UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
OR
For the transition period from to
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
3 Garden Road
(Address of principal executive offices, including zip code)
Registrant’s
telephone number, including area code: +
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Units, each consisting of one Class A ordinary share, $0.0001 par value, and one-half of one redeemable warrant | DEH.U | The New York Stock Exchange | ||
Redeemable warrants, each warrant exercisable for one Class A ordinary share, each at an exercise price of $11.50 per share | DEH WS | The New York Stock Exchange |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | 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).
As
of August 11, 2021,
D8 HOLDINGS CORP.
Form 10-Q
Table of Contents
i
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
D8 HOLDINGS CORP.
CONSOLIDATED CONDENSED BALANCE SHEETS
June 30, 2021 | December 31, 2020 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | $ | ||||||
Prepaid expenses | ||||||||
Total current assets | ||||||||
Investments held in Trust Accounts | ||||||||
Total Assets | $ | $ | ||||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | $ | ||||||
Accrued expenses | ||||||||
Total current liabilities | ||||||||
Deferred underwriting commissions | ||||||||
Warrant liabilities | ||||||||
Total liabilities | ||||||||
Commitments and Contingencies (Note 5) | ||||||||
Class A ordinary shares, $ | ||||||||
Shareholders’ Equity: | ||||||||
Preference shares, $ | ||||||||
Class A ordinary shares, $ | ||||||||
Class B ordinary shares, $ | ||||||||
Additional paid-in capital | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Total shareholders’ equity | ||||||||
Total Liabilities and Shareholders’ Equity | $ | $ |
The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.
1
D8 HOLDINGS CORP.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended | For the Six Months Ended | For the Period from May 6, 2020 (Inception) through | ||||||||||
June 30, 2021 | June 30, 2021 | June 30, 2020 | ||||||||||
Operating expenses | $ | $ | $ | |||||||||
General and administrative expenses | ||||||||||||
Administrative fee - related party | ( | ) | ( | ) | ( | ) | ||||||
Loss from operations | ( | ) | ( | ) | ||||||||
Change in fair value of warrant liabilities | ||||||||||||
Net gain from investments held in Trust Accounts | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Net loss | ||||||||||||
Weighted average shares outstanding of Class A ordinary shares, basic and diluted | ||||||||||||
Basic and diluted net income per share, Class A ordinary shares | $ | $ | $ | |||||||||
Weighted average shares outstanding of Class B ordinary shares, basic and diluted | ||||||||||||
Basic and diluted net loss per share, Class B ordinary shares | $ | ( | ) | $ | ( | ) | $ | ( | ) |
The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.
2
D8 HOLDINGS CORP.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the Three and Six Months Ended June 30, 2021
Ordinary Shares | Additional | Total | ||||||||||||||||||||||||||
Class A | Class B | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
Balance - December 31, 2020 | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||
Shares subject to possible redemption | ||||||||||||||||||||||||||||
Net loss | - | - | ( |
) | ( |
) | ||||||||||||||||||||||
Balance - March 31, 2021 (unaudited) | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||
Shares subject to possible redemption | ||||||||||||||||||||||||||||
Net loss | - | - | ( |
) | ( |
) | ||||||||||||||||||||||
Balance - June 30, 2021 (unaudited) | $ | $ | $ | $ | ( |
) | $ |
For the Period from May 6, 2020 (Inception) through June 30, 2020
Class B | Additional | Total | ||||||||||||||||||
Ordinary Shares | Paid-in | Accumulated | Shareholders’ | |||||||||||||||||
Shares (1) | Amount | Capital | Deficit | Equity (Deficit) | ||||||||||||||||
Balance - May 6, 2020 (inception) | $ | $ | $ | $ | ||||||||||||||||
Net loss | - | ( | ) | ( | ) | |||||||||||||||
Balance - June 30, 2020 (unaudited) | $ | $ | $ | ( | ) | $ | ( | ) |
(1) |
The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.
3
D8 HOLDINGS CORP.
UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
For the Six Months Ended | For the Period from May 6, 2020 (Inception) through | |||||||
June 30, 2021 | June 30, 2020 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Change in fair value of warrant liabilities | ||||||||
Net gain from investments held in Trust Accounts | ( | ) | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses | ||||||||
Accounts payable | ||||||||
Accrued expenses | ||||||||
Net cash used in operating activities | ( | ) | ||||||
Net change in cash | ( | ) | ||||||
Cash - beginning of the period | ||||||||
Cash - end of the period | $ | $ | ||||||
Supplemental disclosure of noncash activities: | ||||||||
Offering costs paid in exchange for issuance of Class B ordinary shares to Sponsor | $ | $ | ||||||
Offering costs included in accrued expenses | $ | $ | ||||||
Offering costs included in note payable | $ | $ | ||||||
Change in value of Class A ordinary shares subject to possible redemption | $ | $ |
The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.
4
D8 HOLDINGS CORP.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1—Description of Organization and Business Operations
D8 Holdings Corp. (the “Company”) was incorporated as a Cayman Islands exempted company on May 6, 2020. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). Although the Company is not limited to a particular industry or sector for purposes of consummating a Business Combination, the Company intends to focus its search on the consumer retail sector. The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As of June 30, 2021, the Company had not commenced any operations. All activity for the period from May 6, 2020 (inception) through June 30, 2021 relates to the Company’s formation, and the Initial Public Offering (as defined below), and since the Initial Public Offering, a search for a business combination target, including the proposed business combination with Vicarious Surgical Inc. (“Vicarious Surgical”). The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of net gain from investments held in Trust Accounts from the proceeds derived from the Initial Public Offering.
Financing
The
Company’s sponsor is D8 Sponsor LLC, a Cayman Islands limited liability company (the “Sponsor”). The registration statement
for the Initial Public Offering was declared effective on July 14, 2020. On July 17, 2020, the Company consummated the Initial Public
Offering of
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of
Trust Accounts
Upon the closing of the Initial Public Offering and the Private Placement,
$
Initial Business Combination
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 Private Placement Warrants, although substantially
all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the
Company will be able to complete a Business Combination successfully. The Company must complete an initial Business Combination with one
or more operating businesses or assets with a fair market value of at least
5
Notwithstanding
the foregoing, the Amended and Restated Memorandum and Articles of Association provide that a Public Shareholder, together with any affiliate
of such shareholder or any other person with whom such shareholder 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
The Company’s Sponsor, officers and directors (the “initial
shareholders”) have agreed, pursuant to a written agreement with the Company, that they will not propose any amendment to the Amended
and Restated Memorandum and Articles of Association (A) to modify the substance or timing of the Company’s obligation to allow redemption
in connection with the initial Business Combination or to redeem
If the Company
is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a
per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Accounts, including interest earned on the
funds held in the Trust Accounts and not previously released to the Company (less taxes payable and up to $
The initial shareholders have
agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within
the Combination Period. However, if the initial shareholders or members of the Company’s management team acquire Public Shares in
or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Accounts with respect to such
Public Shares 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 5) held in the Trust Accounts in the event the Company does not complete
a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other funds held in
the Trust Accounts that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible
that the per share value of the residual assets remaining available for distribution (including Trust Accounts assets) will be only $
6
Proposed Business Combination
On April 15, 2021, the Company (which shall migrate to and domesticate as a Delaware corporation prior to the Closing Date (as defined below)) entered into an agreement and plan of merger, by and among the Company, Snowball Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of the Company (“Merger Sub”), Vicarious Surgical, and Adam Sachs, in his capacity as the stockholder representative (the “Stockholder Representative”) (as it may be amended and/or restated from time to time, the “Merger Agreement”).
The Merger
The Merger Agreement provides that (a) Merger Sub will merge with and into Vicarious Surgical, with Vicarious Surgical being the surviving corporation of the merger. The transactions contemplated by the Merger Agreement are referred to herein as the “Proposed Business Combination.” The time of the closing of the Proposed Business Combination is referred to herein as the “Closing.” The date of the Closing is referred to herein as the “Closing Date.”
The Domestication
At the end of the business day immediately prior to the Closing, subject to the satisfaction or waiver of the conditions of the Merger Agreement, and prior to an investment by the PIPE Investors (as defined below) the Company will migrate to and domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended, and the Cayman Islands Companies Act (As Revised) (the “Domestication”).
By virtue of the Domestication and subject to the satisfaction or waiver of the conditions of the Merger Agreement, including approval of the Company’s shareholders: (i) each of the then issued and outstanding Class B ordinary shares of the Company, par value $0.0001 per share (each, a “Class B Share”), will convert automatically, on a one-for-one basis, into a Class A ordinary share of the Company, par value $0.0001 per share (each, a “Class A Share”); (ii) immediately following the conversion described in clause (i), each of the then issued and outstanding Class A Shares will convert automatically, on a one-for-one basis, into a share of Class A common stock, par value $0.0001 per share, of the Company (after the Domestication) (the “Domesticated Company Class A Stock”), each of which will carry voting rights of one vote per share; (iii) each of the then issued and outstanding warrants to purchase one Class A Share (“Cayman Company Warrant”) will automatically become a warrant to acquire one share of Domesticated Company Class A Stock (“Domesticated Company Warrant”) pursuant to the related warrant agreement; and (iv) each of the then issued and outstanding units of the Company (the “Cayman Company Units”) shall be separated into its component parts, consisting of one share of Domesticated Company Class A Stock and one-half of one Domesticated Company Warrant.
Concurrently with the Domestication and subject to the satisfaction or waiver of the conditions of the Merger Agreement, the Company will also file (a) a certificate of incorporation with the Secretary of State of Delaware in the form attached to the Merger Agreement (the “Company Domesticated Charter”) and (b) adopt bylaws in the form attached to the Merger Agreement (the “Company Domesticated Bylaws”), to (among other things) establish a revised dual class structure with shares of Domesticated Company Class A Stock and shares of Class B common stock, par value $0.0001 per share, of the Company (after Domestication), with the same economic terms as Domesticated Company Class A Stock, but carrying increased voting rights in the form of 20 votes per share (the “Domesticated Company Class B Stock” and together with the Domesticated Company Class A Stock, the “Domesticated Company Stock”).
Consideration and Structure
Under the
Merger Agreement, the Company has agreed to acquire all of the outstanding shares of common stock of Vicarious Surgical for approximately
$
Pursuant to the Merger Agreement, at the effective time of the Business Combination (the “Effective Time”), each outstanding option to purchase shares of Vicarious Surgical common stock (a “Vicarious Option”) that is outstanding, whether or not then vested or unvested, will be assumed by the Company and will be converted into an option to acquire Domesticated Company Class A Stock of the Company (a “Company Option”) with the same terms and conditions as applied to the Vicarious Option (as defined in the Merger Agreement) immediately prior to the Effective Time; provided that the number of shares underlying such Company Option will be determined by multiplying the number of shares of Company Capital Stock (as defined in the Merger Agreement) that are issuable upon the exercise of such Vicarious Option immediately prior to the Effective Time, by the Fully Diluted Adjusted Merger Consideration (as defined in the Merger Agreement) for such class, which product shall be rounded down to the nearest whole number of shares, at a per share exercise price determined by dividing the per share exercise price of such Vicarious Option immediately prior to the Effective Time by the Fully Diluted Adjusted Merger Consideration (as defined in the Merger Agreement) for such class, which quotient shall be rounded up to the nearest whole cent.
Pursuant to the Merger Agreement, at the Effective Time, each warrant to purchase shares of Company Capital Stock (as defined in the Merger Agreement) that is issued and outstanding prior to the Effective Time and has not been terminated pursuant to its terms will be assumed and converted into a warrant exercisable for shares of Domesticated Company Class A Stock of the Company.
The parties to the Merger Agreement have made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants with respect to the conduct of Vicarious Surgical and the Company and its subsidiaries prior to the Closing. The Closing is subject to certain customary conditions.
Refer to the definitive proxy statement/prospectus filed with the Securities and Exchange Commission on August 12, 2021 for additional information.
7
Liquidity and Going Concern
As
of June 30, 2021, the Company had approximately $
Prior
to the completion of the Initial Public Offering, the Over-Allotment and the Private Placement, the Company’s liquidity needs had
been satisfied through the payment of $
In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Codification (“ASC”) 205-40, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if the Company is unable to complete a Business Combination by July 17, 2022, then the Company may cease all operations except for the purpose of liquidating. In addition, the Company has incurred and expects to incur significant costs in pursuit of its financing and acquisition plans. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. There is no assurance that the Company’s plans to consummate a Business Combination or raise additional funds will be successful within the Combination Period. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after July 17, 2022.
Note 2—Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated condensed financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included. Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or any future periods.
The accompanying unaudited consolidated condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10K/A filed with the SEC on May 24, 2021.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder 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 an emerging growth 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 an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited consolidated condensed financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of unaudited consolidated condensed financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated condensed financial statements. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.
8
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents held outside the Trust Accounts as of June 30, 2021 and December 31, 2020.
Investments Held in Trust Accounts
The Company’s portfolio of investments held in the Trust Accounts are comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Accounts are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Accounts are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in net gain from investments held in Trust Accounts in the accompanying unaudited consolidated condensed statements of operations. The estimated fair values of investments held in the Trust Accounts are determined using available market information.
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 $
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities which qualify as financial instruments under the FASB ASC Topic 820, “Fair Value Measurements,” equal or approximate the carrying amounts represented in the condensed balance sheets.
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of:
● | Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; |
● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Offering Costs Associated with the Initial Public Offering
Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities are expensed as incurred, presented as non-operating expenses in the statements of operations. Offering costs associated with the Class A ordinary shares were charged to shareholders’ equity upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Derivative Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued shares purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
9
The Company accounts for its warrants issued in connection with its Initial Public Offering and Private Placement as derivative warrant liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statements of operations. The fair value of warrants issued in connection with the Private Placement has been estimated using the Black-Scholes Option Pricing Model at each balance sheet date. The fair value of the warrants issued in connection with the Initial Public Offering was initially measured using a Binomial Lattice simulation and subsequently been measured at each measurement date based on the market price of such warrants when separately listed and traded. The determination of the fair value of the warrant liability may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible
redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares
subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable
Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within the control of the holder
or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary
equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary
shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence
of uncertain future events. Accordingly, at June 30, 2021 and December 31, 2020,
Income Taxes
FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of June 30, 2021 and December 31, 2020. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of June 30, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company is considered an exempted Cayman Islands company and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the periods presented. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Net Income (Loss) per Ordinary Share
The Company’s condensed statements of operations include a presentation of net income (loss) per share for Class A ordinary shares subject to possible redemption in a manner similar to the two-class method of net income (loss) per ordinary share. Net income (loss) per ordinary share, basic and diluted, for Class A ordinary shares is calculated by dividing the interest income earned on the Trust Accounts, less interest available to be withdrawn for the payment of taxes, by the weighted average number of Class A ordinary shares outstanding for the periods. Net income (loss) per ordinary share, basic and diluted, for Class B ordinary shares is calculated by dividing the net income (loss), adjusted for income attributable to Class A ordinary shares, by the weighted average number of Class B ordinary shares outstanding for the periods. Class B ordinary shares include the Founder Shares as these ordinary shares do not have any redemption features and do not participate in the income earned on the Trust Accounts.
The calculation of diluted net income (loss) per ordinary share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, (ii) exercise of over-allotment and (iii) Private Placement since the exercise price of the warrants is in excess of the average ordinary shares price for the period and therefore the inclusion of such warrants would be anti-dilutive.
10
The following table reflects the calculation of basic and diluted net income (loss) per ordinary share:
For the Three Months Ended | For the Six Months Ended | For the Period from May 6, 2020 (Inception) through | ||||||||||
June 30, 2021 | June 30, 2021 | June 30, 2020 | ||||||||||
Class A ordinary shares | ||||||||||||
Numerator: | ||||||||||||
Net gain from investments held in Trust Accounts | $ | $ | $ | |||||||||
Net income attributable to Class A ordinary shares | $ | $ | $ | |||||||||
Denominator: | ||||||||||||
Weighted average shares outstanding of Class A ordinary shares, basic and diluted | ||||||||||||
Basic and diluted net income per share, Class A ordinary shares | $ | $ | $ | |||||||||
Class B ordinary shares | ||||||||||||
Numerator: | ||||||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Less: Net income attributable to Class A ordinary shares | ( | ) | ( | ) | ||||||||
Net loss attributable to Class B ordinary shares | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Denominator: | ||||||||||||
Weighted average shares outstanding of Class B ordinary shares, basic and diluted | ||||||||||||
Basic and diluted net loss per share, Class B ordinary shares | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The Company adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.
The Company’s management does not believe that any recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the accompanying consolidated condensed financial statements.
Note 3—Initial Public Offering
On
July 17, 2020, the Company consummated the Initial Public Offering of
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Note 4—Related Party Transactions
Founder Shares
On
May 14, 2020, the Sponsor paid $
The
initial shareholders agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares and any Class
A ordinary shares issuable upon conversion thereof until the earlier to occur of: (i) one year after the completion of the initial Business
Combination, or (ii) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction after
the initial Business Combination that results in all of the Company’s shareholders having the right to exchange their Class A ordinary
shares for cash, securities or other property; except to certain permitted transferees and under certain circumstances (the “lock-up”).
Private Placement Warrants
On
July 17, 2020, simultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of
Each
warrant is exercisable to purchase one Class A ordinary share at $
The Sponsor and the Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the initial Business Combination.
Sponsor Loan
On
May 14, 2020, the Sponsor agreed to loan the Company up to $
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Working Capital Loans
In
addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor,
or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans. In the event
that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Accounts to repay the Working
Capital Loans but no proceeds held in the Trust Accounts would be used to repay the Working Capital Loans. Except for the foregoing,
the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans.
The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, up
to $
Administrative Services Agreement
Commencing
on the date of the final prospectus, the Company has agreed to pay the Sponsor a total of $
Note 5—Commitments and Contingencies
Registration Rights
The holders of Founder Shares, Private Placement Warrants, and securities that may be issued upon conversion of Working Capital Loans, if any, will be entitled to registration rights pursuant to a registration rights agreement dated as of July 14, 2020. These holders are entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The
Company granted the underwriters a 45-day option from the final prospectus relating to the Initial Public Offering to purchase up to
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that the specific impact is not readily determinable as of the date of the unaudited consolidated condensed financial statements. The unaudited consolidated condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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Note 6—Warrants
As
of June 30, 2021 and December 31, 2020, the Company had
The
Public Warrants will become exercisable at $
The
warrants will expire
The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the ordinary shares issuable upon exercise of the Private Placement Warrants, so long as they are held by the Sponsor or its permitted transferees, (i) will not be redeemable by the Company, (ii) may not (including the Class A ordinary shares issuable upon exercise of these warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders until 30 days after the completion of the initial Business Combination, (iii) may be exercised by the holders on a cashless basis and (iv) will be entitled to registration rights. If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the Public Warrants.
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Redemption of Warrants when the price per Class A ordinary share equals or exceeds $18.00. The Company may call the Public Warrants for redemption:
● | in whole and not in part; |
● | at a price of $0.01 per warrant; |
● | upon a minimum of 30 days’ prior written notice of redemption; and |
In no event will the Company be required to net cash settle any Warrants.
Redemption of Warrants when the price per Class A ordinary share equals or exceeds $10.00. The Company may also redeem the outstanding Public Warrants once they become exercisable:
● | in whole and not in part; |
● | at a price of $0.10 per warrant; |
● | upon a minimum of 30 days’ prior written notice of redemption; provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the “fair market value” of the Company’s Class A ordinary shares; and |
If the Company is unable to complete the Initial Business Combination within the combination period and the Company liquidates the funds held in the Trust Accounts, 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 Accounts with the respect to such warrants. Accordingly, the warrants may expire worthless.
Note 7—Shareholders’ Equity
Preference
Shares—The Company is authorized to issue
Class
A Ordinary Shares—The Company is authorized to issue
Class
B Ordinary Shares—The Company is authorized to issue
Holders of the Class A ordinary shares and holders of the Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the Company’s shareholders, except as required by law or stock exchange rule; provided that only holders of the Class B ordinary shares have the right to appoint directors in any election held prior to or in connection with the completion of the initial Business Combination.
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The
Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the Initial Business Combination on a
one-for-one basis (as adjusted). In the case that additional Class A ordinary shares or equity-linked securities are issued or deemed
issued in connection with the initial Business Combination, the number of Class A ordinary shares issuable upon conversion of all Founder
Shares will equal, in the aggregate,
Note 8—Fair Value Measurements
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
Fair Value Measured as of June 30, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Investments held in Trust Accounts - U.S. Treasury Securities (1) | $ | $ | $ | $ | ||||||||||||
Liabilities: | ||||||||||||||||
Warrant liabilities - public warrants | $ | $ | $ | $ | ||||||||||||
Warrant liabilities - private warrants | $ | $ | $ | $ |
Fair Value Measured as of December 31, 2020 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Investments held in Trust Accounts - U.S. Treasury Securities (2) | $ | $ | $ | $ | ||||||||||||
Liabilities: | ||||||||||||||||
Warrant liabilities - public warrants | $ | $ | $ | $ | ||||||||||||
Warrant liabilities - private warrants | $ | $ | $ | $ |
(1) |
(2) |
Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. There were no transfers between levels for three and six months ended June 30, 2021.
The fair value of warrants issued in connection with the Private Placement
has been estimated using the Black-Scholes Option Pricing Model at each balance sheet date. The fair value of the warrants issued in connection
with the Initial Public Offering was initially measured using a Binomial Lattice simulation and subsequently been measured at each measurement
date based on the market price of such warrants when separately listed and traded in August 2020. For the three and six months ended June
30, 2021, the Company recognized a charge to the statements of operations resulting from an increase in the fair value of the derivative
warrant liabilities of approximately $
The change in the fair value of the Level 3 warrant liabilities for three and six months ended June 30, 2021 is summarized as follows:
Warrant liabilities at December 31, 2020 | $ | |||
Change in fair value of warrant liabilibites | ||||
Warrant liabilities at March 31, 2021 | ||||
Change in fair value of warrant liabilibites | ||||
Warrant liabilities at June 30, 2021 | $ |
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The estimated fair value of the derivative warrant liabilities of the private warrants is determined using Level 3 inputs. Inherent in a Black-Scholes Option Pricing Model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its ordinary shares based on historical volatility of select peer companies that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.
The following table provides quantitative information regarding Level 3 fair value measurements inputs:
June 30, 2021 | December 31, 2020 | |||||||
Exercise price | $ | $ | ||||||
Stock Price | $ | $ | ||||||
Term (in years) | ||||||||
Volatility | % | % | ||||||
Risk-free interest rate | % | % | ||||||
Dividend yield | % | % |
Volatility
increased from
Note 9—Subsequent Events
In July 2021, the underwriter of the Company’s
Initial Public Offering agreed to reduce its deferred underwriting fee to approximately $
Management has evaluated subsequent events to determine if events or transactions occurring through the date the financial statements were issued and has concluded that all such events that would require recognition or disclosure have been recognized or disclosed.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References to the “Company,” “our,” “us” or “we” refer to D8 Holdings Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited consolidated condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Form 10-Q. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company on May 6, 2020. We were formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). Although we are not limited to a particular industry or sector for purposes of consummating a Business Combination, we intend to focus our search on the consumer retail sector. We are an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies.
Our sponsor is D8 Sponsor LLC, a Cayman Islands limited liability company (the “Sponsor”). Our registration statement for the initial public offering (the “Initial Public Offering”) was declared effective on July 14, 2020. On July 17, 2020, we consummated the Initial Public Offering of 30,000,000 units (the “Units”) at $10.00 per Unit, generating gross proceeds of $300.0 million. Each Unit consists of one Class A ordinary share (the “Public Shares”) of ours, par value $0.0001, and one-half of one redeemable warrant (the “Public Warrants”) of ours, with each warrant entitling the holder thereof to purchase one Class A Ordinary Share for $11.50 per share, subject to adjustment. On July 24, 2020, the underwriters exercised the over-allotment option in full and purchased an additional 4,500,000 Units (the “Over-Allotment Units”), generating additional gross proceeds of $45.0 million. We incurred total offering costs of approximately $19.5 million in underwriting fees (inclusive of approximately $12.1 million in deferred underwriting fees).
Simultaneously with the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 8,000,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to our Sponsor, each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $8.0 million, and incurring offering costs of approximately $16,000. On July 24, 2020, simultaneously with the sale of the Over-Allotment Units, we consummated a private sale of an additional 900,000 Private Placement Warrants to our Sponsor, generating gross proceeds of $900,000.
Upon the closing of the Initial Public Offering and the Private Placement, $345.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in trust accounts (“Trust Accounts”), located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and is invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940 (the “Investment Company Act”), having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the Trust Account.
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Our management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
If we are unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or July 17, 2022 (the “Combination Period”), we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Accounts, including interest earned on the funds held in the Trust Accounts and not previously released to us (less taxes payable and 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 Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject, in the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and in all cases subject to the other requirements of applicable law.
Results of Operations
Our entire activity since inception through June 30, 2021 related to our formation, the preparation for the Initial Public Offering, and since the closing of the Initial Public Offering, the search for a prospective initial Business Combination. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our initial Business Combination. We will generate non-operating income in the form of net gain from investments held in Trust Accounts. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended June 30, 2021, we had net loss of approximately $21.0 million, which consisted of approximately $1.4 million in general and administrative costs, $30,000 in administrative fees – related party, and approximately $19.6 million in change in fair value of warrant liabilities, partially offset by approximately $7,000 in net gain from investments held in Trust Accounts.
For the six months ended June 30, 2021, we had net loss of approximately $24.2 million, which consisted of approximately $2.9 million in general and administrative costs, $60,000 in administrative fees – related party, and approximately $21.3 million in change in fair value of warrant liabilities, partially offset by an approximate $74,000 net gain from investments held in Trust Accounts.
For the period from May 6, 2020 (inception) through June 30, 2020, we had net loss of approximately $27,000, which consisted solely of general and administrative expenses.
Liquidity and Capital Resources
As of June 30, 2021, we had approximately $236,000 in our operating bank account and a working capital deficit of approximately $1.9 million.
Prior to the completion of the Initial Public Offering, our liquidity needs had been satisfied through the payment of $25,000 of offering costs by our Sponsor in exchange for the issuance of the Founder Shares, and a loan of approximately $127,000 pursuant to the Note issued to our Sponsor. We repaid the Note in full on July 17, 2020. Subsequent to the consummation of the Initial Public Offering and Private Placement, our liquidity needs have been satisfied with the proceeds from the consummation of the Private Placement not held in the Trust Accounts. In addition, in order to finance transaction costs in connection with a Business Combination, our Sponsor may, but is not obligated to, provide us the Working Capital Loans. To date, there are no Working Capital Loans outstanding.
In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Codification (“ASC”) 205-40, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if the Company is unable to complete a Business Combination by July 17, 2022, then the Company may cease all operations except for the purpose of liquidating. In addition, the Company has incurred and expects to incur significant costs in pursuit of its financing and acquisition plans. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. There is no assurance that the Company’s plans to consummate a Business Combination or raise additional funds will be successful within the Combination Period. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after July 17, 2022.
We continue to evaluate the impact of the COVID-19 pandemic and have concluded that the specific impact is not readily determinable as of the date of the balance sheet. The unaudited consolidated condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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Proposed Business Combination
On April 15, 2021, our Company (which shall migrate to and domesticate as a Delaware corporation prior to the Closing Date (as defined below)) entered into an agreement and plan of merger, by and among our Company, Snowball Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of the Company (“Merger Sub”), Vicarious Surgical Inc. (“Vicarious Surgical”), and Adam Sachs, in his capacity as the stockholder representative (the “Stockholder Representative”) (as it may be amended and/or restated from time to time, the “Merger Agreement”).
The Merger
The Merger Agreement provides that (a) Merger Sub will merge with and into Vicarious Surgical, with Vicarious Surgical being the surviving corporation of the merger. The transactions contemplated by the Merger Agreement are referred to herein as the “Proposed Business Combination.” The time of the closing of the Proposed Business Combination is referred to herein as the “Closing.” The date of the Closing is referred to herein as the “Closing Date.”
The Domestication
At the end of the business day immediately prior to the Closing, subject to the satisfaction or waiver of the conditions of the Merger Agreement, and prior to an investment by the PIPE Investors (as defined below) the Company will migrate to and domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended, and the Cayman Islands Companies Act (As Revised) (the “Domestication”).
By virtue of the Domestication and subject to the satisfaction or waiver of the conditions of the Merger Agreement, including approval of the Company’s shareholders: (i) each of the then issued and outstanding Class B ordinary shares of the Company, par value $0.0001 per share (each, a “Class B Share”), will convert automatically, on a one-for-one basis, into a Class A ordinary share of the Company, par value $0.0001 per share (each, a “Class A Share”); (ii) immediately following the conversion described in clause (i), each of the then issued and outstanding Class A Shares will convert automatically, on a one-for-one basis, into a share of Class A common stock, par value $0.0001 per share, of the Company (after the Domestication) (the “Domesticated Company Class A Stock”), each of which will carry voting rights of one vote per share; (iii) each of the then issued and outstanding warrants to purchase one Class A Share (“Cayman Company Warrant”) will automatically become a warrant to acquire one share of Domesticated Company Class A Stock (“Domesticated Company Warrant”) pursuant to the related warrant agreement; and (iv) each of the then issued and outstanding units of the Company (the “Cayman Company Units”) shall be separated into its component parts, consisting of one share of Domesticated Company Class A Stock and one-half of one Domesticated Company Warrant.
Concurrently with the Domestication and subject to the satisfaction or waiver of the conditions of the Merger Agreement, the Company will also file (a) a certificate of incorporation with the Secretary of State of Delaware in the form attached to the Merger Agreement (the “Company Domesticated Charter”) and (b) adopt bylaws in the form attached to the Merger Agreement (the “Company Domesticated Bylaws”), to (among other things) establish a revised dual class structure with shares of Domesticated Company Class A Stock and shares of Class B common stock, par value $0.0001 per share, of the Company (after Domestication), with the same economic terms as Domesticated Company Class A Stock, but carrying increased voting rights in the form of 20 votes per share (the “Domesticated Company Class B Stock” and together with the Domesticated Company Class A Stock, the “Domesticated Company Stock”).
Consideration and Structure
Under the Merger Agreement, we have agreed to acquire all of the outstanding shares of common stock of Vicarious Surgical for approximately $1 billion in aggregate consideration. Vicarious Surgical stockholders (other than Adam Sachs, Barry Greene and Sammy Khalifa (the “Founders”)) will receive shares of Domesticated Company Class A Stock (valued at $10.00 per share), equal to (i) the amount of shares of Company Capital Stock (as defined in the Merger Agreement) owned by such Company Stockholder (as defined in the Merger Agreement) multiplied by (ii) the Fully Diluted Adjusted Merger Consideration (as defined by the Merger Agreement) for each share in such class of Company Capital Stock (as defined in the Merger Agreement). The Founders will receive shares of Domesticated Company Class B Stock equal to (i) the amount of shares of Company Class A Common Stock (as defined in the Merger Agreement) owned by such Founder multiplied by (ii) the Fully Diluted Adjusted Merger Consideration (as defined by the Merger Agreement) for each share of Company Class A Common Stock (as defined in the Merger Agreement).
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Pursuant to the Merger Agreement, at the effective time of the Business Combination (the “Effective Time”), each outstanding option to purchase shares of Vicarious Surgical common stock (a “Vicarious Option”) that is outstanding, whether or not then vested or unvested, will be assumed by the Company and will be converted into an option to acquire Domesticated Company Class A Stock of the Company (a “Company Option”) with the same terms and conditions as applied to the Vicarious Option (as defined in the Merger Agreement) immediately prior to the Effective Time; provided that the number of shares underlying such Company Option will be determined by multiplying the number of shares of Company Capital Stock (as defined in the Merger Agreement) that are issuable upon the exercise of such Vicarious Option immediately prior to the Effective Time, by the Fully Diluted Adjusted Merger Consideration (as defined in the Merger Agreement) for such class, which product shall be rounded down to the nearest whole number of shares, at a per share exercise price determined by dividing the per share exercise price of such Vicarious Option immediately prior to the Effective Time by the Fully Diluted Adjusted Merger Consideration (as defined in the Merger Agreement) for such class, which quotient shall be rounded up to the nearest whole cent.
Pursuant to the Merger Agreement, at the Effective Time, each warrant to purchase shares of Company Capital Stock (as defined in the Merger Agreement) that is issued and outstanding prior to the Effective Time and has not been terminated pursuant to its terms will be assumed and converted into a warrant exercisable for shares of Domesticated Company Class A Stock of the Company.
The parties to the Merger Agreement have made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants with respect to the conduct of Vicarious Surgical and the Company and its subsidiaries prior to the Closing. The Closing is subject to certain customary conditions.
Refer to the definitive proxy statement/prospectus filed with the Securities and Exchange Commission on August 12, 2021 for additional information.
Related Party Transactions
Founder Shares
On May 14, 2020, our Sponsor paid $25,000, or approximately $0.003 per share, to cover certain offering costs in consideration for 7,187,500 Class B ordinary shares, par value $0.0001 (the “Founder Shares”). On June 25, 2020, our Sponsor transferred 15,000 Founder Shares to Robert Kirby and 25,000 Founder Shares to each of Michael Kives, Fred Langhammer and Terry Lundgren, resulting in the Sponsor holding 7,097,500 Founder Shares. On July 14, 2020, we effected a share capitalization of 1,437,500 Founder Shares resulting in 8,625,000 Class B ordinary shares outstanding, of which the Sponsor now holds 8,535,000 Founder Shares. All shares and the associated amounts have been retroactively restated to reflect the share capitalization. Of the 8,625,000 Founder Shares outstanding, up to 1,125,000 Founder Shares were subject to forfeiture to the extent that the over-allotment option was not exercised in full by the underwriters, so that the Founder Shares will represent 20.0% of our issued and outstanding shares after the Initial Public Offering. The underwriters exercised their over-allotment option in full on July 24, 2020. As a result, these shares were no longer subject to forfeiture.
The initial shareholders agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares and any Class A ordinary shares issuable upon conversion thereof until the earlier to occur of: (i) one year after the completion of the initial Business Combination, or (ii) the date on which we complete a liquidation, merger, share exchange or other similar transaction after the initial Business Combination that results in all of our shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property; except to certain permitted transferees and under certain circumstances (the “lock-up”). Notwithstanding the foregoing, if (1) the closing price of Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination or (2) if we consummate a transaction after the initial Business Combination which results in our shareholders having the right to exchange their shares for cash, securities or other property, the Founder Shares will be released from the lock-up.
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Private Placement Warrants
On July 17, 2020, simultaneously with the closing of the Initial Public Offering, we consummated the Private Placement of 8,000,000 Private Placement Warrants to our Sponsor, each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $8.0 million, and incurring offering costs of approximately $16,000. On July 24, 2020, simultaneously with the sale of the Over-Allotment Units, we consummated a private sale of an additional 900,000 Private Placement Warrants to our Sponsor, generating additional gross proceeds of $900,000.
Each warrant is exercisable to purchase one Class A ordinary share at $11.50 per share. A portion of the proceeds from the Private Placement Warrants were added to the proceeds from the Initial Public Offering held in the Trust Accounts. If we do not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless.
Our Sponsor, officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the initial Business Combination.
Sponsor Loan
On May 14, 2020, our Sponsor agreed to loan us up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Note”). We borrowed approximately $127,000 under the Note and fully repaid this Note on July 17, 2020.
Working Capital Loans
In addition, in order to finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor, or certain of our officers and directors may, but are not obligated to, loan us funds as may be required (“Working Capital Loans”). If we complete a Business Combination, we would repay the Working Capital Loans. In the event that a Business Combination does not close, we may use a portion of proceeds held outside the Trust Accounts to repay the Working Capital Loans but no proceeds held in the Trust Accounts would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into private placement warrants at a price of $1.00 per warrant. As of June 30, 2021 and December 31, 2020, we had no Working Capital Loans outstanding.
Administrative Services Agreement
Commencing on the date of the final prospectus, we agreed to pay our Sponsor a total of $10,000 per month for office space, utilities, secretarial and administrative support services. Upon completion of the Initial Business Combination or our liquidation, we will cease paying these monthly fees. For the three and six months ended June 30, 2021, we incurred and paid approximately $30,000 and $60,000 in such administrative fees, respectively.
Contractual Obligations
Registration Rights
The holders of Founder Shares, Private Placement Warrants, and securities that may be issued upon conversion of Working Capital Loans, if any, will be entitled to registration rights pursuant to a registration rights agreement dated as of July 14, 2020. These holders are entitled to certain demand and “piggyback” registration rights. We will bear the expenses incurred in connection with the filing of any such registration statements.
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Underwriting Agreement
We granted the underwriters a 45-day option from the final prospectus relating to the Initial Public Offering to purchase up to 4,500,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. The underwriters exercised their over-allotment option in full on July 24, 2020.
The underwriters were paid a cash underwriting discount of $0.20 per unit, or $6.9 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or approximately $12.1 million in the aggregate, was payable to the underwriters for deferred underwriting commissions. Subsequently, the underwriter of the Company’s Initial Public Offering agreed to reduce its deferred underwriting fee to approximately $6.0. D8 and Vicarious Surgical will use the $6 million reduction in underwriting fees to fund additional capital advisory, legal and other fees associated with the Business Combination. The deferred fee will become payable to the underwriters from the amounts held in the Trust Accounts solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have identified the following as its critical accounting policies:
Investments Held in the Trust Accounts
Our portfolio of investments held in the Trust Accounts are comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When our investments held in the Trust Accounts are comprised of U.S. government securities, the investments are classified as trading securities. When our investments held in the Trust Accounts are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in net gain from investments held in Trust Accounts in the accompanying unaudited consolidated condensed statements of operations. The estimated fair values of investments held in the Trust Accounts are determined using available market information.
Class A Ordinary Shares Subject to Possible Redemption
Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, at June 30, 2021 and December 31, 2020, 27,559,115 and 29,980,468 Class A ordinary shares subject to possible redemption are presented as temporary equity, respectively, outside of the shareholders’ equity section of our balance sheets.
Net Income (Loss) per Ordinary Share
Our unaudited consolidated condensed statements of operations includes a presentation of income (loss) per Class A ordinary share subject to redemption in a manner similar to the two-class method of income (loss) per share. Net income per Class A ordinary share, basic and diluted, is calculated by dividing the investment income earned on the Trust Accounts by the weighted average number of Class A ordinary shares outstanding for the periods. Net loss per Class B ordinary share, basic and diluted, is calculated by dividing the net loss, less income attributable to Class A ordinary shares, by the weighted average number of Class B ordinary shares outstanding for the periods.
The calculation of diluted net income (loss) per ordinary share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, (ii) exercise of over-allotment and (iii) Private Placement since the exercise price of the warrants is in excess of the average ordinary shares price for the period and therefore the inclusion of such warrants would be anti-dilutive.
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Derivative warrant liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued shares purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.
We account for the warrants issued in connection with its Initial Public Offering and Private Placement as derivative warrant liabilities in accordance with ASC 815-40. Accordingly, we recognize the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the our unaudited condensed statements of operations. The fair value of warrants issued in connection with the Private Placement has been estimated using the Black-Scholes Option Pricing Model at each balance sheet date. The fair value of the warrants issued in connection with the Initial Public Offering was initially measured using a Binomial Lattice simulation and subsequently been measured at each measurement date based on the market price of such warrants when separately listed and traded. The determination of the fair value of the warrant liability may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. We adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU did not impact our financial position, results of operations or cash flows.
Our management does not believe that any recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the accompanying consolidated financial statements.
Off-Balance Sheet Arrangements
As of June 30, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2021, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective as of June 30, 2021.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
The Company has made changes in its internal control over financial reporting to expand and improve review process for complex securities and related accounting standards enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals. The Company can offer no assurance that these changes will ultimately have the intended effects.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors.
There are no material changes to the risk factors in our most recent Annual Report on Form 10-K/A as filed with the SEC on May 24, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
Unregistered Sales of Equity Securities
On May 14, 2020, D8 Sponsor LLC, our sponsor, paid $25,000, or approximately $0.003 per share, to cover certain of our offering costs in exchange for 7,187,500 Class B ordinary shares (the “Founder Shares”). On June 25, 2020, our sponsor transferred 15,000 Founder Shares to Robert Kirby and 25,000 Founder Shares to each of Michael Kives, Fred Langhammer and Terry Lundgren, resulting in our sponsor holding 7,097,500 Founder Shares. On July 14, 2020, we effected a share capitalization of 1,437,500 Founder Shares resulting in 8,625,000 Class B ordinary shares outstanding, of which our sponsor now holds 8,535,000 Founder Shares. All shares and the associated amounts have been retroactively restated to reflect the share capitalization. Of the 8,625,000 Founder Shares outstanding, up to 1,125,000 Founder Shares were subject to forfeiture to the extent that the over-allotment option was not exercised in full by the underwriters, so that the Founder Shares will represent 20.0% of our issued and outstanding shares after the Initial Public Offering. The underwriters exercised their over-allotment option in full on July 24, 2020. As a result, these shares were no longer subject to forfeiture. Such securities were issued in connection with our organization pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
Concurrently with the closing of the initial public offering, our sponsor purchased an aggregate of 8,000,000 private placement warrants at a price of $1.00 per private placement warrant, generating gross proceeds of $8,000,000. Each warrant is exercisable to purchase one Class A ordinary share at $11.50 per share. On July 24, 2020, simultaneously with the sale of the over-allotment units, we consummated a private sale of an additional 900,000 private placement warrants to our sponsor, generating gross proceeds of $900,000. The proceeds from the private placement warrants were added to the proceeds from the initial public offering held in the Trust Accounts. The private placement warrants are identical to the warrants included as part of the units sold in the initial public offering, except that the private placement warrants, so long as they are held by the sponsor or its permitted transferees, (i) are not redeemable by us, (ii) may not (including the Class A ordinary shares issuable upon exercise of the warrants), subject to certain limited exceptions, be transferred, assigned or sold until 30 days after the completion of our initial business combination, (iii) may be exercised on a cashless basis and (iv) are entitled to registration rights. No underwriting discounts or commissions were paid with respect to such sale. The issuance of the private placement warrants was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
Use of Proceeds
On July 17, 2020 we consummated the initial public offering of 30,000,000 units. Each unit consists of one Class A ordinary share and one-half of one redeemable warrant, with each whole warrant entitling the holder thereof to purchase one Class A ordinary share for $11.50 per share, subject to adjustment. The units were sold at a price of $10.00 per unit, generating gross proceeds to us of $300.0 million. Credit Suisse Securities (USA) LLC served as the sole underwriter of the initial public offering. The underwriters were granted a 45-day option to purchase up to 4,500,000 additional units to cover over-allotments, if any. On July 24, 2020, the underwriter exercised its over-allotment option in full and purchased an additional 4,500,000 units, generating gross proceeds of $45.0 million. The securities sold in the initial public offering were registered under the Securities Act on a registration statement on Form S-1 (File No. 333-239503). The SEC declared the registration statement effective on July 14, 2020.
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A total of $345.0 million was placed in the Trust Accounts, comprised of $338.1 million of the proceeds from the initial public offering and exercise of the over-allotment in full (which amount includes approximately $12.1 million of the underwriters’ deferred discount) and $6.9 million of the proceeds of the private placement. We paid $6.9 million in underwriting discounts and recorded approximately $553,000 for other costs and expenses related to the initial public offering. There has been no material change in the planned use of proceeds from the initial public offering as described in the prospectus.
We paid an underwriting discount at the closing of the Initial Public Offering and at the closing of the exercise of the over-allotment option in full of an aggregate of $6.9 million.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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Item 6. Exhibits.
* | These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: August 12, 2021 | D8 HOLDINGS CORP. | |
By: | /s/ David Chu | |
Name: | David Chu | |
Title: | Chief Executive Officer |
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