Ouster, Inc 8-K, filed Feb 13, 2023
Ouster, Inc. (OUST)
About this 8-K
Ouster, Inc filed this 8-K on February 13, 2023, reporting on events of February 10, 2023.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.01: Completed an acquisition or sale of assets
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Item 1.01 Entry into a Material Definitive Agreement
Hercules Amendment
On February 10, 2023, Ouster, Inc., a Delaware corporation (“Ouster” or the “Company”), entered into a Third Amendment to Loan and Security Agreement (the “Amendment”) with the lenders party thereto, Hercules Capital, Inc., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and the lenders (the “Agent”), and the guarantors party thereto, which amends that certain Loan and Security Agreement, dated as of April 29, 2022 (as amended by that certain First Amendment to Loan and Security Agreement dated as of August 5, 2022, and as amended by that certain Consent and Second Amendment to Loan and Security Agreement dated as of November 1, 2022, the “Existing Credit Agreement”, and as further amended by the Amendment, the “Agreement”), to (i) increase the existing debt baskets for (a) purchase money debt and capital leases, and (b) letter of credit obligations; (ii) provide for increased flexibility to maintain cash in non-US accounts; and (iii) provide for increased flexibility to relocate certain equipment.
The Agreement continues to contain customary affirmative and negative covenants, including limitations on mergers, asset sales, liens, investments, and subsidiary indebtedness.
The foregoing summary does not purport to be a complete description and is qualified in its entirety by reference to the terms of the Amendment, a copy of which is filed as Exhibit 10.1 and incorporated herein by reference.
Item 2.01. Completion of Acquisition or Disposition of Assets.
As previously reported, on November 4, 2022, Ouster, Velodyne Lidar, Inc., a Delaware corporation (“Velodyne”), Oban Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Ouster (“Merger Sub I”), and Oban Merger Sub II LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of Ouster (“Merger Sub II”), entered into an Agreement and Plan of Merger (the “Merger Agreement”).
Pursuant to the Merger Agreement, and following the satisfaction or waiver of the conditions specified therein, on February 10, 2023, Merger Sub I merged with and into Velodyne (the “First Merger”), with Velodyne surviving the First Merger as a direct, wholly owned subsidiary of Ouster (the “Surviving Corporation”), and as soon as practicable following the First Merger, the Surviving Corporation merged with and into Merger Sub II, with Merger Sub II surviving as a direct, wholly owned subsidiary of Ouster (the “Second Merger,” and together with the First Merger, the “Mergers”).
At the effective time of the First Merger (the “Effective Time”), (i) each share of common stock, par value $0.0001 per share, of Velodyne (“Velodyne Common Stock”) issued and outstanding immediately prior to the Effective Time (other than the shares that were owned by Velodyne, Ouster, Merger Sub I or Merger Sub II or any wholly owned subsidiary of Velodyne, Ouster, Merger Sub I or Merger Sub II) was converted into the right to receive 0.8204 (the “Exchange Ratio”) validly issued, fully paid and non-assessable shares of common stock, par value $0.0001 per share, of Ouster (the “Ouster Common Stock,” and such shares the “Velodyne Common Stock Merger Consideration”) and (ii) each share of preferred stock, par value $0.0001 per share, of Velodyne (“Velodyne Preferred Stock”) issued and outstanding immediately prior to the Effective Time (other than the shares that were owned by Velodyne, Ouster, Merger Sub I or Merger Sub II or any wholly owned subsidiary of Velodyne, Ouster, Merger Sub I or Merger Sub II) was cancelled for no consideration. No fractional shares of Ouster Common Stock were issued in the Mergers, and Velodyne stockholders received cash in lieu of fractional shares as part of the Velodyne Common Stock Merger Consideration, as specified in the Merger Agreement. Each share of Ouster Common Stock issued upon conversion of a share of Velodyne Common Stock, as described in this paragraph, that was subject to a substantial risk of forfeiture within the meaning of Section 83 of the Internal Revenue Code of 1986, as amended (“Velodyne Restricted Stock”) is subject to the same substantial risk of forfeiture and has the same terms and conditions, including vesting, as applied to the Velodyne Restricted Stock immediately prior to the Effective Time (“Ouster Restricted Stock”), except that any performance goals applicable to Velodyne Restricted Stock were deemed achieved at the greater of target and actual performance and, as of the Effective Time, the Ouster Restricted Stock issued on conversion of Velodyne Restricted Stock that was originally scheduled to vest based on performance goals became subject solely to the service-based vesting schedule otherwise applicable to the Velodyne Restricted Stock.
The Exchange Ratio resulted in Velodyne equityholders and Ouster equityholders owning approximately 50% and 50%, respectively, of the fully diluted shares of Ouster Common Stock as of the effective date of the Merger Agreement.
Also at the Effective Time, outstanding warrants to purchase shares of Velodyne Common Stock (“Velodyne Warrants”) were assumed by Ouster and converted into warrants to purchase shares of Ouster Common Stock (“Ouster Warrants”) under the same terms and conditions as applied to such Velodyne Warrants as of immediately prior to the Effective Time; however, the Ouster Warrants cover a number of shares of Ouster Common Stock equal to the product of the number of shares of Velodyne Common Stock subject to each such converted Velodyne Warrant and the Exchange Ratio, rounded down to the nearest whole share, and have an exercise price per share equal to the amount obtained by dividing the per share exercise price of each such converted Velodyne Warrant by the Exchange Ratio, rounded up to the nearest whole cent.
At the Effective Time, all outstanding options to acquire shares of Velodyne Common Stock (“Velodyne Options”) held by individuals who are eligible to be included as an “employee” in a registration statement filed on Form S-8 immediately following the Effective Time (“Continuing Service Providers”) were assumed by Ouster and converted into stock options to purchase shares of Ouster Common Stock (“Ouster Options”) with the same terms and conditions as applied to the options immediately prior to the Effective Time; however, each Ouster Option covers a number of shares of Ouster Common Stock equal to the product of the number of shares of Velodyne Common Stock subject to the assumed Velodyne Options and the Exchange Ratio, rounded down to the nearest whole share, and has an exercise price per share equal to the amount obtained by dividing the per-share exercise price of the assumed Velodyne Options by the Exchange Ratio, rounded up to the nearest cent. Each Velodyne Option that was not held by a Continuing Service Provider was terminated immediately prior to the Effective Time for no consideration.
At the Effective Time, all outstanding awards of Velodyne restricted stock units (“Velodyne RSU Awards”) held by Continuing Service Providers were converted into awards of Ouster restricted stock units (“Ouster RSU Awards”) with the same terms and conditions as applied to the Velodyne RSU Awards immediately prior to the Effective Time; however, each Ouster RSU Award covers a number of shares of Ouster Common Stock equal to the product of the number of shares of Velodyne Common Stock subject to the converted Velodyne RSU Award and the Exchange Ratio, rounded down to the nearest whole share. Each Velodyne RSU Award that was not held by a Continuing Service Provider was terminated immediately prior to the Effective Time for no consideration.
All shares of Velodyne Restricted Stock and all Velodyne RSU Awards held by non-employee members of the Velodyne board of directors vested in full and became free of any restrictions, including any risk of forfeiture, as of the Effective Time and were treated as shares of Velodyne Common Stock under the Merger Agreement.
The foregoing summary does not purport to be a complete description and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
The Merger Agreement has been attached as an exhibit to this report to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about Velodyne or Ouster or to modify or supplement any factual disclosures about Velodyne or Ouster in their public reports filed with the Securities and Exchange Commission (the “SEC”). The Merger Agreement includes representations, warranties and covenants of Velodyne and Ouster made solely for the purposes of the Merger Agreement and which may be subject to important qualifications and limitations agreed to by Velodyne and Ouster in connection with the negotiated terms of the Merger Agreement. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to certain disclosures between the parties and a contractual standard of materiality different from those generally applicable to Velodyne’s or Ouster’s SEC filings. In addition, the representations and warranties were made for purposes of allocating risk among the parties to the Merger Agreement and should not be relied upon as establishing factual matters.
Item 7.01. Regulation FD Disclosure.
As a result of the Mergers, Velodyne has ceased to exist as a separate legal entity and therefore no longer fulfills the listing requirements of the Nasdaq Global Select Market (“Nasdaq”). On February 10, 2023, Nasdaq was notified that the Mergers had closed and it has been requested that Nasdaq (1) suspend trading of Velodyne Common Stock and the publicly traded Velodyne Warrants, (2) withdraw Velodyne Common Stock and the publicly traded Velodyne Warrants from listing on Nasdaq prior to the open of trading on February 13, 2023 and (3) file with the SEC a notification of delisting of Velodyne Common Stock and the publicly traded Velodyne Warrants under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As a result, neither Velodyne Common Stock nor Velodyne Warrants will continue to be listed on Nasdaq.
In furtherance of the foregoing, Merger Sub II, which has been renamed “Velodyne, LLC”, as successor to Velodyne, intends to file with the SEC certifications on Form 15 under the Exchange Act requesting the deregistration of Velodyne Common Stock under Section 12(g) of the Exchange Act and the corresponding immediate suspension of Velodyne’s reporting obligations under Sections 13 and 15(d) of the Exchange Act as promptly as practicable, and to cease filing any further periodic reports with respect to Velodyne since it no longer exists as a public company.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
The audited consolidated financial statements of Velodyne as of and for the years ended December 31, 2021 and 2020 are incorporated by reference to Exhibit 99.1 of this Current Report on Form 8-K. The unaudited condensed consolidated financial statements of Velodyne as of and for the nine months ended September 30, 2022 are incorporated by reference to Exhibit 99.2 of this Current Report on Form 8-K.
The audited consolidated financial statements of Velodyne as of December 31, 2022 and 2021 will be filed as an exhibit to an amendment to this Current Report on Form 8-K within 71 days of the due date of this report.
(b) Pro Forma Financial Information.
The unaudited pro forma condensed combined financial information of Ouster as of and for the nine-month period ended September 30, 2022 and for the year ended December 31, 2021, giving effect to the Mergers and the transactions contemplated by the Merger Agreement, are set forth in Exhibit 99.3 hereto and is incorporated herein by reference.
The unaudited pro forma condensed combined financial statements of Ouster as of and for the year ended December 31, 2022, giving effect to the Mergers and the transactions contemplated by the Merger Agreement, will be filed as an exhibit to an amendment to this Current Report on Form 8-K within 71 days of the due date of this report.
(d) Exhibits.
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.
| OUSTER, INC. | ||
| By: | /s/ Angus Pacala | |
| Name: | Angus Pacala | |
| Title: | Chief Executive Officer | |
Date: February 10, 2023
Exhibit 10.1
Execution Version
THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Agreement”), dated as of February 10, 2023, is entered into by and among OUSTER, INC., a Delaware corporation (“Borrower”), the guarantors party hereto (the “Guarantors”), the several banks and other financial institutions or entities party hereto (each a “Lender” and, collectively, “Lenders”) and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and the Lenders (together with its successors and assigns, in such capacity, the “Agent”).
A. Borrower, Guarantors, Lenders and Agent are parties to that certain Loan and Security Agreement, dated as of April 29, 2022, as amended by that certain First Amendment to Loan and Security Agreement dated as of August 5, 2022, and as amended by that certain Consent and Second Amendment to Loan and Security Agreement dated as of November 1, 2022 (the “Existing Loan Agreement”, and as the same may be further amended, restated, supplemented or otherwise modified from time to time prior to the date of this Agreement, the “Loan Agreement”).
B. Borrower has requested that Agent and the Lenders make certain revisions to the Existing Loan Agreement.
SECTION 1 Definitions; Interpretation.
(a) Terms Defined in Loan Agreement. All capitalized terms used in this Agreement (including in the recitals hereof) and not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement (as amended by this Agreement).
(b) Rules of Construction. The rules of construction in Section 1.3 of the Loan Agreement shall be applicable to this Agreement and are incorporated herein by this reference.
SECTION 2 Amendments to the Existing Loan Agreement.
(a) Upon satisfaction of the conditions set forth in Section 3 hereof, the Existing Loan Agreement is hereby amended as follows:
(i) Exhibit A attached hereto sets forth a clean copy of the Loan Agreement as amended hereby;
(ii) In Exhibit B hereto, deletions of the text in the Existing Loan Agreement (including, to the extent included in such Exhibit
B, each Schedule or Exhibit to the Existing Loan Agreement) are indicated by struck-through text, and
insertions of text are indicated by bold, double-underlined text.
(b) References Within Existing Loan Agreement. Each reference in the Existing Loan Agreement to “this Agreement” and the words “hereof,” “herein,” “hereunder,” or words of like import, shall mean and be a reference to the Existing Loan Agreement as amended by this Agreement. This Agreement shall be a Loan Document.
SECTION 3 Conditions of Effectiveness. The effectiveness of this Agreement (the “Third Amendment Effective Date”) shall be subject to Agent’s receipt of the following documents, in form and substance satisfactory to Agent, or, as applicable, the following conditions being met:
(a) this Agreement, executed by Agent, each Lender, Borrower and Guarantors;
(b) Borrower shall have paid (i) all invoiced costs and expenses then due in accordance with Section 6(d) of this Agreement, and (ii) all other fees, costs and expenses, if any, due and payable as of the date hereof under the Loan Agreement; and
(c) on the Third Amendment Effective Date, immediately after giving effect to the amendment of the Loan Agreement contemplated hereby:
(i) The representations and warranties contained in Section 4 of this Agreement shall be true and correct on and as of the Third Amendment Effective Date as though made on and as of such date; and
(ii) There exist no Events of Default or events that with the passage of time would result in an Event of Default.
SECTION 4 Representations and Warranties. To induce Agent and Lenders to enter into this Agreement, Borrower hereby confirms, as of the date hereof, (a) that the representations and warranties made by it in Section 5 of the Loan Agreement and in the other Loan Documents are true and correct in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; provided, further, that to the extent such representations and warranties by their terms expressly relate only to a prior date such representations and warranties shall be true and correct as of such prior date, and (a) that no Event of Default has occurred and is continuing; (b) that there has not been and there does not exist a Material Adverse Effect; (c) Lenders have and shall continue to have valid, enforceable and perfected first-priority liens, subject only to Permitted Liens, on and security interests in the Collateral and all other collateral heretofore granted by Borrower to Lenders, pursuant to the Loan Documents or otherwise granted to or held by Lenders; (d) the agreements and obligations of Borrower contained in the Loan Documents and in this Agreement constitute the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors’ rights or by the application of general principles of equity; and (e) the execution, delivery and performance of this Agreement by Borrower will not violate any law, rule, regulation, order, contractual obligation or organizational document of Borrower and will not result in, or require, the creation or imposition of any lien, claim or encumbrance of any kind on any of its properties or revenues. For the purposes of this Section 4, each reference in Section 5 of the Loan Agreement to “this Agreement,” and the words “hereof”, “herein”, “hereunder”, or words of like import in such Section, shall mean and be a reference to the Loan Agreement as amended by this Agreement.
SECTION 5 Release. In consideration of the agreements of Agent and each Lender contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower, on behalf of itself and its successors, assigns, and other legal representatives, hereby to the extent possible under applicable law fully, absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and each Lender, and its successors and assigns, and its present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, Lenders and all such other persons being hereinafter referred to collectively as the “Releasees” and individually as a “Releasee”), of and from all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which Borrower, or any of its successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever which arises at any time on
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or prior to the day and date of this Agreement, for or on account of, or in relation to, or in any way in connection with the Loan Agreement, or any of the other Loan Documents or transactions thereunder or related thereto. Borrower understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release. Borrower agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.
SECTION 6 Miscellaneous.
(a) Loan Documents Otherwise Not Affected; Reaffirmation; No Novation.
(i) Except as expressly amended pursuant hereto or referenced herein, the Loan Agreement and the other Loan Documents shall remain unchanged and in full force and effect and are hereby ratified and confirmed in all respects. The Lenders’ and Agent’s execution and delivery of, or acceptance of, this Agreement shall not be deemed to create a course of dealing or otherwise create any express or implied duty by any of them to provide any other or further amendments, consents or waivers in the future.
(ii) Borrower hereby expressly (1) reaffirms, ratifies and confirms its Secured Obligations under the Loan Agreement and the other Loan Documents, (2) reaffirms, ratifies and confirms the grant of security under Section 3 of the Loan Agreement, (3) reaffirms that such grant of security in the Collateral secures all Secured Obligations under the Loan Agreement, including without limitation any Term Loan Advances funded on or after the Third Amendment Effective Date, as of the date hereof, and with effect from (and including) the Third Amendment Effective Date, such grant of security in the Collateral: (x) remains in full force and effect notwithstanding the amendments expressly referenced herein; and (y) secures all Secured Obligations under the Loan Agreement, as amended by this Agreement, and the other Loan Documents, (4) agrees that this Agreement shall be a “Loan Document” under the Loan Agreement, and (5) agrees that the Loan Agreement and each other Loan Document shall remain in full force and effect following any action contemplated in connection herewith.
(iii) This Agreement is not a novation and the terms and conditions of this Agreement shall be in addition to and supplemental to all terms and conditions set forth in the Loan Documents. Nothing in this Agreement is intended, or shall be construed, to constitute an accord and satisfaction of Borrower’s Secured Obligations under or in connection with the Loan Agreement and any other Loan Document or to modify, affect or impair the perfection or continuity of Agent’s security interest in, (on behalf of itself and the Lenders) security titles to or other liens on any Collateral for the Secured Obligations.
(b) Conditions. For purposes of determining compliance with the conditions specified in Section 3 of this Agreement, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless Agent shall have received notice from such Lender prior to the date hereof specifying its objection thereto.
(c) No Reliance. Borrower hereby acknowledges and confirms to Agent and Lenders that Borrower is executing this Agreement on the basis of its own investigation and for its own reasons without reliance upon any agreement, representation, understanding or communication by or on behalf of any other Person.
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(d) Costs and Expenses. Borrower agrees to pay to Agent on the date hereof the out-of-pocket costs and expenses of Agent and each Lender party hereto, and the fees and disbursements of counsel to Agent and each Lender party hereto (including allocated costs of internal counsel) in connection with the negotiation, preparation, execution and delivery of this Agreement and any other documents to be delivered in connection herewith on the date hereof.
(e) Binding Effect. This Agreement binds and is for the benefit of the successors and permitted assigns of each party.
(f) Governing Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, EXCLUDING CONFLICT OF LAWS PRINCIPLES THAT WOULD CAUSE THE APPLICATION OF LAWS OF ANY OTHER JURISDICTION.
(g) Complete Agreement; Amendments. This Agreement and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements with respect to such subject matter. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan Documents.
(h) Severability of Provisions. Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.
(i) Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile, portable document format (.pdf) or other electronic transmission will be as effective as delivery of a manually executed counterpart hereof.
(j) Electronic Execution of Certain Other Documents. The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation assignments, assumptions, amendments, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the California Uniform Electronic Transactions Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, as of the date first above written.
| BORROWER: | ||
| OUSTER, INC. | ||
| Signature: | /s/ Charles Angus Pacala | |
| Print Name: | Charles Angus Pacala | |
| Title: | Chief Executive Officer | |
| GUARANTORS: | ||
| SENSE PHOTONICS, INC. | ||
| Signature: | /s/ Charles Angus Pacala | |
| Print Name: | Charles Angus Pacala | |
| Title: | Chief Executive Officer | |
| OBAN MERGER SUB, INC. | ||
| Signature: | /s/ Mark Frichtl | |
| Print Name: | Mark Frichtl | |
| Title: | Vice President | |
| OBAN MERGER SUB II LLC | ||
| Signature: | /s/ Mark Frichtl | |
| Print Name: | Mark Frichtl | |
| Title: | Vice President | |
[SIGNATURES CONTINUE ON THE NEXT PAGE]
[Third Amendment to Loan and Security Agreement]
| AGENT: | ||
| HERCULES CAPITAL, INC. | ||
| By: | /s/ Seth Meyer | |
| Name: | Seth Meyer | |
| Title: | Chief Financial Officer | |
[Third Amendment to Loan and Security Agreement]
| LENDERS: | ||
| HERCULES CAPITAL, INC. | ||
| By: | /s/ Seth Meyer | |
| Name: | Seth Meyer | |
| Title: | Chief Financial Officer | |
| HERCULES PRIVATE GLOBAL VENTURE GROWTH FUND I L.P. | ||
| By: Hercules Adviser LLC, its Investment Adviser | ||
| By: | /s/ Seth Meyer | |
| Name: | Seth Meyer | |
| Title: | Authorized Signatory | |
[Third Amendment to Loan and Security Agreement]
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statements (Nos. 333-254987 and 333-264600) on Form S-3 and registration statements (Nos. 333-257859, 333-260576, 333-266140, and 333-266141) on Form S-8 of Ouster, Inc. of our report dated March 1, 2022, with respect to the consolidated financial statements of Velodyne Lidar, Inc., and the effectiveness of internal control over financial reporting which report appears in the Form 8-K of Ouster, Inc. dated February 10, 2023.
/s/ KPMG LLP
Santa Clara, California
February 10, 2023
Exhibit 99.3
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following tables set forth selected unaudited pro forma condensed combined financial information giving effect to the planned mergers of Ouster and Velodyne. The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2022 and the fiscal year ended December 31, 2021, give effect to the mergers as if they had been consummated on January 1, 2021. The unaudited pro forma condensed combined balance sheet as of September 30, 2022 gives effect to the mergers as if they had been consummated on September 30, 2022.
The selected unaudited pro forma condensed combined financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or consolidated financial condition of the combined company would have been had the mergers actually occurred on the dates indicated, nor do they purport to project the future consolidated results of operations or consolidated financial condition of the combined company for any future period or as of any future date.
The selected unaudited pro forma condensed combined financial data as of and for the nine months ended September 30, 2022 and for the year ended December 31, 2021 are derived from the unaudited pro forma condensed combined financial information included under the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” of this joint proxy statement/prospectus and should be read in conjunction with that information. The unaudited pro forma adjustments are based upon available information and certain assumptions that Ouster and Velodyne believe are reasonable under the circumstances. The unaudited pro forma condensed combined financial information also gives effect to the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements included in this joint proxy statement/prospectus. For more information, please see the section titled “Unaudited Pro Forma Condensed Combined Financial Information” of this joint proxy statement/prospectus.
| (In thousands, except per share data) | Nine Months Ended September 30, 2022 |
Year Ended December 31, 2021 |
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| Unaudited Pro Forma Condensed Combined Statement of Operations Data: |
||||||||
| Revenues |
$ | 57,419 | $ | 95,502 | ||||
| Net loss |
$ | (234,332 | ) | $ | (338,154 | ) | ||
| Net loss per share: |
||||||||
| Basic and diluted |
$ | (0.63 | ) | $ | (1.03 | ) | ||
| (In thousands) | As of September 30, 2022 |
|||
| Unaudited Pro Forma Condensed Combined Balance Sheet Data: |
||||
| Cash and cash equivalents, and short-term investments |
$ | 331,033 | ||
| Total assets |
$ | 630,929 | ||
| Total liabilities |
$ | 117,546 | ||
| Total stockholders’ equity |
$ | 513,383 | ||
COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA
Presented below are Velodyne’s historical per share data for the nine months ended September 30, 2022 and the fiscal year ended December 31, 2021, Ouster’s historical per share data for the nine months ended September 30, 2022 and the fiscal year ended December 31, 2021, unaudited pro forma combined per share data for the nine months ended September 30, 2022 and the fiscal year ended December 31, 2021, and unaudited pro forma equivalent data for the nine months ended September 30, 2022 and the fiscal year ended December 31, 2021. This information should be read together with the consolidated financial statements and related notes of Velodyne and Ouster that are incorporated by reference into this joint proxy statement/prospectus and with the unaudited pro forma condensed combined financial data included under the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” of this joint proxy statement/prospectus. The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the mergers had been completed as of the beginning of the periods presented or on the dates presented, nor is it necessarily indicative of the future operating results or financial position of the combined company. The historical book value per share is computed by dividing total stockholders’ equity by the number of shares outstanding at the end of the relevant period. The pro forma net loss per share of the combined company is computed by dividing the pro forma net loss by the pro forma weighted average number of basic and diluted shares outstanding. The pro forma book value per share of the combined company is computed by dividing total pro forma stockholders’ equity by the pro forma number of shares outstanding at the end of the period.
| Nine Months Ended September 30, 2022 |
Year Ended December 31, 2021 |
|||||||
| Velodyne Historical Data |
||||||||
| Historical per share of common stock |
||||||||
| Basic and diluted net loss per share |
$ | (0.66 | ) | $ | (1.09 | ) | ||
| Book value per share (at period end) |
$ | 0.93 | $ | 1.52 | ||||
| Nine Months Ended September 30, 2022 |
Year Ended December 31, 2021 |
|||||||
| Ouster Historical Data |
||||||||
| Historical per share of common stock |
||||||||
| Basic and diluted net loss per share |
$ | (0.55 | ) | $ | (0.70 | ) | ||
| Book value per share (at period end) |
$ | 1.11 | $ | 1.51 | ||||
| Nine Months Ended September 30, 2022 |
Year Ended December 31, 2021 |
|||||||
| Pro Forma Combined Data |
||||||||
| Pro Forma per share of common stock |
||||||||
| Basic and diluted net loss per share |
$ | (0.63 | ) | $ | (1.03 | ) | ||
| Book value per share (at period end) |
$ | 1.37 | $ | N/A | (1) | |||
| Nine Months Ended September 30, 2022 |
Year Ended December 31, 2021 |
|||||||
| Velodyne Pro Forma Equivalent Data |
||||||||
| Pro Forma per share of common stock |
||||||||
| Basic and diluted net loss per share |
$ | (0.52 | ) | $ | (0.84 | ) | ||
| Book value per share (at period end) |
$ | 1.12 | $ | N/A | (1) | |||
| (1) | Pro Forma balance sheet information as of December 31, 2021 is not required and as such is not included in the table. |
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information presents the combination of the historical financial information of Ouster and Velodyne adjusted to give effect to the transactions contemplated by that certain Agreement and Plan of Merger, dated as of November 4, 2022, by and among Ouster, Merger Sub I, Merger Sub II and Velodyne, referred to as the merger agreement. Pursuant to the merger agreement, Merger Sub I merged with and into Velodyne, with Velodyne as the surviving entity and continuing as a direct, wholly owned subsidiary of Ouster, in accordance with the applicable provisions of the Delaware General Corporate Law, as amended, referred to as the first merger, and, as soon as practicable after the first merger and as the second step in a single integrated transaction with the first merger, Velodyne merged with and into Merger Sub II, with Merger Sub II as the surviving entity and continuing as a direct, wholly-owned subsidiary of Ouster, in accordance with the Delaware Limited Liability Company Act, as amended, referred to as the second merger. The first merger and the second merger, together, are referred to as the “mergers.” The mergers are expected to be accounted for as a business combination with Ouster identified as accounting acquirer.
The unaudited pro forma condensed combined balance sheet as of September 30, 2022 combines the historical unaudited condensed consolidated balance sheet of Ouster and the historical unaudited condensed consolidated balance sheet of Velodyne as of September 30, 2022 on a pro forma basis as if the first merger contemplated by the merger agreement had been consummated on September 30, 2022.
The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2022 combines the historical unaudited condensed consolidated statement of operations of Ouster for the nine months ended September 30, 2022 and the historical unaudited condensed consolidated statement of operations of Velodyne for the nine months ended September 30, 2022, giving effect to the mergers as if the first merger had been consummated on January 1, 2021.
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2021 combines the historical audited consolidated statement of operations of Ouster for the year ended December 31, 2021 and the historical audited consolidated statement of operations of Velodyne for the year ended December 31, 2021, giving effect to the mergers as if the first merger had been consummated on January 1, 2021.
The unaudited pro forma condensed combined financial information was derived from and should be read in conjunction with the following historical financial statements and the accompanying notes:
| • | the (a) historical unaudited condensed consolidated financial statements of Ouster as of and for the nine months ended September 30, 2022, and (b) historical unaudited condensed consolidated financial statements of Velodyne as of and for the nine months ended September 30, 2022; and |
| • | the (a) historical audited consolidated financial statements of Ouster as of and for the year ended December 31, 2021, and (b) historical audited consolidated financial statements of Velodyne as of and for the year ended December 31, 2021 |
The pro forma financial information has been prepared in accordance with Regulation S-X Article 11, Pro Forma Financial Information, as amended by the final rule, Release No. 33-10786, which is referred to herein as Article 11. The acquisition method of accounting is dependent upon certain valuations that, as of the date hereof, have yet to progress to a stage where there is sufficient information for a definitive measure. Ouster has performed a preliminary valuation analysis of the fair market value of Velodyne’s identifiable assets to be acquired and Velodyne’s liabilities to be assumed to reflect preliminary estimates of the fair value necessary to prepare the unaudited pro forma condensed combined financial information. A final determination of the fair value of Velodyne’s identifiable assets and liabilities, including potential intangible assets with both indefinite or finite lives, will be based on the actual net tangible and intangible assets and liabilities of Velodyne that exist as of the closing date of the first merger and, therefore, cannot be made prior to the completion of the first merger. In addition, the value of the consideration to be paid by Ouster upon the consummation of the first merger will be determined based on the closing price of Ouster common stock on the closing date of the first merger. As a result of the foregoing, the pro forma adjustments are preliminary and are subject to change as additional information becomes available and as additional analysis is performed. Ouster allocated the preliminary purchase price to such identifiable assets and liabilities using total preliminary consideration for the first merger. The preliminary pro forma adjustments have been made solely for the purpose of providing the unaudited pro forma condensed combined financial information presented below. Ouster estimated the fair value of Velodyne’s assets and liabilities based on discussions with Velodyne’s management, preliminary valuation studies, due diligence, and information presented in Velodyne’s SEC filings. Until the mergers are completed, both companies are limited in their ability to share certain information. Any increases or decreases in the fair value of the identifiable assets acquired and liabilities assumed upon completion of the final valuations will result in adjustments to the unaudited pro forma condensed combined balance sheet and/or statements of operations. The final purchase price allocation may be materially different than that reflected in the pro forma purchase price allocation presented herein. The pro forma adjustments are described in the accompanying footnotes.
The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and is not necessarily indicative of the operating results and financial position that would have been achieved had the mergers occurred on the dates indicated, and do not reflect adjustments for any anticipated synergies, adjustments related to restructuring or integration activities, operating efficiencies, tax savings or cost savings. Further, the unaudited pro forma condensed combined financial information does not purport to project the future operating results or financial position of Ouster following the completion of the mergers. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma condensed combined financial information and are subject to change as additional information becomes available and analyses are performed. Ouster and Velodyne did not have any historical relationships reflected in the historical financial statements prior to the entry into the merger agreement. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of September 30, 2022
(in thousands)
| Ouster (Historical) |
Velodyne (Historical) |
Reclassifi- cation Adjustments |
Transaction Accounting Adjustments |
Pro Forma Combined |
||||||||||||||||||||||||
| ASSETS |
||||||||||||||||||||||||||||
| Current assets: |
||||||||||||||||||||||||||||
| Cash and cash equivalents |
$ | 133,189 | $ | 51,487 | $ | (7,310 | ) | E | $ | 158,498 | ||||||||||||||||||
| (14,499 | ) | F | ||||||||||||||||||||||||||
| (4,369 | ) | H | ||||||||||||||||||||||||||
| Restricted cash, current |
250 | — | 250 | |||||||||||||||||||||||||
| Short-term investments |
— | 168,570 | 168,570 | |||||||||||||||||||||||||
| Accounts receivable, net |
10,783 | 6,129 | 16,912 | |||||||||||||||||||||||||
| Inventories, net |
20,804 | 11,498 | 32,302 | |||||||||||||||||||||||||
| Prepaid expenses and other current assets |
6,923 | 8,201 | 15,124 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total current assets |
171,949 | 245,885 | — | (26,178 | ) | 391,656 | ||||||||||||||||||||||
| Property and equipment, net |
8,594 | 11,684 | 20,278 | |||||||||||||||||||||||||
| Operating lease, right-of-use assets |
13,652 | 16,727 | 92 | B | 30,471 | |||||||||||||||||||||||
| Goodwill |
51,151 | 1,189 | 60,240 | B | 126,763 | |||||||||||||||||||||||
| 5,862 | C | |||||||||||||||||||||||||||
| 1,011 | D | |||||||||||||||||||||||||||
| 7,310 | E | |||||||||||||||||||||||||||
| Intangible assets, net |
19,286 | 402 | 30,398 | B | 50,086 | |||||||||||||||||||||||
| Restricted cash, non-current |
1,088 | — | 1,088 | |||||||||||||||||||||||||
| Contract assets |
— | 9,182 | 9,182 | |||||||||||||||||||||||||
| Other non-current assets |
554 | 851 | 1,405 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total assets |
$ | 266,274 | $ | 285,920 | $ | — | $ | 78,735 | $ | 630,929 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||||||||||||||||||
| Current liabilities: |
||||||||||||||||||||||||||||
| Accounts payable |
$ | 8,154 | $ | 5,001 | $ | 13,155 | ||||||||||||||||||||||
| Accrued and other current liabilities |
14,395 | 31,074 | (68 | ) | A | 45,401 | ||||||||||||||||||||||
| Operating lease liability, current |
3,127 | 3,062 | 6,189 | |||||||||||||||||||||||||
| Contract liabilities, current |
— | 5,456 | 68 | A | (3,800 | ) | B | 1,724 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total current liabilities |
25,676 | 44,593 | — | (3,800 | ) | 66,469 | ||||||||||||||||||||||
| Operating lease liabilities, non-current |
14,288 | 14,674 | (917 | ) | B | 28,045 | ||||||||||||||||||||||
| Warrant liabilities |
276 | — | 276 | |||||||||||||||||||||||||
| Debt |
19,181 | — | 19,181 | |||||||||||||||||||||||||
| Contract liabilities, non-current |
— | 9,841 | 249 | A | (9,100 | ) | B | 990 | ||||||||||||||||||||
| Non-current tax liabilities |
— | 459 | (459 | ) | A | — | ||||||||||||||||||||||
| Other non-current liabilities |
1,561 | 814 | 210 | A | 2,585 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total liabilities |
60,982 | 70,381 | — | (13,817 | ) | 117,546 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Redeemable convertible preferred stock |
— | — | — | |||||||||||||||||||||||||
| Stockholders’ equity: |
||||||||||||||||||||||||||||
| Preferred stock |
— | — | — | |||||||||||||||||||||||||
| Common stock |
18 | 23 | (23 | ) | B | 37 | ||||||||||||||||||||||
| 19 | B | |||||||||||||||||||||||||||
| Additional paid-in capital |
605,195 | 877,935 | (557,868 | ) | B | 941,192 | ||||||||||||||||||||||
| 5,862 | C | |||||||||||||||||||||||||||
| 1,011 | D | |||||||||||||||||||||||||||
| 1,249 | G | |||||||||||||||||||||||||||
| 7,808 | H | |||||||||||||||||||||||||||
| Accumulated other comprehensive loss |
(399,740 | ) | (1,103 | ) | 1,103 | B | (399,740 | ) | ||||||||||||||||||||
| Accumulated deficit |
(181 | ) | (661,316 | ) | 661,316 | B | (28,106 | ) | ||||||||||||||||||||
| (14,499 | ) | F | ||||||||||||||||||||||||||
| (1,249 | ) | G | ||||||||||||||||||||||||||
| (12,177 | ) | H | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total stockholders’ equity |
205,292 | 215,539 | — | 92,552 | 513,383 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total liabilities and stockholders’ equity |
$ | 266,274 | $ | 285,920 | $ | — | $ | 78,735 | $ | 630,929 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2021
(in thousands, except share and per share data)
| Ouster (Historical) |
Velodyne (Historical) |
Transaction Accounting Adjustments |
Pro Forma Combined |
|||||||||||||||
| Revenue |
||||||||||||||||||
| Product |
$ | 33,578 | $ | 48,002 | $ | 81,580 | ||||||||||||
| License and services |
— | 13,922 | 13,922 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total revenue |
33,578 | 61,924 | — | 95,502 | ||||||||||||||
| Cost of revenue |
||||||||||||||||||
| Product |
24,492 | 67,313 | 4,012 | AA | 95,817 | |||||||||||||
| License and services |
— | 525 | 525 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total cost of revenue |
24,492 | 67,838 | 4,012 | 96,342 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Gross profit (loss) |
9,086 | (5,914 | ) | (4,012 | ) | (840 | ) | |||||||||||
| Operating expenses |
||||||||||||||||||
| Research and development |
34,579 | 77,863 | 112,442 | |||||||||||||||
| General and administrative |
51,959 | 70,307 | 14,499 | BB | 149,533 | |||||||||||||
| 1,249 | CC | |||||||||||||||||
| 11,519 | DD | |||||||||||||||||
| Sales and marketing |
22,258 | 68,025 | 658 | DD | 90,941 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total operating expenses |
108,796 | 216,195 | 27,925 | 352,916 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Loss from operations |
(99,710 | ) | (222,109 | ) | (31,937 | ) | (353,756 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Other income (expense) |
||||||||||||||||||
| Interest income |
471 | 448 | 919 | |||||||||||||||
| Interest expense |
(504 | ) | (80 | ) | (584 | ) | ||||||||||||
| Other income (expense), net |
2,968 | 10,150 | 13,118 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total other income (expense), net |
2,935 | 10,518 | — | 13,453 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Loss before income taxes |
(96,775 | ) | (211,591 | ) | |
(31,937 |
) |
(340,303 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Provision for (benefit from) income taxes |
(2,794 | ) | 645 | (2,149 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Net loss |
$ | (93,981 | ) | $ | (212,236 | ) | $ | (31,937 | ) | $ | (338,154 | ) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Net loss per share |
||||||||||||||||||
| Basic and diluted |
$ | (0.70 | ) | $ | (1.09 | ) | $ | (1.03 | ) | |||||||||
| Weighted-average shares used in computing net loss per share |
||||||||||||||||||
| Basic and diluted |
133,917,571 | 193,982,168 | 329,485,956 | |||||||||||||||
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2022
(in thousands, except share and per share data)
| Transaction | ||||||||||||||||||
| Ouster | Velodyne | Accounting | Pro Forma | |||||||||||||||
| (Historical) | (Historical) | Adjustments | Combined | |||||||||||||||
| Revenue |
||||||||||||||||||
| Product |
$ | 30,091 | $ | 21,456 | $ | 51,547 | ||||||||||||
| License and services |
— | 5,872 | 5,872 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total revenue |
30,091 | 27,328 | — | 57,419 | ||||||||||||||
| Cost of revenue |
||||||||||||||||||
| Product |
21,002 | 53,896 | 2,965 | FF | 77,863 | |||||||||||||
| License and services |
— | 689 | 689 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total cost of revenue |
21,002 | 54,585 | 2,965 | 78,552 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Gross profit (loss) |
9,089 | (27,257 | ) | (2,965 | ) | (21,133 | ) | |||||||||||
| Operating expenses |
||||||||||||||||||
| Research and development |
49,011 | 56,972 | 105,983 | |||||||||||||||
| General and administrative |
40,306 | 35,330 | 75,636 | |||||||||||||||
| Sales and marketing |
23,194 | 16,223 | 39,417 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total operating expenses |
112,511 | 108,525 | — | 221,036 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Loss from operations |
(103,422 | ) | (135,782 | ) | (2,965 | ) | (242,169 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Other income (expense) |
||||||||||||||||||
| Interest income |
1,231 | 1,253 | 2,484 | |||||||||||||||
| Interest expense |
(1,143 | ) | (3 | ) | (1,146 | ) | ||||||||||||
| Other income (expense), net |
7,071 | (104 | ) | 6,967 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total other income (expense), net |
7,159 | 1,146 | — | 8,305 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Loss before income taxes |
(96,263 | ) | (134,636 | ) | (2,965 | ) | (233,864 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Provision for (benefit from) income taxes |
121 | 347 | 468 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Net loss |
$ | (96,384 | ) | $ | (134,983 | ) | $ | (2,965 | ) | $ | (234,332 | ) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Net loss per share |
||||||||||||||||||
| Basic and diluted |
$ | (0.55 | ) | $ | (0.66 | ) | $ | (0.63 | ) | |||||||||
| Weighted-average shares used in computing net loss per share |
||||||||||||||||||
| Basic and diluted |
175,795,093 | 203,504,556 | 371,363,478 | |||||||||||||||
Notes to the Unaudited Pro Forma Condensed Combined Financial Information
1. Description of the Transaction
Pursuant to the merger agreement, Merger Sub I merged with and into Velodyne, with Velodyne as the surviving entity and continuing as a direct, wholly owned subsidiary of Ouster, in accordance with the applicable provisions of the Delaware General Corporate Law, as amended, referred to as the first merger, and, as soon as practicable after the first merger and as the second step in a single integrated transaction with the first merger, Velodyne merged with and into Merger Sub II, with Merger Sub II as the surviving entity and continuing as a direct, wholly-owned subsidiary of Ouster, in accordance with the Delaware Limited Liability Company Act, as amended, referred to as the second merger. The first merger and second merger are referred to collectively herein as the “mergers.” The mergers are expected to be accounted for as a business combination in accordance with accounting standards codification 805 (“ASC 805”) with Ouster being identified as the accounting acquirer. Upon the consummation of the first merger, Velodyne’s equityholders received or have the right to receive shares of Ouster common stock at a deemed value of approximately $1.37 per share based on the closing price of Ouster common stock shares on February 8, 2023 of $1.67, and after giving effect to the exchange ratio of 0.8204 based on the terms of the merger agreement. Accordingly, 193.9 million shares of Ouster common stock are deemed to be issued and outstanding immediately following the mergers, based on Velodyne’s outstanding common stock balance as of November 4, 2022 and accelerated vesting of certain restricted stock units (“RSUs”), performance stock awards (“PSAs”) and restricted stock awards (“RSAs”) upon closing of the first merger as discussed below, 18,782,071 shares will be reserved for the potential future issuance of Ouster common stock upon the exercise of Ouster Warrants and RSUs, based on the following transactions contemplated by the merger agreement:
| • | the cancellation of each issued and outstanding share of Velodyne common stock and the conversion of each such issued and outstanding share of Velodyne common stock into the right to receive 0.8204 shares of Ouster common stock, referred to as the exchange ratio; |
| • | the automatic vesting upon change of control of approximately 0.4 million Ouster restricted common stock units; |
| • | the automatic vesting due to change of control and expected termination of approximately 0.9 million Velodyne RSAs and PSAs; |
| • | the automatic vesting upon change of control of a portion of a Velodyne warrant granted to a customer and exercisable into approximately 19.8 million Velodyne common stock shares; |
| • | the automatic vesting upon change of control of approximately 0.7 million Velodyne RSUs; |
| • | the cancellation of outstanding Velodyne warrants and the conversion of each Velodyne warrant into the right to receive an Ouster warrant to acquire a number of shares of Ouster common stock equal to the number of shares of Velodyne common stock subject to such Velodyne warrant and the exchange ratio with the corresponding adjustment to the exercise price of the warrants; |
| • | the conversion of 18,782,071 outstanding unvested restricted shares of Velodyne common stock into shares of Ouster common stock at the exchange ratio, which shares will continue to be governed by the same terms and conditions (including vesting and repurchase terms) effective immediately prior to the effective time of the first merger. |
Ouster determined preliminary acquisition consideration based on the fair value of Ouster’s common stock of $1.67 as of February 8, 2023, as follows:
| Number of Ouster common stock (in millions) |
Preliminary acquisition consideration (in thousands) |
|||||||
| Fair value of shares of Ouster common stock issued to Velodyne equityholders |
190.9 | $ | 318,867 | |||||
| Fair value of Velodyne Restricted Stock units that would be accelerated by a change of control trigger |
0.6 | 1,011 | ||||||
| Fair value of Velodyne RSAs and PSAs vested on the date of the first merger for which compensation cost had been already recognized prior to the date of the first merger |
0.7 | 1,201 | ||||||
| Fair value of Velodyne vested warrants |
5,880 | |||||||
|
|
|
|
|
|||||
| Total consideration |
192.26 | $ | 326,959 | |||||
For purposes of this pro forma analysis, the preliminary acquisition consideration of $327.0 million has been allocated based on the estimated fair values of identifiable assets and liabilities acquired as of September 30, 2022 (in thousands) as follows:
| Fair value of total preliminary consideration transferred |
$ | 326,959 | ||
|
|
|
|||
| Preliminary amounts of identifiable assets and liabilities assumed |
||||
| Cash and cash equivalents |
44,177 | |||
| Short-term investments |
168,570 | |||
| Accounts receivable |
6,129 | |||
| Inventories |
11,498 | |||
| Prepaid and other current assets |
8,201 | |||
| Intangible assets |
||||
| Patents |
27,100 | |||
| Customer relationships |
1,000 | |||
| Developed technology |
2,700 | |||
| Property and equipment |
11,684 | |||
| Right-of-use assets under operating leases |
16,819 | |||
| Noncurrent contract assets |
9,182 | |||
| Other noncurrent assets |
851 | |||
| Accounts payable, accrued and other liabilities |
(36,007 | ) | ||
| Operating lease liability, current |
(3,062 | ) | ||
| Contract liabilities, current |
(1,724 | ) | ||
| Other long term liabilities |
(1,024 | ) | ||
| Operating lease liabilities |
(13,757 | ) | ||
| Noncurrent contract liabilities |
(990 | ) | ||
|
|
|
|||
| Total identifiable net assets |
251,347 | |||
| Goodwill |
75,612 | |||
|
|
|
|||
| $ | 326,959 | |||
|
|
|
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends ASC 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption of the amendments is permitted, including adoption in an interim period. In the fourth quarter of 2022, Ouster adopted the amendments and recognized contract assets acquired and contract liabilities assumed in the mergers in accordance with ASC 606. Ouster has elected to apply the practical expedient under paragraph ASC 805-20-30-29 (b) of the adopted amendments and allocated the transaction price based on the standalone selling price of each performance obligation in the contract with a customer for all contracts acquired in the mergers.
2. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information
The adjustments included in the unaudited pro forma condensed combined balance sheets as of September 30, 2022, are as follows:
| (A) | Represents reclassification of certain balances to comply with Ouster’s manner of presentation. |
| (B) | Represents application of acquisition accounting for the mergers, including elimination of Velodyne historical equity balances, issuance of 191.7 million shares of Ouster common stock in exchange for Velodyne common stock and RSAs and PSAs vested on the date of the first merger for which compensation cost had been already recognized prior to the date of the first merger, recognition of Velodyne identifiable assets at fair values, adjustment to assumed contract liabilities relating to allocation of transaction price based on a standalone selling price of each performance obligation in the contract with a customer for all contracts acquired in the mergers, and recognition of goodwill. |
| (C) | Represents vesting of 50% of Velodyne common stock warrant issued to a customer as a result of the pre-existing change of control provision and replacement of such warrant with a warrant to purchase common stock of Ouster based on the exchange ratio. |
| (D) | Represents fair value of Velodyne RSUs automatically vested on the closing date of the first merger. |
| (E) | Represents payment of estimated costs of $7.3 million expected to be incurred by Velodyne in connection with the mergers, which is reflected as decrease in cash and cash equivalents and decrease in goodwill. |
| (F) | Represents payment of estimated transaction costs of $14.5 million expected to be incurred by Ouster in connection with the mergers, which is reflected as decrease in cash and cash equivalents and increase in accumulated deficit. |
| (G) | Represents stock-based compensation expense related to accelerated vesting of Ouster’s equity awards triggered by a change of control. |
| (H) | Represents cash severance payments and acceleration of vesting of share-based awards for certain executives vested on the closing date of the first merger for which no compensation cost had been recognized prior to the first merger. |
Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations
The adjustments included in the unaudited pro forma condensed combined statement of operations for the year ended as of December 31, 2021, are as follows:
| (AA) | Represents amortization expense related to the fair value of acquired Velodyne identifiable intangible assets, net of the amortization expense of $0.4 million already reflected in actual historical results. The $3.9 million of amortization expense related to the acquired patents is recognized as Cost of product revenue expense based on an estimated weighted average useful life of 7 years, and the remaining $0.5 million amortization expense related to the acquired developed technology intangible asset is recognized as Cost of product revenue expense based on an estimated useful life of 5 years. The amortization of acquired customer relationships is not material. The amortization of the intangible assets is based on a straight-line amortization method as this represents management’s best estimate of the pattern of utilization for the intangible assets |
| (BB) | Represents estimated transaction costs of $14.5 million expected to be incurred by Ouster in connection with the mergers. |
| (CC) | Represents stock-based compensation expense related to accelerated vesting of Ouster’s equity awards triggered by a change of control. |
| (DD) | Represents cash severance payments and acceleration of vesting of share-based awards for certain executives vested on the closing date of the first merger for which no compensation cost had been recognized prior to the first merger. |
The adjustments included in the unaudited pro forma condensed combined statement of operations for the nine months ended as of September 30, 2022, are as follows:
| (EE) | Represents amortization expense related to the fair value of acquired Velodyne identifiable intangible assets, net of the amortization expense of $0.3 million already reflected in actual historical results. The $2.9 million of amortization expense related to the acquired patents intangible assets is recognized as Cost of product revenue expense based on an estimated weighted average useful life of 7 years, and the remaining $0.4 million amortization expense related to the acquired developed technology intangible asset is recognized as Cost of product revenue expense based on an estimated useful life of 5 years. The amortization of the intangible assets is based on a straight-line amortization method as this represents management’s best estimate of the pattern of utilization for the intangible assets. |
There are no reclassification adjustments reflected in the Unaudited Pro Forma Condensed Combined Statements of Operations for the year ended December 31, 2021 and for the nine months ended as of September 30, 2022.
3. Net Loss per Share
Represents the net loss per share calculated using the historical weighted average shares outstanding. As the first merger is being reflected as if it had occurred as of January 1, 2021, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes the shares issued in connection with the first merger have been outstanding for the entire periods presented.
| Year Ended December 31, 2021 |
Nine Months Ended September 30, 2022 |
|||||||
| Pro forma net loss |
$ | (338,154 | ) | $ | (234,332 | ) | ||
| Basic and diluted weighted average shares outstanding |
329,485,956 | 371,363,478 | ||||||
| Pro forma net loss per share — Basic and Diluted(1) |
$ | (1.03 | ) | $ | (0.63 | ) | ||
| Weighted average shares outstanding — basic and diluted |
||||||||
| Former Ouster shareholders(2) |
134,296,667 | 176,174,189 | ||||||
| Shares issued in the mergers(2) |
195,189,289 | 195,189,289 | ||||||
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|
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| 329,485,956 | 371,363,478 | |||||||
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| (1) | Outstanding options, restricted stock awards, unvested restricted stock units and warrants are anti-dilutive and are not included in the calculation of diluted net loss per share. |
| (2) | Includes impact of acceleration of vesting of equity awards upon change of control or change of control and employment termination. |