurement to fair value at each balance sheet date. As of April 30, 2022, all Public Warrants and Private Placement Warrants had been exercised or redeemed. The Company recorded a $9.2 million change in fair value of redeemable convertible preferred stock warrant liability and $47.8 million change in fair value in assumed common stock warrant liabilities during the fiscal year ended January 31, 2022. As of January 31, 2023, ChargePoint had no outstanding warrant liabilities.
Year Ended January 31, | Year-over-Year Change | ||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2021 | 2023 to 2022 | 2022 to 2021 | |||||||||||||||||||||||||||||||||||||
(dollar amounts in thousands, except percentages) | Change ($) | Change (%) | Change ($) | Change (%) | |||||||||||||||||||||||||||||||||||||
Other income (expense), net | $ | (1,569) | $ | (2,775) | $ | 229 | $ | 1,206 | (43.5) | % | $ | (3,004) | (1311.8) | % | |||||||||||||||||||||||||||
Percentage of total revenue | (0.3) | % | (1.2) | % | 0.2 | % |
Year Ended January 31, | Year-over-Year Change | ||||||||||||||||||||||||||||||||||||||||
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(dollar amounts in thousands, except percentages) | Change ($) | Change (%) | Change ($) | Change (%) | |||||||||||||||||||||||||||||||||||||
Provision (benefit) for income taxes | $ | (2,167) | $ | (2,930) | $ | 198 | $ | 763 | (26.0) | % | $ | (3,128) | (1579.8) | % | |||||||||||||||||||||||||||
Percentage of loss before provision (benefit) for income taxes | 0.6 | % | 2.2 | % | (0.1) | % |
Year Ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
(in thousands) | |||||||||||||||||
Net cash (used in) provided by: | |||||||||||||||||
Operating activities | $ | (267,049) | $ | (157,178) | $ | (91,846) | |||||||||||
Investing activities | (126,154) | (221,740) | 35,530 | ||||||||||||||
Financing activities | 372,859 | 549,687 | 128,913 | ||||||||||||||
Effects of exchange rates on cash, cash equivalents, and restricted cash | (729) | (1,025) | 141 | ||||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | (21,073) | $ | 169,744 | $ | 72,738 |
Recent Accounting Pronouncements
We do not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material impact on our financial statements.
Off-Balance Sheet Arrangements
As
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” under the JOBS Act and are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We elected to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our consolidated financial statements may not be comparable to companies that comply with new or revisedincluded elsewhere in this Annual Report on Form 10-K for more information regarding recently issued accounting pronouncements as of public company effective dates.
As an “emerging growth company,” we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose comparisons of the Chief Executive Officer’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Public Offering or until we otherwise no longer qualify as an “emerging growth company.”
We are a smaller reporting company as definedRule 12b-2 under the Exchange Act. As a result, pursuant to Item 305(e)interest rates. ChargePoint had cash, cash equivalents and restricted cash totaling $294.6 million and short-term investments of Regulation S-K, we are not required to provide the information required by this Item.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures (Restated).
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.
On February 10, 2021, we filed the Original Filing. At that time, 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$105.0 million as of DecemberJanuary 31, 2020. Based upon this evaluation, our Chief Executive Officer2023. Cash equivalents were invested primarily in money market funds. ChargePoint’s investment policy is focused on the preservation of capital and Chief Financial Officer had concluded that our disclosure controls and procedures (as definedsupporting its liquidity needs. Under the policy, ChargePoint invests in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective. Subsequently, and as a result of the material weakness in our internal control over financial reporting as described below, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2020 to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in rules and forms of the SEC.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effectedhighly rated securities, issued by the Company’s board of directors, managementU.S. government, and other personnel, to provide reasonable assurance regarding the reliability ofshort durations or liquid money market funds. ChargePoint does not invest in financial reporting and the preparation ofinstruments for trading or speculative purposes, nor does it use leveraged financial statements forinstruments. ChargePoint utilizes external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
pertaininvestment managers who adhere to the maintenanceguidelines of records thatits investment policy. A hypothetical 10% change in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that couldinterest rates would not have a material effectimpact on the financial statements.
Under
Subsequent to performing that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that we did not maintain effective internal control over financial reporting as
of December 31, 2020, due to a material weakness in internal control over financial reporting related to mistakes in the accounting for the Warrants. Notwithstanding this material weakness, which is further described below, management has concluded that our audited consolidated financial statements included in this Form 10-K/these currencies can impact ChargePoint’s net loss. A are fairly statedhypothetical decrease in all material respects in accordance withforeign currencies against the U.S. GAAP for eachdollar of the years and periods presented herein.
Our internal control over financial reporting did10% would not result in the proper classification of the Warrants, which, due to its impacta material foreign currency loss on the Company’s audited consolidated financial statementsforeign-denominated balances, as of DecemberJanuary 31, 2020 and 2019, for the2023. There was no material change in ChargePoint’s foreign currency risk during fiscal year ended DecemberJanuary 31, 2020 and for the period from May 10, 2019 (inception) through December2023 compared to fiscal year ended January 31, 2019, we determined2022.
Our remediation plan can only be accomplished over time and will be continually reviewed to determine that it is achieving its objectives. We can offer no assurance that these initiatives will ultimately have the intended effects.
Changes in Internal Control Over Financial Reporting
During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, as the circumstances that led to the restatement of our consolidated financial statements described in this Form 10-K/A had not yet been identified.
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Our current officers and directors are as follows:
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Scott McNeill has been our Chief Executive Officer and Chief Financial Officer and a member of our board of directors since May 2019. Mr. McNeill co-founded and has served as Co-Chief Executive Officer of Switchback II Corporation since December 2020 and as a member of its board of directors since October 2020. Mr. McNeill served as Chief Financial Officer of RSP Permian, Inc. (“RSP”) from April 2013 through the completion of its acquisition by Concho Resources, Inc. (“Concho”) in July 2018. Mr. McNeill also served as a member of the board of directors of RSP from December 2013 through July 2018. Before joining RSP, Mr. McNeill served as a managing director in the energy investment banking group of Raymond James Financial, Inc., advising companies operating in the exploration and production, midstream, and energy service and equipment segments of the energy industry. Mr. McNeill holds a B.B.A. from Baylor University and an M.B.A. from The University of Texas at Austin and is a certified public accountant in the State of Texas.
We believe Mr. McNeill’s extensive knowledge of the energy industry, as well as his substantial business, leadership and management experience, including serving as the chief financial officer and a member of the board of directors of a publicly traded company, brings important and valuable skills to our board of directors.
Jim Mutrie has been our Chief Commercial Officer, General Counsel and Secretary and a member of our board of directors since May 2019. Mr. Mutrie co-founded and has served as Co-Chief Executive Officer of Switchback II Corporation since December 2020 and as a member of its board of directors since October 2020. Mr. Mutrie served as RSP’s Vice President, General Counsel and Corporate Secretary from June 2014 through the completion of the acquisition of RSP by Concho in July 2018. While at RSP, Mr. Mutrie was a board member of the Texas Oil and Gas Association, the largest and oldest group in Texas representing petroleum interests. Prior to RSP, Mr. Mutrie served as General Counsel and Compliance Officer at United Surgical Partners International (NASDAQ: USPI). From October 2003 to January 2007, Mr. Mutrie practiced corporate law at Vinson & Elkins L.L.P., representing public and private companies in M&A transactions and capital market offerings, predominantly in the oil and gas industry. Mr. Mutrie holds a B.A. from Cornell University, a J.D. from Northwestern University School of Law, a Certificate in Financial Management from Cornell University and a Certificate in Financial Skills for The Energy Industry from SMU Cox School of Business, Executive Education.
We believe Mr. Mutrie’s extensive experience in managing public company M&A and financing transactions, as well as his extensive knowledge of the energy industry, brings important and valuable skills to our board of directors.
Josh Rosinski has been our Chief Operating Officer since May 2019. Mr. Rosinski joined RSP in September 2014 and served as RSP’s Vice President of Reservoir Engineering from February 2017 through the
completion of RSP’s acquisition by Concho in July 2018. Prior to RSP, Josh served as Vice President of Engineering at Simmons & Co. in the upstream advisory group where he directed engineering valuations supporting transactions across a variety of basins across the continental United States. Prior to Simmons & Co., Mr. Rosinski managed and implemented completion engineering operations in the East Texas Haynesville asset for Exco Resources. Mr. Rosinski began his career at Devon Energy in Houston and worked in multiple operational, reservoir, and corporate engineering functions throughout Texas and Louisiana assets. Mr. Rosinski graduated from Texas A&M University with a B.S. in Petroleum Engineering.
Chris Carter has been a member of our board of directors since May 2019. Mr. Carter has been a member of the board of directors of Switchback II Corporation since December 2020. Mr. Carter joined NGP in 2004 and currently serves as Managing Partner and as a director of certain private NGP portfolio companies. Prior to joining NGP, Mr. Carter was an analyst with Deutsche Bank’s Energy Investment Banking group in Houston, where he focused on financing and merger and acquisition transactions in the oil and gas and oilfield services industries. Mr. Carter served on the board of directors of PennTex Midstream GP, LLC from June 2015 to November 2016 and on the board of directors of Parsley Energy, Inc. from December 2013 to January 2016. Mr. Carter also served on the board of directors of Rice Energy, Inc. from October 2013 to November 2014. Mr. Carter received a B.B.A. and an M.P.A. in Accounting, summa cum laude, in 2002 from The University of Texas at Austin, where he was a member of the Business Honors Program. He received an M.B.A. in 2008 from Stanford University, where he graduated as an Arjay Miller Scholar.
We believe that Mr. Carter’s considerable experience with financing and merger and acquisition transactions in the energy industry, as well as his experience on the boards of several public and private energy companies, bring important and valuable skills to our board of directors.
Scott Gieselman has been a member of our board of directors since May 2019. Mr. Gieselman has been a member of the board of directors of Switchback II Corporation since December 2020. Mr. Gieselman has served as a Partner for NGP since April 2007. Mr. Gieselman serves as a director of certain private NGP portfolio companies. Prior to joining NGP, Mr. Gieselman worked in various positions in the investment banking energy group of Goldman Sachs & Co. LLC, where he became a partner in 2002. He has served on the board of directors of HighPoint Resources Corporation since March 2018 and on the board of directors of Chesapeake Energy Corporation since May 2019. Mr. Gieselman served on the board of directors of WildHorse Resource Development Corporation from September 2016 until it was acquired by Chesapeake Energy Corporation in February 2019. Mr. Gieselman also served as a member of the board of directors of Rice Energy, Inc. from January 2014 to April 2017 and was a member of the board of directors of Memorial Resource Development Corp. from its formation until it was acquired by Range Resources Corporation in September 2016. In addition, Mr. Gieselman served as a member of the board of directors of Memorial Production Partners GP LLC from December 2011 to March 2016. Mr. Gieselman received a B.S. in 1985 and an M.B.A. in 1988 from Boston College.
We believe that Mr. Gieselman’s considerable financial and energy investment banking experience, as well as his experience on the boards of several public and private energy companies, bring important and valuable skills to our board of directors.
Sam Stoutner has been a member of our board of directors since May 2019. Mr. Stoutner has been a member of the board of directors of Switchback II Corporation since December 2020. Mr. Stoutner joined NGP in 2011 and currently serves as Principal and as a director of certain private NGP portfolio companies. Prior to joining NGP, Mr. Stoutner was an investment banking analyst with Madison Williams and Company’s Energy Investment Banking Group in Houston, where he focused on financing and merger and acquisition transactions in the oil and gas industry. Mr. Stoutner received a B.B.A. and M.P.A. in Accounting, summa cum laude, in 2010 from The University of Texas at Austin. He received an M.B.A. in 2016 from Stanford University.
We believe that Mr. Stoutner’s considerable experience with financing and merger and acquisition transactions in the energy industry, as well as his experience on the boards of several private energy companies, bring important and valuable skills to our board of directors.
Joseph Armes has been a member of our board of directors since July 2019. Mr. Armes has served as Chief Executive Officer and Chairman of the board of directors of CSW Industrials, Inc., a publicly traded industrial products company (“CSWI”), since September 2015, and as President of CSWI since February 2018. Prior to CSWI’s spin-off from Capital Southwest Corporation, a capital provider to middle market companies, in September 2015, Mr. Armes served as the Chief Executive Officer and President of Capital Southwest Corporation from June 2013 to September 2015 and Chairman of the board of directors of Capital Southwest Corporation from January 2014 to August 2017. From December 2013 until the completion of the acquisition of RSP by Concho in July 2018, Mr. Armes served as a board member and as audit committee chairman for RSP. Mr. Armes has a B.B.A. and M.B.A. from Baylor University, and a J.D. from Southern Methodist University’s Dedman School of Law.
We believe that Mr. Armes’s broad executive and board leadership experience, compliance and governance expertise, and extensive corporate development experience, bring important and valuable skills to our board of directors.
Zane Arrott has been a member of our board of directors since July 2019. Mr. Arrott served as Chief Operating Officer of RSP from its formation in 2013 until the completion of the acquisition of RSP by Concho in July 2018. Since 1995, Mr. Arrott has served as the Chief Operating Officer for Rising Star Energy Development Company, L.L.C. and continues to serve on the boards of Rising Star Energy Development Company, L.L.C. and Rising Star Petroleum, L.L.C. From 1982 to 1995, Mr. Arrott held several positions with Placid Oil Company and was elevated to General Manager of its Canadian Division in 1988. He has a B.S. in Petroleum Engineering from Texas Tech University.
We believe that Mr. Arrott’s extensive experience with reservoir engineering, production engineering, project economic forecasting and reserve acquisitions brings important and valuable skills to our board of directors.
Ray Kubis has been a member of our board of directors since July 2020. Mr. Kubis has been a member of the board of directors of Switchback II Corporation since January 2021. Mr. Kubis has served as a director of Gridtential, Energy Inc., an inventor and developer of battery technology (“Gridtential”), since October 2015 and as the Chairman of Gridtential since November 2016. From June 2013 to October 2015, Mr. Kubis served as President of ECO-BAT Technologies Limited, which collects, recycles and produces products to the battery, mining and other industries, and from June 2013 to January 2020, as a member of the board of directors. From March 2002 to January 2013, Mr. Kubis served as President—Europe, Middle East and Africa of EnerSys, a manufacturer, marketer and distributor of industrial batteries. From October 1998 to March 2002, Mr. Kubis served as Vice President, General Manager, for the Energy Storage Group of Invensys plc. He has also worked in senior leadership positions with Johnson Controls and Exide in the automotive battery industry. Mr. Kubis received his M.B.A. from The Wharton School of the University of Pennsylvania and his B.S. in Accounting from the University of Illinois.
We believe that Mr. Kubis’ extensive experience in various leadership roles throughout the transportation and industrial battery industries brings important and valuable skills to our board of directors.
Number and Terms of Office of Officers and Directors
We have eight directors. Our board of directors is divided into three classes, with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term. The term of office of the first class of directors, consisting of Scott
McNeill, Scott Gieselman and Joseph Armes, will expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of Sam Stoutner and Zane Arrott, will expire at the second annual meeting of stockholders. The term of office of the third class of directors, consisting of Jim Mutrie, Chris Carter and Ray Kubis, will expire at the third annual meeting of stockholders. We may not hold an annual meeting of stockholders until after we consummate our initial business combination.
Holders of our Founder Shares will have the right to elect all of our directors prior to consummation of our initial business combination and holders of our public shares will not have the right to vote on the election of directors during such time. These provisions of our amended and restated certificate of incorporation may only be amended if approved by a majority of at least 90% of our common stock voting at a stockholder meeting.
Approval of our initial business combination will require the affirmative vote of a majority of our board of directors, which must include a majority of our independent directors and each of the non-independent directors nominated by our Sponsor.
Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws provide that our officers may consist of a Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer, Vice Presidents, Secretary and such other offices as may be determined by the board of directors.
Committees of the Board of Directors
Our board of directors has three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee. Subject to phase-in rules and a limited exception, the rules of the NYSE and Rule 10A of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors. Subject to phase-in rules and a limited exception, the rules of the NYSE require that the compensation and nominating and corporate governance committees of a listed company be comprised solely of independent directors. The charter of each committee is available on our website.
Audit Committee
Our board of directors has established an audit committee of the board of directors. Joseph Armes, Zane Arrott and Ray Kubis serve as members of our audit committee. Under the NYSE listing standards and applicable SEC rules, we are required to have at least three members of the audit committee, all of whom must be independent. Joseph Armes, Zane Arrott and Ray Kubis are independent.
Joseph Armes serves as chair of the audit committee. Each member of the audit committee is financially literate and our board of directors has determined that Joseph Armes qualifies as an “audit committee financial expert” as defined in applicable SEC rules.
We have adopted an audit committee charter, which details the principal functions of the audit committee, including:
the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent registered public accounting firm engaged by us;
pre-approving all audit and permitted non-audit services to be provided by the independent auditors or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures;
reviewing and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their continued independence;
setting clear hiring policies for employees or former employees of the independent auditors;
setting clear policies for audit partner rotation in compliance with applicable laws and regulations;
obtaining and reviewing a report, at least annually, from the independent auditors describing (i) the independent auditor’s internal quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues;
reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and
reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.
Compensation Committee
Our board of directors has established a compensation committee of the board of directors. Joseph Armes and Zane Arrott serve as members of our compensation committee. Under the NYSE listing standards and applicable SEC rules, we are required to have at least two members of the compensation committee, all of whom must be independent. Joseph Armes and Zane Arrott are independent. Zane Arrott serves as chair of the compensation committee.
We have adopted a compensation committee charter, which details the principal functions of the compensation committee, including:
reviewing and approving on an annual basis the corporate goals and objectives relevant to our chief executive officer’s compensation, evaluating our chief executive officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our chief executive officer based on such evaluation;
reviewing and approving on an annual basis the compensation of all of our other officers;
reviewing on an annual basis our executive compensation policies and plans;
implementing and administering our incentive compensation equity-based remuneration plans;
assisting management in complying with our proxy statement and annual report disclosure requirements;
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;
if required, producing a report on executive compensation to be included in our annual proxy statement; and
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by the NYSE and the SEC.
Nominating and Corporate Governance Committee
Our board of directors has established a nominating and corporate governance committee of the board of directors. The members of our nominating and corporate governance committee are Joseph Armes and Zane Arrott. Joseph Armes serves as chair of the nominating and corporate governance committee.
The primary purposes of our nominating and corporate governance committee are to assist the board in:
identifying, screening and reviewing individuals qualified to serve as directors and recommending to the board of directors candidates for nomination for election at the annual meeting of stockholders or to fill vacancies on the board of directors;
developing, recommending to the board of directors and overseeing implementation of our corporate governance guidelines;
coordinating and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and management in the governance of the company; and
reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary.
The nominating and corporate governance committee is governed by a charter that complies with the rules of the NYSE.
Director Nominations
Our nominating and corporate governance committee will recommend to the board of directors candidates for nomination for election at the annual meeting of the stockholders. The board of directors will also consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed nominees to stand for election at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders). Our stockholders that wish to nominate a director for election to our board of directors should follow the procedures set forth in our bylaws.
We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, our board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders. Prior to our initial business combination, holders of our public shares will not have the right to recommend director candidates for nomination to our board of directors.
Code of Ethics and Committee Charters
We have adopted a Code of Ethics applicable to our directors, officers and employees. Our Code of Ethics, compensation, nominating and corporate governance and audit committee charters are available on our website, www.switchback-energy.com. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.
Conflicts of Interest
NGP manages several investment vehicles. NGP Funds and other NGP affiliates and portfolio companies may compete with us for acquisition opportunities. If these entities or companies decide to pursue any such opportunity, we may be precluded from procuring such opportunities. In addition, investment ideas generated within NGP may be suitable for both us and for a current or future NGP Fund or other portfolio company and
may be directed to such investment vehicle rather than to us. Neither NGP nor members of our board of directors who are also employed by NGP have any obligation to present us with any opportunity for a potential business combination of which they become aware. NGP and/or our management, in their capacities as partners, officers or managing directors of NGP or in their other endeavors, may be required to present potential business combinations to the related entities described above, current or future NGP Funds or portfolio companies, or third parties, before they present such opportunities to us.
Notwithstanding the foregoing, we may pursue an acquisition opportunity jointly with our Sponsor, or one or more other entities affiliated with NGP, including other NGP Funds, other NGP Fund portfolio companies, and/or one or more investors in the NGP Funds, which we refer to as an “Affiliated Joint Acquisition.” Such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by issuing to such entity a class of equity or equity-linked securities. Certain of our directors presently have, and any of our officers and directors in the future may have, additional fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity that is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such other entity. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our business combination. In addition, we may pursue an Affiliated Joint Acquisition opportunity with an entity to which an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by issuing to such entity a class of equity or equity-linked securities. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the Company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.
Investors and potential investors should also be aware of the following other potential conflicts of interest:
None of our officers or directors is required to commit his or her full time to our affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business activities.
In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the other entities with which they are then affiliated. Our management may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Our initial stockholders have agreed to waive their redemption rights with respect to any Founder Shares and any public shares held by them in connection with the consummation of our initial business combination. Additionally, our initial stockholders have agreed to waive their redemption rights with respect to any Founder Shares held by them if we fail to consummate our initial business combination within 24 months after the closing of our Public Offering. If we do not complete our initial business combination within such applicable time period, the proceeds of the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of our public shares, and the Private Placement Warrants will expire worthless. Furthermore, our initial stockholders have agreed not to transfer, assign or sell any Founder Shares held by them until one year after the date of the consummation of our initial business combination or earlier if, subsequent to our initial business combination, (i) the last sale price of our 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 our initial business combination or (ii) we consummate a subsequent liquidation, merger, stock exchange or other similar
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Our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination.
Our Sponsor, officers or directors may have a conflict of interest with respect to evaluating a business combination and financing arrangements as we may obtain loans from our Sponsor or an affiliate of our Sponsor or any of our officers or directors to finance transaction costs in connection with an intended initial business combination. Up to $1,500,000 of such loans may be convertible into warrants at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants, including as to exercise price, exercisability and exercise period.
The conflicts described above may not be resolved in our favor.
In general, officers and directors of a corporation incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:
the corporation could financially undertake the opportunity;
the opportunity is within the corporation’s line of business; and
it would not be fair to the Company and its stockholders for the opportunity not to be brought to the attention of the corporation.
Accordingly, as a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities. Furthermore, our amended and restated certificate of incorporation provides that the doctrine of corporate opportunity will not apply with respect to any of our officers or directors in circumstances where the application of the doctrine would conflict with any fiduciary duties or contractual obligations they may have.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our Sponsor, officers or directors or making the acquisition through a joint venture or other form of shared ownership with our Sponsor, officers or directors. In the event we seek to complete our initial business combination with a business combination target that is affiliated with our Sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm which is a member of the Financial Industry Regulatory Authority (“FINRA”) or from an independent accounting firm that such initial business combination is fair to the Company from a financial point of view. We are not required to obtain such an opinion in any other context. Furthermore, in no event will our Sponsor or any of our existing officers or directors, or any of their respective affiliates, be paid by the Company any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the completion of our initial business combination. Further, we pay an amount equal to $10,000 per month to our Sponsor for office space, utilities, secretarial support and administrative services provided to us.
We cannot assure you that any of the above mentioned conflicts will be resolved in our favor.
In the event that we submit our initial business combination to our public stockholders for a vote, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are
voted in favor of the initial business combination. Our initial stockholders have agreed to vote any Founder Shares and public shares held by them in favor of our initial business combination, and our officers and directors have also agreed to vote any public shares held by them in favor of our initial business combination.
Limitation on Liability and Indemnification of Officers and Directors
Our amended and restated certificate of incorporation provides that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware law, as it now exists or may in the future be amended. In addition, our amended and restated certificate of incorporation provides that our directors will not be personally liable for monetary damages to us or our stockholders for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived an improper personal benefit from their actions as directors.
We have entered into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification provided for in our amended and restated certificate of incorporation. Our bylaws also permit us to secure insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit such indemnification.
Our officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the Trust Account. Accordingly, any indemnification provided will only be able to be satisfied by us if (i) we have sufficient funds outside of the Trust Account or (ii) we consummate an initial business combination.
Our indemnification obligations may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
We believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.
Item 11. Executive Compensation.
None of our officers or directors have received any cash compensation for services rendered to us. Commencing on the date that our securities were first listed on the NYSE through the earlier of consummation of our initial business combination and our liquidation, we have agreed to pay our Sponsor a total of $10,000 per month for office space, utilities, secretarial support and administrative services. In addition, our Sponsor, executive officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Other than these payments and reimbursements, no compensation of any kind, including finder’s and consulting fees, will be paid by the Company to our Sponsor, officers and directors, or any of their respective affiliates, prior to completion of our initial business combination.
After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All of these fees will be fully disclosed to stockholders, to the extent then known, in the proxy solicitation or tender offer materials (as applicable) furnished to our stockholders in connection with a proposed business combination. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be known at the time of the proposed business combination, because the directors of the post-combination business will be responsible
for determining officer and director compensation. Any compensation to be paid to our officers will be determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely of independent directors or by a majority of the independent directors on our board of directors.
We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our officers and directors may negotiate employment or consulting arrangements to remain with us after our initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business, but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our officers and directors that provide for benefits upon termination of employment.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth information regarding the beneficial ownership of our common stock as of February 1, 2021 by:
each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
each of our named executive officers and directors that beneficially owns shares of our common stock; and
all our executive officers and directors as a group.
Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. The following table does not reflect record or beneficial ownership of the Warrants or the Private Placement Warrants.
Name and Address of Beneficial Owner(1) | Number of Shares Beneficially Owned | Approximate Percentage of Outstanding Common Stock | ||||||
NGP Switchback, LLC (our Sponsor)(2)(3) | 7,732,941 | 19.7 | % | |||||
Scott McNeill(3) | 7,835,941 | 20.0 | % | |||||
Jim Mutrie(3) | 7,775,941 | 19.8 | % | |||||
Josh Rosinski | 5,000 | * | ||||||
Chris Carter(4) | 7,732,941 | 19.7 | % | |||||
Scott Gieselman(4) | 7,732,941 | 19.7 | % | |||||
Sam Stoutner(4) | 7,732,941 | 19.7 | % | |||||
Joseph Armes | 65,000 | * | ||||||
Zane Arrott | 64,000 | * | ||||||
Ray Kubis | 40,000 | * | % | |||||
All directors and executive officers as a group (9 individuals) | 7,972,941 | 20.3 | % | |||||
Glazer Capital, LLC(5) | 3,060,483 | 7.8 | % | |||||
Hayman Capital Management, L.P. (6) | 2,853,225 | 7.3 | % | |||||
Adage Capital Partners, L.P.(7) | 2,400,000 | 6.1 | % | |||||
Davidson Kempner Partners(8) | 2,000,000 | 5.1 | % | |||||
HITE Hedge Asset Management LLC(9) | 2,000,000 | 5.1 | % |
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Item 13. Certain Relationships and Related Transactions, and Director Independence.
Founder Shares
On May 16, 2019, we issued an aggregate of 8,625,000 Founder Shares to our Sponsor for an aggregate purchase price of $25,000 in cash, or approximately $0.003 per share. In July 2019, our Sponsor transferred 40,000 Founder Shares to each of our independent director nominees at their original purchase price. In September 2019, our Sponsor forfeited an aggregate of 772,059 Founder Shares.
In connection with the execution of the Business Combination Agreement, the initial stockholders entered into the Founders Stock Letter with Switchback pursuant to which, among other things, the initial stockholders will, (a) subject to the satisfaction of the conditions to Closing set forth in the Business Combination Agreement, immediately prior to the Closing, surrender to Switchback, for no consideration and as a capital contribution to Switchback, 984,706 Founder Shares held by them (on a pro rata basis), whereupon such Founder Shares will be immediately cancelled and (b) upon and subject to the Closing, subject to the 900,000 Founder Earn Back Shares (including any Class A common stock issued in exchange therefor in the Merger) held by them on (on a pro rata basis) to potential forfeiture if the Closing VWAP of one share of Class A common stock quoted on the NYSE does not satisfy the price target set forth in the Founders Stock Letter for any ten trading days within any 20 consecutive trading day period within the Earnout Period. The Founders Stock Letter also provides that our Sponsor will bear any Switchback Transaction Costs in excess of the Switchback Transaction Costs Cap, excluding any PIPE Financing Transaction Costs.
Private Placement Warrants
Our Sponsor purchased an aggregate of 5,521,568 Private Placement Warrants for a purchase price of $1.50 per warrant in private placements that occurred simultaneously with the closing of our Public Offering and the sale of the Over-allotment Units. As such, our Sponsor’s interest in this transaction is valued at approximately $8.3 million. Each Private Placement Warrant entitles the holder to purchase one share of our Class A common stock at $11.50 per share. The Private Placement Warrants (including the Class A common stock issuable upon exercise thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder until 30 days after the completion of our initial business combination.
Conflicts of Interest
As more fully discussed in “Part III, Item 10. Directors, Executive Officers and Corporate Governance —,” if any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such entity. Our officers and directors currently have certain relevant fiduciary duties or contractual obligations that
may take priority over their duties to us. We may pursue an Affiliated Joint Acquisition opportunity with an entity to which an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by issuing to such entity a class of equity or equity-linked securities.
Administrative Services Agreement
On July 25, 2019, we entered into an administrative services agreement pursuant to which have agreed to pay our Sponsor a total of $10,000 per month for office space, utilities, secretarial support and administrative services. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Other than these monthly fees, no compensation of any kind, including finder’s and consulting fees, will be paid by the Company to our Sponsor, officers and directors, or any of their respective affiliates, for services rendered prior to or in connection with the completion of an initial business combination. However, these individuals will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
Related Party Loans and Advances
Until the consummation of our Public Offering, our only source of liquidity was an initial sale of Founder Shares to our Sponsor, and the proceeds of loans and advances from our Sponsor in the amount of $251,000. In August 2019, the Company repaid the Sponsor $251,000 in settlement of the outstanding loan and advances.
In addition, in order to finance transaction costs in connection with an intended initial business combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete an initial business combination, we would repay such loaned amounts. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from the Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants, including as to exercise price, exercisability and exercise period. Except as set forth above, the terms of such loans by our officers and directors, if any, have not been determined, and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.
Registration Rights
The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement, dated July 25, 2019, requiring us to register such securities for resale (in the case of the Founder Shares, only after conversion to our Class A common stock). The holders of at least $25 million in value of these securities are entitled to demand that we file a registration statement covering such securities and to require us to effect up to an aggregate of three underwritten offerings of such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial business combination. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable
lock-up period, which occurs (a) in the case of the Founder Shares, on the earlier of (A) one year after the completion of our initial business combination or (B) subsequent to our business combination, (i) if the last sale price of our 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 our initial business combination or (ii) the date on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property and (b) in the case of the Private Placement Warrants and the respective Class A common stock underlying such warrants, 30 days after the completion of our initial business combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
In connection with the Closing, the IPO Registration Rights Agreement will be amended and restated and Switchback and the Registration Rights Holders will enter into that amended and restated IPO Registration Rights Agreement attached as an exhibit to the Business Combination Agreement. Pursuant to the A&R Registration Rights Agreement, New ChargePoint will agree that, within 15 business days after the Closing, New ChargePoint will file with the SEC (at New ChargePoint’s sole cost and expense) the Resale Registration Statement, and New ChargePoint will use its commercially reasonable efforts to have the Resale Registration Statement become effective as soon as reasonably practicable after the filing thereof. In certain circumstances, the Registration Rights Holders can demand up to four underwritten offerings and will be entitled to customary piggyback registration rights. The A&R Registration Rights Agreement does not provide for the payment of any cash penalties by Switchback if it fails to satisfy any of its obligations under the A&R Registration Rights Agreement.
Director Independence
An “independent director” is defined generally as a person who has no material relationship with the listed company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the company). Our board of directors has determined that Joseph Armes, Zane Arrott and Ray Kubis are “independent directors” as defined in the NYSE listing standards and applicable SEC rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Item 14. Principal Accountant Fees and Services.
Fees for professional services provided by our independent registered public accounting firm since inception include:
For the period from May 10, 2019 (inception) through December 31, 2019 | For the Fiscal Year ended December 31, 2020 | |||||||
Audit Fees(1) | $ | 74,675 | 89,610 | |||||
Audit-Related Fees(2) | — | |||||||
Tax Fees(3) | — | |||||||
All Other Fees(4) | — | |||||||
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Total | $ | 74,675 | 89,610 | |||||
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Policy on Board Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Auditors
The audit committee is responsible for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the audit committee shall review and, in its sole discretion, pre-approve all audit and permitted non-audit services to be provided by our independent registered public accounting firm as provided under the audit committee charter.
Item 8. Financial Statements and Supplementary Data (Restated).
Report of Independent Registered Public Accounting Firm (PCAOB ID 238) | ||||||||
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Notes to Consolidated Financial Statements |
Switchback Energy Acquisition Corporation
Opinion ChargePoint Holdings, Inc.
and Internal Control over Financial Reporting
Restatement Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of Consolidated Financial Statements
As discussedJanuary 31, 2023, based on criteria established in Note 1Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date related to the Company not designing and maintaining (i) effective controls over certain information technology general controls for information systems that are relevant to the preparation of the Company’s consolidated financial statements, including effective controls over program change management, user access, and program development and (ii) effective controls over segregation of duties.
Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.
TheseOpinions
Our auditsstatements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinion.
opinions.
PricewaterhouseCoopers LLP
New York, New York
May 26, 2021
CONSOLIDATED BALANCE SHEETS
December 31, 2020 (As Restated) | December 31, 2019 (As Restated) | |||||||
Assets: | ||||||||
Current assets: | ||||||||
Cash | $ | 111,803 | $ | 398,721 | ||||
Prepaid expenses | 238,641 | 374,286 | ||||||
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Total current assets | 350,444 | 773,007 | ||||||
Investments held in Trust Account | 316,991,065 | 316,398,889 | ||||||
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Total Assets | $ | 317,341,509 | $ | 317,171,896 | ||||
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Liabilities and Stockholders’ Equity (Deficit): | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 39,094 | $ | 200,971 | ||||
Accrued expenses | 4,133,165 | — | ||||||
Accrued expenses - related party | 76,045 | — | ||||||
Due to related party | 1,279,360 | — | ||||||
Franchise tax payable | 200,000 | 87,928 | ||||||
Income tax payable | 200,667 | 479,064 | ||||||
Total current liabilities | 5,928,331 | 767,963 | ||||||
Deferred underwriting commissions | 10,924,117 | 10,924,117 | ||||||
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Public warrants derivative liability | 161,456,462 | 6,282,349 | ||||||
Private warrants derivative liability | 158,469,002 | 3,312,941 | ||||||
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Total liabilities | 336,777,912 | 21,287,370 | ||||||
Commitments and Contingencies | ||||||||
Class A common stock, $0.0001 par value; 0 and 29,088,452 shares subject to possible redemption at $10.00 per share at December 31, 2020 and 2019, respectively | — | 290,884,520 | ||||||
Stockholders’ Equity (Deficit): | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | — | ||||||
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 31,411,763 and 2,323,311 shares issued and outstanding (excluding 0 and 29,088,452 shares subject to possible redemption) at December 31, 2020 and 2019, respectively | 3,141 | 232 | ||||||
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 7,852,941 shares issued and outstanding | 785 | 785 | ||||||
Additional paid-in capital | 296,379,599 | 5,497,988 | ||||||
Accumulated deficit | (315,819,928 | ) | (498,999 | ) | ||||
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Total stockholders’ equity (deficit) | (19,436,403 | ) | 5,000,006 | |||||
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Total Liabilities and Stockholders’ Equity (Deficit) | $ | 317,341,509 | $ | 317,171,896 | ||||
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January 31, | |||||||||||
2023 | 2022 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 264,162 | $ | 315,235 | |||||||
Restricted cash | 30,400 | 400 | |||||||||
Short-term investments | 104,966 | — | |||||||||
Accounts receivable, net of allowance of $10,000 as of January 31, 2023 and $5,584 as of January 31, 2022 | 164,892 | 75,939 | |||||||||
Inventories | 68,730 | 35,879 | |||||||||
Prepaid expenses and other current assets | 71,020 | 36,603 | |||||||||
Total current assets | 704,170 | 464,056 | |||||||||
Property and equipment, net | 40,046 | 34,593 | |||||||||
Intangible assets, net | 92,673 | 107,209 | |||||||||
Operating lease right-of-use assets | 22,242 | 25,535 | |||||||||
Goodwill | 213,716 | 218,484 | |||||||||
Other assets | 7,110 | 6,020 | |||||||||
Total assets | $ | 1,079,957 | $ | 855,897 | |||||||
Liabilities and Stockholders' Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 62,076 | $ | 27,576 | |||||||
Accrued and other current liabilities | 133,483 | 84,328 | |||||||||
Deferred revenue | 88,777 | 77,142 | |||||||||
Total current liabilities | 284,336 | 189,046 | |||||||||
Deferred revenue, noncurrent | 109,833 | 69,666 | |||||||||
Debt, noncurrent | 294,936 | — | |||||||||
Operating lease liabilities | 21,841 | 25,370 | |||||||||
Deferred tax liabilities | 12,987 | 17,697 | |||||||||
Other long-term liabilities | 1,032 | 7,104 | |||||||||
Total liabilities | 724,965 | 308,883 | |||||||||
Commitments and contingencies (Note 10) | |||||||||||
Stockholders' equity: | |||||||||||
Common stock: $0.0001 par value; 1,000,000,000 shares authorized as of each of January 31, 2023 and 2022; 348,330,481 and 334,760,615 shares issued and outstanding as of January 31, 2023 and 2022, respectively | 35 | 33 | |||||||||
Preferred stock, $0.0001 par value; 10,000,000 shares authorized as of each of January 31, 2023 and 2022; zero shares issued and outstanding as of each of January 31, 2023 and 2022 | — | — | |||||||||
Additional paid-in capital | 1,528,104 | 1,366,855 | |||||||||
Accumulated other comprehensive income (loss) | (16,384) | (8,219) | |||||||||
Accumulated deficit | (1,156,763) | (811,655) | |||||||||
Total stockholders' equity | 354,992 | 547,014 | |||||||||
Total liabilities and stockholders' equity | $ | 1,079,957 | $ | 855,897 |
CONSOLIDATED STATEMENTS OF OPERATIONS
For the year ended December 31, 2020 (As Restated) | For the period from May 10, 2019 (inception) through December 31, 2019 (As Restated) | |||||||
General and administrative expenses | $ | 5,749,166 | $ | 934,695 | ||||
Franchise tax expense | 200,000 | 87,928 | ||||||
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Loss from operations | (5,949,166 | ) | (1,022,623 | ) | ||||
Change in fair value of warrant liabilities | (310,330,174 | ) | (959,526 | ) | ||||
Issuance costs allocated to warrant liabilities | — | (319,045 | ) | |||||
Gain on marketable securities, dividends and interest held in Trust Account | 1,160,014 | 2,281,259 | ||||||
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Loss before income tax expense | (315,119,326 | ) | (19,935 | ) | ||||
Income tax expense | 201,603 | 479,064 | ||||||
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Net loss | $ | (315,320,929 | ) | $ | (498,999 | ) | ||
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Basic and diluted weighted average shares outstanding, Class A | 31,411,763 | 31,092,978 | ||||||
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Basic and diluted net income per share, Class A | $ | 0.02 | $ | 0.06 | ||||
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Basic and diluted weighted average shares outstanding, Class B | 7,852,941 | 7,852,941 | ||||||
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Basic and diluted net loss per share, Class B | $ | (40.25 | ) | $ | (0.28 | ) | ||
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Year Ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Revenue | |||||||||||||||||
Networked charging systems | $ | 363,622 | $ | 173,850 | $ | 91,893 | |||||||||||
Subscriptions | 85,296 | 53,512 | 40,563 | ||||||||||||||
Other | 19,176 | 13,644 | 14,034 | ||||||||||||||
Total revenue | 468,094 | 241,006 | 146,490 | ||||||||||||||
Cost of revenue | |||||||||||||||||
Networked charging systems | 318,628 | 147,313 | 87,083 | ||||||||||||||
Subscriptions | 51,416 | 31,190 | 20,385 | ||||||||||||||
Other | 12,117 | 8,970 | 6,073 | ||||||||||||||
Total cost of revenue | 382,161 | 187,473 | 113,541 | ||||||||||||||
Gross profit | 85,933 | 53,533 | 32,949 | ||||||||||||||
Operating expenses | |||||||||||||||||
Research and development | 194,957 | 145,043 | 75,017 | ||||||||||||||
Sales and marketing | 142,392 | 92,550 | 53,002 | ||||||||||||||
General and administrative | 90,366 | 81,380 | 25,922 | ||||||||||||||
Total operating expenses | 427,715 | 318,973 | 153,941 | ||||||||||||||
Loss from operations | (341,782) | (265,440) | (120,992) | ||||||||||||||
Interest income | 5,534 | 98 | 315 | ||||||||||||||
Interest expense and amortization of debt discount and issuance cost | (9,434) | (1,502) | (3,253) | ||||||||||||||
Change in fair value of redeemable convertible preferred stock warrant liability | — | 9,237 | (73,125) | ||||||||||||||
Change in fair value of assumed common stock warrant liabilities | (24) | 47,822 | — | ||||||||||||||
Change in fair value of contingent earnout liability | — | 84,420 | — | ||||||||||||||
Transaction costs expensed | — | (7,031) | — | ||||||||||||||
Other income (expense), net | (1,569) | (2,775) | 229 | ||||||||||||||
Net loss before income taxes | $ | (347,275) | $ | (135,171) | $ | (196,826) | |||||||||||
Provision (benefit) for income taxes | (2,167) | (2,930) | 198 | ||||||||||||||
Net loss | $ | (345,108) | $ | (132,241) | $ | (197,024) | |||||||||||
Accretion of beneficial conversion feature of redeemable convertible preferred stock | — | — | (60,377) | ||||||||||||||
Cumulative undeclared dividends on redeemable convertible preferred stock | — | (4,292) | (16,799) | ||||||||||||||
Deemed dividends attributable to vested option holders | — | (51,855) | — | ||||||||||||||
Deemed dividends attributable to common stock warrant holders | — | (110,635) | — | ||||||||||||||
Net loss attributable to common stockholders - Basic | $ | (345,108) | $ | (299,023) | $ | (274,200) | |||||||||||
Gain attributable to earnout shares issued | — | (84,420) | — | ||||||||||||||
Change in fair value of dilutive warrants | — | (68,223) | — | ||||||||||||||
Net loss attributable to common stockholders - Diluted | $ | (345,108) | $ | (451,666) | $ | (274,200) | |||||||||||
Weighted average shares outstanding - Basic | 338,488,667 | 297,421,969 | 15,116,763 | ||||||||||||||
Weighted average shares outstanding - Diluted | 338,488,667 | 302,490,266 | 15,116,763 | ||||||||||||||
Net loss per share - Basic | $ | (1.02) | $ | (1.01) | $ | (18.14) | |||||||||||
Net loss per share - Diluted | $ | (1.02) | $ | (1.49) | $ | (18.14) |
Year Ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Net loss | $ | (345,108) | $ | (132,241) | $ | (197,024) | |||||||||||
Other comprehensive income (loss): | |||||||||||||||||
Foreign currency translation adjustment, net of tax | (7,716) | (8,374) | 141 | ||||||||||||||
Available-for-sale short-term investments: | |||||||||||||||||
Unrealized loss on short-term investments, net of tax | (449) | — | — | ||||||||||||||
Reclassification to net income, net of tax | — | — | (23) | ||||||||||||||
Other comprehensive income (loss) | (8,165) | (8,374) | 118 | ||||||||||||||
Comprehensive loss | $ | (353,273) | $ | (140,615) | $ | (196,906) |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
For the year ended December 31, 2020 (As Restated) | ||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | |||||||||||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance—December 31, 2019 (as restated) | 2,323,311 | $ | 232 | 7,852,941 | $ | 785 | $ | 5,497,988 | $ | (498,999 | ) | $ | 5,000,006 | |||||||||||||||
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Change in value of Class A common stock subject to possible redemption | 29,088,452 | 2,909 | — | — | 290,881,611 | — | 290,884,520 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (315,320,929 | ) | (315,320,929 | ) | |||||||||||||||||||
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Balance—December 31, 2020 (as restated) | 31,411,763 | $ | 3,141 | 7,852,941 | $ | 785 | $ | 296,379,599 | $ | (315,819,928 | ) | $ | (19,436,403 | ) | ||||||||||||||
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For the period from May 10, 2019 (inception) through December 31, 2019 (As Restated) | ||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance—May 10, 2019 (inception) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
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Issuance of Class B common stock to Sponsor | — | — | 8,625,000 | 863 | 24,137 | — | 25,000 | |||||||||||||||||||||
Sale of units in initial public offering, net of fair value of Public Warrants | 31,411,763 | 3,141 | — | — | 308,460,372 | — | 308,463,513 | |||||||||||||||||||||
Offering costs | — | — | — | — | (17,405,694 | ) | — | (17,405,694 | ) | |||||||||||||||||||
Excess of cash received over fair value of private placement warrants | — | — | — | — | 5,300,706 | — | 5,300,706 | |||||||||||||||||||||
Forfeiture of Class B common stock | — | — | (772,059 | ) | (78 | ) | 78 | — | — | |||||||||||||||||||
Class A common stock subject to possible redemption | (29,088,452 | ) | (2,909 | ) | — | — | (290,881,611 | ) | — | (290,884,520 | ) | |||||||||||||||||
Net loss | — | — | — | — | — | (498,999 | ) | (498,999 | ) | |||||||||||||||||||
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Balance—December 31, 2019 (as restated) | 2,323,311 | $ | 232 | 7,852,941 | $ | 785 | $ | 5,497,988 | $ | (498,999 | ) | $ | 5,000,006 | |||||||||||||||
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Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders' Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balances as of January 31, 2020 | 160,583,203 | $ | 520,241 | 11,918,418 | $ | 1 | $ | 20,331 | $ | 37 | $ | (482,390) | $ | (462,021) | |||||||||||||||||||||||||||||||||
Issuance of redeemable convertible preferred stock and common warrants, net of issuance costs | 22,351,054 | 95,456 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock warrants in connection with Series H-1 redeemable convertible preferred stock | — | — | — | — | 31,547 | — | — | 31,547 | |||||||||||||||||||||||||||||||||||||||
Beneficial conversion feature in connection with Series H-1 redeemable preferred stock | — | (60,377) | — | — | 60,377 | — | — | 60,377 | |||||||||||||||||||||||||||||||||||||||
Accretion of beneficial conversion feature in connection with Series H-1 redeemable preferred stock | — | 60,377 | — | — | (60,377) | — | — | (60,377) | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of vested stock options | — | — | 10,363,603 | 1 | 5,643 | — | — | 5,644 | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock related to early exercise of stock options | — | — | 679,011 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Vesting of early exercised stock options | — | — | — | — | 268 | — | — | 268 | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 4,947 | — | — | 4,947 | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (197,024) | (197,024) | |||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 118 | — | 118 | |||||||||||||||||||||||||||||||||||||||
Balances as of January 31, 2021 | 182,934,257 | $ | 615,697 | 22,961,032 | $ | 2 | $ | 62,736 | $ | 155 | $ | (679,414) | $ | (616,521) | |||||||||||||||||||||||||||||||||
Conversion of redeemable convertible preferred stock into common stock in connection with the reverse recapitalization, including impact of Series H-1 paid in kind dividend | (182,934,257) | (615,697) | 194,060,336 | 20 | 615,677 | — | — | 615,697 | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock under stock plans, net of tax withholdings | — | — | 8,620,607 | — | 4,516 | — | — | 4,516 | |||||||||||||||||||||||||||||||||||||||
Reclassification of Legacy ChargePoint preferred stock warrant liability upon the reverse recapitalization | — | — | — | — | 66,606 | — | — | 66,606 | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon the reverse recapitalization, net of issuance costs | — | — | 60,746,989 | 6 | 200,460 | — | — | 200,466 | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of warrants | — | — | 16,364,810 | 1 | 352,612 | — | — | 352,613 | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock pursuant to business combinations | — | — | 5,695,176 | 1 | 102,057 | — | — | 102,058 | |||||||||||||||||||||||||||||||||||||||
Issuance of earnout shares upon triggering events, net of tax withholding | — | — | 26,313,253 | 3 | 480,222 | — | — | 480,225 | |||||||||||||||||||||||||||||||||||||||
Contingent earnout liability recognized upon the closing of the reverse recapitalization | — | — | — | — | (828,180) | — | — | (828,180) | |||||||||||||||||||||||||||||||||||||||
Reclassification of remaining contingent earnout liability upon triggering event | — | — | — | — | 242,640 | — | — | 242,640 | |||||||||||||||||||||||||||||||||||||||
Vesting of early exercised stock options | — | — | — | — | 178 | — | — | 178 | |||||||||||||||||||||||||||||||||||||||
Repurchase of early exercised common stock | — | — | (1,588) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 67,331 | — | — | 67,331 | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (132,241) | (132,241) | |||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | (8,374) | — | (8,374) | |||||||||||||||||||||||||||||||||||||||
Balances as of January 31, 2022 | — | $ | — | 334,760,615 | $ | 33 | $ | 1,366,855 | $ | (8,219) | $ | (811,655) | $ | 547,014 | |||||||||||||||||||||||||||||||||
Issuance of common stock under stock plans, net of tax withholdings | — | — | 7,267,807 | 1 | 2,501 | — | — | 2,502 | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of warrants | — | — | 1,041,533 | — | 6,932 | — | — | 6,932 | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon ESPP purchase | — | — | 607,384 | — | 8,947 | — | — | 8,947 | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with ATM offerings, net of issuance costs | — | — | 4,657,806 | 1 | 49,449 | — | — | 49,450 | |||||||||||||||||||||||||||||||||||||||
Vesting of early exercised stock options | — | — | — | — | 69 | — | — | 69 |
Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders' Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Repurchase of early exercised common stock | — | — | (4,664) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 93,351 | — | — | 93,351 | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (345,108) | (345,108) | |||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | (8,165) | — | (8,165) | |||||||||||||||||||||||||||||||||||||||
Balances as of January 31, 2023 | — | $ | — | 348,330,481 | $ | 35 | $ | 1,528,104 | $ | (16,384) | $ | (1,156,763) | $ | 354,992 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended December 31, 2020 (As Restated) | For the period from May 10, 2019 (inception) through December 31, 2019 (As Restated) | |||||||
Cash Flows from Operating Activities: | ||||||||
Net loss | $ | (315,320,929 | ) | $ | (498,999 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
General and administrative expenses paid by related parties | 9,360 | 125,151 | ||||||
Gain, dividends and interest on marketable securities held in Trust Account | (1,160,014 | ) | (2,281,259 | ) | ||||
Change in fair value of warrant liabilities | 310,330,174 | 959,526 | ||||||
Issuance costs allocated to warrant liabilities | — | 319,045 | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses | 135,645 | (374,286 | ) | |||||
Accounts payable | (161,877 | ) | 186,470 | |||||
Accrued expenses | 4,133,165 | — | ||||||
Accrued expenses—related party | 76,045 | — | ||||||
Franchise tax payable | 112,072 | 87,928 | ||||||
Income tax payable | (278,397 | ) | 479,064 | |||||
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Net cash used in operating activities | (2,124,756 | ) | (997,360 | ) | ||||
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Cash Flows from Investing Activities | ||||||||
Cash deposited in Trust Account | — | (314,117,630 | ) | |||||
Income released from Trust Account to pay taxes | 567,838 | — | ||||||
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Net cash provided by (used in) investing activities | 567,838 | (314,117,630 | ) | |||||
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Cash Flows from Financing Activities: | ||||||||
Proceeds from issuance of Class B common stock to Sponsor | — | 25,000 | ||||||
Repayment of loans from related party | — | (251,375 | ) | |||||
Proceeds received from related party | 1,270,000 | — | ||||||
Proceeds received from initial public offering, gross | — | 314,117,630 | ||||||
Proceeds received from private placement | — | 8,282,353 | ||||||
Offering costs paid | — | (6,659,897 | ) | |||||
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Net cash provided by financing activities | 1,270,000 | 315,513,711 | ||||||
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Net change in cash | (286,918 | ) | 398,721 | |||||
Cash—beginning of the period | 398,721 | — | ||||||
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Cash—end of the period | $ | 111,803 | $ | 398,721 | ||||
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Supplemental disclosure of cashflow activities: | ||||||||
Cash paid for income taxes | $ | 480,000 | $ | — | ||||
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Offering costs included in accounts payable | $ | — | $ | 14,501 | ||||
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Offering costs paid by related party under note payable from related party | $ | — | $ | 126,224 | ||||
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Deferred underwriting commissions | $ | — | $ | 10,924,117 | ||||
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Forfeiture of Class B common stock | $ | — | $ | 78 | ||||
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Year Ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Cash flows from operating activities | |||||||||||||||||
Net loss | $ | (345,108) | $ | (132,241) | $ | (197,024) | |||||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||||||||
Depreciation and amortization | 25,050 | 16,457 | 10,083 | ||||||||||||||
Non-cash operating lease cost | 4,739 | 4,244 | 3,762 | ||||||||||||||
Stock-based compensation | 93,350 | 67,331 | 4,947 | ||||||||||||||
Amortization of deferred contract acquisition costs | 2,361 | 1,786 | 1,206 | ||||||||||||||
Transaction costs expensed | — | 7,031 | — | ||||||||||||||
Change in fair value of common stock warrant liabilities | 24 | (47,822) | — | ||||||||||||||
Change in fair value of redeemable convertible preferred stock warrant liability | — | (9,237) | 73,125 | ||||||||||||||
Change in fair value of contingent earnout liabilities | — | (84,420) | — | ||||||||||||||
Change in fair value of earnout liability recognized upon acquisition of ViriCiti | — | 2,266 | — | ||||||||||||||
Other | 16,832 | 374 | 1,858 | ||||||||||||||
Changes in operating assets and liabilities, net of effect of acquisitions: | |||||||||||||||||
Accounts receivable, net | (94,600) | (38,388) | 3,292 | ||||||||||||||
Inventories | (39,358) | (1,991) | (9,585) | ||||||||||||||
Prepaid expenses and other assets | (37,969) | (23,941) | (8,914) | ||||||||||||||
Operating lease liabilities | (5,043) | (3,460) | (2,815) | ||||||||||||||
Accounts payable | 31,476 | 7,933 | (493) | ||||||||||||||
Accrued and other liabilities | 29,394 | 21,619 | 11,556 | ||||||||||||||
Deferred revenue | 51,803 | 55,281 | 17,156 | ||||||||||||||
Net cash used in operating activities | (267,049) | (157,178) | (91,846) | ||||||||||||||
Cash flows from investing activities | |||||||||||||||||
Purchases of property and equipment | (18,563) | (16,410) | (11,484) | ||||||||||||||
Purchases of investments | (284,835) | — | — | ||||||||||||||
Maturities of investments | 180,000 | — | 47,014 | ||||||||||||||
Cash paid for acquisition, net of cash acquired | (2,756) | (205,330) | — | ||||||||||||||
Net cash provided by (used in) investing activities | (126,154) | (221,740) | 35,530 | ||||||||||||||
Cash flows from financing activities | |||||||||||||||||
Proceeds from issuance of redeemable convertible preferred stock | — | — | 95,456 | ||||||||||||||
Proceeds from the exercise of public warrants | 6,884 | 118,864 | — | ||||||||||||||
Merger and PIPE financing | — | 511,646 | — | ||||||||||||||
Payment of tax withholding obligations on settlement of earnout shares | — | (20,895) | — | ||||||||||||||
Repayment of borrowings | — | (36,051) | — | ||||||||||||||
Proceeds from issuance of common stock warrants, net of issuance costs | — | — | 31,547 | ||||||||||||||
Proceeds from issuance of debt, net of issuance costs | 293,972 | — | — | ||||||||||||||
Payments of transaction costs related to Merger | — | (32,468) | — | ||||||||||||||
Change in driver funds and amounts due to customers | 11,107 | 3,675 | — | ||||||||||||||
Payment of deferred transaction costs | — | — | (4,003) | ||||||||||||||
Proceeds from issuance of stock in connection with stock plans, net of withholding taxes | 11,446 | 4,916 | 5,913 | ||||||||||||||
Proceeds from issuance of common stock in connection with ATM offerings | 49,450 | — | — | ||||||||||||||
Net cash provided by financing activities | 372,859 | 549,687 | 128,913 | ||||||||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (729) | (1,025) | 141 | ||||||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (21,073) | 169,744 | 72,738 | ||||||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 315,635 | 145,891 | 73,153 | ||||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 294,562 | $ | 315,635 | $ | 145,891 |
Year Ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Supplementary cash flow information | |||||||||||||||||
Cash paid for interest | $ | 4,929 | $ | 346 | $ | 2,801 | |||||||||||
Cash paid for taxes | $ | 598 | $ | 268 | $ | 172 | |||||||||||
Supplementary cash flow information on non-cash investing and financing activities | |||||||||||||||||
Accretion of beneficial conversion feature of redeemable convertible preferred stock | $ | — | $ | — | $ | 60,377 | |||||||||||
Deferred transaction costs not yet paid | $ | — | $ | — | $ | 1,685 | |||||||||||
Right-of-use assets obtained in exchange for lease liabilities | $ | — | $ | 7,991 | $ | 2,118 | |||||||||||
Right-of-use asset remeasurement subsequent to lease extension | $ | — | $ | — | $ | 12,867 | |||||||||||
Acquisitions of property and equipment included in accounts payable and accrued and other current liabilities | $ | 1,954 | $ | 660 | $ | 647 | |||||||||||
Vesting of early exercised stock options | $ | 69 | $ | 178 | $ | 268 | |||||||||||
Conversion of redeemable convertible preferred stock into common stock in connection with the reverse recapitalization | $ | — | $ | 615,697 | $ | — | |||||||||||
Reclassification of Legacy ChargePoint redeemable convertible preferred stock warrant liability upon the reverse capitalization | $ | — | $ | 66,606 | $ | — | |||||||||||
Contingent earnout liability recognized upon the closing of the reverse recapitalization | $ | — | $ | 828,180 | $ | — | |||||||||||
Reclassification of remaining contingent earnout liability upon triggering event | $ | — | $ | 242,640 | $ | — | |||||||||||
Issuance of common stock in connection with acquisitions | $ | — | $ | 102,057 | $ | — |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1—
As of December 31, 2020, the Company had not commenced any operations. All activity for the period from May 10, 2019 (inception) through December 31, 2020 relates to the Company’s formation and the initial public offering (the “Public Offering”“Closing Date”), and, sinceSwitchback consummated the closing ofpreviously announced transactions contemplated by the Public Offering, the search for a prospective initial business combination.
In September 2020, in connection with the Proposed Transactions (as defined and described below), the Company formedMerger Agreement pursuant to which Lightning Merger Sub Inc., a wholly-owned subsidiary of Switchback incorporated in the State of Delaware corporation (“Merger Sub”), merged with ChargePoint, Inc., a Delaware corporation (“Legacy ChargePoint”); Legacy ChargePoint survived as a wholly owned directwholly-owned subsidiary of Switchback (the “Merger” and, collectively with the Company.
The Company’s sponsor is NGP Switchback, LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Public Offering was declared effective on July 25, 2019. On July 30, 2019, the Company consummated the Public Offering of 30,000,000 units (the “Units” and, with respect to the shares of Class A common stock includedother transactions described in the Units,Merger Agreement, the “public shares”“Reverse Recapitalization”) at $10.00 per Unit, generating gross proceeds of $300.0 million. The underwriters were granted a 45-day option from. On the date of the final prospectus relating to the Public Offering to purchase up to 4,500,000 additional Units to cover over-allotments, if any, at $10.00 per Unit, less underwriting discountsClosing Date, and commissions. On September 4, 2019, the underwriters partially exercised the over-allotment option and, on September 6, 2019, the underwriters purchased an additional 1,411,763 units (the “Over-allotment Units”), generating gross proceeds of approximately $14.1 million, and the remaining over-allotment option subsequently expired. The Company incurred offering costs of approximately $17.7 million, inclusive of $10.9 million in deferred underwriting commissions (Note 6).
Simultaneouslyconnection with the closing of the Public Offering, the Company consummated the saleMerger (the “Private Placement”“Closing”) of 5,333,333 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, Switchback changed its name to the Sponsor, generating gross proceeds of approximately $8.0 million (Note 5). Simultaneously with the closingChargePoint Holdings, Inc. As part of the sale of the Over-allotment Units, the SponsorMerger, certain investors purchased an additional 188,235 Private Placement Warrants at a price of $1.50 per Private Placement Warrant, generating gross proceeds of approximately $282,000.
Approximately $314.1 million ($10.00 per Unit) of the net proceeds of the Public Offering (including the Over-allotment Units) and certain of the proceeds of the Private Placement was placed in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government securities,” within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in money market funds meeting the conditions of paragraphs (d)(1), (d)(2), (d)(3) and (d)(4) of Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering and the sale of Private Placement Warrants, although substantially all of the net
proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial business combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes and excluding the amount of any deferred underwriting discount held in trust) at the time of the agreement to enter into the Business Combination. However, the Company will only complete an initial business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
The Company will provide holders of the Company’s outstanding public shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their public shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their public shares for a pro rata portion of the amount then held in the Trust Account (initially anticipated to be $10.00 per Public Share). The per-share amount to be distributed to Public Stockholders who redeem their public shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 6). These public shares were recorded at a redemption value and classified as temporary equity upon the completion of the Public Offering. In such case, the Company will only proceed with a Business Combination if, among other things, the Company has net tangible assets of at least $5,000,001 upon consummation of such Business Combination and a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the Initial Stockholders (as defined below) have agreed to vote their Founder Shares (as defined below in Note 5) and any public shares purchased during or after the Public Offering in favor of a Business Combination. In addition, the Initial Stockholders have agreed to waive their redemption rights with respect to their Founder Shares and public shares in connection with the completion of a Business Combination.
Notwithstanding the foregoing, the Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 20%22,500,000 shares of common stock (“PIPE Investors”) concurrently with the public shares.
Closing for an aggregate purchase price of $225.0 million.
If the Company is unable to complete a Business Combination within 24 months from the closing of the Public Offering, or July 30, 2021 (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then-outstanding public shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and its board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The Initial Stockholders have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, the Initial Stockholders will be entitled to liquidating distributions from the Trust Account with respect to any public shares that they hold if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to the deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the public shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a letter of intent, confidentiality or other similar agreement or business combination agreement (a “Target”), reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account due to reductions in the value of the trust assets as of the date of the liquidation of the Trust Account, in each case including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income taxes, less franchise and income taxes payable. This liability will not apply with respect to any claims by a third party or Target that executed an agreement waiving claims against and all rights to seek access to the Trust Account whether or not such agreement is enforceable or to any claims under the Company’s indemnity of the underwriters of the Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Restatement of Previously Issued Financial Statements
The Company has restated its consolidated financial statements as of December 31, 2020, and 2019, for the year ended December 31, 2020 and the period from May 10, 2019 (inception) through December 31, 2019, as well as the unaudited condensed financial statements as of March 31, 2021 and for the three month period ended March 31, 2020, as of June 30, 2020 and for the three and six month periods ended June 30, 2020 as of September 30, 2020 and for the three and nine month periods ended September 30, 2020, as of September 30, 2019 and for the three months ended September 30, 2019 and for the period from May 10, 2019 (inception) through September 30, 2019, and the audited balance sheet as of July 30, 2019, to correct misstatementsaccompanying notes have been prepared in those prior periods primarily related to misstatements identified in improperly applying accounting guidance on certain warrants, recognizing them as equity instead of a warrant liability, under the guidance of Accounting Standards Codification (“ASC”) 815-40, Contracts in Entity’s Own Equity.
See Note 2 for additional information regarding the errors identified and the restatement adjustments made to the consolidated financial statements.
Basis of Presentation
The accompanying consolidated financial statements are presented in U.S. dollars in conformityaccordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for. The Company’s consolidated financial information and pursuant tostatements include the rules and regulationsaccounts of the SEC.
Emerging Growth Company
and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
(in thousands) | |||||||||||||||||
Cash and cash equivalents | $ | 264,162 | $ | 315,235 | $ | 145,491 | |||||||||||
Restricted cash | 30,400 | 400 | 400 | ||||||||||||||
Total cash, cash equivalents, and restricted cash | $ | 294,562 | $ | 315,635 | $ | 145,891 |
Beginning Balance | Additions Charged To Expense | Write-offs | Ending Balance | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Year ended January 31, 2023 | |||||||||||||||||||||||
Allowance for expected credit losses | $ | 5,584 | $ | 6,353 | $ | (1,937) | $ | 10,000 | |||||||||||||||
Year ended January 31, 2022 | |||||||||||||||||||||||
Allowance for expected credit losses | $ | 2,000 | $ | 3,835 | $ | (251) | $ | 5,584 | |||||||||||||||
Year ended January 31, 2021 | |||||||||||||||||||||||
Allowance for expected credit losses | $ | 2,000 | $ | 121 | $ | (121) | $ | 2,000 |
Useful Lives | |||||
Furniture and fixtures | 3 to 5 years | ||||
Computers and software | 3 to 5 years | ||||
Machinery and equipment | 3 to 5 years | ||||
Tooling | 3 to 5 years | ||||
Leasehold improvements | Shorter of the estimated lease term or useful life | ||||
Owned and operated systems | 5 to 7 years |
Further, section 102(b)(1)measurement of the JOBS Act exempts emerging growth companies from being required to comply with newapplicable ROU asset 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. lease liability.
This may makeasset group. Recoverability of assets held and used is measured by comparison of the carrying amounts of an asset or an asset group to the estimated future undiscounted cash flows which the asset or asset group is expected to generate. If the carrying amount of an asset or asset group exceeds estimated undiscounted future cash flows, then an impairment charge would be recognized based on the excess of the carrying amount of the asset or asset group over its fair value. Assets to be disposed of are reported at the lower of their carrying amount or fair value less costs to sell. There were no impairments of long-lived assets for the years ended January 31, 2023, 2022, and 2021.
Note 2the fourth quarter, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. As of January 31, 2023 and 2022, the Company had a single operating segment and reporting unit structure. As part of the annual goodwill impairment test performed in the fourth quarter, the Company first performs a qualitative assessment to determine whether further impairment testing is necessary. If, as a result of the qualitative assessment, it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the quantitative impairment test will be required. If the Company has determined it necessary to perform a quantitative impairment assessment, the Company will compare the fair value of the reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the total amount of goodwill of the reporting unit. The carrying value of goodwill was $213.7 million as of January 31, 2023 and $218.5 million as of January 31, 2022, and no goodwill impairment has been recognized to date.
In May 2021,consider factors specific to the audit committeeasset or liability. The fair value hierarchy requires the use of observable market data when available in determining fair value. The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each period. There were no transfers between levels during the periods presented. The Company had no material non-financial assets valued on a non-recurring basis that resulted in an impairment in any period presented.
On April 12, 2021, the Staff of the SEC issued a public statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”)” (the “Staff Statement”). In the Staff Statement, the Staff of the SEC expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified aspurchase shares of redeemable convertible preferred stock were freestanding financial instruments that obligated the Company to redeem the underlying preferred stock at some point in the future and determined that each of its outstanding warrants for preferred stock were liability classified. Redeemable convertible preferred stock warrants were recorded within noncurrent liabilities on the SPAC’s balance sheet as opposed to equity. Since issuance on July 25, 2019, the Company’s Warrants were accounted for as equity within the Company’s previously reported consolidated balance sheets. Accordingly,The warrants were recorded at fair value upon issuance and were subject to remeasurement to fair value at each balance sheet date. Changes in fair value of the redeemable convertible preferred stock warrant liability were recorded in the consolidated statements of operations did not include anyoperations.
classified within stockholders’ equity. The warrant agreement governing the Common Stock Warrants includes a provision (the “Replacement(“Replacement of Securities Upon Reorganization”), the application of which could result in a different settlement value for the Common Stock Warrants depending on their holder. Because the holder of an instrument is not an input into the pricing of a fixed-for-fixed option on the Company’s ordinary shares, the Private Placement Warrants which contain this term couldare not considered to be considered “indexed to the Company’s own stock.” In addition, the provision provides that in the event of a tender or exchange offer accepted by holders of more than 50% of the outstanding shares of the Company’s ordinary shares, all holders of the Common Stock Warrants (both the Public Warrants and the Private Placement Warrants) would be entitled to receive cash for all of their Common Stock Warrants. In other words,Specifically, in the event of a qualifying cash tender offer (which could be outside of the Company’s control), all Common Stock Warrant holders would be entitled to cash, while only certain of the holders of the Company’s ordinary shares wouldmay be entitled to cash. These provisions preclude the Company from classifying the Common Stock Warrants in stockholders’ equity. As the Common Stock Warrants meet the definition of a result of these provisions,derivative, the Company has restated itsrecorded these warrants as liabilities on the consolidated financialbalance sheets at fair value, with subsequent changes in their respective fair values recognized in the consolidated statements of operations and comprehensive loss at each reporting date.
netted against deferred revenue on a customer-by-customer basis. Deferred revenue that will be recognized during the succeeding twelve-month period is recorded as deferred revenue with the remainder recorded as deferred revenue, noncurrent on the consolidated balance sheets.
January 31, 2023 | January 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Total deferred revenue | $ | 198,610 | $ | 146,808 |
Year Ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
(in thousands) | |||||||||||||||||
Total deferred revenue recognized | $ | 77,142 | $ | 40,934 | $ | 39,400 |
December 31, 2020 | ||||||||||||
As Previously Reported | Restatement Adjustment | As Restated | ||||||||||
Balance Sheet | ||||||||||||
Public warrants derivative liability | — | 161,456,462 | 161,456,462 | |||||||||
Private warrants derivative liability | — | 158,469,002 | 158,469,002 | |||||||||
Total liabilities | 16,852,448 | 319,925,464 | 336,777,912 | |||||||||
Class A common stock subject to possible redemption | 295,489,060 | (295,489,060 | ) | — | ||||||||
Class A common stock | 186 | 2,955 | 3,141 | |||||||||
Additional paid-in-capital | 9,210,213 | 287,169,386 | 296,379,599 | |||||||||
Accumulated deficit | (4,211,183 | ) | (311,608,745 | ) | (315,819,928 | ) | ||||||
Total stockholders’ equity (deficit) | 5,000,001 | (24,436,404 | ) | (19,436,403 | ) | |||||||
Statement of Operations for the year ended December 31, 2020 | ||||||||||||
Change in fair value of warrant liabilities | — | (310,330,174 | ) | (310,330,174 | ) | |||||||
Loss before income tax expense | (4,789,152 | ) | (310,330,174 | ) | (315,119,326 | ) | ||||||
Net loss | (4,990,755 | ) | (310,330,174 | ) | (315,320,929 | ) | ||||||
Basic and diluted net loss per Class B common stock | (0.73 | ) | (39.52 | ) | (40.25 | ) | ||||||
Statement of Cash Flows for the year ended December 31, 2020 | ||||||||||||
Net loss | (4,990,755 | ) | (310,330,174 | ) | (315,320,929 | ) | ||||||
Change in fair value of warrant liabilities | — | 310,330,174 | 310,330,174 |
September 30, 2020 | ||||||||||||
As Previously Reported | Restatement Adjustment | As Restated | ||||||||||
Balance Sheet (unaudited) | ||||||||||||
Public warrants derivative liability | — | 49,107,054 | 49,107,054 | |||||||||
Private warrants derivative liability | — | 32,522,036 | 32,522,036 | |||||||||
Total liabilities | 12,158,095 | 81,629,090 | 93,787,185 | |||||||||
Class A common stock subject to possible redemption | 300,029,150 | (81,629,090 | ) | 218,400,060 | ||||||||
Class��A common stock | 141 | 816 | 957 | |||||||||
Additional paid-in-capital | 4,670,168 | 73,311,555 | 77,981,723 | |||||||||
Retained earnings (Accumulated deficit) | 328,914 | (73,312,371 | ) | (72,983,457 | ) | |||||||
Total stockholders’ equity | 5,000,008 | — | 5,000,008 | |||||||||
Statement of Operations for the three months ended September 30, 2020 (unaudited) | ||||||||||||
Change in fair value of warrant liabilities | — | (68,996,330 | ) | (68,996,330 | ) | |||||||
Loss before income tax expense | (787,652 | ) | (68,996,330 | ) | (69,783,982 | ) | ||||||
Net loss | (792,915 | ) | (68,996,330 | ) | (69,789,245 | ) | ||||||
Basic and diluted net loss per Class B common stock | (0.10 | ) | (8.79 | ) | (8.89 | ) | ||||||
Statement of Operations for the nine months ended September 30, 2020 (unaudited) | ||||||||||||
Change in fair value of warrant liabilities | — | (72,033,800 | ) | (72,033,800 | ) | |||||||
Loss before income tax expense | (208,400 | ) | (72,033,800 | ) | (72,242,200 | ) | ||||||
Net loss | (450,658 | ) | (72,033,800 | ) | (72,484,458 | ) | ||||||
Basic and diluted net loss per Class B common stock | (0.15 | ) | (9.17 | ) | (9.32 | ) | ||||||
Statement of Cash Flows for the nine months ended September 30, 2020 (unaudited) | ||||||||||||
Net loss | (450,658 | ) | (72,033,800 | ) | (72,484,458 | ) | ||||||
Change in fair value of warrant liabilities | — | 72,033,800 | 72,033,800 |
June 30, 2020 | ||||||||||||
As Previously Reported | Restatement Adjustment | As Restated | ||||||||||
Balance Sheet (unaudited) | ||||||||||||
Public warrants derivative liability | — | 8,270,721 | 8,270,721 | |||||||||
Private warrants derivative liability | — | 4,362,039 | 4,362,039 | |||||||||
Total liabilities | 11,905,001 | 12,632,760 | 24,537,761 | |||||||||
Class A common stock subject to possible redemption | 300,822,070 | (12,632,760 | ) | 288,189,310 | ||||||||
Class A common stock | 133 | 126 | 259 | |||||||||
Additional paid-in-capital | 3,877,256 | 4,315,915 | 8,193,171 | |||||||||
Retained earnings (Accumulated deficit) | 1,121,829 | (4,316,041 | ) | (3,194,212 | ) | |||||||
Total stockholders’ equity | 5,000,003 | — | 5,000,003 | |||||||||
Statement of Operations for the three months ended June 30, 2020 (unaudited) | ||||||||||||
Change in fair value of warrant liabilities | — | (2,685,170 | ) | (2,685,170 | ) | |||||||
Loss before income tax expense | (96,889 | ) | (2,685,170 | ) | (2,782,059 | ) | ||||||
Net loss | (124,174 | ) | (2,685,170 | ) | (2,809,344 | ) | ||||||
Basic and diluted net loss per Class B common stock | (0.02 | ) | (0.34 | ) | (0.36 | ) | ||||||
Statement of Operations for the six months ended June 30, 2020 (unaudited) | ||||||||||||
Change in fair value of warrant liabilities | — | (3,037,470 | ) | (3,037,470 | ) | |||||||
Income (loss) before income tax expense | 579,252 | (3,037,470 | ) | (2,458,218 | ) | |||||||
Net income (loss) | 342,257 | (3,037,470 | ) | (2,695,213 | ) | |||||||
Basic and diluted net loss per Class B common stock | (0.06 | ) | (0.39 | ) | (0.45 | ) | ||||||
Statement of Cash Flows for the six months ended June 30, 2020 (unaudited) | ||||||||||||
Net income (loss) | 342,257 | (3,037,470 | ) | (2,695,213 | ) | |||||||
Change in fair value of warrant liabilities | — | 3,037,470 | 3,037,470 |
March 31, 2020 | ||||||||||||
As Previously Reported | Restatement Adjustment | As Restated | ||||||||||
Balance Sheet (unaudited) | ||||||||||||
Public warrants derivative liability | — | 6,524,218 | 6,524,218 | |||||||||
Private warrants derivative liability | — | 3,423,372 | 3,423,372 | |||||||||
Total liabilities | 11,877,840 | 9,947,590 | 21,825,430 | |||||||||
Class A common stock subject to possible redemption | 300,946,240 | (9,947,590 | ) | 290,998,650 | ||||||||
Class A common stock | 132 | 99 | 231 | |||||||||
Additional paid-in-capital | 3,753,087 | 1,630,772 | 5,383,859 | |||||||||
Retained earnings (Accumulated deficit) | 1,246,003 | (1,630,871 | ) | (384,868 | ) | |||||||
Total stockholders’ equity | 5,000,007 | — | 5,000,007 | |||||||||
Statement of Operations for the three months ended March 31, 2020 (unaudited) | ||||||||||||
Change in fair value of warrant liabilities | — | (352,300 | ) | (352,300 | ) | |||||||
Income before income taxes | 676,141 | (352,300 | ) | 323,841 | ||||||||
Net income | 466,431 | (352,300 | ) | 114,131 | ||||||||
Basic and diluted net loss per Class B common stock | (0.03 | ) | (0.04 | ) | (0.07 | ) | ||||||
Statement of Cash Flows for the three months ended March 31, 2020 (unaudited) | ||||||||||||
Net income | 466,431 | (352,300 | ) | 114,131 | ||||||||
Change in fair value of warrant liabilities | — | 352,300 | 352,300 |
December 31, 2019 | ||||||||||||
As Previously Reported | Restatement Adjustment | As Restated | ||||||||||
Balance Sheet | ||||||||||||
Public warrants derivative liability | — | 6,282,349 | 6,282,349 | |||||||||
Private warrants derivative liability | — | 3,312,941 | 3,312,941 | |||||||||
Total liabilities | 11,692,080 | 9,595,290 | 21,287,370 | |||||||||
Class A common stock subject to possible redemption | 300,479,810 | (9,595,290 | ) | 290,884,520 | ||||||||
Class A common stock | 136 | 96 | 232 | |||||||||
Additional paid-in-capital | 4,219,513 | 1,278,475 | 5,497,988 | |||||||||
Retained earnings (Accumulated deficit) | 779,572 | (1,278,571 | ) | (498,999 | ) | |||||||
Total stockholders’ equity | 5,000,006 | — | 5,000,006 | |||||||||
Statement of Operations for the period from May 19, 2019 (inception) through December 31, 2019 | ||||||||||||
Change in fair value of warrant liabilities | — | (959,526 | ) | (959,526 | ) | |||||||
Allocated expense for warrant issuance cost | — | (319,045 | ) | (319,045 | ) | |||||||
Income (loss) before income taxes | 1,258,636 | (1,278,571 | ) | (19,935 | ) | |||||||
Net income (loss) | 779,572 | (1,278,571 | ) | (498,999 | ) | |||||||
Basic and diluted net loss per Class B common stock | (0.12 | ) | (0.16 | ) | (0.28 | ) | ||||||
Statement of Cash Flows for the period from May 19, 2019 (inception) through December 31, 2019 | ||||||||||||
Net income (loss) | 779,572 | (1,278,571 | ) | (498,999 | ) | |||||||
Issuance costs related to warrant liability | — | 319,045 | 319,045 | |||||||||
Change in fair value of warrant liabilities | — | 959,526 | 959,526 |
September 30, 2019 | ||||||||||||
As Previously Reported | Restatement Adjustment | As Restated | ||||||||||
Balance Sheet (unaudited) | ||||||||||||
Public warrants derivative liability | — | 9,947,060 | 9,947,060 | |||||||||
Private warrants derivative liability | — | 4,858,980 | 4,858,980 | |||||||||
Total liabilities | 11,406,919 | 14,806,040 | 26,212,959 | |||||||||
Class A common stock subject to possible redemption | 299,838,630 | (14,806,040 | ) | 285,032,590 | ||||||||
Class A common stock | 143 | 148 | 291 | |||||||||
Additional paid-in-capital | 4,860,686 | 6,489,173 | 11,349,859 | |||||||||
Retained earnings (Accumulated deficit) | 138,392 | (6,489,321 | ) | (6,350,929 | ) | |||||||
Total stockholders’ equity | 5,000,006 | — | 5,000,006 | |||||||||
Statement of Operations for the three months ended September 30, 2019 (unaudited) | ||||||||||||
Change in fair value of warrant liabilities | — | (6,170,276 | ) | (6,170,276 | ) | |||||||
Allocated expense for warrant issuance cost | — | (319,045 | ) | (319,045 | ) | |||||||
Income (loss) before income tax expense | 388,196 | (6,489,321 | ) | (6,101,125 | ) | |||||||
Net income (loss) | 194,611 | (6,489,321 | ) | (6,294,710 | ) | |||||||
Basic and diluted net loss per Class B common stock | (0.07 | ) | (0.83 | ) | (0.90 | ) | ||||||
Statement of Operations for the period from May 10, 2019 (inception) through September 30, 2019 (unaudited) | ||||||||||||
Change in fair value of warrant liabilities | — | (6,170,276 | ) | (6,170,276 | ) | |||||||
Allocated expense for warrant issuance cost | — | (319,045 | ) | (319,045 | ) | |||||||
Income (loss) before income tax expense | 331,977 | (6,489,321 | ) | (6,157,344 | ) | |||||||
Net income (loss) | 138,392 | (6,489,321 | ) | (6,350,929 | ) | |||||||
Basic and diluted net loss per Class B common stock | (0.08 | ) | (0.83 | ) | (0.91 | ) | ||||||
Statement of Cash Flows for the period from May 10, 2019 (inception) through September 30, 2019 (unaudited) | ||||||||||||
Net income (loss) | 138,392 | (6,489,321 | ) | (6,350,929 | ) | |||||||
Issuance costs related to warrant liability | — | 319,045 | 319,045 | |||||||||
Change in fair value of warrant liabilities | — | 6,170,276 | 6,170,276 |
July 30, 2019 | ||||||||||||
As Previously Reported | Restatement Adjustment | As Restated | ||||||||||
Balance Sheet | ||||||||||||
Public warrants derivative liability | — | 5,400,000 | 5,400,000 | |||||||||
Private warrants derivative liability | — | 2,880,000 | 2,880,000 | |||||||||
Total liabilities | 11,443,548 | 8,280,000 | 19,723,548 | |||||||||
Class A common stock subject to possible redemption | 285,849,880 | (8,280,000 | ) | 277,569,880 | ||||||||
Class A common stock | 142 | 83 | 225 | |||||||||
Additional paid-in-capital | 5,175,033 | 305,917 | 5,480,950 | |||||||||
Accumulated deficit | (176,030 | ) | (306,000 | ) | (482,030 | ) | ||||||
Total stockholders’ equity | 5,000,008 | — | 5,000,008 |
Note 3—Summarylength of Significant Accounting Policies
Use of Estimates
The preparation of these 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 balance sheet and the reported amounts of revenue and expenses during the reporting period. 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 balance sheet, which management considered in formulating its estimate, could change due to one or more future events. Actual results could differ from these estimates.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation limit of $250,000, and investments held in the Trust Account. At December 31, 2020, the Company has not experienced losses on these accounts, and management believes that the Company is not exposed to significant risks on such accounts. The Company’s investments held in the Trust Account as of December 31, 2020 are comprised of money market funds which invest only in direct U.S. government treasury obligations.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Merger Sub, at December 31, 2020. All significant inter-company transactions and balances have been eliminated in consolidation.
Investments Held in the Trust Account
The Company’s portfolio of investments held in the Trust Account is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities, or a combination thereof. The Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in gain on marketable securities, dividends and interest held in Trust Account in the accompanying consolidated statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received for the sale of an asset or paid for the 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 for identical instruments in active markets;
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
As of December 31, 2020, the carrying values of cash, accounts payable, accrued expenses, due to related party and taxes payable approximate their fair values due to the short-term nature of the instruments. The Company’s portfolio of investments held in the Trust Account is comprised of investments in U.S. Treasury securities with an original maturity of 185 days or less, or in money market funds which invest only in direct U.S. government treasury obligations, and are recognized at fair value. The fair value for trading securities is determined using quoted market prices in active markets.
Offering Costs Associated with the Public Offering
Offering costs consist of legal, accounting, underwriting feescustomer contracts, renewals, technology lifecycle, and other costs that were directly related to the Public Offering. Offering costs related to the issuance of shares were recognized in shareholders’ equity while costs allocated to the warrant liabilities were expensed in the Company’s consolidated statements of operations upon the completion of the Public Offering in Julyfactors. This amortization is recorded within sales and September 2019.
Shares of Class A Common Stock Subject to Possible Redemption
Shares of the Company’s Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable shares of the Company’s Class A common stock (including shares of the Company’s Class A common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, shares of the Company’s Class A common stock are classified as stockholders’ equity. Shares of the Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, at December 31, 2020 and 2019, 0 and 29,088,452 shares of the Company’s Class A common stock subject to possible redemption, respectively, are presented as temporary equity, outside of the stockholders’ equity (deficit) section of the Company’s consolidated balance sheets.
Net Income (Loss) Per Share of Common Stock
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 periods. The Company has not considered the effect of the warrants sold in the Public Offering (including the consummation of the over-allotment) and Private Placement to purchase an aggregate of 15,992,155 shares of the Company’s Class A common stock in the calculation of diluted income per share, since their inclusion would be anti-dilutive under the treasury stock method.
Net income per share, basic and diluted for the Company’s Class A common stock for the year ended December 31, 2020 is calculated by dividing (i) the gain on marketable securities, dividends and interest held in Trust Account of approximately $1.2 million, net of applicable taxes and funds available to be withdrawn from the Trust Account for franchise and income tax obligations of approximately $401,000, resulting in an aggregate of approximately $758,000, by (ii) the weighted average number of shares of the Company’s Class A common stock outstanding for the period of 31,411,763 shares. Net loss per share, basic and diluted for the Company’s Class B common stock for the year ended December 31, 2020 is calculated by dividing (i) the net loss of approximately $315.3 million, less income attributable to public shares of approximately $758,000, resulting in a net loss of approximately $316.1 million, by (ii) the weighted average number of shares of the Company’s Class B common stock outstanding for the period of 7,852,941 shares.
Net income per share, basic and diluted for the Company’s Class A common stock for the period from May 10, 2019 (inception) through December 31, 2019 is calculated by dividing (i) the gain on marketable
securities, dividends and interest held in Trust Account of approximately $2.3 million, net of applicable taxes and funds available to be withdrawn from the Trust Account for franchise and income tax obligations of approximately $567,000, resulting in an aggregate of approximately $1.7 million, by (ii) the weighted average number of shares of the Company’s Class A common stock outstanding for the period of 31,092,978 shares. Net loss per share, basic and diluted for the Company’s Class B common stock for the period from May 10, 2019 (inception) through December 31, 2019 is calculated by dividing (i) the net loss of approximately $499,000, less income attributable to public shares of approximately $1.7 million, resulting in a net loss of approximately $2.2 million, by (ii) the weighted average number of shares of the Company’s Class B common stock outstanding for the period of 7,852,941 shares.
Warrant Liability
The Company accounts for warrants for shares of the Company’s Class A common stock as liabilities held at fair value on the consolidated balance sheets. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a change in fair value of warrant liabilitiesmarketing expense in the Company’s consolidated statements of operations. The sales commissions paid related to the sale of Networked Charging Systems are expensed as incurred.
(in thousands) | |||||
Balance as of January 31, 2021 | $ | 5,534 | |||
Capitalization of deferred contract acquisition costs | 3,381 | ||||
Amortization of deferred contract acquisition costs | (1,786) | ||||
Balance as of January 31, 2022 | $ | 7,129 | |||
Capitalization of deferred contract acquisition costs | 3,374 | ||||
Amortization of deferred contract acquisition costs | (2,361) | ||||
Balance as of January 31, 2023 | $ | 8,142 |
January 31 | |||||||||||
2023 | 2022 | ||||||||||
(in thousands) | |||||||||||
Deferred contract acquisition costs, current | $ | 2,598 | $ | 2,104 | |||||||
Deferred contract acquisition costs, noncurrent | 5,544 | 5,025 | |||||||||
Total deferred contract acquisition costs | $ | 8,142 | $ | 7,129 |
Income Taxes
Company’s Common Stock on grant date.
For tax benefits to be recognized, a tax position must bethat is more likely than not to be realized.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material impact on the Company’s consolidated financial statements.
Note 4—Initial Public Offering
On July 30, 2019,
annual reporting periods beginning after December 15, 2021. Early application is permitted. The Company grantedadopted the underwritersamendments effective February 1, 2022. The adoption of ASU 2021-10 did not have a 45-day option from the date of the final prospectus relating to the Public Offering to purchase up to 4,500,000 additional Units to cover over-allotments, if any, at the Public Offering price, less underwriting discounts and commissions. On September 4, 2019, the underwriters partially exercised the over-allotment option and, on September 6, 2019, the underwriters purchased the Over-allotment Units, generating gross proceeds of approximately $14.1 million. The remaining over-allotment option subsequently expired.
Note 5—Related Party Transactions
Founder Shares
On May 16, 2019, the Sponsor purchased 8,625,000 shares (the “Founder Shares”) of the Company’s Class B common stock, par value $0.0001 per share, for an aggregate price of $25,000. The Initial Stockholders agreed to forfeit up to 1,125,000 Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriters. The forfeiture was adjusted to the extent that the over-allotment option was not exercised in full by the underwriters so that the Founder Shares would represent 20.0% of the Company’s issued and outstanding shares after the Public Offering. On September 6, 2019, the underwriters purchased the Over-allotment Units, and the remaining over-allotment option subsequently expired. As a result, an aggregate of 772,059 Founder Shares were forfeited accordingly.
The Initial Stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until one year after the date of the consummation of the Business Combination or earlier if, subsequent to the Business Combination, (i) the last sale price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination or (ii) the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.
The Founder Shares are also subject to the Founders Stock Letter described in Note 1.
Private Placement Warrants
Simultaneously with the closing of the Public Offering, the Sponsor purchased an aggregate of 5,333,333 Private Placement Warrants at a price of $1.50 per Private Placement Warrant, generating gross proceeds of approximately $8.0 million. Simultaneously with the closing of the sale of the Over-allotment Units, the Sponsor purchased an additional 188,235 Private Placement Warrants at a price of $1.50 per Private Placement Warrant, generating gross proceeds of approximately $282,000.
Each whole Private Placement Warrant is exercisable for one whole share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement Warrants to the Sponsor was added to the proceeds from the Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable for cash and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.
The Sponsor and the Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the Business Combination.
Related Party Loans
On May 16, 2019, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover organizational expenses and expenses related to the Public Offering pursuant to a promissory note (the “Note”).
This loan was non-interest bearing and payable on the completion of the Public Offering. The Company borrowed approximately $251,000 under the Note, and then repaid the Note in full to the Sponsor on August 12, 2019.
During the year ended December 31, 2020, the Sponsor advanced approximately $1.3 million to the Company to fund general administrative expenses.
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. To date, the Company had no borrowings under the Working Capital Loans.
Administrative Services Agreement
Commencing on the date that the securities of the Company were first listed on the New York Stock Exchange and continuing until the earlier of the Company’s consummation of its initial business combination or the Company’s liquidation, the Company has agreed to pay the Sponsor a total of $10,000 per month for office space, utilities, secretarial support and administrative services. The Company recorded an aggregate of $120,000 during the year ended December 31, 2020, as well as an aggregate of $50,000 during the period from May 10, 2019 (inception) through December 31, 2019 in general and administrative expenses in connection with the related agreement in the accompanying consolidated statements of operations. As of December 31, 2020, the Company recorded an aggregate of approximately $76,000 in related party accrued expenses.
Note 6—Commitments and Contingencies
Risks and Uncertainties
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The fullmaterial impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on the Company’s results of operations,consolidated financial position and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s financial position, results of operations, financial position and cash flows may be materially adversely affected. Additionally, the Company’s ability to complete an initial business combination may be materially adversely affected due to significant governmental measures being implemented to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential investors or affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate an initial Business Combination in a timely manner. The Company’s ability to consummate an initial business combination may also be dependent on the ability to raise additional equity and debt financing, which may be impacted by the COVID-19 outbreak and the resulting market downturn.
Registration Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any, and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares will be entitled to registration rights pursuant to a registration rights agreement. These holders will be entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
Except for the Affiliated Units, the underwriters were entitled to an underwriting discount of $0.20 per unit, or $5.96 million in the aggregate, paid upon closing of the Public Offering. An additional fee of approximately $282,000 in the aggregate was due in connection with the closing of the sale of the Over-allotment Units.
In addition, $0.35 per unit (but not including the Affiliated Units), or approximately $10.9 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Litigation
On October 29, 2020, a putative class action lawsuit was filed in the Supreme Court of the State of New York by a purported Switchback stockholder in connection with the Business Combination: Bulsa v. Switchback Energy Acquisition Corporation, et al., Index No. 655800/2020 (Sup. Ct. N.Y. Cnty.). Separately, on November 6, 2020, a putative class action lawsuit was filed in the Supreme Court of the State of New York by a different purported Switchback stockholder in connection with the Business Combination: Bushansky v. Switchback Energy Acquisition Corporation, et al., Index No. 656119/2020 (Sup. Ct. N.Y. Cnty.). Additionally, on December 15, 2020, a complaint was filed in the United States District Court for the Southern District of New York by a purported Switchback stockholder in connection with the Business Combination: Ward v. Switchback Energy Acquisition Corporation, et al., Case No. 1:20-cv-10577 (S.D.N.Y.). On December 16, 2020, a separate complaint was filed in the Supreme Court of the State of New York by a purported Switchback stockholder in connection with the Business Combination: Baker v. Switchback Energy Acquisition Corporation, et al., Index No. 657063/2020 (Sup. Ct. N.Y. Cnty.) (collectively, the “Complaints”). The Complaints name Switchback and current members of the Switchback’s board of directors as defendants. The Complaints allege, among other things, breach of fiduciary duty claims against the board of in connection with the Business Combination. The Complaints also allege that this proxy statement/prospectus/consent solicitation statement is materially misleading and/or omits material information concerning the Business Combination, including, with respect to the Federal Complaint, in violation of Sections 14(a) and 20(a) of the Exchange Act. The Complaints generally seek injunctive relief, unspecified damages and awards of attorneys’ and experts’ fees, among other remedies. Although Switchback believes no supplemental disclosures were required under applicable law to address the claims made in the Complaints, in order to alleviate the costs, risks and uncertainties inherent in litigation and provide additional information to its stockholders, Switchback determined to voluntarily supplement the definitive proxy statement/prospectus/consent solicitation statement as described in a Current Report on Form 8-K, which Switchback filed on February 4, 2021. In connection with the filing of the Form 8-K, each of the stockholders bringing one of the Complaints confirmed that he will voluntarily dismiss his Complaint upon the closing of the Business Combination.
Note 7—Stockholders’ Equity
Class A Common Stock—The Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of December 31, 2020 and 2019, there were 31,411,763 shares of Class A common stock issued and outstanding, of which 0 and 29,088,452 shares of Class A common stock were classified outside of permanent equity, respectively.
Class B Common Stock—The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. In May 2019, the Company issued 8,625,000 shares of Class B common stock, including an aggregate of up to 1,125,000 shares of Class B common stock that were subject to forfeiture to the Company by the Sponsor for no consideration to the extent that the underwriters’ over-allotment option for the Public Offering was not exercised in full. On September 6, 2019, the underwriters purchased the Over-allotment Units, and the remaining over-allotment option subsequently expired. As a result, an aggregate of 772,059 shares of Class B common stock were forfeited accordingly. As of December 31, 2020 and 2019, there were 7,852,941 shares of Class B common stock outstanding.
Prior to an initial business combination, only holders of the Company’s Class B common stock will have the right to vote on the election of directors. Holders of the Class A common stock will not be entitled to vote on the election of directors during such time. These provisions of the Certificate of Incorporation may only be amended if approved by a majority of at least 90% of the Company’s common stock. With respect to any other matter submitted to a vote of the Company’s stockholders, including any vote in connection with the initial business combination, except as required by applicable law or stock exchange rule, holders of the Company’s Class A common stock and holders of the Company’s Class B common stock will vote together as a single class, with each share entitling the holder to one vote.
The Class B common stock will automatically convert into Class A common stock at the time of the initial 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 sold in the Public Offering and related to the closing of the initial business combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Public Offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in the Business Combination).
Preferred Stock—The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of December 31, 2020 and 2019, there were no shares of preferred stock issued or outstanding.
Warrants—Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable 30 days after the completion of a Business Combination; provided that the Company has an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of
Class A common stock issuable upon exercise of the Public Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless” basis, and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but the Company will be required to use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon 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 non-redeemable for cash so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
The Company may call the Public Warrants for redemption:
in whole and not in part;
at a price of $0.01 per warrant;
upon a minimum of 30 days’ prior written notice of redemption; and
if, and only if, the last sales price of the Class A common stock equals or exceeds $18.00 per share on each of 20 trading days within the 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
In addition, commencing 90 days after the warrants become exercisable, the Company may redeem the outstanding warrants for shares of Class A common stock (including both Public Warrants and Private Placement Warrants):
in whole and not in part;
at a price equal to a number of shares of Class A common stock to be determined by reference to the agreed table (i.e. “make-whole table”) set forth in the warrant agreement based on the redemption date and the “fair market value” of the Class A common stock;
upon a minimum of 30 days’ prior written notice of redemption; and
if, and only if, the last sale price of the Class A common stock equals or exceeds $10.00 per share (as adjusted) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
The exercise price and number of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. In addition, if the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of the initial business combination at an issue price or
effective issue price of less than $9.20 per share of common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Newly Issued Price.
In no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such warrants. Accordingly, the warrants may expire worthless.
Note 8—3. Fair Value Measurements
Fair Value Measured as of January 31, 2023 | ||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
( in thousands) | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Money market funds | $ | 133,979 | $ | — | $ | — | $ | 133,979 | ||||||||||||||||||
U.S. Treasury securities | — | 104,966 | — | 104,966 | ||||||||||||||||||||||
Total financial assets | $ | 133,979 | $ | 104,966 | $ | — | $ | 238,945 | ||||||||||||||||||
Fair Value Measured as of January 31, 2022 | ||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
( in thousands) | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Money market funds | $ | 254,716 | $ | — | $ | — | $ | 254,716 | ||||||||||||||||||
Total financial assets | $ | 254,716 | $ | — | $ | — | $ | 254,716 | ||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||
Common stock warrant liabilities (Private Placement) | $ | — | $ | — | $ | 25 | $ | 25 | ||||||||||||||||||
Contingent earnout liability recognized upon acquisition of ViriCiti (ViriCiti Earnout) | — | — | 5,993 | 5,993 | ||||||||||||||||||||||
Total financial liabilities | $ | — | $ | — | $ | 6,018 | $ | 6,018 |
December 31, 2020
Description | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||
Assets | ||||||||||||
Investments held in Trust Account Money Market Funds | $ | 316,991,065 | $ | — | $ | — | ||||||
Liabilities | ||||||||||||
Public Warrants | 161,456,462 | — | — | |||||||||
Private Placement Warrants | — | — | 158,469,002 | |||||||||
|
|
|
|
|
| |||||||
161,456,462 | — | 158,469,002 |
December 31, 2019
Description | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||
Assets | ||||||||||||
Investments held in Trust Account Money Market Funds | $ | 316,398,889 | $ | — | $ | — | ||||||
Liabilities | ||||||||||||
Public Warrants | 6,282,349 | — | — | |||||||||
Private Placement Warrants | — | — | 3,312,941 | |||||||||
|
|
|
|
|
| |||||||
6,282,349 | — | 3,312,941 |
Level 1 instruments include investments in money market funds and U.S. Treasury securities, and the Public Warrants when representative market prices were available based on the public trading of the Public Warrants.
hierarchy. The estimatedaggregate fair value of the Company’s money market funds approximated amortized cost and, as such,
Redeemable convertible preferred stock warrant liability | Private placement warrant liability | Earnout liability | ViriCiti Earnout liability | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Fair value as of January 31, 2020 | $ | (2,718) | $ | — | $ | — | $ | — | ||||||||||||||||||
Change in fair value included in other income (expense), net | (73,125) | — | — | — | ||||||||||||||||||||||
Fair value as of January 31, 2021 | $ | (75,843) | $ | — | $ | — | $ | — | ||||||||||||||||||
Private placement warrant liability acquired as part of the Merger | — | (127,888) | — | — | ||||||||||||||||||||||
Contingent earnout liability recognized upon the closing of the reverse recapitalization | — | — | (828,180) | — | ||||||||||||||||||||||
Contingent earnout liability recognized upon the acquisition of ViriCiti (“ViriCiti Earnout”) | — | — | — | (3,856) | ||||||||||||||||||||||
Change in fair value | 9,237 | 63,746 | 84,420 | (2,137) | ||||||||||||||||||||||
Reclassification of warrants to stockholders’ equity (deficit) due to exercise | — | 64,117 | — | — | ||||||||||||||||||||||
Reclassification of Legacy ChargePoint preferred stock warrant liability upon the reverse capitalization | 66,606 | — | — | — | ||||||||||||||||||||||
Issuance of earnout shares upon triggering events | — | — | 501,120 | — | ||||||||||||||||||||||
Reclassification of remaining contingent earnout liability upon triggering event | — | — | 242,640 | — | ||||||||||||||||||||||
Fair value as of January 31, 2022 | $ | — | $ | (25) | $ | — | $ | (5,993) | ||||||||||||||||||
Change in fair value included in other income (expense), net | — | (23) | — | — | ||||||||||||||||||||||
Effect of foreign currency translation | — | — | — | 191 | ||||||||||||||||||||||
Reclassification of warrants to stockholder’s equity (deficit) due to exercise | — | 48 | — | — | ||||||||||||||||||||||
Contingent earnout liability increase upon satisfaction of earnings goal of ViriCiti (ViriCiti Earnout) | — | — | — | (1,283) | ||||||||||||||||||||||
Transfer out of Level 3 upon achievement of earnings target for the earnout period | — | — | — | 7,085 | ||||||||||||||||||||||
Fair Value as of January 31, 2023 | $ | — | $ | — | $ | — | $ | — |
estimate the fair value using unobservable inputs including the expected share-priceterm, expected volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility input based on the observed price of its Public Warrants, when available. Otherwise, the volatility input is based on implied volatilities of guideline companies. The risk-free interest rate is based on the U.S. Treasury curve on the grant date for a maturity similar to the expected remaining life of the Warrants. The expected life of the Warrants is assumed to be equivalent to a probability-weighted average between a two-year life (in the event that there is no business combination) and the contractual life (if a business combination is consummated) of the Warrants. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. For all of the periods presented, the probability assigned to the consummation of a business combination was in the range of 75% - 90%. For the below valuation dates, when a public market price for the stock was not available, the closest available date where a public market price was available for such stock was used instead.
The following table provides quantitative information regarding fair value assumptions for the Public Warrants (fair values, and related inputs and assumptions, of Private Placement Warrants and Public Warrants were materially consistent between July 30, 2019 (IPO Closing Date) and September 6, 2019 (Overallotment Option exercise date by investors):
The following table provides quantitative information regarding fair value assumptions for the Public Warrants:
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The following table provides quantitative information regarding fair value assumptions for the Private Placement Warrants:
Initial measurement (July 30 and September 6, 2019) | September 30, 2019 | December 31, 2019 | ||||||||||
Market price of public stock | 9.82 | 9.71 | 9.80 | |||||||||
Exercise price | 11.50 | 11.50 | 11.50 | |||||||||
Expected term | 5.38 | 5.21 | 4.96 | |||||||||
Volatility | 8.60 | % | 14.10 | % | 10.50 | % | ||||||
Risk-free rate | 1.85 | % | 1.55 | % | 1.68 | % | ||||||
Dividend yield | 0 | % | 0 | % | 0 | % | ||||||
Probability of completing a Business Combination | 75 | % | 75 | % | 75 | % |
March 30, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | |||||||||||||
Market price of public stock | 9.65 | 10.05 | 15.60 | 40.08 | ||||||||||||
Exercise price | 11.50 | 11.50 | 11.50 | 11.50 | ||||||||||||
Expected term | 4.71 | 4.46 | 4.59 | 4.47 | ||||||||||||
Volatility | 14.20 | % | 15.10 | % | 46.30 | % | 74.30 | % | ||||||||
Risk-free rate | 0.36 | % | 0.26 | % | 0.26 | % | 0.31 | % | ||||||||
Dividend yield | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Probability of completing a Business Combination | 75 | % | 75 | % | 90 | % | 90 | % |
The change inIn determining the fair value of the warrant liabilities is summarized as follows:
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Transfers to/from Levels 1 and 3 are recognized atearnout liability, the endCompany used the Monte Carlo simulation valuation model using a distribution of potential outcomes on a monthly basis over the Earnout Period using the most reliable information available.
January 31, 2023 | ||||||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
U.S. Treasury Securities | $ | 105,415 | $ | — | $ | (449) | $ | 104,966 | ||||||||||||||||||
Note 9—Income Taxes
The income tax provision consists of the following:
For the year ended December 31, 2020 | For the period From May 10, 2019 (inception) through December 31, 2019 | |||||||
Current | ||||||||
Federal | $ | 201,603 | $ | 479,064 | ||||
State | — | — | ||||||
Deferred | �� | |||||||
Federal | (1,207,074 | ) | (222,823 | ) | ||||
State | — | — | ||||||
Valuation allowance | 1,207,074 | 222,823 | ||||||
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| |||||
Income tax provision | $ | 201,603 | $ | 479,064 | ||||
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The Company’s net deferred tax assets arebelow amortized cost basis was not considered other than temporary as follows:
December 31, 2020 | December 31, 2019 | |||||||
Deferred tax assets: | ||||||||
StartUp/Organization Costs | $ | 1,207,074 | $ | 222,823 | ||||
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Total deferred tax assets | 1,207,074 | 222,823 | ||||||
Valuation allowance | (1,207,074 | ) | (222,823 | ) | ||||
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Deferred tax asset, net of allowance | $ | — | $ | — | ||||
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|
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portionthe Company will hold the debt securities until maturity or a recovery of the cost basis.
A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows (as restated):
For the year ended December 31, 2020 | For The period from May 10, 2019 (inception) through December 31,2019 | |||||||
Statutory federal income tax rate | 21.0 | % | 21.0 | % | ||||
Change in fair value of warrant liabilities | (20.7 | )% | (1,010.6 | )% | ||||
Allocated expense for warrant issuance costs | 0.0 | % | (336.0 | )% | ||||
Meals & entertainment | 0.0 | % | 0.0 | % | ||||
Change in Valuation Allowance | (0.4 | )% | (1,077.1 | )% | ||||
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Income Taxes Provision (Benefit) | (0.1 | )% | (2,402.7 | )% | ||||
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The Company’s taxable income primarily consists of interest income on the Trust Account. The Company’s general and administrative expenses are generally considered start-up costs and are not currently deductible. During the year ended December 31, 2020, approximately $202,000 of income tax expense was recognized.
Note 10—Subsequent Events
Management has evaluated subsequent events to determine if events or transactions occurring through the date the consolidated financial statements were available for issuance require potential adjustment to or disclosure in the consolidated financial statements and has concluded that all such events that would require recognition or disclosure have been recognized or disclosed.
Reverse Recapitalization
PursuantImmediately prior to the termsclosing of the business combination agreement, each stockholder of ChargePoint received 0.9966Merger:
$225.0 million, in a private placement pursuant to the subscription agreements (“PIPE Financing”). The PIPE Financing closed simultaneously with the consummation of the Merger.
Also atEarn Back Triggering Event on March 12, 2021.
Shares | |||||
Common stock of Switchback, outstanding prior to Merger | 39,264,704 | ||||
Less redemption of Switchback shares | (33,009) | ||||
Less surrender of Switchback Founder Shares | (984,706) | ||||
Common stock of Switchback | 38,246,989 | ||||
Shares issued in PIPE | 22,500,000 | ||||
Merger and PIPE financing shares (1) | 60,746,989 | ||||
Legacy ChargePoint shares (2) | 217,021,368 | ||||
Total shares of common stock immediately after Merger | 277,768,357 |
(in thousands) | |||||
Balance as of January 31, 2021 | $ | 1,215 | |||
Goodwill acquired with ViriCiti acquisition | 62,839 | ||||
Goodwill acquired with HTB acquisition | 158,997 | ||||
Foreign exchange fluctuations | (4,567) | ||||
Balance as of January 31, 2022 | $ | 218,484 | |||
Foreign exchange fluctuations | (4,768) | ||||
Balance as of January 31, 2023 | $ | 213,716 |
January 31, 2023 | ||||||||||||||
Cost (1) | Accumulated Amortization (1) | Net (1) | Useful Life | |||||||||||
(amounts in thousands, useful lives in years) | ||||||||||||||
Customer relationships | $ | 90,738 | $ | (12,223) | $ | 78,515 | 10 | |||||||
Developed technology | 18,355 | (4,197) | 14,158 | 6 | ||||||||||
$ | 109,093 | $ | (16,420) | $ | 92,673 |
January 31, 2022 | ||||||||||||||
Cost (1) | Accumulated Amortization (1) | Net (1) | Useful Life | |||||||||||
(amounts in thousands, useful lives in years) | ||||||||||||||
Customer relationships | $ | 93,065 | $ | (3,223) | $ | 89,842 | 10 | |||||||
Developed technology | 18,731 | (1,364) | 17,367 | 6 | ||||||||||
$ | 111,796 | $ | (4,587) | $ | 107,209 |
Year ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
(in thousands) | |||||||||||||||||
Amortization Expense | $ | 11,646 | $ | 4,617 | $ | — |
Years Ending January 31, | (in thousands) | ||||
2024 | $ | 12,133 | |||
2025 | 12,133 | ||||
2026 | 12,133 | ||||
2027 | 12,133 | ||||
2028 | 10,995 | ||||
Thereafter | 33,146 | ||||
Total amortization expense | $ | 92,673 |
January 31, | |||||||||||
2023 | 2022 | ||||||||||
(in thousands) | |||||||||||
Raw materials | $ | 11,509 | $ | 9,712 | |||||||
Finished goods | 57,221 | 26,167 | |||||||||
Total Inventories | $ | 68,730 | $ | 35,879 |
January 31, | |||||||||||
2023 | 2022 | ||||||||||
(in thousands) | |||||||||||
Prepaid expense | $ | 48,464 | $ | 16,951 | |||||||
Other current assets | 22,556 | 19,652 | |||||||||
Total Prepaid Expense and Other Current Assets | $ | 71,020 | $ | 36,603 |
January 31, | |||||||||||
2023 | 2022 | ||||||||||
(in thousands) | |||||||||||
Furniture and fixtures | $ | 1,244 | $ | 903 | |||||||
Computers and software | 7,164 | 6,147 | |||||||||
Machinery and equipment | 25,144 | 16,193 | |||||||||
Tooling | 13,782 | 10,572 | |||||||||
Leasehold improvements | 9,357 | 10,549 | |||||||||
Owned and operated systems | 24,119 | 22,546 | |||||||||
Construction in progress | 2,790 | 2,720 | |||||||||
83,600 | 69,630 | ||||||||||
Less: Accumulated depreciation | (43,554) | (35,037) | |||||||||
Total Property and Equipment, Net | $ | 40,046 | $ | 34,593 |
Year ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
(in thousands) | |||||||||||||||||
Depreciation Expense | $ | 13,404 | $ | 11,840 | $ | 10,083 |
January 31, | |||||||||||
2023 | 2022 | ||||||||||
(in thousands) | |||||||||||
Accrued expenses | $ | 46,105 | $ | 31,865 | |||||||
Refundable customer deposits | 14,551 | 9,409 | |||||||||
Payroll and related expenses | 21,495 | 16,131 | |||||||||
Taxes payable | 14,232 | 8,955 | |||||||||
Other current liabilities(1) | 37,100 | 17,968 | |||||||||
Total Accrued and Other Current Liabilities | $ | 133,483 | $ | 84,328 |
January 31, | |||||||||||
2023 | 2022 | ||||||||||
(in thousands) | |||||||||||
Operating leases | |||||||||||
Operating lease right-of-use assets | $ | 22,242 | $ | 25,535 | |||||||
Operating lease liabilities, current | 3,753 | 3,876 | |||||||||
Operating lease liabilities, noncurrent | 21,841 | 25,370 | |||||||||
Total operating lease liabilities | $ | 25,594 | $ | 29,246 |
(in thousands) | |||||
Years Ending January 31, | |||||
2024 | $ | 6,657 | |||
2025 | 6,186 | ||||
2026 | 4,983 | ||||
2027 | 4,682 | ||||
2028 | 4,087 | ||||
Thereafter | 6,233 | ||||
Total undiscounted operating lease payments | $ | 32,828 | |||
Less: imputed interest | (7,234) | ||||
Total operating lease liabilities | $ | 25,594 |
January 31, | |||||||||||
2023 | 2022 | ||||||||||
Lease Term and Discount Rate | |||||||||||
Weighted-average remaining operating lease term (years) | 5.7 | 6.5 | |||||||||
Weighted-average operating lease discount rate | 7.3 | % | 7.3 | % |
Year ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
(in thousands) | |||||||||||||||||
Supplemental Cash Flow Information | |||||||||||||||||
Cash paid for amounts in the measurement of operating lease liabilities | $ | 6,927 | $ | 5,164 | $ | 4,226 |
January 31, 2023 | ||||||||||||||||||||||||||
Gross Amount | Debt Discount and Issuance Costs | Carrying Amount | Estimated Fair Value | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
2027 Convertible Notes | $ | 300,000 | $ | (5,064) | $ | 294,936 | $ | 233,000 |
Year ended January 31, | ||||||||||||||
2023 | ||||||||||||||
(in thousands) | ||||||||||||||
Contractual interest expense | $ | 8,429 | ||||||||||||
Amortization of debt discount and issuance costs | 965 | |||||||||||||
Total interest expense | $ | 9,394 |
February 26, 2021 (Merger Date) | January 31, 2021 | January 31, 2020 | |||||||||||||||
Expected volatility | 84.3 | % | 80.5 | % | 58.4 | % | |||||||||||
Risk-free interest rate | 0.0 | % | 0.1 | % | 1.6 | % | |||||||||||
Dividend rate | 0.0 | % | 0.0 | % | 0.0 | % | |||||||||||
Expected term (years) | 0 | 1.4 | 2.0 |
January 31, 2023 | |||||||||||||||||
Outstanding Warrants | Expiration Date | ||||||||||||||||
Number of Warrants | Exercise Price | ||||||||||||||||
Common Stock | 20,922,215 | $ | 6.03 | 7/31/2030 – 8/4/2030 | |||||||||||||
Common Stock | 13,577,221 | $ | 9.04 | 11/16/2028 – 2/13/2029 | |||||||||||||
Total outstanding common stock warrants | 34,499,436 |
January 31, 2022 | |||||||||||||||||
Outstanding Warrants | Expiration Date | ||||||||||||||||
Number of Warrants | Exercise Price | ||||||||||||||||
Common Stock | 21,727,177 | $1.25 - $6.03 | 3/4/2022 - 8/6/2030 | ||||||||||||||
Common Stock | 13,811,412 | $ | 9.04 | 11/16/2028 – 2/14/2029 | |||||||||||||
Total outstanding common stock warrants | 35,538,589 |
January 31, 2022 | February 26, 2021 (Merger Date) | ||||||||||
Market price of public stock | $ | 13.85 | $ | 30.83 | |||||||
Exercise price | $ | 11.50 | $ | 11.50 | |||||||
Expected term (years) | 4.1 | 5.0 | |||||||||
Volatility | 70.5 | % | 73.5 | % | |||||||
Risk-free interest rate | 1.0 | % | 0.8 | % | |||||||
Dividend rate | 0.0 | % | 0.0 | % |
Legacy Warrants | Private Placement Warrants | Total Common Stock Warrants | |||||||||||||||||||||
Outstanding as of January 31, 2022 | 35,538,589 | 10,435 | 35,549,024 | ||||||||||||||||||||
Warrants Exercised | (1,039,153) | (10,435) | (1,049,588) | ||||||||||||||||||||
Outstanding as of January 31, 2023 | 34,499,436 | — | 34,499,436 |
March 12, 2021 | February 26, 2021 | ||||||||||
Current stock price | $ | 27.84 | $ | 30.83 | |||||||
Expected volatility | 72.00 | % | 71.60 | % | |||||||
Risk-free interest rate | 0.85 | % | 0.75 | % | |||||||
Dividend rate | 0.00 | % | 0.00 | % | |||||||
Expected term (years) | 4.96 | 5.00 |
Year Ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
(in thousands) | |||||||||||||||||
Cost of revenue | $ | 4,351 | $ | 3,782 | $ | 115 | |||||||||||
Research and development | 37,967 | 25,461 | 1,807 | ||||||||||||||
Sales and marketing | 17,393 | 9,154 | 1,501 | ||||||||||||||
General and administrative | 33,639 | 28,934 | 1,524 | ||||||||||||||
Total stock-based compensation expense | $ | 93,350 | $ | 67,331 | $ | 4,947 |
Number of Shares | Weighted Average Grant Date Fair Value per Share | ||||||||||
Outstanding as of January 31, 2022 | 4,033,418 | $ | 26.27 | ||||||||
RSU granted | 13,044,848 | $ | 12.72 | ||||||||
RSU vested | (3,066,215) | $ | 19.06 | ||||||||
RSU forfeited | (1,076,638) | $ | 17.69 | ||||||||
Outstanding as of January 31, 2023 | 12,935,413 | $ | 15.02 |
Number of Shares | Weighted Average Grant Date Fair Value per Share | ||||||||||
Outstanding as of January 31, 2022 | — | $ | — | ||||||||
PRSU granted | 2,266,754 | $ | 10.81 | ||||||||
PRSU forfeited | (119,388) | $ | 10.47 | ||||||||
Outstanding as of January 31, 2023 | 2,147,366 | $ | 10.83 |
Number of Stock Option Awards | Weighted Average Exercise Price | Weighted Average Remaining Contractual term (in years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
Outstanding as of January 31, 2022 | 22,200,869 | $ | 0.68 | 6.6 | $ | 292,362 | |||||||||||||||||
Granted | — | $ | — | ||||||||||||||||||||
Exercised | (4,201,592) | $ | 0.60 | ||||||||||||||||||||
Cancelled | (398,753) | $ | 0.76 | ||||||||||||||||||||
Outstanding as of January 31, 2023 | 17,600,524 | $ | 0.70 | 5.6 | $ | 201,352 | |||||||||||||||||
Options vested and expected to vest as of January 31, 2023 | 17,578,098 | $ | 0.70 | 5.6 | $ | 201,097 | |||||||||||||||||
Exercisable as of January 31, 2023 | 14,356,582 | $ | 0.69 | 5.2 | $ | 164,436 |
Year Ended January 31, | |||||||||||||||||
2023 | 2022 | ||||||||||||||||
Expected volatility | 64.9% - 72.2% | 61.8% - 73.5% | |||||||||||||||
Risk-free interest rate | 0.8% - 3.6% | 0.1% - 0.3% | |||||||||||||||
Dividend rate | 0.0 | % | 0.0 | % | |||||||||||||
Expected term (in years) | 0.5 - 2.0 | 0.4 - 1.9 |
Year Ended January 31, 2023 | |||||||||||||||||
Expected volatility | 72.1% - 74.0% | ||||||||||||||||
Risk-free interest rate | 2.8% - 3.3% | ||||||||||||||||
Dividend rate | 0.0 | % | |||||||||||||||
Expected term (in years) | 0.3 - 4.8 |
Year Ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
(in thousands) | |||||||||||||||||
Domestic | $ | (342,999) | $ | (131,916) | $ | (197,908) | |||||||||||
Foreign | (4,276) | (3,255) | 1,082 | ||||||||||||||
Net loss before income taxes | $ | (347,275) | $ | (135,171) | $ | (196,826) |
Year Ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
(in thousands) | |||||||||||||||||
Current | |||||||||||||||||
Federal | $ | — | $ | — | $ | — | |||||||||||
State | 44 | 17 | 47 | ||||||||||||||
Foreign | 1,345 | 359 | 151 | ||||||||||||||
Total current | $ | 1,389 | $ | 376 | $ | 198 | |||||||||||
Deferred | |||||||||||||||||
Federal | $ | 1 | $ | (1,242) | $ | — | |||||||||||
State | — | (423) | — | ||||||||||||||
Foreign | (3,557) | (1,641) | — | ||||||||||||||
Total deferred | (3,556) | (3,306) | — | ||||||||||||||
Total provision for income taxes | $ | (2,167) | $ | (2,930) | $ | 198 |
Year Ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Tax at federal statutory rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
State tax rate, net | — | % | — | % | — | % | |||||||||||
Warrant and earnout revaluation | — | % | 20.9 | % | (7.8 | %) | |||||||||||
Stock-based compensation | — | % | 8.0 | % | (0.2 | %) | |||||||||||
Intangible assets amortization | — | % | 1.3 | % | — | % | |||||||||||
Change in valuation allowance | (18.9 | %) | (45.5 | %) | (13.6 | %) | |||||||||||
Transaction cost | — | % | (1.2 | %) | — | % | |||||||||||
Research and development tax credits | 0.8 | % | 2.8 | % | 1.1 | % | |||||||||||
Section 162(m) executive compensation limitation | (1.2) | % | (5.3) | % | — | % | |||||||||||
Other | (1.1) | % | 0.2 | % | (0.6) | % | |||||||||||
Effective tax rate | 0.6 | % | 2.2 | % | (0.1) | % |
Year Ended January 31, | |||||||||||
2023 | 2022 | ||||||||||
(in thousands) | |||||||||||
Deferred tax assets: | |||||||||||
Net operating losses | $ | 216,642 | $ | 199,299 | |||||||
Research & development credits | 34,406 | 25,725 | |||||||||
Deferred revenue | 18,124 | 10,691 | |||||||||
Accruals and reserves | 16,742 | 10,882 | |||||||||
Stock-based compensation | 11,706 | 2,445 | |||||||||
Operating lease liabilities | 6,589 | 7,490 | |||||||||
Capitalized research & development expense | 39,761 | — | |||||||||
Total deferred tax assets | 343,970 | 256,532 | |||||||||
Less: valuation allowance | (328,786) | (240,584) | |||||||||
Deferred tax liabilities: | |||||||||||
Depreciation and amortization | (390) | (177) | |||||||||
Operating lease right-of-use assets | (5,723) | (6,550) | |||||||||
Acquired intangible assets | (22,058) | (26,918) | |||||||||
Total deferred tax liabilities | (28,171) | (33,645) | |||||||||
Net deferred tax assets (liabilities) | $ | (12,987) | $ | (17,697) |
Year Ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
(in thousands) | |||||||||||||||||
Unrecognized tax benefits - beginning | $ | 19,238 | $ | 9,402 | $ | 10,153 | |||||||||||
Gross changes - prior period tax position | 109 | 2,039 | (3,620) | ||||||||||||||
Gross changes - current period tax position | 6,415 | 7,797 | 2,869 | ||||||||||||||
Unrecognized tax benefits — ending | $ | 25,762 | $ | 19,238 | $ | 9,402 |
Year Ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
(in thousands) | |||||||||||||||||
United States | $ | 373,736 | $ | 205,186 | $ | 131,571 | |||||||||||
Rest of World | 94,358 | 35,820 | 14,919 | ||||||||||||||
Total revenue | $ | 468,094 | $ | 241,006 | $ | 146,490 |
January 31, | |||||||||||
2023 | 2022 | ||||||||||
(in thousands) | |||||||||||
United States | $ | 71,032 | $ | 72,026 | |||||||
Netherlands | 76,747 | 87,731 | |||||||||
Rest of World | 7,182 | 7,580 | |||||||||
Total long-lived assets | $ | 154,961 | $ | 167,337 |
Year Ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
(in thousands, except share and per share data) | |||||||||||||||||
Numerator: | |||||||||||||||||
Net income (loss) | $ | (345,108) | $ | (132,241) | $ | (197,024) | |||||||||||
Adjust: Accretion of beneficial conversion feature of redeemable convertible preferred stock | — | — | (60,377) | ||||||||||||||
Adjust: Cumulative dividends on redeemable convertible preferred stock | — | (4,292) | (16,799) | ||||||||||||||
Adjust: Deemed dividends attributable to vested option holders | — | (51,855) | — | ||||||||||||||
Adjust: Deemed dividends attributable to common stock warrant holders | — | (110,635) | — | ||||||||||||||
Net loss attributable to common stockholders - Basic | $ | (345,108) | $ | (299,023) | $ | (274,200) | |||||||||||
Less: Gain attributable to earnout shares issued | — | (84,420) | — | ||||||||||||||
Less: Change in fair value of dilutive warrants | — | (68,223) | — | ||||||||||||||
Net loss attributable to common stockholders - Diluted | $ | (345,108) | $ | (451,666) | $ | (274,200) | |||||||||||
Denominator: | |||||||||||||||||
Weighted average common shares outstanding(1) | 338,576,326 | 297,642,999 | 15,116,763 | ||||||||||||||
Less: Weighted-average unvested restricted shares and shares subject to repurchase | (87,659) | (221,030) | — | ||||||||||||||
Weighted average shares outstanding - Basic | 338,488,667 | 297,421,969 | 15,116,763 | ||||||||||||||
Add: Earnout Shares under the treasury stock method | — | 3,701,427 | — | ||||||||||||||
Add: Public and Private Placement Warrants under the treasury stock method | — | 1,366,870 | — | ||||||||||||||
Weighted average shares outstanding - Diluted | 338,488,667 | 302,490,266 | 15,116,763 | ||||||||||||||
Net loss per share - Basic | $ | (1.02) | $ | (1.01) | $ | (18.14) | |||||||||||
Net loss per share - Diluted | $ | (1.02) | $ | (1.49) | $ | (18.14) |
Year Ended January 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Redeemable convertible preferred stock (on an as-converted basis) | — | — | 193,037,715 | ||||||||||||||
2027 Convertible Notes (on an as-converted basis) | 12,483,569 | — | — | ||||||||||||||
Options to purchase common stock | 17,600,524 | 22,200,869 | 30,167,178 | ||||||||||||||
Restricted stock units | 12,935,413 | 4,033,418 | — | ||||||||||||||
Unvested early exercised common stock options | 40,555 | 132,180 | 371,193 | ||||||||||||||
Redeemable convertible preferred stock warrants (on an as-converted basis) | — | — | 2,358,546 | ||||||||||||||
Common stock warrants | 34,499,436 | 35,549,024 | 36,402,515 | ||||||||||||||
Employee stock purchase plan | 1,835,659 | 894,348 | — | ||||||||||||||
Total potentially dilutive common share equivalents | 79,395,156 | 62,809,839 | 262,337,147 |
•Designing and implementing controls over segregation of duties; and
|
Financial Statements: See “Index to Financial Statements” at “Item 8. Financial Statements and Supplementary Data” herein.
Exhibit No. |
|
IV-1
Exhibit No. | Description | |||||||
10.10* | ||||||||
10.11* | ||||||||
10.12 | ||||||||
10.13 | ||||||||
10.14^* | ||||||||
10.15^* | ||||||||
10.16* | ||||||||
10.17* | ||||||||
10.18* | ||||||||
10.19* | ||||||||
10.20* | ||||||||
10.21* | ||||||||
10.22^* | ||||||||
10.23^* | ||||||||
10.24^* | ||||||||
10.25 | ||||||||
10.26^* | ||||||||
10.27^*+ | ||||||||
10.28*+ | ||||||||
21.1+ | ||||||||
Exhibit No. | Description | |||||||
23.1+ | ||||||||
24.1+ | ||||||||
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because iXBRL tags are embedded within the Inline XBRL document). | ||||||||
Inline XBRL Taxonomy Extension Schema Document | ||||||||
Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||
Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||||||
Inline XBRL Taxonomy Extension | ||||||||
Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||
104+ | The Cover Page Interactive Data File, formatted in Inline XBRL (included within the Exhibit 101 attachments). | |||||||
^ | The schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request. | |||||||
* | Denotes management compensatory plan, contract or arrangement. | |||||||
+ | Filed herewith | |||||||
*** | Furnished herewith |
|
|
IV-2
April 3, 2023 |
| |||||||||||
| ||||||||||||
| ||||||||||||
CHARGEPOINT HOLDINGS, INC. | ||||||||||||
By: | /s/ Rex S. Jackson | |||||||||||
Name: | Rex S. Jackson | |||||||||||
Title: | Chief Financial Officer and Principal Financial Officer | |||||||||||
Signature | Title | Signature Date | ||||||||||||
/s/ Rex S. Jackson | Chief Financial Officer | April 3, 2023 | ||||||||||||
REX S. JACKSON | (Principal Financial Officer) | |||||||||||||
/s/ Henrik Gerdes | Chief Accounting Officer | April 3, 2023 | ||||||||||||
HENRIK GERDES | (Principal Accounting Officer) | |||||||||||||
/s/ Pasquale Romano | Chief Executive Officer and Director | April 3, 2023 | ||||||||||||
PASQUALE ROMANO | (Principal Executive Officer) | |||||||||||||
/s/ Roxanne Bowman | Director | April 3, 2023 | ||||||||||||
ROXANNE BOWMAN | ||||||||||||||
/s/ Elaine L. Chao | Director | April 3, 2023 | ||||||||||||
ELAINE L. CHAO | ||||||||||||||
/s/ Bruce Chizen | Director | April 3, 2023 | ||||||||||||
BRUCE CHIZEN | ||||||||||||||
/s/ Axel Harries | Director | April 3, 2023 | ||||||||||||
AXEL HARRIES | ||||||||||||||
/s/ Jeffrey Harris | Director | April 3, 2023 | ||||||||||||
JEFFREY HARRIS | ||||||||||||||
/s/ Susan Heystee | Director | April 3, 2023 | ||||||||||||
SUSAN HEYSTEE | ||||||||||||||
Signature | Title | Signature Date | ||||||||||||
/s/ Mark Leschly | Director | April 3, 2023 | ||||||||||||
MARK LESCHLY | ||||||||||||||
/s/ Michael Linse | Director | April 3, 2023 | ||||||||||||
MICHAEL LINSE | ||||||||||||||
/s/ Ekta Singh-Bushell | Director | April 3, 2023 | ||||||||||||
EKTA SINGH-BUSHELL | ||||||||||||||
/s/ G. Richard Wagoner, Jr. | Director | April 3, 2023 | ||||||||||||
G. RICHARD WAGONER, JR. | ||||||||||||||