SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
| For the quarterly period ended June 30, 2022. | |||||
(MARK ONE)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the transition period from to . | |||||
For the quarter ended September 30, 2021
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: number 001-39881
EMBARK TECHNOLOGY, INC.
(Exact Namename of Registrantregistrant as Specifiedspecified in Its Charter)
| ||||||
| Delaware | 85-3343695 | |||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||
424 Townsend Street, San Francisco, California | 94107 | |||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||
424 Townsend Street
San Francisco, CA
(Address of principal executive offices)
(415) 671-9628
(Issuer’sRegistrant's telephone number)
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||
| Class A common | EMBK | The Nasdaq | ||||||||
| Warrants, | EMBKW | The Nasdaq | ||||||||
CheckIndicate by check mark whether the issuerregistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the pastpreceding 12 months (or for such shorter period that the registrant was required to file such reports),; and (2) has been subject to such filing requirements for the past 90 days. Yes ☒x No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒x No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”,filer,” “accelerated filer”, and “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | Accelerated filer | |||||||||||
| Non-accelerated filer | Smaller reporting company | |||||||||||
| Emerging growth company | ||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒o No ☐
As of November 9, 2021, there were 51,750,000August 5, 2022, the number of shares of the issuer’s Class A common stock $0.0001 par value issuedoutstanding was 373,586,994 and outstanding.
EXPLANATORY NOTE
Embark Technology, Inc., formerly known as Northern Genesis Acquisition Corp. II (the “Company”) is filingAs used in this Amendment No. 1 to its Quarterly Report on Form 10-Q, unless the context requires otherwise, references to “Embark,” the “Company,” “we,” “us,” and “our,” and similar references refer to Embark Technology, Inc. and its wholly owned subsidiaries following the Business Combination (as defined herein) and to Embark Trucks, Inc. prior to the Business Combination.
This amended and restated report on Form 10-Q/A is presentedrepresenting Embark’s views as of the filingany subsequent date, of the Original Form 10-Q and Embark does not reflect events occurring after that date, or modify orundertake any obligation to update disclosures in any way other than as required to reflect the restatement as described below. Accordingly, this Amendment No. 1 on Form 10-Q/A should be read in conjunction with our filings with the SEC subsequent to the date on which we filed the Original Form 10-Q.
The Company is filing this First Amendment on Form 10-Q/A to reflect a restatement of the Company’s condensed financialforward‑looking statements as of January 15, 2021, as of and for the three months ended March 31, 2021, as of and for the three and six months ended June 30, 2021 and for the three and nine months ended September 30, 2021 to correct errors in the Company’s classification of public shares as permanent equity as further described below.
On November 10, 2021, subsequent to the fiscal quarter ended September 30, 2021, Northern Genesis Acquisition Corp. II, our predecessor and a Delaware corporation (“NGA”), consummated the previously announced business combination pursuant to the agreement and plan of merger, dated as of June 22, 2021 (the “Merger Agreement”), by and among NGA, NGAB Merger Sub Inc., a Delaware corporation (“Merger Sub”), and Embark Trucks Inc., a Delaware corporation (“Embark Trucks”).Pursuant to the Merger Agreement, NGA acquired Embark Trucks, by way of Merger Sub merging with and into Embark Trucks, with Embark Trucks becoming a direct subsidiary of NGA as a result thereof (the “Business Combination”).
On November 9, 2021, NGA held a special meeting of stockholders (the “Special Meeting”), at which the NGA stockholders considered and adopted, among other matters, a proposal to approve the Business Combination, including (a) adopting the Merger Agreement and (b) approving the other transactions contemplated by the Merger Agreement and related agreements described in the proxy statement/prospectus related thereto.
Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, on November 10, 2021 (the “Closing Date”), the Business Combination was consummated (the “Closing”).
On November 11, 2021, the business day following the Closing Date, the Company’s Class A common stock and warrants began trading on Nasdaq under the symbols “EMBK” and “EMBKW”. NGA’s public units automatically separated into their component securities upon consummation of the Business Combination and, as a result, no longer trade as a separate security and were delisted from the New York Stock Exchange.
Unless stated otherwise, this report contains information about NGA before the consummation of the Business Combination. References to the “Company” in this report refer to NGA before the consummation of the Business Combination.
Background of Restatement
In the Company’s previously issued financial statements as of January 15, 2021 and March 31, 2021, a portion of the public shares were classified as permanent equity to maintain stockholders’ equity greater than $5,000,000 on the basis that the Company could consummate its initial business combination only if the Company has net tangible assets of at least $5,000,001 under the Company’s charter. Thus, the Company can only complete a merger and continue to exist as a public company if there are sufficient public shares that do not redeem at the merger and so it was deemed appropriate to classify the portion of its public shares required to keep its stockholders’ equity above the $5,000,000 threshold as “shares not subject to redemption.”
However, in light of recent comment letters issued by the Securities & Exchange Commission (“SEC”) to several special purpose acquisition companies, management re-evaluated the Company’s application of ASC 480-10-99 to its accounting classification of public shares. Upon re-evaluation, management determined that the public shares include certain provisions that require classification of the public shares as temporary equity regardless of the minimum net tangible asset required by the Company to complete its initial business combination.
The Company’s management and the audit committee of the Company’s Board of Directors concluded that it is appropriate to restate all of the Company’s previously issued financial statements to report all public shares as temporary equity as of January 15, 2021, as of and for the three months ended March 31, 2021, as of and for the three and six months ended June 30, 2021 and for the three and nine months ended September 30, 2021.
This First Amendment on Form 10-Q/A sets forth the Original Form 10-Q in its entirety, as amended to reflect the restatement. Among other things, forward-looking statements made in the Original Form 10-Q have not been revised to reflect events that occurred or facts that became known to the Companycircumstances after the filing of the Original Form 10-Q, and such forward-looking statements should be read in their historical context.
The following items have been amendeddate they were made, whether as a result of the restatement:
Part I, Item 1, “Financial Statements” and
Part I, Item 4, “Controls and Procedures.”
In accordance withnew information, future events or otherwise, except as may be required under applicable SEC rules, this First Amendment on Form 10-Q/A includes an updated signature page and certifications of our Chief Executive Officer and Chief Financial Officer in Exhibits 31.1, 31.2 and 32.1 as required by Rule 12b-15.
Refer to Note 2, Restatement of Previously Issued Financial Statements of this Form 10-Q/A for additional information and for the summary of the accounting impacts of these adjustments to the Company’s condensed financial statements as of and for the three months ended March 31, 2021, as of and for the three and six months ended June 30, 2021 and for the three and nine months ended September 30, 2021.
The Company previously identified a material weakness in internal controls related to the accounting for warrants issued in connection with our initial public offering. As a result of the restatement described in this First Amendmenta number of known and unknown risks and uncertainties, Embark’s actual results or performance may be materially different from those expressed or implied by these forward‑looking statements. You should not place undue reliance on Form 10-Q/A, the Company has concluded there was a material weakness in the Company's internal control over financial reporting at the time the abovementioned financial statements were issued, and its disclosure controls and procedures were not effective at the time the abovementioned financial statements were issued.
NORTHERN GENESIS ACQUISITION CORP. II
FORM 10-Q/A FOR THE QUARTER ENDED SEPTEMBER 30, 2021
TABLE OF CONTENTS
| Page | |||||||||
PARTPart I - FINANCIAL INFORMATION
Item 1. Interim Financial Statements.
NORTHERN GENESIS ACQUISITION CORP. II
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2021 | December 31, 2020 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 34,688 | $ | — | ||||
| Prepaid expenses and other current assets | 116,653 | — | ||||||
| Total Current Assets | 151,341 | — | ||||||
| Deferred offering costs | — | 249,917 | ||||||
| Marketable securities held in Trust Account | 414,028,694 | — | ||||||
| TOTAL ASSETS | $ | 414,180,035 | $ | 249,917 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accrued expenses | $ | 1,091,604 | $ | 1,450 | ||||
| Accrued offering costs | — | 107,000 | ||||||
| Promissory note – related party | 750,000 | 117,917 | ||||||
| Total Current Liabilities | 1,841,604 | 226,367 | ||||||
| FPA liability | 713,334 | — | ||||||
| Warrant liability | 22,255,067 | — | ||||||
| Deferred underwriting fee payable | 14,490,000 | — | ||||||
| Total Liabilities | 39,300,005 | 226,367 | ||||||
| Commitments | ||||||||
| Common stock subject to possible redemption 41,400,000 and 0 shares at redemption value at September 30, 2021 and December 31, 2020, respectively | 414,000,000 | — | ||||||
| Stockholders’ Equity | ||||||||
| Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding | — | — | ||||||
| Common stock, $0.0001 par value; 100,000,000 shares authorized; 10,350,000 at September 30, 2021 and December 31, 2020 | 1,035 | 1,035 | ||||||
| Additional paid-in capital | — | 23,965 | ||||||
| Accumulated deficit | (39,121,005 | ) | (1,450 | ) | ||||
| Total Stockholders’ Equity (Deficit) | (39,119,970 | ) | 23,550 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 414,180,035 | $ | 249,917 | ||||
| June 30, 2022 | December 31, 2021 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 220,403 | $ | 264,615 | |||||||
| Restricted cash, short-term | 65 | 130 | |||||||||
| Prepaid expenses and other current assets | 6,424 | 12,746 | |||||||||
| Total current assets | 226,892 | 277,491 | |||||||||
| Restricted cash, long-term | 812 | 275 | |||||||||
| Property, equipment and software, net | 14,970 | 9,637 | |||||||||
| Operating lease right-of-use assets | 6,073 | — | |||||||||
| Other assets | 7,218 | 3,596 | |||||||||
| Total assets | $ | 255,965 | $ | 290,999 | |||||||
| Liabilities and stockholders’ equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 4,440 | $ | 2,497 | |||||||
| Accrued expenses and other current liabilities | 6,634 | 3,142 | |||||||||
| Current portion of operating lease liabilities | 2,040 | — | |||||||||
| Short-term notes payable | 527 | 358 | |||||||||
| Total current liabilities | 13,641 | 5,997 | |||||||||
| Long-term notes payable | 1,321 | 722 | |||||||||
| Warrant liability | 3,010 | 49,419 | |||||||||
| Non-current portion of operating lease liabilities | 4,358 | — | |||||||||
| Other long-term liability | 110 | 50 | |||||||||
| Long-term deferred rent | — | 177 | |||||||||
| Total liabilities | 22,440 | 56,365 | |||||||||
| Commitments and contingencies (Note 10) | 0 | 0 | |||||||||
| Stockholders’ equity: | |||||||||||
| Preferred stock, $0.0001 par value; 10,000,000 shares authorized, none issued and none outstanding as of June 30, 2022 and December 31, 2021 | — | — | |||||||||
| Class A common stock, $0.0001 par value; 4,000,000,000 shares authorized, 373,089,177 shares issued as of June 30, 2022; 4,000,000,000 shares authorized, 362,832,986 shares issued as of December 31, 2021 | 37 | 36 | |||||||||
| Class B common stock, $0.0001 par value; 100,000,000 shares authorized, 87,078,781 shares issued as of June 30, 2022 and December 31, 2021 | 9 | 9 | |||||||||
| Additional paid-in capital | 449,153 | 417,492 | |||||||||
| Accumulated deficit | (215,674) | (182,903) | |||||||||
| Total stockholders’ equity | 233,525 | 234,634 | |||||||||
| Total liabilities and stockholders’ equity | $ | 255,965 | $ | 290,999 | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | $ | 19,041 | $ | 9,111 | $ | 37,736 | $ | 15,342 | |||||||||||||||
| General and administrative | 18,765 | 4,702 | 40,691 | 6,992 | |||||||||||||||||||
| Total operating expenses | 37,806 | 13,813 | 78,427 | 22,334 | |||||||||||||||||||
| Loss from operations | (37,806) | (13,813) | (78,427) | (22,334) | |||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Change in the fair value of derivative liability | — | (4,773) | — | (4,773) | |||||||||||||||||||
| Change in fair value of warrant liability | 24,253 | — | 46,409 | — | |||||||||||||||||||
| Other income (expense) | (620) | (3) | (594) | 6 | |||||||||||||||||||
| Interest income | 160 | 40 | 173 | 70 | |||||||||||||||||||
| Interest expense | (311) | (1,677) | (332) | (1,677) | |||||||||||||||||||
| Loss before provision for income taxes | (14,324) | (20,226) | (32,771) | (28,708) | |||||||||||||||||||
| Provision for income taxes | — | — | — | — | |||||||||||||||||||
| Net loss | $ | (14,324) | $ | (20,226) | $ | (32,771) | $ | (28,708) | |||||||||||||||
| Net loss attributable to common stockholders, basic and diluted | $ | (14,324) | $ | (20,226) | $ | (32,771) | $ | (28,708) | |||||||||||||||
| Net loss per share attributable to common stockholders: | |||||||||||||||||||||||
| Basic and diluted, Class A and Class B | $ | (0.03) | $ | (0.14) | $ | (0.07) | $ | (0.20) | |||||||||||||||
| Weighted-average shares used in computing net loss per share attributable to common stockholders: | |||||||||||||||||||||||
| Basic and diluted | 457,195,552 | 141,997,299 | 454,963,170 | 141,997,299 | |||||||||||||||||||
NORTHERN GENESIS ACQUISITION CORP. II
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended September 30, | For the September 30, | Nine Months September 30, | ||||||||||
| 2021 | 2020 | 2021 | ||||||||||
| Operating and formation costs | $ | 1,554,197 | $ | 1,000 | $ | 3,016,548 | ||||||
| Loss from operations | (1,554,197 | ) | (1,000 | ) | (3,016,548 | ) | ||||||
| Other income (loss): | ||||||||||||
| Change in fair value of warrant liability | 12,701,734 | — | 8,328,400 | |||||||||
| Change in fair value of FPA liability | 393,333 | — | 253,333 | |||||||||
| Loss on initial issuance of private warrants | — | — | (267,467 | ) | ||||||||
| Offering costs allocated to warrant and FPA liabilities | — | — | (1,148,289 | ) | ||||||||
| Interest earned on marketable securities held in Trust Account | 5,328 | — | 28,694 | |||||||||
| Total other income, net | 13,100,395 | — | 7,194,671 | |||||||||
| Net income (loss) | $ | 11,546,198 | $ | (1,000 | ) | $ | 4,178,123 | |||||
| Basic and diluted weighted average shares outstanding, redeemable common stock subject to possible redemption | 41,400,000 | — | 39,125,275 | |||||||||
| Basic and diluted net income (loss) per share, redeemable common stock | $ | 0.22 | $ | — | $ | 0.08 | ||||||
| Basic and diluted weighted average shares outstanding, non-redeemable common stock subject to possible redemption | 10,350,000 | 10,350,000 | 10,275,824 | |||||||||
| Basic and diluted net income (loss) per shares, non-redeemable common stock | $ | 0.22 | $ | 0.00 | $ | 0.08 | ||||||
The accompanying notes are an integral part of thethese unaudited condensed consolidated financial statements.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net loss | $ | (14,324) | $ | (20,226) | $ | (32,771) | $ | (28,708) | |||||||||||||||
| Other comprehensive loss (net of tax): | |||||||||||||||||||||||
| Unrealized losses on available-for-sale securities, net | — | (23) | — | (42) | |||||||||||||||||||
| Comprehensive loss | $ | (14,324) | $ | (20,249) | $ | (32,771) | $ | (28,750) | |||||||||||||||
NORTHERN GENESIS ACQUISITION CORP. II
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
| Common Stock | Additional Paid-In | Retained Earnings / (Accumulated | Total Stockholders’ Equity | |||||||||||||||||
| Shares | Amount | Capital | Deficit) | (Deficit) | ||||||||||||||||
| Balance — January 1, 2021 | 10,350,000 | $ | 1,035 | $ | 23,965 | $ | (1,450 | ) | $ | 23,550 | ||||||||||
| Accretion for common stock subject to redemption amount | — | — | (23,965 | ) | (42,335,161 | ) | (42,359,126 | ) | ||||||||||||
| Net Income | — | — | — | 4,880,183 | 4,880,183 | |||||||||||||||
| Balance – March 31, 2021 | 10,350,000 | $ | 1,035 | $ | — | $ | (37,456,428 | ) | $ | (37,455,393 | ) | |||||||||
| Initial classification of FPA liability | — | — | — | (966,667 | ) | (966,667 | ) | |||||||||||||
| Net Loss | — | — | — | (12,244,108 | ) | (12,244,108 | ) | |||||||||||||
| Balance – June 30, 2021 | 10,350,000 | $ | 1,035 | $ | — | $ | (50,667,203 | ) | $ | (50,666,168 | ) | |||||||||
| Net Income | — | — | — | 11,546,198 | 11,546,198 | |||||||||||||||
| Balance – September 30, 2021 | 10,350,000 | $ | 1,035 | $ | — | $ | (39,121,005 | ) | $ | (39,119,970 | ) | |||||||||
FOR THE PERIOD FROM SEPTEMBER 25, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020
| Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance—September 25, 2020 (inception) | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
| Issuance of common stock to Sponsor | 10,350,000 | 1,035 | 23,965 | — | 25,000 | |||||||||||||||
| Net loss | — | — | — | (1,000 | ) | (1,000 | ) | |||||||||||||
| Balance—September 30, 2020 | 10,350,000 | $ | 1,035 | $ | 23,965 | $ | (1,000 | ) | $ | 24,000 | ||||||||||
The accompanying notes are an integral part of thethese unaudited condensed consolidated financial statements.
NORTHERN GENESIS ACQUISITION CORP. II
| Preferred Stock | Founders Preferred Stock | Common Stock | Class A | Class B | Warrants | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2021 | 260,582,311 | $ | 1 | 484,912 | $ | — | 142,460,804 | $ | — | — | $ | — | — | $ | — | — | $ | 130,229 | $ | (67,172) | $ | 26 | $ | 63,084 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued upon exercise of stock options | — | — | — | — | 46,050 | — | — | — | — | — | — | 4 | — | — | $ | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of early exercised options | — | — | — | — | — | — | — | — | — | — | — | 6 | — | — | $ | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | — | — | — | — | 593 | — | — | $ | 593 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock warrants | — | — | — | — | — | — | — | — | — | — | — | 1,350 | — | — | $ | 1,350 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | — | — | — | — | — | — | — | (23) | $ | (23) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | — | — | — | — | (20,226) | — | $ | (20,226) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2021 | 260,582,311 | $ | 1 | 484,912 | $ | — | 142,506,854 | $ | — | — | $ | — | — | $ | — | — | $ | 132,182 | $ | (87,398) | $ | 3 | $ | 44,788 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
| Nine Months Ended September 30, | For the period from September 25, 2020 (inception) through September 30, | |||||||
| 2021 | 2020 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income (loss) | $ | 4,182,273 | $ | (1,000 | ) | |||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Interest earned on marketable securities held in Trust Account | (28,694 | ) | - | |||||
| Changes in fair value of warrant liability | (8,328,400 | ) | - | |||||
| Change in fair value of FPA liability | (253,333 | ) | - | |||||
| Loss on initial issuance of private warrants | 267,467 | - | ||||||
| Offering costs allocable to warrant liabilities | 1,148,289 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | (116,653 | ) | - | |||||
| Accrued expenses | 1,090,154 | 1,000 | ||||||
| Net cash used in operating activities | (2,038,897 | ) | - | |||||
| Cash Flows from Investing Activities: | ||||||||
| Investment of cash in Trust Account | (414,000,000 | ) | - | |||||
| Net cash used in investing activities | (414,000,000 | ) | - | |||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from sale of Units, net of underwriting discounts paid | 405,720,000 | - | ||||||
| Proceeds from sale of Private Placement Warrants | 10,030,000 | - | ||||||
| Proceeds from promissory note - related party | 750,000 | 5,000 | ||||||
| Repayment of promissory note – related party | (117,917 | ) | - | |||||
| Payment of offering costs | (308,498 | ) | (5,000 | ) | ||||
| Net cash provided by financing activities | 416,073,585 | - | ||||||
| Net Change in Cash | 34,688 | - | ||||||
| Cash – Beginning of period | — | - | ||||||
| Cash – End of period | $ | 34,688 | $ | - | ||||
| Non-Cash investing and financing activities: | ||||||||
| Initial classification of common stock subject to possible redemption | $ | 414,000,000 | $ | - | ||||
| Initial Classification of Warrant Liabilities | $ | 30,583,467 | $ | - | ||||
| Deferred underwriting fee payable | $ | 14,490,000 | $ | - | ||||
The accompanying notes are an integral part of thethese unaudited condensed consolidated financial statements.
| Preferred Stock | Founders Preferred Stock | Common Stock | Class A | Class B | Warrants | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | — | $ | — | — | $ | — | — | — | 362,832,986 | $ | 36 | 87,078,781 | $ | 9 | 23,153,266 | $ | 434,573 | (201,350) | $ | — | $ | 233,268 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued upon exercise of stock options | — | — | — | — | — | — | 7,528,517 | 1 | — | — | — | 770 | — | — | $ | 771 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued upon vesting of common stock units | — | — | — | — | — | — | 266,432 | — | — | — | — | — | — | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued upon vesting of restricted stock units | — | — | — | — | — | — | 2,011,242 | — | — | — | — | — | — | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of early exercised options | — | — | — | — | — | — | — | — | — | — | — | 9 | — | — | $ | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | — | — | — | — | 13,135 | — | — | $ | 13,135 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for services | — | — | — | — | — | — | 450,000 | — | — | — | — | 666 | — | — | $ | 666 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | — | — | — | — | (14,324) | — | $ | (14,324) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2022 | — | $ | — | — | $ | — | — | $ | — | 373,089,177 | $ | 37 | 87,078,781 | $ | 9 | 23,153,266 | $ | 449,153 | $ | (215,674) | $ | — | $ | 233,525 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Founders Preferred Stock | Common Stock | Class A | Class B | Warrants | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | 260,582,311 | $ | 1 | 484,912 | $ | — | 141,216,455 | $ | — | — | $ | — | — | $ | — | — | $ | 129,449 | $ | (58,690) | $ | 45 | $ | 70,805 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued upon exercise of stock options | — | — | — | — | 1,290,399 | — | — | — | — | — | — | 98 | — | — | $ | 98 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of early exercised options | — | — | — | — | — | — | — | — | — | — | — | 11 | — | — | $ | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | — | — | — | — | 1,191 | — | — | $ | 1,191 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock warrants | — | — | — | — | — | — | — | — | — | — | — | 1,433 | — | — | $ | 1,433 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | — | — | — | — | — | — | — | (42) | $ | (42) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | — | — | — | — | (28,708) | — | $ | (28,708) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2021 | 260,582,311 | $ | 1 | 484,912 | — | 142,506,854 | $ | — | — | $ | — | — | $ | — | — | $ | 132,182 | $ | (87,398) | $ | 3 | $ | 44,788 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Founders Preferred Stock | Common Stock | Class A | Class B | Warrants | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | — | $ | — | — | — | — | $ | — | 362,832,986 | $ | 36 | 87,078,781 | $ | 9 | 23,153,266 | $ | 417,492 | $ | (182,903) | $ | — | $ | 234,634 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued upon exercise of stock options | — | — | — | — | — | — | 7,528,517 | 1 | — | — | — | 1,142 | — | — | $ | 1,143 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued upon vesting of common stock units | — | — | — | — | — | — | 266,432 | — | — | — | — | — | — | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued upon vesting of restricted stock units | — | — | — | — | — | — | 2,011,242 | — | — | — | — | — | — | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of early exercised options | — | — | — | — | — | — | — | — | — | — | — | 20 | — | — | $ | 20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | — | — | — | — | 29,833 | — | — | $ | 29,833 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for services | — | — | — | — | — | — | 450,000 | — | — | — | — | 666 | — | — | $ | 666 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | — | — | — | — | (32,771) | — | $ | (32,771) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2022 | — | $ | — | — | $ | — | — | $ | — | 373,089,177 | $ | 37 | 87,078,781 | $ | 9 | 23,153,266 | $ | 449,153 | $ | (215,674) | $ | — | $ | 233,525 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net loss | $ | (32,771) | $ | (28,708) | |||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Depreciation and amortization | 834 | 474 | |||||||||
| Amortization expense - right-of-use assets - operating leases | 1,004 | — | |||||||||
| Stock-based compensation, net of amounts capitalized | 29,023 | 1,099 | |||||||||
| Issuance of warrants for services | — | 1,433 | |||||||||
| Change in fair value of warrants | (46,409) | — | |||||||||
| Net amortization of premiums and accretion of discounts on investments | — | 229 | |||||||||
| Amortization of debt discount | — | 1,677 | |||||||||
| Change in the fair value of derivative liability | — | 4,773 | |||||||||
| Issuance of common stock for services | 666 | — | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Prepaid expenses and other current assets | 6,200 | (2,439) | |||||||||
| Other assets | (3,622) | (3,135) | |||||||||
| Accounts payable | 2,086 | 1,650 | |||||||||
| Other long-term liabilities | 60 | — | |||||||||
| Accrued expenses and other current liabilities | 2,663 | 2,863 | |||||||||
| Net cash used in operating activities | (40,266) | (20,084) | |||||||||
| Cash flows from investing activities | |||||||||||
| Maturities of investments | — | 35,239 | |||||||||
| Purchase of property, equipment and software | (4,403) | (1,547) | |||||||||
| Deposit for purchase of trucks | — | (400) | |||||||||
| Refund of deposit for trucks | — | 47 | |||||||||
| Net cash provided by (used in) investing activities | (4,403) | 33,339 | |||||||||
| Cash flows from financing activities | |||||||||||
| Cash proceeds received from convertible note payable | — | 25,000 | |||||||||
| Payment towards notes payable | (209) | (135) | |||||||||
| Proceeds from exercise of stock options | 1,142 | 98 | |||||||||
| Repurchase of early exercised stock options | (4) | — | |||||||||
| Net cash provided by (used in) financing activities | 929 | 24,963 | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | (43,740) | 38,218 | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 265,020 | 11,460 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 221,280 | $ | 49,678 | |||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Cash paid during the period for interest | $ | 18 | $ | 34 | |||||||
| Supplemental schedule of noncash investing and financing activities | |||||||||||
| Acquisition of property, equipment and software in accounts payable | $ | 387 | $ | 71 | |||||||
| Acquisition of trucks by assuming notes payable | $ | 976 | $ | 278 | |||||||
| Right-of-use assets obtained in exchange for lease obligations | $ | 7,077 | $ | — | |||||||
| Deferred offering costs in accrued liability | $ | — | $ | 2,176 | |||||||
| Stock-based compensation capitalized into internally developed software | $ | 932 | $ | 92 | |||||||
| Vesting of early exercised stock options | $ | 20 | $ | 11 | |||||||
| Issuance of common stock for services | $ | 666 | $ | — | |||||||
4
NORTHERN GENESIS ACQUISITION CORP. II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 1.DESCRIPTION OF ORGANIZATIONBUSINESS AND BUSINESS OPERATIONS
Northern Genesis Acquisition Corp. II (theEmbark Technology, Inc. (“Embark” or the “Company”) was originally incorporated in Delaware on September 25, 2020.2020 under the name Northern Genesis Acquisition Corp. II (“NGA”). The Company is a blank check companywas formed for the purpose of entering intoeffecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entitiesbusinesses. On November 10, 2021 (the “Closing Date”), the Company (at such time named Northern Genesis Acquisition Corp. II) consummated the business combination (the “Business Combination”) pursuant to the Agreement and Plan of Merger, dated June 22, 2021 with the pre-Business Combination company, Embark Trucks, Inc. (“Embark Trucks”). AlthoughIn connection with the Company is not limited to a particular industry or geographic region for purposesconsummation of consummating athe Business Combination, the Company intendschanged its name from Northern Genesis Acquisition Corp. II to initially concentrate on target businesses makingEmbark Technology, Inc. and became the parent entity of Embark Trucks.
The principal activities of Embark Technology, Inc. include design and development of autonomous driving software for the truck freight industry. The Company is an early stageheadquartered in San Francisco, California and emerging growth company and, as such,was incorporated in the State of Delaware in 2016. Other than Embark Trucks, the Company is subject to allhas no other subsidiaries as of the risks associated with early stage and emerging growth companies.
The Company has a wholly owned subsidiary NGAB Merger Sub Inc., which was incorporated in Delaware on June 21, 2021 (“Merger Sub”).
As of September 30, 2021, the Company had not commenced any operations. All activity through September 30, 2021 relates to the Company’s formation, initial public offering (“Initial Public Offering”), which is described below, and subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statement for the Company’s Initial Public Offering was declared effective on January 12, 2021. On January 15, 2021, the Company consummated the Initial Public Offering of 41,400,000 units (the “Units” and, with respect to the shares of common stock included in the Units sold, the “Public Shares, which includes the full exercise by the underwriter of its over-allotment option in the amount of 5,400,000 Units, at $10.00 per Unit, generating gross proceeds of $414,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 6,686,667 warrants (the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to the Company’s sponsor, Northern Genesis Sponsor II LLC (the “Sponsor”), generating gross proceeds of $10,030,000, which is described in Note 4.
Transaction costs amounted to $23,221,415 consisting of $8,280,000 of underwriting fees, $14,490,000 of deferred underwriting fees and $451,415 of other offering costs.
Following the closing of the Initial Public Offering on January 15, 2021, an amount of $414,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) located in the United States and held as cash or 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 any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account, as described below.
5
NORTHERN GENESIS ACQUISITION CORP. II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, althoughdevoted substantially all of its resources to develop its autonomous truck technology, to enable and expand its route models - transfer point and direct-to-customer, to expand its partnerships with shippers and carriers, to raising capital, and providing general and administrative support for these operations. The Company has not generated revenues from its principal operations from inception through June 30, 2022.
The Company will provide its stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously releasedgain access to the Company to pay its tax obligations). There will be no redemption rights upon the completionU.S. capital markets.
The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 immediately prior to or upon such consummation of a Business CombinationU.S. generally accepted accounting principles (“GAAP”) and if the Company seeks stockholder approval, if a majority of the then outstanding shares of common stock present and entitled to vote at the meeting to approve the business combination (or such greater number as may be required by applicable law or the rules of any applicable national securities exchange) are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rulesregulations of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC containing substantially the same information as would be included in a proxy statement 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. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against the proposed Business Combination.
Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.
The Sponsor and the Company’s officers, directors and director nominees will agree (a) to waive redemption rights with respect to the Founder Shares and Public Shares held by them in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination and certain amendments to the Amended and Restated Certificate of Incorporation or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provisions that specifically apply only to the period prior to the consummation of our initial business combination, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment (See Note 7).
The Company will have until January 15, 2023 to complete a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period and stockholders do not approve an amendment to the Amended and Restated Certificate of Incorporation to extend this date, 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 (which interest shall be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
6
NORTHERN GENESIS ACQUISITION CORP. II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The holders of the Founder Shares will agree to waive liquidation rights with respect to such shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 7) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).
In order to protect the amounts held in the Trust Account, the Sponsor will agree to be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of trust assets, in each case net of the interest which may be withdrawn to pay the Company’s tax obligation and up to $100,000 for liquidation excepts, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account (even if such waiver is deemed to be unenforceable) and except as to any claims under the Company’s indemnity of the underwriters of Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, 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.
Liquidity and Capital Resources
As of September 30, 2021, the Company had $34,688 in its operating bank accounts, $414,028,694 in marketable securities held in the Trust Account to be used for a Business Combination or to repurchase or redeem stock in connection therewith and working capital deficit of ($1,544,413), which excludes franchise taxes payable of $150,000, of which such amount will be paid from interest earned on the Trust Account and $28,694 of franchise taxes paid and not yet reimbursed from the trust.
The Company may raise additional capital through loans or additional investments from the Sponsor or its stockholders, officers, directors, or third parties. The Company’s officers and directors and the Sponsor may but are not obligated to (except as described above), loan the Company funds, from time to time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Based on the foregoing, the Company believes it will have sufficient cash to meet its needs through the earlier of consummation of a Business Combination or January 15, 2023, the deadline to complete a Business Combination pursuant to the Company’s Amended and Restated Certificate of Incorporation (unless otherwise amended by stockholders).
NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
In connection with the preparation of the Company’s financial statements as of September 30, 2021 in its Original Form 10-Q, the Company concluded it should restate its financial statements to classify all Public Shares in temporary equity. In accordance with ASC 480, paragraph 10-S99, redemption provisions not solely within the control of the Company require common stock subject to possible redemption to be classified outside of permanent equity. The Company previously determined the common stock subject to possible redemption to be equal to the redemption value of $10.00 per share of common stock while also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001. Previously, the Company did not consider redeemable shares classified as temporary equity as part of net tangible assets. Effective with these financial statements, the Company revised this interpretation to include temporary equity in net tangible assets. Accordingly, effective with this filing, the Company presents all redeemable common stock as temporary equity. Additionally, the Company in its Original Form 10-Q referred to these adjustments as a ‘revision’, however, these adjustments should have been identified as a ‘restatement’ of the previously issued financial statements.
As a result, management has noted a reclassification adjustment related to temporary equity and permanent equity. This resulted in an adjustment to the initial carrying value of the common stock subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and common stock.
7
NORTHERN GENESIS ACQUISITION CORP. II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The impact of the restatement on the Company’s financial statements is reflected in the following table:
| As Previously Reported | Adjustment | As Restated | ||||||||||
| Balance Sheet as of January 15, 2021 | ||||||||||||
| Common stock subject to redemption | $ | 365,248,533 | $ | 48,751,367 | $ | 414,000,000 | ||||||
| Common stock shares | $ | 1,523 | $ | (488 | ) | $ | 1,035 | |||||
| Additional paid-in capital | $ | 6,415,718 | $ | (6,415,718 | ) | $ | — | |||||
| Accumulated deficit | $ | (1,417,236 | ) | $ | (42,335,161 | ) | $ | (43,752,397 | ) | |||
| Total Stockholders’ Equity (Deficit) | $ | 5,000,005 | $ | (48,751,367 | ) | $ | (43,751,362 | ) | ||||
| Balance Sheet as of March 31, 2021 | ||||||||||||
| Common stock subject to possible redemption | $ | 371,544,602 | $ | 42,455,398 | $ | 414,000,000 | ||||||
| Common stock shares | $ | 1,460 | $ | (425 | ) | $ | 1,035 | |||||
| Additional paid-in capital | $ | 119,812 | $ | (119,812 | ) | $ | — | |||||
| Retained Earnings (Accumulated deficit) | $ | 4,878,733 | $ | (42,335,161 | ) | $ | (37,456,428 | ) | ||||
| Total Stockholders’ Equity (Deficit) | $ | 5,000,005 | $ | (42,455,398 | ) | $ | (37,455,393 | ) | ||||
| Statement of Cash Flows for the Three Months Ended March 31, 2021 | As Previously Reported | Adjustment | As Restated | |||||||||
| Initial classification of common stock subject to possible redemption | $ | 365,248,633 | $ | 48,751,367 | $ | 414,000,000 | ||||||
| Change in value of common stock subject to possible redemption | $ | 6,295,969 | $ | (6,295,969 | ) | $ | — | |||||
| Statement of Cash Flows for the Six Months Ended June 30, 2021 | ||||||||||||
| Initial classification of common stock subject to possible redemption | $ | 365,248,633 | $ | 48,751,367 | $ | 414,000,000 | ||||||
| Change in value of common stock subject to possible redemption | $ | 48,751,367 | $ | (48,751,367 | ) | $ | — | |||||
| Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit) March 31, 2021 | As Previously Reported | Adjustment | As Restated | |||||||||
| Sale of 41,400,000 Units, net of underwriting discounts | $ | 371,629,911 | $ | (371,629,911 | ) | $ | — | |||||
| Initial value of common stock subject to possible redemption at IPO date | (365,248,633 | ) | 365,248,633 | — | ||||||||
| Change in value of common stock subject to redemption | 6,295,969 | (6,295,969 | ) | — | ||||||||
| Accretion for common stock to redemption amount | — | (42,359,126 | ) | (42,359,126 | ) | |||||||
| Total stockholders’ equity (deficit) | 5,000,005 | (42,455,398 | ) | (37,455,393 | ) | |||||||
| Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit) June 30, 2021 | ||||||||||||
| Change in value of common stock subject to redemption | $ | 42,455,398 | $ | (42,455,398 | ) | $ | — | |||||
| Total stockholders’ equity | (50,666,168 | ) | — | (50,666,168 | ) | |||||||
In connection with the change in presentation for common stock subject to redemption, the Company also restated its income (loss) per share. The impact of this restatement on the Company’s financial statements is reflected in the following table:
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption
| Basic and diluted net loss per share, Class A common stock | Basic and diluted weighted average shares outstanding, Class B common stock subject to possible redemption | Basic and diluted net loss per share, Class B common stock | |||||||||||||
| For the three months ended, March 31, 2021 | ||||||||||||||||
| As Previously Reported | 36,524,863 | $ | — | 14,187,614 | $ | 0.34 | ||||||||||
| As Restated | 34,500,000 | $ | 0.11 | 10,125,000 | $ | 0.11 | ||||||||||
| For the three months ended, June 30, 2021 | ||||||||||||||||
| As Previously Reported | 37,153,752 | $ | — | 14,596,248 | $ | (0.84 | ) | |||||||||
| As Restated | 41,400,000 | $ | (0.24 | ) | 10,350,000 | $ | (0.24 | ) | ||||||||
| For the six months ended, June 30, 2021 | ||||||||||||||||
| As Previously Reported | 61,945,851 | $ | — | 14,393,060 | $ | (0.51 | ) | |||||||||
| As Restated | 37,969,061 | $ | (0.15 | ) | 10,238,122 | $ | (0.15 | ) | ||||||||
| For the three months ended, September 30, 2021 | ||||||||||||||||
| As Previously Reported | 51,750,000 | $ | 0.22 | — | $ | — | ||||||||||
| As Restated | 41,400,000 | $ | 0.22 | 10,350,000 | $ | 0.22 | ||||||||||
| For the nine months ended, September 30, 2021 | ||||||||||||||||
| As Previously Reported | 48,906,593 | $ | 0.09 | — | $ | — | ||||||||||
| As Restated | 39,125,275 | $ | 0.08 | 10,275,824 | $ | 0.08 | ||||||||||
8
NORTHERN GENESIS ACQUISITION CORP. II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the U.S. Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form10-K as filed with the SEC on April 15, 2021. The interim results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the period ending December 31, 2021 or for any future interim periods.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and itsCompany’s wholly-owned subsidiary. All significant intercompany balancestransactions and transactionsbalances have been eliminated upon consolidation.
Risksconjunction with the audited financial statements and Uncertainties
Management is currently evaluatingnotes thereto contained in Embark’s Annual Report. The condensed consolidated balance sheet at December 31, 2021, has been derived from the impact ofaudited financial statements at that date, but does not include all disclosures, including notes, required by GAAP for complete financial statements. In management’s opinion, the COVID-19 pandemicunaudited interim financial statements have been prepared on the industrysame basis as the annual financial statements and has concluded that while it is reasonably possible thatinclude all adjustments, which include only normal recurring adjustments, necessary for the virus could have a negative effect onfair presentation of the Company’s financial position as of June 30, 2022 and the Company’s results of its operations closefor the three and six months ended June 30, 2022 and 2021, and cash flows for the six months ended June 30, 2022 and 2021. The interim results are not necessarily indicative of the Initial Public Offering, and/results for any future interim period or search for the entire year.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-OxleySarbanes- Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholdershareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt
9
NORTHERN GENESIS ACQUISITION CORP. II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make certain estimates and assumptions. These estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dateas of the financial statements and thebalance sheet date, as well as reported amounts of revenues and expenses during the reporting period.
MakingThe Company’s most significant estimates requires management to exercise significant judgment. It is at least reasonably possible thatand judgments involve the estimateuseful lives of long-lived assets, the recoverability of long-lived assets, the incremental borrowing rate (“IBR”) applied in lease accounting, the capitalization of software development costs, the valuation of the effectCompany’s stock-based compensation, including the valuation of a condition, situation or setwarrants to purchase the Company’s stock and the valuation allowance for income taxes. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of circumstances that existed atwhich form the datebasis for making judgments about the carrying values of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these condensed consolidated financial statements is the determination of the fair value of the warrantassets and liabilities. Such estimates may be subject to change as more current information becomes available and accordingly the actualActual results could differ significantly from those estimates.
The Company considers all short-termhighly liquid investments purchased with an original maturitymaturities of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents asAs of SeptemberJune 30, 20212022 and December 31, 2020.
Marketable Securities Held in Trust Account
At September 30, 2021 and December 31, 2020, substantially allThe Company maintains letters of the assets held in the Trust Account were held in money market funds which are invested primarily in U.S. Treasury securities. Allcredit to secure leases of the Company’s investments heldoffices and facilities. A portion of the Company’s cash is collateralized in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in Trust Account in the accompanying condensed consolidated statements of operations. The estimated fair values of investments held in Trust Account are determined using available market information.
Warrant and FPA Liabilities
The Company accounts for the Warrants and forward purchase warrants (as defined in Note 7) in accordanceconjunction with the guidance contained in ASC 815-40, under which the Warrantsletter of credit and forward purchase warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Warrants and forward purchase warrants as liabilities at their fair value and adjust the Warrants and forward purchase warrants to fair value at each reporting period. These liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the statement of operations. The fair value of the Public Warrants were initially estimated using a Monte Carlo simulation. For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrant price was used as the fair value of the Warrants as of each relevant date. The Private Placement Warrants and forward purchase warrants are valued using a Modified Black Scholes Option Pricing Model.
Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, the 41,400,000 shares of common stock subject to possible redemption at September 30, 2021 are presented as temporary equity, outside of the stockholders’ equity (deficit) section ofrestricted cash on the Company’s condensed consolidated balance sheets.
The As of June 30, 2022 and December 31, 2021, the Company recognizes changeshad $0.9 million and $0.4 million in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value atrestricted cash, respectively. At the end of each reporting period. Immediately upon the closingyear of the Initial Public Offering,lease, the face amount of the letter of credit is reduced by a fixed amount of approximately $0.1 million and reclassified into cash and cash equivalents on the Company’s condensed consolidated balance sheets. The Company recognizeddetermines short-term or long-term classification based on the accretion from initial book valueexpected duration of the restriction.
At September 30, 2021 and December 31, 2020, the Class A common stock reflectedamounts presented in the condensed consolidated balance sheets are reconciled in the following table:
| Gross proceeds | $ | 414,000,000 | ||
| Less: | ||||
| Proceeds allocated to Public Warrants | $ | (20,286,000 | ) | |
| Class A common stock issuance costs | $ | (22,073,126 | ) | |
| Plus: | ||||
| Accretion of carrying value to redemption value | $ | 42,359,126 | ||
| Class A common stock subject to possible redemption | $ | 414,000,000 |
10
NORTHERN GENESIS ACQUISITION CORP. II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Income Taxes
The Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more -likely -than -not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company is subject to income tax examinations by major taxing authorities since inception. The effective tax rate differs from the statutory tax rate of 21% for the three and nine months ended September 30, 2021, due to the valuation allowance recorded on the Company’s net operating losses and permanent differences.
Net income (loss) per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. The Company applies the two-class method in calculating earnings per share. Accretion associated with the redeemable shares of common stock is excluded from earnings per share as the redemption value approximates fair value.
The Company has not considered the effect of the warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 20,486,667 shares in the calculation of diluted loss per share, since the average stock price of the Company’s common stock for the three and nine months ended September 30, 2021 was less than the exercise price and therefore, the inclusion of such warrants under the treasury stock method would be anti-dilutive.
11
NORTHERN GENESIS ACQUISITION CORP. II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts):
| Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2021 | For the Period from September 25, 2020 (Inception) Through September 30, 2020 | ||||||||||||||||||||||
| Redeemable | Non-redeemable | Redeemable | Non-redeemable | Redeemable | Non-redeemable | |||||||||||||||||||
| Basic and diluted net income (loss) per common share | ||||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||
| Allocation of net income (loss), as adjusted | $ | 9,233,638 | $ | 2,308,410 | $ | 3,309,040 | $ | 869,083 | $ | — | $ | (1,000 | ) | |||||||||||
| Denominator: | ||||||||||||||||||||||||
| Basic and diluted weighted average shares outstanding | 41,400,000 | 10,350,000 | 39,125,275 | 10,275,824 | — | 10,350,000 | ||||||||||||||||||
| Basic and diluted net income (loss) per common share | $ | 0.22 | $ | 0.22 | $ | 0.08 | $ | 0.08 | $ | — | $ | (0.00 | ) | |||||||||||
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 Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
The Fair Value Measurements The Private Placement The Company As of June 30, As of December 31, 2022 2021 2021 Cash and cash equivalents $ 220,403 $ 49,273 $ 264,615 Restricted cash, short-term 65 65 130 Restricted cash, long-term 812 340 275 Total cash, cash equivalents and restricted cash $ 221,280 $ 49,678 $ 265,020 fair valueCompany’s financial instruments consist of the Company’scash and cash equivalents, restricted cash, prepaid expenses and other current assets, accounts payable and accrued expenses, short-term and long-term notes payable and other current liabilities. The assets and liabilities which qualify asthat were measured at fair value on a recurring basis are cash equivalents and warrant liabilities. The Company believes that the carrying values of the remaining financial instruments underapproximate their fair values. The Company applies fair value accounting in accordance with ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed consolidated balance sheets, primarily due to their short-term nature, except for warrant liabilities (see Note 10).Fair for valuation of financial instruments. ASC 820 provides a framework for measuring fair value is defined as the priceunder GAAP that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAPexpands disclosures about fair value measurements, establishes a three-tier fair value hierarchy, which prioritizesand requires an entity to maximize the use of observable inputs used inand minimize the use of unobservable inputs when measuring fair value. The three levels of the fair value hierarchy gives the highest priority to unadjustedare summarized as follows: in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:●Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;●Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instrumentsLevel 2 — Fair value is determined using quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities 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.12 NORTHERN GENESIS ACQUISITION CORP. IINOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSEPTEMBER 30, 2021(Unaudited)Derivative Financial InstrumentsThe Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrumentnot active or are directly or indirectly observable.initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changesdetermined using one or more significant inputs that are unobservable in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluatedactive markets at the endmeasurement date, such as an option pricing model, discounted cash flow, or similar technique.each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current basedNGA’s initial public offering on whether or not net-cash settlement or conversionOctober 13, 2020, NGA issued to third party investors 41.4 million units, consisting of the instrument could be required within 12 months1 share of the balance sheet date.Recent Accounting StandardsIn August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with ConversionClass A common stock of NGA and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separationone-third of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.NOTE 4. PUBLIC OFFERINGPursuant to the Initial Public Offering, the Company sold 41,400,000 Units, which includes a full exercise by the underwriters of their over-allotment option in the amount of 5,400,000 Units,one warrant, at a price of $10.00 per Unit. Each Unit consists of one share of common stock and one-third of one redeemable warrant redeemable warrant (“Public Warrant”).unit. Each whole Public Warrantwarrant entitles the holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment (see Note 9). NOTE 5. PRIVATE PLACEMENTSimultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 6,686,667 Private Placement Warrants, at a price of $1.50 per Private Placement Warrant, for an aggregate purchase price of $10,030,000, from the Company in a private placement. Each Private Placement Warrant will entitle the holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment (see Note 9). The proceeds from the sale of the Private Placement Warrants were deposited into the Company’s operating account, $8,280,000 of which was used to pay deferred underwriting fees and $1,080,000 was due to the Sponsor for working capital and $670,000 was maintained in the operating account to be used towards working capital purposes. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.13 NORTHERN GENESIS ACQUISITION CORP. IINOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSEPTEMBER 30, 2021(Unaudited)NOTE 6. RELATED PARTY TRANSACTIONSFounder SharesOn October 2, 2020, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration of 8,625,000 shares of the Company’s common stock (the “Founder Shares”). On January 12, 2021, the Company effected a stock dividend of 0.2 shares for each founder share outstanding, resulting in 10,350,000 shares of common stock outstanding. All share and per-share amounts have been retroactively restated to reflect the stock dividend. As a result of the underwriters’ election to fully exercise their over-allotment option, a total of 1,350,000 Founder Shares are no longer subject to forfeiture.The Sponsor will agree, subject to limited exceptions, not to transfer title to any of the Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination or (B) subsequent to a Business Combination, (x) if the last sale price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. Administrative Services AgreementThe Company entered into an agreement, commencing on January 12, 2021, pursuant to which the Company will pay an affiliate of the Sponsor a total of up to $10,000 per month for office space, utilities, secretarial support and administrative services. For the three and nine months ended September 30, 2021, the Company incurred $30,000 and $90,000 in fees for these services, respectively, of which $10,000 is included in accrued expenses in the accompanying balance sheet. For the period from September 25, 2020 (inception) through September 30, 2020, the Company did not incur any fees for these services.Due from SponsorAt the closing of the Initial Public Offering on January 15, 2021, a portion of the proceeds from the sale of the Private Placement Warrants in the amount of $1,080,000 was due to the Company to be held outside of the Trust Account for working capital purposes. Such amount was paid by the Sponsor to the Company on January 18, 2021.Promissory Note — Related PartyOn September 25, 2020, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $150,000. The Promissory Note is non-interest bearing and payable on the earlier of (i) June 30, 2021, (ii.) the consummation of the Initial Public Offering or (iii) the abandonment of the Initial Public Offering. As of September 30, 2021 and December 31, 2020, there was $0 and $117,917, respectively, outstanding under the Promissory Note.On August 12, 2021 the sponsor committed to provide up to $1,000,000 in working capital loans as needed by the Company in order to finance transaction costs in connection with a Business Combination. The loans, if issued, will be non-interest bearing, unsecured and will be repaid upon the consummation of an initial business combination. If the Company does not consummate an initial business combination, all amounts loaned to the Company will be forgiven except to the extent that we have funds available outside of the Trust Account to repay such loans. As of September 30, 2021 there was $750,000 of working capital loans outstanding. On September 30, 2021 the sponsor committed to provide up to an additional $2,000,000 in working capital loans as needed by the Company in order to finance transaction costs in connection with a Business Combination. The loans will follow the same structure as the $1,000,000 working capital loans as described above. This borrowing is in addition to the above note initiated on August 12, 2021. The total commitment provided by the Sponsor will total $3,000,000, where $750,000 of which has been borrowed as of September 30, 2021.Personnel Services AgreementThe Company entered into a Personnel Services Agreement, dated April 1 2021, with the Sponsor pursuant to which, subject to maintaining funds adequate for our projected obligations, the Company expects to pay up to $2,000,000 in the aggregate in respect of the services of personnel affiliated with the Sponsor, including persons who may be directors or officers of the Company, for activities on the Company’s behalf, including services related to identifying, investigating and completing an initial business combination and other operational and support services. To the extent any amounts are in respect of the services of individuals who also serve as directors or executive officers of the Company, such amounts will be reviewed and approved by its audit committee. For the nine months ended September 30, 2021, the Company incurred $680,000, inclusive of $200,000 in initial payment of the agreement and $80,000 for each month within the second and third quarter for these services, of which $80,000 is included in accounts payable in the accompanying balance sheets.The Sponsor, the Company’s 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. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on the Company’s behalf. For the three and nine months ended September 30, 2021, there were no amounts relating to the above arrangement recorded.14 NORTHERN GENESIS ACQUISITION CORP. IINOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSEPTEMBER 30, 2021(Unaudited)Related Party LoansIn order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or the Company’s officers, directors and director nominees or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $3,000,000 of the notes may be converted into warrants at a price of $1.50 per warrant (“Working Capital Warrants”). Such Working Capital Warrants would be identical to the Private Placement Warrants. 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. NOTE 7. COMMITMENTSRegistration RightsPursuant to a registration rights agreement entered into on January 12, 2021, the holders of the Founder Shares, Private Placement Warrants and any Working Capital Warrants that may be issued upon conversion of the Working Capital Loans (and any shares of common stock issuable upon the exercise of the Private Placement Warrants or Working Capital Warrants) will be entitled to registration rights pursuant to a registration rights agreement requiring the Company to register such securities for resale. The holders of these securities will be entitled to make up to four demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements. The agreement was amended as described below under “–Forward Purchase Agreement” to add the forward purchase securities.Underwriting AgreementThe underwriters are entitled to a deferred fee of 3.5% of the gross proceeds of the Initial Public Offering, or $14,490,000. The deferred fee will be payable in cash to the underwriters solely in the event that the Company completes a Business Combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement.Forward Purchase AgreementOn January 8, 2021. the Company entered into the forward purchase agreement (the “Forward Purchase Agreement”) with Northern Genesis Capital LLC (the “forward purchase investor”), pursuant to which, if the Company determines to raise capital by issuing equity securities in connection with the closing of its initial business combination, the forward purchase investor, an entity which is affiliated with the Company’s Sponsor, agreed and has the first right to purchase, subject to certain conditions, in an aggregate maximum amount of $75,000,000 of either (i) a number of units (the “forward purchase units”), consisting of one share of Class A common stock at an exercise price of $11.50 per share (the “forward"Public Warrants"). Further, NGA completed the private sale of 6.7 million warrants to NGA's sponsor at a purchase shares”) and one-sixthprice of one redeemable$1.50 per warrant (the “forward purchase warrants”"Private Warrants"), for $10.00 per unit or (ii) a number of forward purchase shares for $9.75 per share (such forward purchase shares valued at $9.75 per share or. Each Private Warrant allows the forward purchase units, as the case may be, the “forward purchase securities”), in a private placement that would close simultaneously with the closing of the Initial Business Combination. The forward purchase warrants would have the same terms as the Public Warrants and the forward purchase shares would be identical to the shares of common stock included in the Units sold in the Initial Public Offering, except the forward purchase shares and the forward purchase warrants would be subject to transfer restrictions and certain registration rights. The funds from the sale of the forward purchase securities may be used as part of the consideration to the sellers in the initial Business Combination and for expenses in connection with an initial Business Combination, and any excess funds may be used for the working capital needs of the post-transaction company.The forward purchase transaction is not dependent upon or affected by the percentage of stockholders electing to redeem their Public Shares and may provide the Company with an increased minimum funding level for the initial Business Combination. The forward purchase transaction is subject to conditions, including the forward purchase investor giving the Company its irrevocable written confirmation, confirming its commitmentsponsor to purchase forward purchase securities and the amount thereof, no later than fifteen days after the Company notifies it of the Company’s intention to raise capital through the issuance of equity securities in connection with the closing of an initial Business Combination. The forward purchase investor may grant or withhold its consent and confirmation entirely within its sole discretion. Accordingly, if the forward purchase investor does not consent to and confirm the purchase, it will not be obligated to purchase any of the forward purchase securities.On April 21, 2021, the Company entered into an Amended and Restated Forward Purchase Agreement with Northern Genesis Capital II LLC (formerly known as Northern Genesis Capital LLC) (“NGC”) (the “NGC Forward Purchase Agreement”), and certain additional forward purchase agreements with additional institutional investors (collectively, with the NGC Forward Purchase Agreement, the “Forward Purchase Agreements”). The Forward Purchase Agreements collectively replace that certain Forward Purchase Agreement previously entered into by the Company and NGC in connection with the closing of the Company’s initial public offering (the “Original Agreement”).15 NORTHERN GENESIS ACQUISITION CORP. IINOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSEPTEMBER 30, 2021(Unaudited)Pursuant to the Forward Purchase Agreements, if the Company determines to raise capital by the private placement of equity securities in connection with the closing of its initial business combination (subject to certain limited exceptions), the members of NGC (institutional investors that also are members of the Company’s Sponsor,) and the parties to the additional Forward Purchase Agreements have the first right to purchase an aggregate amount of up to 7,500,000 “forward purchase units” of the Company (under all Forward Purchase Agreements, taken together) for $10.00 per forward purchase unit, or an aggregate total of $75,000,000. Each forward purchase unit would consist of one1 share of the Company’s common stock and one-sixth of one warrant, with each whole warrant exercisable to purchase one share of the Company’sClass A common stock at $11.50 per share. The common stock and warrants included in the forward purchase units would have the same terms as the Company’s publicly traded common stock and warrants but would not be freely tradable until registered. As with the Original Agreement, any commitment by any potential purchaser under any of the Forward Purchase Agreements is subjectSubsequent to and conditioned upon written confirmation from the prospective purchaser, following the Company’s notification to such purchaser of its intention to enter into an initial business combination agreement, which a prospective purchaser was grant or withhold in its sole discretion.In addition, if a private placement of equity securities in connection with the Company’s initial business combination exceeds $75,000,000, the Company agreed under each Forward Purchase Agreement to use its commercially reasonable efforts to permit priority participation in such additional amount by the members of NGC and the parties to the additional Forward Purchase Agreements, in an aggregate additional amount up to $150,000,000, on the same terms as those offered to other prospective purchasers in connection with such additional private placement amount.Each Forward Purchase Agreement that the holders of the shares of common stock and warrants included in the forward purchase units will be entitled to registration rights pursuant to the terms of any registration rights agreement applicable to any equity securities issued by way of private placement in connection with the closing of the Company’s initial business combination or, in the absence of the foregoing, pursuant to the terms of the registration rights agreement entered into by the Company, Sponsor and NGC in connection with the Company’s initial public offering (the “Registration Rights Agreement”). Pursuant to the foregoing, on April 21, 2021, the Registration Rights Agreement was amended to clarify that the shares and warrants included in up to 7,500,000 total forward purchase units remain subject to the Registration Rights Agreement, regardless of the specific Forward Purchase Agreement pursuant to which they may be issued.Each Forward Purchase Agreement contains representations and warranties by each party, conditions to closing, and additional provisions that are customary for agreements of this nature. The terms of all of the Forward Purchase Agreements are substantively the same, except that the NGC Forward Purchase Agreement gives NGC board observation rights prior to the Company’s initial business combination, and gives the members of NGC a priority right to subscribe for any of the forward purchase units that any other prospective purchasers do not elect to purchase under any of the other Forward Purchase Agreements.Proposed Business CombinationOn June 22, 2021, the Company, Embark Trucks Inc., a Delaware Corporation (“Embark”), and NGAB Merger Sub Inc., a Delaware corporation and our wholly owned subsidiary (“Merger Sub”), entered into an agreement and plan of merger (the “Merger Agreement”), pursuant to which, among other things, Merger Sub will be merged with and into Embark (the “Merger,” together with the other transactions related thereto, the “Embark Business Combination”), with Embark surviving the Merger as a wholly owned subsidiary of us (the “Surviving Corporation”).On the date of closing of the Merger (the “Closing”) immediately prior to the effective time of the Merger (the “Effective Time”), the Company will amend and restate our certificate of incorporation (the “Post-Closing Charter”), pursuant to which, among other things, (i) the Company will have a dual class share structure with (x) shares of Class A common stock that will carry voting rights in the form of one vote per share (the “New Class A Common Stock”), and (y) shares of Class B common stock that will carry voting rights in the form of ten votes per share (the “New Class B Common Stock” and, together with the New Class A Common Stock, the “New Common Stock”) and (ii) all outstanding shares of Company common stock will be reclassified into shares of New Class A Common Stock. At Closing, the Company will also change its name to Embark Technology, Inc.Consummation of the transactions contemplated by the Merger Agreement is subject to customary conditions of the respective parties, including the approval of the Embark Business Combination by the Company’s stockholders. (See Note 11)Subscription AgreementsIn connection with the execution of the Merger Agreement, the Company and Embark entered into separate subscription agreements (collectively, the “Subscription Agreements”) with a number of investors (the “PIPE Investors”). Pursuant to the Subscription Agreements, the PIPE Investors agreed to purchase, and the Company agreed to sell to the PIPE Investors, an aggregate of 16,000,000 shares of New Class A Common Stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $160 million, in the PIPE Financing.In addition, in connection with the execution of the Merger Agreement, and pursuant to the Forward Purchase Agreements, certain FPA PIPE Investors agreed to purchase, and the Company agreed to sell to the FPA PIPE Investors, an aggregate of 4,000,000 units, consisting of one share of New Class A Common Stock and one-sixth of a warrant (the “PIPE Units”), for a purchase price of $10.00 per unit and an aggregate purchase price of $40 million, in the PIPE Financing.The closing of the sale of the PIPE Shares pursuant to the Subscription Agreements and PIPE Units pursuant to the Forward Purchase Agreements is contingent upon, among other customary closing conditions, the substantially concurrent consummation of the Embark Business Combination. The purpose of the PIPE is to raise additional capital for use by the Surviving Corporation following the Closing.16 NORTHERN GENESIS ACQUISITION CORP. IINOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSEPTEMBER 30, 2021(Unaudited)Sponsor Support Agreement and Foundation Investor Support AgreementIn connection with the Merger Agreement, the Company, Embark and the Sponsor entered into the Sponsor Support Agreement pursuant to which Sponsor agreed to vote all of its shares of NGA Common Stock in favor of the approval and adoption of the Business Combination. Additionally, Sponsor agreed, among other things, not to (i) transfer any of its shares of New Class A Common Stock or warrants for certain periods of time as set forth in the Sponsor Support Agreement, subject to certain customary exceptions or (ii) enter into any voting arrangement that is inconsistent with the commitment under the Sponsor Support Agreement to vote in favor of the approval and adoption of the Business Combination. Sponsor also agreed to forfeit, immediately prior to Closing, (i) a relative percentage of up to 1,130,239 Founder Shares to the extent that the Sponsor’s institutional investors fail to hold, at the Closing, at least one-half of the shares of NGA Common Stock issued to such investors in connection with our initial public offering, and (ii) up to 627,910 Founder Shares (currently expected to be 393,025 Founder Shares) in connection with the Forward Purchase Agreements investment. The Sponsor Support Agreement will terminate upon the termination of the Merger Agreement if the Closing does not occur.In addition, in connection with the Merger Agreement, the Sponsor expects certain of its institutional investors to enter into separate Support Agreements pursuant to which such investors will agree, among other things, to vote all shares of our common stock held by such investor at the time of such vote (i) in favor of the approval and adoption of the Business Combination, the Merger Agreement and each of the Transaction Proposals (as defined in the Merger Agreement), (ii) against any other business combination proposal or related proposals; and (iii) against any proposal, action or agreement that would reasonably be expected to impede, frustrate, or prevent the Merger or the satisfaction of any of the conditions thereto. Each such investor is further expected to represent and agree that such investor has not entered into, and will not enter, any agreement that would restrict, limit or interfere with the voting agreement made in the Support Agreement. The Business Combination Agreement and related agreements are further described in the Form 8-K filed by the Company on June 23, 2021.NOTE 8. STOCKHOLDERS’ EQUITYPreferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. At September 30, 2021 and December 31, 2020, there were no shares of preferred stock issued or outstanding.Common Stock — The Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.0001 per share. Holders of common stock are entitled to one vote for each share. At September 30, 2021 and December 31, 2020, there were 10,350,000 shares of common stock issued and outstanding, excluding 41,400,000 and -0- shares of common stock subject to possible redemption, respectively.NOTE 9. WARRANT LIABILITYWarrants —13.8 million Public Warrants may only be exercised for a whole numberand 6.7 million Private Warrants remained outstanding as of shares. No fractional warrants will be issued upon separationJune 30, 2022.The Company will not be obligated to deliver any shares of common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue any shares of common stock upon exercise of a warrant unless common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.The Company has agreed that as soon as practicable, but in no event later than 15 days, after the closing of a Business Combination, it will use its best efforts to file with the SEC a registration statement for the registration under the Securities Act of the shares of common stock issuable upon exercise of the warrants and thereafter 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 warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if the Company’s common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section��3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but it 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.17 NORTHERN GENESIS ACQUISITION CORP. IINOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSEPTEMBER 30, 2021(Unaudited)Once the warrants become exercisable, the Company may redeem the Public Warrants:●in whole and not in part;●at a price of $0.01 per warrant;●upon not less than 30 days’ prior written notice of redemption to each warrant holder; and●if, and only if, the reported last sale price of the 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 commencing once the warrants become exercisable and ending commencing once the warrants become exercisable and ending three business days before the Company sends the notice of redemption to the warrant holdersIf and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. 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.The exercise price and number of shares 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. However, the warrants will not be adjusted for issuance of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.In addition, if (x) the Company issues additional common stock or equity-linked securities for capital raising purposes in connection with the closing of a 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”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the common stock during the 10 trading day period starting on the trading day prior the day on which the Company consummates a Business Combination (such price, the “Market Value”) is below $9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price. Warrants and Working Capital Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants Working Capital Warrants, and the Class A common stock issuable upon the exercise of the Private Placement Warrants and Working Capital Warrants cannot be transferreddid not become transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants and Working Capital Warrants will beare exercisable on a cashless basis and beare non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If anythe Private Placement Warrants or Working Capital Warrants are held by someone other than the initial purchasers or their permitted transferees, suchthe Private Placement Warrants and Working Capital Warrants will beare redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.18 NORTHERN GENESIS ACQUISITION CORP. IINOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSEPTEMBER 30, 2021(Unaudited)NOTE 10. FAIR VALUE MEASUREMENTS followsevaluated the Public and Private Warrants under ASC 815-40, Derivatives and Hedging-Contracts in Entity's Own Equity, and concluded that they do not meet the criteria to be classified in stockholders' equity. Since the Public and Private Warrants meet the definition of a derivative under ASC 815, the Company recorded these warrants as liabilities on the balance sheet at fair value upon the closing of the Business Combination, with subsequent changes in their respective fair values recognized in the condensed consolidated statements of operations and comprehensive income (loss) at each reporting date.Property, Equipment and Software Useful life (years) Machinery and equipment 5 years Electronic equipment 3 years Vehicles and vehicle hardware 3 – 7 years Leasehold improvements Shorter of useful life or lease term Furniture and fixtures 7 years Developed software 2 – 4 years 820260, Earnings Per Share, to require entities to calculate diluted earnings per share for convertible instruments by using the if-converted method. Theassetsstatements.liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. interim periods within fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact the adoption of this standard on its consolidated financial statements.
| June 30, 2022 | December 31, 2021 | ||||||||||
| Prepaid insurance | $ | 2,839 | $ | 7,459 | |||||||
| Prepaid software | 1,335 | 2,564 | |||||||||
| Income tax receivable | 493 | 494 | |||||||||
| Short-term deposits | 475 | 448 | |||||||||
| Prepaid salary | 532 | 279 | |||||||||
| Other prepaid expenses | 252 | 936 | |||||||||
| Other current assets | 498 | 566 | |||||||||
| Total prepaid expenses and other current assets | $ | 6,424 | $ | 12,746 | |||||||
| June 30, 2022 | December 31, 2021 | ||||||||||
| Machinery and equipment | $ | 418 | $ | 344 | |||||||
| Electronic equipment | $ | 1,018 | $ | 413 | |||||||
| Vehicles and vehicle hardware | $ | 8,053 | $ | 6,268 | |||||||
| Leasehold improvements | $ | 553 | $ | 258 | |||||||
| Developed software | $ | 8,592 | $ | 5,184 | |||||||
| Other | $ | 27 | $ | 26 | |||||||
| Property, equipment and software, gross | $ | 18,661 | $ | 12,493 | |||||||
| Less: accumulated depreciation and amortization | $ | (3,691) | $ | (2,856) | |||||||
| Total property, equipment and software, net | $ | 14,970 | $ | 9,637 | |||||||
| June 30, 2022 | December 31, 2021 | ||||||||||
| Intangible assets | $ | — | $ | 4 | |||||||
| Long-term prepaid insurance and deposits | 7,218 | 3,592 | |||||||||
| Total Other Assets | $ | 7,218 | $ | 3,596 | |||||||
| June 30, 2022 | December 31, 2021 | ||||||||||
| Accrued payroll expenses | $ | 3,758 | $ | 823 | |||||||
| Accrued legal expenses | 482 | 124 | |||||||||
| Accrued consulting expenses | 929 | — | |||||||||
| Accrued transaction costs | — | 1,092 | |||||||||
| Accrued software | 580 | — | |||||||||
| Other | 885 | 1,103 | |||||||||
| Total accrued expenses and other current liabilities | $ | 6,634 | $ | 3,142 | |||||||
As of June 30, 2022 (in thousands) | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| United States money market funds | $ | 4,357 | $ | — | $ | — | $ | 4,357 | |||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Warrant liabilities - FPA warrants | $ | 87 | $ | — | $ | — | $ | 87 | |||||||||||||||
| Warrant liabilities - public warrants | $ | 1,793 | $ | — | $ | — | $ | 1,793 | |||||||||||||||
| Warrant liabilities - working capital warrants | $ | — | $ | — | $ | 260 | $ | 260 | |||||||||||||||
| Warrant liabilities - private warrants | $ | — | $ | — | $ | 870 | $ | 870 | |||||||||||||||
| Cantor put option derivative | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
As of December 31, 2021 (in thousands) | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| United States money market funds | $ | 22,349 | $ | — | $ | — | $ | 22,349 | |||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Warrant liabilities - FPA warrants | $ | 1,337 | $ | — | $ | — | $ | 1,337 | |||||||||||||||
| Warrant liabilities - public warrants | $ | 27,669 | $ | — | $ | — | $ | 27,669 | |||||||||||||||
| Warrant liabilities - working capital warrants | $ | — | $ | — | $ | 4,700 | $ | 4,700 | |||||||||||||||
| Warrant liabilities - private warrants | $ | — | $ | — | $ | 15,714 | $ | 15,714 | |||||||||||||||
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| Description | Level | September 30, 2021 | ||||||
| Assets: | ||||||||
| Marketable securities held in Trust Account | 1 | $ | 414,028,694 | |||||
| Liabilities: | ||||||||
| Warrant liability – Public Warrants | 1 | $ | 14,766,000 | |||||
| Warrant liability – Private Placement Warrants | 3 | $ | 7,489,067 | |||||
| FPA Liability | 2 | $ | 713,333 | |||||
The Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on our balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the consolidated statementsabove liability classified Public, Private, Working Capital and FPA Warrants have been measured based on the listed market price of operations.
such warrants on November 10, 2021. The FPA warrants and public warrants were valued using the public price as of June 30, 2022 and December 31, 2021 . The Private Warrantsand Working Capital warrants were initiallyfair valued using a Modifiedthe Black Scholes Option Pricing Model which is considered to beas of June 30, 2022 and December 31, 2021. For the three and six months ended June 30, 2022, the Company recognized income in the condensed consolidated statement of operations resulting from a Level 3 fair value measurement. The Modified Black Scholes model’s primary unobservable input utilizedchange in determining the fair value of warrants of approximately $24.3 million and $46.4 million, respectively, presented as other income (expense) on the Private Warrants isaccompanying condensed consolidated statement of operations.
| Description | Classification | Issue Date | Warrants Outstanding | Fair Value Price Per Share | Exercise Price per Share | Expiration | |||||||||||||||||||||||||||||
FPA warrants (1) | Liability | November 10, 2021 | 666,663 | $ | 0.13 | $ | 11.50 | November 10, 2026 | |||||||||||||||||||||||||||
| Public warrants | Liability | November 10, 2021 | 13,799,936 | $ | 0.13 | $ | 11.50 | November 10, 2026 | |||||||||||||||||||||||||||
| Private warrants | Liability | November 10, 2021 | 6,686,667 | $ | 0.13 | $ | 11.50 | November 10, 2026 | |||||||||||||||||||||||||||
| Working capital warrants | Liability | November 10, 2021 | 2,000,000 | $ | 0.13 | $ | 11.50 | November 10, 2026 | |||||||||||||||||||||||||||
| Risk – free interest rate | 3.00% | |||||||
| Expected term (in years) | 4.36 | |||||||
| Expected dividend yield | 0% | |||||||
| Expected volatility | 115.0% | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| Risk-free interest rate | n/a | 0.55 - 1.10% | n/a | 0.55 – 1.10% | ||||||||||||||||||||||
| Expected term (in years) | n/a | 5.47 - 6.07 | n/a | 5.47 – 6.07 | ||||||||||||||||||||||
| Expected dividend yield | n/a | —% | n/a | —% | ||||||||||||||||||||||
| Expected volatility | n/a | 36.88 - 51.52% | n/a | 36.88 – 51.52% | ||||||||||||||||||||||
Number of Outstanding Options | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic (in thousands) | ||||||||||||||||||||
| Outstanding at December 31, 2021 | 25,358,455 | $ | 0.20 | 6.9 | $ | 215,093 | |||||||||||||||||
| Exercised | (7,667,637) | 0.12 | |||||||||||||||||||||
| Cancelled | (545,274) | $ | 0.44 | ||||||||||||||||||||
| Outstanding at June 30, 2022 | 17,145,544 | 0.23 | 6.6 | $ | 5,666 | ||||||||||||||||||
| Vested and exercisable as of June 30, 2022 | 12,034,871 | $ | 0.14 | 5.9 | $ | 4,751 | |||||||||||||||||
| Number of Shares | Weighted Average Grant date Fair Value Per Share | |||||||||||||
| Balance as of December 31, 2021 | 9,616,774 | $ | 8.44 | |||||||||||
| Granted | 18,128,682 | 1.23 | ||||||||||||
| Forfeited | (753,282) | 5.91 | ||||||||||||
| Vested | (3,081,610) | 6.70 | ||||||||||||
| Balance as of June 30, 2022 | 23,910,564 | $ | 3.27 | |||||||||||
Number of Shares | Weighted Average Grant date Fair Value Per Share | |||||||||||||
| Balance as of December 31, 2021 | 44,715,756 | $1.97 | ||||||||||||
| Granted | — | — | ||||||||||||
| Forfeited | — | — | ||||||||||||
| Vested | — | — | ||||||||||||
| Balance as of June 30, 2022 | 44,715,756 | $1.97 | ||||||||||||
Number of Shares | Weighted Average Grant date Fair Value Per Share | |||||||||||||
| Balance as of December 31, 2021 | 1,481,065 | $ | 2.48 | |||||||||||
| Granted | — | $ | — | |||||||||||
| Forfeited | — | $ | — | |||||||||||
| Vested | (266,435) | $ | 2.48 | |||||||||||
| Balance as of June 30, 2022 | 1,214,630 | 0 | ||||||||||||
| Private Placement | Public | Warrant Liabilities | ||||||||||
| Fair value as of September 25, 2020 (inception) | $ | — | $ | — | $ | — | ||||||
| Initial measurement on January 15, 2021 | 10,297,467 | 20,286,000 | 30,583,467 | |||||||||
| Change in valuation inputs or other assumptions | (2,808,400 | ) | (5,520,000 | ) | (8,328,400 | ) | ||||||
| Fair value as of September 30, 2021 | $ | 7,849,067 | $ | 14,766,000 | $ | 22,255,067 | ||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| Research and development | $ | 3,955 | $ | 340 | $ | 8,059 | $ | 651 | ||||||||||||||||||
| General, and administrative | 8,466 | 197 | 20,964 | 448 | ||||||||||||||||||||||
| Total stock-based compensation expense | $ | 12,421 | $ | 537 | $ | 29,023 | $ | 1,099 | ||||||||||||||||||
19
NORTHERN GENESIS ACQUISITION CORP. II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The measurements of the FPA liability are classified as Level 2 due to the use of an observable market quote for a similar asset in an active market.
The following table presents a summarythe impact of stock-based compensation expense by award type for the changes inthree and six months ended June 30, 2022 and 2021 respectively (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| Award Type | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||
| Options | $ | 540 | $ | 592 | $ | 1,267 | $ | 1,191 | ||||||||||||||||||
| RSUs | 9,527 | — | 22,466 | — | ||||||||||||||||||||||
| PSUs | 2,630 | — | 5,231 | — | ||||||||||||||||||||||
| CSUs | 499 | — | 990 | — | ||||||||||||||||||||||
| Total stock-based compensation expense | $ | 13,196 | $ | 592 | $ | 29,954 | $ | 1,191 | ||||||||||||||||||
| SBC capitalized into internally developed software | (775) | (55) | (931) | (92) | ||||||||||||||||||||||
| Total stock-based compensation expense, net | $ | 12,421 | $ | 537 | $ | 29,023 | $ | 1,099 | ||||||||||||||||||
| FPA | ||||
| Liability | ||||
| Fair value, April 21, 2021 | $ | 966,667 | ||
| Loss on change in fair value | (253,333 | ) | ||
| Fair value, September 30, 2021 | $ | 713,334 | ||
There were no transfers inthree or out of Level 3 from other levels in the fair value hierarchy.
The fair value of the Private Placement Warrants was estimated at January 15, 2021 to be $1.54 per share and at Septembersix months ended June 30, 2021, to be $1.12 per share using the modified Black-Scholes option pricing model and the following assumptions:
| January 15, 2021 | September 30, 2021 | |||||||
| Expected Volatility | 25.0 | % | 17.0 | % | ||||
| Risk-free interest rate | 0.58 | % | 1.02 | % | ||||
| Expected term (years) | 5.00 | 5.00 | ||||||
| Fair value per share of common stock | $ | 9.51 | $ | 9.93 | ||||
NOTE 11. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed consolidated financial statements were issued. Based upon this review, other than as described below, the Company did 0t recognize any stock-based expense associated with PSUs, RSUs, and CSUs as the performance condition had not identify any subsequent eventsbeen satisfied until November 10, 2021.
| Years Ended December 31, | Amounts | |||||||
| 2022 (remaining six months) | $ | 270 | ||||||
| 2023 | 505 | |||||||
| 2024 | 372 | |||||||
| 2025 | 313 | |||||||
| 2026 and thereafter | 388 | |||||||
| Total future payments | $ | 1,848 | ||||||
On September 30, 2021,April 1, 2022, Tyler Hardy filed a putative securities class action lawsuit against Embark and certain of our executive officers and the Sponsor has amendedformer executive officers of Northern Genesis Acquisition Corp., captioned Hardy v. Embark Technology, Inc., et al., Case No. 3:22-cv-02090-JSC, in the AugustUnited States District Court for the Northern District of California, purportedly on behalf of a class consisting of those who purchased or otherwise acquired Embark common stock between January 12, 2021 Commitment Letter to provide $2,000,000and January 5, 2022. The complaint alleges that defendants made false and/or misleading statements in working capital loansviolations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Plaintiff Hardy does not quantify any damages in the complaint, but in addition to attorneys’ fees and costs, seeks to recover damages on behalf of himself and other persons who purchased or otherwise acquired Embark stock during the previously provided $1,000,000. putative class period at allegedly inflated prices and purportedly suffered financial harm as a result. On July 7, 2022, the Court appointed Tyler Hardy as lead plaintiff in the case, and his counsel at Pomerantz LLP as lead counsel. On July 15, 2022, the Court entered the parties’ stipulation whereby Plaintiff Hardy will file a consolidated amended complaint by August 25, 2022, to which defendants’ response will be due by October 24, 2022.
| Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | ||||||||||||||||||||||
| Lease cost | |||||||||||||||||||||||
| Operating lease cost | $ | 609 | 1,209 | ||||||||||||||||||||
| Short-term lease cost (1) | 102 | 204 | |||||||||||||||||||||
| Total lease cost | $ | 711 | 1,413 | ||||||||||||||||||||
| Six Months Ended June 30, 2022 | ||||||||||||||
| Other Information | ||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||
| Operating cash flows used in operating leases | $ | 1,048 | ||||||||||||
| Right-of-use assets obtained in exchange for lease obligations | ||||||||||||||
| Operating lease liabilities | $ | 7,077 | ||||||||||||
| June 30, 2022 | ||||||||
| Assets | ||||||||
| Operating lease right-of-use assets | $ | 6,073 | ||||||
| Liabilities | ||||||||
| Operating lease liability, current | $ | 2,040 | ||||||
| Operating lease liability, non-current | $ | 4,358 | ||||||
| Total operating lease liability | $ | 6,398 | ||||||
| June 30, 2022 | ||||||||
| Weighted Average Lease Term (in years) | ||||||||
| Operating Leases | 3.30 | |||||||
| Weighted Average Discount Rate | ||||||||
| Operating Leases | 5.77 | % | ||||||
| Years Ended December 31, | Operating leases | |||||||
| 2022 (remaining six months) | $ | 1,237 | ||||||
| 2023 | 2,222 | |||||||
| 2024 | 2,090 | |||||||
| 2025 | 662 | |||||||
| 2026 | 677 | |||||||
| 2027 and thereafter | 170 | |||||||
| Total undiscounted lease payments | $ | 7,058 | ||||||
| Less: imputed interest | (660) | |||||||
| Total lease liabilities | $ | 6,398 | ||||||
On November 9,
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net loss | $ | (14,324) | $ | (20,226) | $ | (32,771) | $ | (28,708) | |||||||||||||||
| Net loss attributable to common stockholders | $ | (14,324) | $ | (20,226) | $ | (32,771) | $ | (28,708) | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Net loss per share attributable to Class A and Class B common stockholders, basic and diluted (1) | $ | (0.03) | $ | (0.14) | $ | (0.07) | $ | (0.20) | |||||||||||||||
| Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted (1) | 457,195,552 | 141,997,299 | 454,963,170 | 141,997,299 | |||||||||||||||||||
| Class A | 370,116,771 | n/a* | 367,884,389 | n/a* | |||||||||||||||||||
| Class B | 87,078,781 | n/a* | 87,078,781 | n/a* | |||||||||||||||||||
At a special meeting of stockholders on November 9, 2021 (the “Special Meeting”),(1) During the stockholdersthree months ended June 30, 2022, the Company identified an error related to the weighted-average shares and net loss per share amounts for the three months ended March 31, 2021. The weighted-average shares and net loss per share did not reflect the retrospective effect of the Company voted and approved Proposal Nos. 1 through 7, including the Embark Business Combination, each of which is further describedexchange ratio established in the Proxy Statement/Prospectus filed byMerger (approximately 2.98 shares of Company A common stock for 1 share of Embark Class A common stock). The weighted-average shares and net loss per share as of March 31, 2021 are 141,807,168 and $(0.06), as corrected within the six month year-to-date comparative period financial information. Management evaluated the materiality of this error from quantitative and qualitative perspectives and concluded the error was not material to the prior periods.
| For the Six Months Ended June 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| (1) | |||||||||||
| Founders Preferred shares | — | 484,911 | |||||||||
| Series A-1 convertible preferred shares | — | 10,902,511 | |||||||||
| Series A-2 convertible preferred shares | — | 16,026,809 | |||||||||
| Series A-3 convertible preferred shares | — | 7,413,655 | |||||||||
| Series A-4 convertible preferred shares | — | 1,762,026 | |||||||||
| Series A-5 convertible preferred shares | — | 7,995,162 | |||||||||
| Series A-6 convertible preferred shares | — | 10,881,463 | |||||||||
| Series A-7 convertible preferred shares | — | 45,162,476 | |||||||||
| Series B convertible preferred shares | — | 97,945,840 | |||||||||
| Series C convertible preferred shares | — | 62,492,365 | |||||||||
| Outstanding options | 17,145,544 | 34,365,393 | |||||||||
| Warrants issued and outstanding | 23,153,266 | 2,556,860 | |||||||||
| Restricted stock units | 23,910,564 | — | |||||||||
| Common stock units | 1,214,630 | — | |||||||||
| Performance stock units | 44,715,756 | — | |||||||||
| Total | 110,139,760 | 297,989,471 | |||||||||
20
References in this report (the “Quarterly Report”) to “we,” “us” orYou should read the “Company” refer to Northern Genesis Acquisition Corp. II. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Northern Genesis Sponsor II LLC. The following discussion and analysis of the Company’sour financial condition and results of operations together with our condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the Annual Report. In addition to the historical financial information, this discussion contains forward-looking statements that involve risk, assumptions and uncertainties, such as statements of our plans, objectives, expectations, intentions, forecasts and projections. Our actual results and the timing of selected events could differ materially from those discussed in these forward-looking statements as a result of several factors. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the sections entitled “Forward-Looking Statements” above and “Risk Factors” below, and in the section entitled “Risk Factors” in the Annual Report.
| Three Months Ended June 30, | $ | % | |||||||||||||||||||||
| 2022 | 2021 | Change | Change | ||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | $ | 19,041 | $ | 9,111 | $ | 9,930 | 109.0 | % | |||||||||||||||
| General and administrative | 18,765 | 4,702 | 14,063 | 299.1 | % | ||||||||||||||||||
| Total operating expenses | 37,806 | 13,813 | 23,993 | 173.7 | % | ||||||||||||||||||
| Loss from operations | (37,806) | (13,813) | (23,993) | 173.7 | % | ||||||||||||||||||
| Other income (expense), net | 23,482 | (6,413) | 29,895 | (466.2) | % | ||||||||||||||||||
| Loss before provision for income taxes | (14,324) | (20,226) | 5,902 | (29.2) | % | ||||||||||||||||||
| Provision for income taxes | — | — | — | N.M | |||||||||||||||||||
| Net loss | $ | (14,324) | $ | (20,226) | 5,902 | (29.2) | % | ||||||||||||||||
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” withinGeneral and administrative expense increased by $14.1 million in the meaningthree months ended June 30, 2022, compared to the three months ended June 30, 2021. The increase was primarily due to $13.0 million higher headcount expenses including stock-based compensation, salaries and employee benefits, related to growth in the business, a $0.5 million increase in occupancy expenses related to additional leases and a $0.4 million increase in insurance expenses.
| Six Months Ended June 30, | $ | % | |||||||||||||||||||||
| 2022 | 2021 | Change | Change | ||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | $ | 37,736 | $ | 15,342 | $ | 22,394 | 146.0 | % | |||||||||||||||
| General and administrative | 40,691 | 6,992 | 33,699 | 482.0 | % | ||||||||||||||||||
| Total operating expenses | 78,427 | 22,334 | 56,093 | 251.2 | % | ||||||||||||||||||
| Loss from operations | (78,427) | (22,334) | (56,093) | 251.2 | % | ||||||||||||||||||
| Other income (expense), net | 45,656 | (6,374) | 52,030 | (816.3) | % | ||||||||||||||||||
| Loss before provision for income taxes | (32,771) | (28,708) | (4,063) | 14.2 | % | ||||||||||||||||||
| Provision for income taxes | — | — | — | N.M | |||||||||||||||||||
| Net loss | $ | (32,771) | $ | (28,708) | (4,063) | 14.2 | % | ||||||||||||||||
Overview
We are a blank check company formed under the laws of the State of Delaware on September 25, 2020 for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”). We intend to effectuate our Business Combination using cash from the proceeds of the Initial Public Offering andprimarily through the sale of the Private Placement Warrants, our capital stock, debt or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
Recent Developments
Personnel Services Agreement
We entered to a Personnel Services Agreement, dated April 1, 2021, with Northern Genesis Sponsor II LLC (the “Sponsor”) pursuant to which, subject to maintaining funds adequate for our projected obligations, we expect to pay up to $2,000,000 in the aggregate in respect of the services of personnel affiliated with the Sponsor, including persons who may be our directors or officers, for activities on our behalf, including services related to identifying, investigating and completing an initial business combination and other operational and support services. To the extent any amounts are in respect of the services of individuals who also serve as directors or executive officers of the Company, such amounts will be reviewed and approved by its audit committee.
The Sponsor, our 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. 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.
Forward Purchase Agreements
On April 21, 2021, the Company entered into an Amended and Restated Forward Purchase Agreement with Northern Genesis Capital II LLC (formerly known as Northern Genesis Capital LLC) (“NGC”) (the “NGC Forward Purchase Agreement”), and certain additional Forward Purchase Agreements with additional institutional investors (collectively, with the NGC Forward Purchase Agreement, the “Forward Purchase Agreements”). The Forward Purchase Agreements collectively replace that certain Forward Purchase Agreement previously entered into by the Company and NGC in connection with the closing of the Company’s initial public offering (the “Original Agreement”).
21
Pursuant to the Forward Purchase Agreements, if the Company determines to raise capital by the private placement of equity securities in connection with the closing of its initial business combination (subject to certain limited exceptions), the members of NGC (institutional investors that also are members of the Company’s Sponsor) and the parties to the additional Forward Purchase Agreements have the first right to purchase an aggregate amount of up to 7,500,000 “forward purchase units” of the Company (under all Forward Purchase Agreements, taken together) for $10.00 per forward purchase unit, or an aggregate total of $75,000,000. Each forward purchase unit would consist of one share of the Company’s common stock and one-sixth of one warrant, with each whole warrant exercisable to purchase one share of the Company’s common stock at $11.50 per share. The common stock and warrants included in the forward purchase units would have the same terms as the Company’s publicly traded common stock and warrants but would not be freely tradable until registered. As with the Original Agreement, any commitment by any potential purchaser under any of the Forward Purchase Agreements is subject to and conditioned upon written confirmation from the prospective purchaser, following the Company’s notification to such purchaser of its intention to enter into an initial business combination agreement, which a prospective purchaser was grant or withhold in its sole discretion.
In addition, if a private placement of equity securities in connection with the Company’s initial business combination exceeds $75,000,000, the Company agreed under each Forward Purchase Agreement to use its commercially reasonable efforts to permit priority participation in such additional amount by the members of NGC and the parties to the additional Forward Purchase Agreements, in an aggregate additional amount up to $150,000,000, on the same terms as those offered to other prospective purchasers in connection with such additional private placement amount.
Each Forward Purchase Agreement that the holders of the shares of common stock and warrants included in the forward purchase units will be entitled to registration rights pursuant to the terms of any registration rights agreement applicable to any equity securities issued by way of private placement in connection with the closing of the Company’s initial business combination or, in the absence of the foregoing, pursuant to the terms of the registration rights agreement entered into by the Company, Sponsor and NGC in connection with the Company’s initial public offering (the “Registration Rights Agreement”). Pursuant to the foregoing, on April 21, 2021, the Registration Rights Agreement was amended to clarify that the shares and warrants included in up to 7,500,000 total forward purchase units remain subject to the Registration Rights Agreement, regardless of the specific Forward Purchase Agreement pursuant to which they may be issued.
Each Forward Purchase Agreement contains representations and warranties by each party, conditions to closing, and additional provisions that are customary for agreements of this nature. The terms of all of the Forward Purchase Agreements are substantively the same, except that the NGC Forward Purchase Agreement gives NGC board observation rights prior to the Company’s initial business combination, and gives the members of NGC a priority right to subscribe for any of the forward purchase units that any other prospective purchasers do not elect to purchase under any of the other Forward Purchase Agreements.
Proposed Business Combination
On June 22, 2021, we, Embark Trucks Inc., a Delaware Corporation (“Embark”), and NGAB Merger Sub Inc., a Delaware corporation and our wholly owned subsidiary (“Merger Sub”), entered into an agreement and plan of merger (the “Merger Agreement”), pursuant to which, among other things, Merger Sub will be merged with and into Embark (the “Merger,” together with the other transactions related thereto, the “Embark Business Combination”), with Embark surviving the Merger as a wholly owned subsidiary of us (the “Surviving Corporation”).
On the date of closing of the Merger (the “Closing”) immediately prior to the effective time of the Merger (the “Effective Time”), we will amend and restate our certificate of incorporation (the “Post-Closing Charter”), pursuant to which, among other things, (i) we will have a dual class share structure with (x) shares of Class A common stock that will carry voting rights in the form of one vote per share (the “New Class A Common Stock”), and (y) shares of Class B common stock that will carry voting rights in the form of ten votes per share (the “New Class B Common Stock” and, together with the New Class A Common Stock, the “New Common Stock”) and (ii) all outstanding shares of our common stock will be reclassified into shares of New Class A Common Stock. At Closing, we will also change our name to Embark Technology, Inc.
Consummation of the transactions contemplated by the Merger Agreement is subject to customary conditions of the respective parties, including the approval of the Embark Business Combination by our stockholders.
Subscription Agreements
In connection with the execution of the Merger Agreement, we and Embark entered into separate subscription agreements (collectively, the “Subscription Agreements”) with a number of investors (the “PIPE Investors”). Pursuant to the Subscription Agreements, the PIPE Investors agreed to purchase, and we agreed to sell to the PIPE Investors, an aggregate of 16,000,000 shares of New Class A Common Stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $160 million, in the PIPE Financing.
In addition, in connection with the execution of the Merger Agreement, and pursuant to the Forward Purchase Agreements, certain FPA PIPE Investors agreed to purchase, and we agreed to sell to the FPA PIPE Investors, an aggregate of 4,000,000 units, consisting of one share of New Class A Common Stock and one-sixth of a warrant (the “PIPE Units”), for a purchase price of $10.00 per unit and an aggregate purchase price of $40 million, in the PIPE Financing.
The closing of the sale of the PIPE Shares pursuant to the Subscription Agreements and PIPE Units pursuant to the Forward Purchase Agreements is contingent upon, among other customary closing conditions, the substantially concurrent consummation of the Embark Business Combination. The purpose of the PIPE is to raise additional capital for use by the Surviving Corporation following the Closing.
22
Sponsor Support Agreement and Foundation Investor Support Agreement
In connection with the Merger Agreement, we, Embark and the Sponsor entered into the Sponsor Support Agreement pursuant to which Sponsor agreed to vote all of its shares of NGA Common Stock in favor of the approval and adoption of the Business Combination. Additionally, Sponsor agreed, among other things, not to (i) transfer any of its shares of New Class A Common Stock or warrants for certain periods of time as set forth in the Sponsor Support Agreement, subject to certain customary exceptions or (ii) enter into any voting arrangement that is inconsistent with the commitment under the Sponsor Support Agreement to vote in favor of the approval and adoption of the Business Combination. Sponsor also agreed to forfeit, immediately prior to Closing, (i) a relative percentage of up to 1,130,239 Founder Shares to the extent that the Sponsor’s institutional investors fail to hold, at the Closing, at least one-half of the shares of NGA Common Stock issued to such investors in connection with our initial public offering, and (ii) up to 627,910 Founder Shares (currently expected to be 393,025 Founder Shares) in connection with the Forward Purchase Agreement investment. The Sponsor Support Agreement will terminate upon the termination of the Merger Agreement if the Closing does not occur.
In addition, in connection with the Merger Agreement, the Sponsor expects certain of its institutional investors to enter into separate Support Agreements pursuant to which such investors will agree, among other things, to vote all shares of our common stock held by such investor at the time of such vote (i) in favor of the approval and adoption of the Business Combination, the Merger Agreement and each of the Transaction Proposals (as defineda convertible promissory note (the “Convertible Note”) issued by Embark in the Merger Agreement), (ii) against any other business combination proposal or related proposals; and (iii) against any proposal, action or agreement that would reasonably be expected to impede, frustrate, or prevent the Merger or the satisfaction of any of the conditions thereto. Each such investor is further expected to represent and agree that such investor has not entered into, and will not enter, any agreement that would restrict, limit or interfere with the voting agreement madeApril 2021 was converted in the Support Agreement. The Business Combination Agreement and related agreements are further described in the Form 8-K filed by the Company on June 23, 2021.
Embark Holders Support Agreement
In connection with the Merger Agreement, we, Embark and certain stockholders of Embark (the “Embark Holders”) entered into the Company Holders Support Agreement (the “Embark Holders Support Agreement”) pursuant to which the Embark Holders each agreed to (i) vote his, her or itsexchange for 3,774,951 shares of Embark Class A common stockstock. As of June 30, 2022, Embark had outstanding debt of $1.8 million from a financing of freight trucks that it utilizes for R&D. Embark makes monthly installment payments on its truck financing arrangements. The truck financings have varying maturities between March 2023 and January 2027. Embark’s principal uses of cash in favorrecent periods have been to fund its operations, invest in research and development, repay borrowings, and make investments in accordance with its investments policy.
Registration Rights Agreement
In connection with the Closing, we will enter into a Registration Rights Agreement with the Sponsor and certain former Embark Holders. The Registration Rights Agreement, subject to the terms thereof, will require the Surviving Corporation to, among other things, file a resale shelf registration statement on behalf of the Sponsor and the Embark Holders and their respective permitted transferees within thirty (30) days following the Closing. The Registration Rights Agreement will also provide for certain demand rights and piggyback registration rights in favor of each of the Sponsor and the Embark Holders and their respective permitted transferees, subject to customary underwriter cutbacks. The Surviving Corporation will agree to pay certain fees and expenses relating to registrations under the Registration Rights Agreement.
On July 2, 2021, we filed a registration statement on Form S-4 (File No: 333-257647) relating to the Embark Business Combination, which was subsequently amended through October 14, 2021. The SEC declared the Registration Statement effective on October 18, 2021, and we commenced mailing on or about October 20, 2021 of the definitive proxy statement/prospectus statement relating to the special meeting (the “Special Meeting”) of our stockholders in connection with the Embark Business Combination. At the Special Meeting held on November 9, 2021, our stockholders voted and approved Proposal Nos. 1 through 7, including the Embark Business Combination, each of which is further described in the definitive proxy statement/prospectus.
Other than as specifically discussed, this report does not assume the closing of the Embark Business Combination.
Working Capital Warrants
On November 9, 2021, we issued 2,000,000 Working Capital Warrants in full payment of its obligation under the Working Capital Loans.
23
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from September 25, 2020 (inception) through January 15, 2021 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance),support R&D efforts, as well as general and administrative activities for due diligence expenses.
For the threebusiness. If, at any time, Embark determines it requires more capital to execute upon its business plan, and /or that market conditions are favorable, Embark may seek additional equity or debt financing. Additionally, in the event Embark may in the future enter into arrangements to acquire or invest in related products, technologies, software and services, and Embark may need to seek additional equity or debt financing to support such growth. As of June 30, 2022, there were future minimum lease payments of $7.1 million.
| Six Months Ended June 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| Net cash (used in) provided by: | |||||||||||
| Operating activities | $ | (40,266) | $ | (20,084) | |||||||
| Investing activities | $ | (4,403) | $ | 33,339 | |||||||
| Financing activities | $ | 929 | $ | 24,963 | |||||||
For the nine months ended September 30, 2021, we hadnon-cash adjustments to net incomeloss (comprised of $4,182,273 which consists$46.4 million of change in fair value of warrant liabilitiesliability, $4.8 million of $8,328,400, change in the fair value of FPAthe derivative liability, $1.4 million of $253,333, and interest earned on marketable securities held in Trust Account of $28,694, offset by formation and operating costs of $3,012,398, loss on initial issuance of private warrants of $267,467, and offering costs allocated to warrant liability of $1,148,289.
Liquidity and Capital Resources
On January 15, 2021, we completed the Initial Public Offering of 41,400,000 Units, at $10.00 per Unit, generating gross proceeds of $414,000,000. Simultaneously with the closing of the Initial Public Offering, we completed the sale of 6,686,667 Private Placement Warrants at a price of $1.50 per Private Placement Warrant in a private placement to Northern Genesis Sponsor II LLC, the Sponsor, generating gross proceeds of $10,030,000.
Following the Initial Public Offering and the full exercise of the over-allotment option, a total of $414,000,000 was placedchange in the Trust Account. We incurred $23,221,415 in Initial Public Offering related costs, including $8,280,000 of underwriting fees, $14,490,000 of deferred underwriting fees and $451,415 of other costs.
For the nine months ended September 30, 2021, cash used in operating activities was $2,038,897. Net income of $4,182,273 was affected by interest earned on marketable securities held in the Trust Account of $28,694, the decrease in fair value of warrant liabilitywarrants issued for services and $1.7 million of $8,328,400, loss on initialamortization of debt discounts, which was offset by $27.9 million of stock-based compensation, depreciation and amortization of $1.4 million and $0.7 million of issuance of private warrants of $267,467,common stock for services). In addition, the increase was offset further by $8.4 million net cash decrease by changes in fair value of FPA liability of $253,333 and offering cost related to warrant liabilities of $1,148,289. Changes inEmbark’s operating assets and liabilities, which was primarily attributable to prepaid expenses and other current assets, accrued expenses and other current liabilities primarily due to overall growth and timing of payables.
As of September 30, 2021, we had marketable securities held in the Trust Account of $414,028,694 (including $28,694 of interest income) consisting of U.S. Treasury Bills with a maturity of 185 days or less. Interest income on the balance in the Trust Account may be used by us to pay taxes. Through September 30, 2021, we have not withdrawn any interest earnedproceeds from the Trust Account.
We intend to use substantially all
As of September 30, 2021, we had cash of $34,688. We intend to use the funds heldThere have been no material changes outside the Trust Account primarily to identify and evaluate target businesses, performordinary course of business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.
24
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, or certain of our officers and directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that a 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 our Trust Account would be used for such repayment. Up to $3,000,000 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.
Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity from the sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination. On August 12, 2021, the Sponsor has signed a Commitment Letter to provide up to $1,000,000 in working capital loans if required.
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.
Off-Balance Sheet Arrangements
WeEmbark did not have no obligations, assets or liabilities, which would be consideredany off-balance sheet arrangements as of SeptemberJune 30, 2021. We do not participate2022.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the Sponsor or an affiliate of the Sponsor a monthly fee of $10,000 for office space, utilities, secretarial supportthree and administrative services. We began incurring these fees on January 12, 2021 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.
The underwriters are entitled to a deferred fee of 3.5% of the gross proceeds of the Initial Public Offering, or $14,490,000. The deferred fee will become payable to the underwriterssix months ended June 30, 2022, from the amounts heldthose discussed in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
In connection with the Initial Public Offering, the Company entered into the NGC Forward Purchase Agreement with NGC, which NGC Forward Purchase Agreement was subsequently amended and restated as described under “—Recent Developments—Forward Purchase Agreements” above.
The forward purchase transaction is not dependent upon or affected by the percentage of stockholders electing to redeem their Public Shares and may provide the Company with an increased minimum funding level for the initial Business Combination. The forward purchase transaction is subject to conditions, including the forward purchase investor giving the Company its irrevocable written confirmation, confirming its commitment to purchase forward purchase securities and the amount thereof, no later than fifteen days after the Company notifies it of the Company’s intention to raise capital through the issuance of equity securities in connection with the closing of an initial Business Combination. The forward purchase investor may grant or withhold its consent and confirmation entirely within its sole discretion. Accordingly, if the forward purchase investor does not consent to and confirm the purchase, it will not be obligated to purchase any of the forward purchase securities. In connection with the proposed Embark Business Combination, certain FPA Investors agreed to purchase PIPE Units as described under “—Recent Developments—Proposed Business Combination” above.
25
CriticalFor information on recently issued accounting pronouncements, refer to Note 2, “ Summary of Significant Accounting Policies
The preparation ofPolicies” in Embark’s condensed consolidated financial statements and related disclosuresincluded elsewhere in conformity with accounting principles generally acceptedthis Quarterly Report on Form 10-Q.
Warrant Liability
We account for warrantssame as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our own common shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption is classified as a liability instrument and measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rightspublic companies that are either within the controlnot emerging growth companies or that have opted out of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of our condensed consolidated balance sheets.
Net Income Per Common Share
Net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during theusing such extended transition period. We apply the two-class method in calculating earnings per share. Accretion associated with the redeemable shares is excluded from earnings per share as the redemption value approximates fair value.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. We are currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed consolidated financial statements.
26
Not required
Item 4. Controls and Procedures (As Revised)
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 our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Under the supervision andOur management, with the participation of our management, including our principal executive officerChief Executive Officer (“CEO”) and principal financial and accounting officer, we conducted an evaluation ofChief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures(as of the end of the fiscal quarter ended September 30, 2021, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation our principal executive officer and principal financial and accounting officer have concluded that duringAct), as of the end of the period covered by this report,Quarterly Report on Form 10-Q. Based on that evaluation, our CEO and CFO concluded that, as of June 30, 2022, due to the material weakness described in the Annual Report, our disclosure controls and procedures were not effective. Our internal control over financial reporting did not result
Changes in Internal Control Over Financial Reporting
There was no changeweakness in our internal control over financial reporting resulting from a lack of sufficient number of qualified personnel within our accounting function who possessed an appropriate level of expertise to effectively perform the following functions:
None
Factors that could cause our actual results to differ materiallyExcept as set forth herein, there are no other material changes from those in this report include the risk factors describeddiscussed in ourEmbark’s Annual Report on Form 10-K forunder the fiscal year ended December 31, 2021 filedheading “Risk Factors.” You should carefully consider these risks, together with management’s discussion and analysis of Embark’s financial condition and results of operations in conjunction with the SEC. Except as described below, as of the date of this Report, there have been no material changes to the risk factors disclosed in our Annual Report filed with the SEC.
Our warrants are accounted for as liabilitiescondensed consolidated financial statements and the changes in value of our warrants could have a material effect on our financial results.
On April 12, 2021, the SEC issued the SEC Staff Statement regarding the accounting and reporting considerations for warrants issued by SPACs. Specifically, the SEC Staff Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement governing our warrants. As a result of the SEC Staff Statement, we reevaluated the accounting treatment of our public warrants and private placement warrants, and determined to classify the warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.
As a result,notes thereto included on our balance sheet as of September 30, 2021 contained elsewhere in this Quarterly Report are derivative liabilities related to embedded features contained within our warrants. ASC Subtopic 815, Derivatives and Hedging, provides for the remeasurementon Form 10-Q. If any of the fair valueevents contemplated should occur, Embark’s business, results of such derivativesoperations, financial condition and cash flows could suffer significantly.
On January 15, 2021, we consummated the Initial Public Offering of 41,400,000 Units. The Units were sold at an offering price of $10.00 per unit, generating total gross proceeds of $414,000,000. J.P. Morgan Securities LLC, Barclays Capital Inc. and CIBC Capital Markets acted as joint book-running managers of the Initial Public Offering. The securities in the offering were registered under the Securities Act on registration statement on Form S-1 (No. 333-251639 and 333-252056). The Securities and Exchange Commission declared the registration statements effective on January 12, 2021.
Simultaneous with the consummation of the Initial Public Offering, the Sponsor and Northern Genesis Sponsor II LLC consummated the private placement of an aggregate of 6,686,667 Units at a price of $1.50 per Private Placement Warrant, generating total proceeds of $10,030,000. Each Private Placement Warrant will entitle the holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
The Private Warrants are identical to the warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants are not transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.
Of the gross proceeds received from the Initial Public Offering, the exercise of the over-allotment option and the Private Placement Warrants, an aggregate of $414,000,000 was placed in the Trust Account.
We paid a total of $8,280,000 in underwriting fees, $14,490,000 of deferred underwriting fees and $451,415 for other costs and expenses related to the Initial Public Offering.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form 10-Q/A.
None
None
None
28
| Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||
| Exhibit Number | Description | Form | File No. | Date | Exhibit | Filed Herewith | ||||||||||||||||||||||||||||||||
| 2.1+ | 8-K | 001-39881 | 6/23/2021 | 2.1 | ||||||||||||||||||||||||||||||||||
| 3.1 | 8-K | 001-39881 | 11/17/2021 | 3.1 | ||||||||||||||||||||||||||||||||||
| 3.2 | 8-K | 001-39881 | 11/17/2021 | 3.2 | ||||||||||||||||||||||||||||||||||
| 4.1 | S-4 | 333-257647 | 10/13/2021 | 4.5 | ||||||||||||||||||||||||||||||||||
| 4.2 | S-4 | 333-257647 | 10/13/2021 | 4.6 | ||||||||||||||||||||||||||||||||||
| 4.3 | 8-K | 001-39881 | 1/19/2021 | 4.1 | ||||||||||||||||||||||||||||||||||
| 4.4 | 8-K | 001-39881 | 6/1/2022 | 4.1 | ||||||||||||||||||||||||||||||||||
| 4.5 | 8-K | 001-39881 | 6/1/2022 | 4.2 | ||||||||||||||||||||||||||||||||||
| 31.1** | X | |||||||||||||||||||||||||||||||||||||
| 31.2** | X | |||||||||||||||||||||||||||||||||||||
| 32.1** | X | |||||||||||||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRIL document. | X | ||||||||||||||||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | X | ||||||||||||||||||||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | X | ||||||||||||||||||||||||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | X | ||||||||||||||||||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | X | ||||||||||||||||||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | X | ||||||||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document. | X | ||||||||||||||||||||||||||||||||||||
29
SIGNATURES
In accordance with the requirements of Section 13 or 15(d) of the ExchangeSecurities Act of 1934, the registrant has duly caused this reportQuarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
| EMBARK TECHNOLOGY, INC. | ||||||||||||
| By: | /s/ Alex Rodrigues | |||||||||||
| Name: | Alex Rodrigues | |||||||||||
| Title: | Chief Executive Officer | |||||||||||
| (Principal Executive Officer) | ||||||||||||
| By: | /s/ Richard Hawwa | ||||||||||
| Name: | Richard Hawwa | ||||||||||
| Title: | Chief Financial Officer | ||||||||||
| (Principal Financial Officer and Principal Accounting Officer) | |||||||||||
30