The accompanying notes are an integral part
of the unaudited condensed financial statements.
The accompanying notes are an integral part
of the unaudited condensed financial statements.
The accompanying notes are an integral part
of the unaudited condensed financial statements.
The accompanying notes are an integral part
of the unaudited condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Social Capital Hedosophia
Holdings Corp. II (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on October 18,
2019. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization
or similar business combination with one or more businesses (a “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
on businesses in the technology industries primarily located in the United States. The Company is an early stage and emerging growth
company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of March 31,
2020, the Company had not commenced any operations. All activity for the period from October 18, 2019 (inception) through
March 31, 2020 relates to the Company’s formation and the initial public offering (“Initial Public Offering”),
which is described below. The Company will not generate any operating revenues until after the completion of its initial Business
Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived
from the Initial Public Offering.
The registration statements
for the Company’s Initial Public Offering became effective on April 27, 2020. On April 30, 2020, the Company consummated
the Initial Public Offering of 41,400,000 units (the “Units” and, with respect to the shares of Class A ordinary
shares included in the Units sold, the “Public Shares”), which includes the full exercise by the underwriters of the
over-allotment option to purchase an additional 5,400,000 Units, at $10.00 per Unit, generating gross proceeds of $414,000,000
which is described in Note 3.
Simultaneously with
the closing of the Initial Public Offering, the Company consummated the sale of 6,133,333 warrants (the “Private Placement
Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to SCH Sponsor II LLC (the “Sponsor”),
generating gross proceeds of $9,200,000, which is described in Note 4.
Transaction
costs amounted to $22,196,558 consisting of $7,200,000 of underwriting fees, $14,490,000 of deferred underwriting fees and
$506,558 of other offering costs. In addition, $1,452,394 of cash was held outside of the Trust Account (as defined below) and is
available for working capital purposes.
Following the closing
of the Initial Public Offering on April 30, 2020, an amount of $414,000,000 ($10.00 per Unit) from the net proceeds of the
sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the
“Trust Account”) located in the United States and invested in U.S. government securities, within the meaning set forth
in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity
of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund meeting the conditions
of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of
a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as
described below.
The Company will provide
the holders of the public shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their
public shares upon the completion of the Business Combination, either (i) in connection with a shareholder meeting called
to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder
approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public
Shareholders will be entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account, calculated
as of two business days prior to the completion of a Business Combination, including any pro rata interest earned on the funds
held in the Trust Account and not previously released to the Company to pay its tax obligations. The per-share amount to be distributed
to the Public Shareholders who redeem their shares will not be reduced by the deferred underwriting commissions the Company will
pay to the underwriters (as discussed in Note 6). There will be no redemption rights upon the completion of a Business Combination
with respect to the Company’s warrants.
The Company will proceed
with a Business Combination only if the Company has net tangible assets, after payment of the deferred underwriting commission,
of at least $5,000,001 upon such completion of a Business Combination and, if the Company seeks shareholder approval, it receives
an ordinary resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote of a majority
of the shareholders who attend and vote and a general meeting of the Company. If a shareholder vote is not required and the Company
does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated
Memorandum and Articles of Association, conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange
Commission (“SEC”), and file tender offer documents containing substantially the same information as would be included
in a proxy statement with the SEC prior to completing a Business Combination. If the Company seeks shareholder approval in connection
with a Business Combination, the Company’s Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public
Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination and to waive its redemption
rights with respect to any such shares in connection with a shareholder vote to approve a Business Combination or seek to sell
any shares to the Company in a tender offer in connection with a Business Combination. Additionally, subject to the immediately
succeeding paragraph, each public shareholder may elect to redeem their Public Shares, without voting, and if they do vote, irrespective
of whether they vote for or against a proposed Business Combination.
SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.
II
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
Notwithstanding the
foregoing, if the Company seeks shareholder approval of the Business Combination and the Company does not conduct redemptions pursuant
to the tender offer rules, 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
15% of the Public Shares without the Company’s prior written consent.
The Sponsor has agreed
(a) to waive its redemption rights with respect to any Founder Shares and Public Shares held by it in connection with the
completion of a Business Combination (and not seek to sell its shares to the Company in any tender offer the Company undertakes
in connection with its initial Business Combination) and (b) not to propose an amendment to the Amended and Restated Memorandum
of Articles of Association (i) to modify the substance or timing of the Company’s obligation to redeem 100% of the Public
Shares if the Company does not complete a Business Combination within Combination Period (as defined below) or (ii) with respect
to any other provision relating to shareholders’ rights or pre-initial business combination activity, unless the Company
provides the public shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
The Company will have
until April 30, 2022 (the “Combination Period”) to consummate a Business Combination. However, if the Company
has not completed 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 Account, including
interest (which interest shall be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses) divided
by the number of then outstanding public shares, which redemption will completely extinguish the rights of the Public Shareholders
as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining Public Shareholders
and its Board of Directors, liquidate and dissolve, subject in each case to the Company’s obligations under Cayman Islands
law to provide for claims of creditors and the requirements of other applicable law. In the event of a liquidation, the Public
Shareholders will be entitled to receive a full pro rata interest in the Trust Account ($10.00 per share, plus any pro rata
interest earned on the Trust Fund not previously released to the Company and less up to $100,000 of interest to pay dissolution
expenses). There will be no redemption rights or liquidating distributions with respect to the Founder Shares or the Private Placement
Warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
In order to protect
the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to the Company, if and to the extent any claims
by a third party (other than the Company’s independent auditors) for services rendered or products sold to the Company, or
a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of
funds in the Trust Account to below (1) $10.00 per Public Share or (2) such lesser amount per Public Share held in the
Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of trust assets, in each case
net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any
and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters
of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended
(the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a third party, the
Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the
possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors,
service providers (other than the Company’s independent auditors), prospective target businesses or other entities with which
the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to
monies held in the Trust Account.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of presentation
The accompanying unaudited condensed financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X
of the Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included
in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations
of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a
complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying
unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary
for a fair presentation of the financial position, operating results and cash flows for the periods presented.
SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.
II
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company’s prospectus for its Initial Public Offering as filed with the
SEC on April 29, 2020, as well as the Company’s Current Reports on Form 8-K, as filed with the SEC on April 30,
2020 and May 6, 2020. The interim results for the three months ended March 31, 2020 are not necessarily indicative of
the results to be expected for the year ending December 31, 2020 or for any future periods.
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 a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt
out of such extended transition period which means that when a standard is issued or revised and it has different application dates
for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time
private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with
another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using
the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of estimates
The preparation of the financial statements
in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
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. Accordingly, the actual results could differ significantly
from those estimates.
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. The Company did not have any cash equivalents
as of March 31, 2020 and December 31, 2019.
Deferred offering costs
Offering costs consist of legal, accounting,
underwriting fees and other costs incurred through the balance sheet date that are directly related to the Initial Public Offering.
Offering costs amounting to $22,196,558 were charged to shareholders’ equity upon the completion of the Initial Public Offering.
Income taxes
The Company accounts for income taxes under
ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities
for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the
expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation
allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.
II
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
ASC 740 also clarifies the accounting for
uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and
measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax
return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing
authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.
There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2020 and December 31,
2019. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material
deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The 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 period presented.
On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security “CARES” Act into
law. The CARES Act includes several significant business tax provisions that, among other things, would eliminate the taxable
income limit for certain net operating losses (“NOL) and allow businesses to carry back NOLs arising in 2018, 2019 and
2020 to the five prior years, suspend the excess business loss rules, accelerate refunds of previously generated corporate
alternative minimum tax credits, generally loosen the business interest limitation under IRC section 163(j) from 30 percent
to 50 percent among other technical corrections included in the Tax Cuts and Jobs Act tax provisions. The Company does not
believe that the CARES Act will have a significant impact on Company's financial position or statement of operations.
Net loss per ordinary share
Net loss per ordinary share is computed
by dividing net loss by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares
subject to forfeiture. Weighted average shares were reduced for the effect of an aggregate of 1,350,000 ordinary shares, that were
subject to forfeiture if the over-allotment option was not exercised by the underwriters (see Note 7). At March 31, 2020 and
December 31, 2019, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised
or converted into ordinary shares and then share in the earnings of the Company. As a result, diluted loss per common share is
the same as basic loss per share for the period presented.
Concentration of credit risk
Financial instruments that potentially
subject the Company to concentrations of credit risk consist of a cash account in a financial institution which, at times may exceed
the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes
the Company is not exposed to significant risks on such account.
Fair Value of financial instruments
The fair value of the Company’s assets
and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates
the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
Recent accounting standards
Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying condensed
financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering,
the Company sold 41,400,000 Units, which includes the full exercise by the underwriter of its option to purchase an additional
5,400,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one Class A ordinary share and one-third of
one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one Class A
ordinary share at an exercise price of $11.50 per whole share (see Note 7).
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the
Initial Public Offering, the Sponsor purchased an aggregate of 6,133,333 Private Placement Warrants at a price of $1.50 per Private
Placement Warrant, for an aggregate purchase price of $9,200,000. Each Private Placement Warrant is exercisable for one Class A
Share at a price of $11.50 per share, subject to adjustment (see Note 7). The proceeds from the sale of the Private Placement Warrants
were added to the net proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business
Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account
will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement
Warrants will expire worthless.
SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.
II
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
In October 2019, the Company issued
one ordinary share to the Sponsor for no consideration. On January 21, 2020, the Company cancelled the one share issued in
October 2019 and the Sponsor purchased 8,625,000 Founder Shares for an aggregate purchase price of $25,000. On April 27,
2020, the Company effected a share capitalization, resulting in 10,350,000 Founder Shares issued and outstanding as of such date.
All share and per-share amounts have been retroactively restated to reflect the share capitalization. The Founder Shares will automatically
convert into Class A ordinary shares on the first business day following the completion of a Business Combination, or earlier
at the option of the holder, on a one-for-one basis, subject to certain adjustments, as described in Note 7.
The Founder Shares included an aggregate
of up to 1,350,000 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment was not
exercised in full or in part, so that the number of Founder Shares would collectively represent 20% of the Company’s issued
and outstanding shares upon the completion of the Initial Public Offering. As a result of the underwriters’ election to fully
exercise their over-allotment option, no Founder Shares are subject to forfeiture.
The Sponsor has agreed, subject to limited
exceptions, not to transfer, assign or sell any of its Class B ordinary shares or Class A ordinary shares received upon
conversion thereof (together, “Founder Shares”) until the earlier of: (A) one year after the completion
of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A
ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions,
reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days
after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, amalgamation, share exchange,
reorganization or other similar transaction 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.
Advances – Related Party
The Sponsor advanced the Company an aggregate
of $21,631 to cover expenses related to the Initial Public Offering. The advances were non-interest bearing and due on demand.
Advances in the aggregate amount of $21,631 were repaid in February 2020.
Promissory Note — Related
Party
On January 21, 2020, the Company issued
an unsecured promissory note to the Sponsor, pursuant to which the Company borrowed an aggregate principal amount of $300,000,
which amount was outstanding as of March 31, 2020. The note was non-interest bearing and payable on the earlier of (i) June 30,
2020 and (ii) the completion of the Initial Public Offering. The borrowings outstanding under the note in the amount of $300,000
were repaid upon the consummation of the Initial Public Offering on April 30, 2020.
Administrative Support Agreement
The Company entered into an agreement whereby,
commencing on April 27, 2020, the Company will pay an affiliate of the Sponsor up to $10,000 per month for office space, administrative
and support services. Upon completion of a Business Combination or its liquidation, the Company will cease paying these monthly
fees.
Related Party Loans
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”). Such
Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination,
without interest, or, at the lender’s discretion, up to $1,500,000 of notes may be converted upon completion of a Business
Combination into warrants at a price of $1.50 per warrant. Such warrants would be identical to the Private Placement Warrants.
In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account
to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
NOTE 6. COMMITMENTS
Registration Rights
Pursuant to a registration rights agreement
entered into on April 27, 2020, the holders of the Founder Shares, Private Placement Warrants and warrants that may be issued
upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement
Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) will be entitled
to registration rights requiring the Company to register such securities for resale (in the case of the Founder Shares, only after
conversion to the Company’s Class A ordinary shares). The holders of these securities will be entitled to make up to
three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders have
certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion
of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under
the Securities Act. However, the registration rights agreement provides that the Company will not be required to effect or permit
any registration or cause any registration statement to become effective until termination of the applicable lock-up period. The
Company will bear the expenses incurred in connection with the filing of any such registration statements.
SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.
II
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
Underwriting Agreement
The underwriters are entitled to a deferred
fee of $0.35 per Unit, or $14,490,000 in the aggregate. The deferred fee will become payable to the underwriters from the
amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of
the underwriting agreement.
Financial Advisory Fee
The underwriters agreed to reimburse the
Company for an amount equal to 10% of the discount paid to the underwriters for financial advisory services provided by Connaught
(UK) Limited in connection with the Initial Public Offering, of which $720,000 was paid at the closing of the Initial Public Offering
and up to $1,449,000 will be payable at the time of the closing of a Business Combination.
NOTE 7. SHAREHOLDER’S EQUITY
Preferred Shares — The
Company is authorized to issue 5,000,000 preference shares with a par value of $0.0001. The Company’s board of directors
will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or
other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The
board of directors will be able to, without shareholder approval, issue preferred shares with voting and other rights that could
adversely affect the voting power and other rights of the holders of the ordinary shares and could have anti-takeover effects.
At March 31, 2020 and December 31, 2019, there were no preferred shares issued or outstanding.
Common Stock
Class A Ordinary Shares
— The Company is authorized to issue 500,000,000 Class A ordinary shares, with a par value of $0.0001 per share. Holders
of Class A ordinary shares are entitled to one vote for each share. At March 31, 2020 and December 31, 2019, there
were no Class A ordinary shares issued or outstanding.
Class B Ordinary Shares
— The Company is authorized to issue 50,000,000 Class B ordinary shares, with a par value of $0.0001 per share. Holders
of the Class B ordinary shares are entitled to one vote for each share. At March 31, 2020 and December 31, 2019,
there were 10,350,000 Class B ordinary shares issued and outstanding.
Only holders of the Class B ordinary
shares will have the right to vote on the election of directors prior to the Business Combination. Holders of Class A ordinary
shares and holders of Class B ordinary shares will vote together as a single class on all matters submitted to a vote of our
shareholders except as otherwise required by law.
The Class B Shares will automatically
convert into Class A ordinary shares on the first business day following the completion of the Business Combination, or earlier
at the option of the holder, on a one-for-one basis, subject to adjustment. In the case that additional Class A ordinary shares,
or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and related
to the closing of a Business Combination, the ratio at which Founder Shares will convert into Class A ordinary shares will
be adjusted (subject to waiver by holders of a majority of the Class B ordinary shares) so that the number of Class A
ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the
sum of the ordinary shares issued and outstanding upon completion of the Initial Public Offering plus the number of Class A
ordinary shares and equity-linked securities issued or deemed issued in connection with a Business Combination (net of redemptions),
excluding any Class A ordinary shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination
and any Private Placement Warrants issued to the Sponsor.
Warrants — Public Warrants
may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The
Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and
(b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years from the completion
of a Business Combination or earlier upon redemption or liquidation.
SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.
II
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
The Company will not be obligated to deliver
any Class A ordinary shares pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public
Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A ordinary shares
issuable upon exercise of the Public Warrants is then effective and a prospectus relating thereto is current, subject to the Company
satisfying its obligations with respect to registration. No Public Warrant will be exercisable for cash or on a cashless basis,
and the Company will not be obligated to issue any shares to holders seeking to exercise their Public Warrants, unless the issuance
of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or
an exemption from registration is available.
The Company has agreed that as soon as
practicable, but in no event later than 15 business days, after the closing of a Business Combination, it will use its commercially
reasonable efforts to file with the SEC a registration statement registering the issuance, under the Securities Act, of the Class A
ordinary shares issuable upon exercise of the Public Warrants. The Company will use it commercially reasonable efforts to cause
the same to become effective within 60 business days after the closing of the Business Combination and to maintain the effectiveness
of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance
with the provisions of the warrant agreement. Notwithstanding the above, if the Class A ordinary shares are, at the time of
any exercise of a Public Warrant, not listed on a national securities exchange such that they satisfy the definition of a “covered
security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public
Warrants who exercise their Public Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of
the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration
statement, but will use its commercially reasonable efforts to qualify the shares under applicable blue sky laws to the extent
an exemption is not available.
Redemption of warrants when the price
per Class A ordinary share equals or exceeds $18.00. Once the Public Warrants become exercisable, the Company may redeem
the Public Warrants:
|
·
|
in whole and not in part;
|
|
·
|
at a price of $0.01 per Public Warrant;
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·
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upon not less than 30 days’ prior written notice of redemption to each warrant holder and
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·
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if, and only if, the reported last sale price of the Class A ordinary shares for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like).
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Redemption of warrants when the price per Class A ordinary
share equals or exceeds $10.00. Once the Public Warrants become exercisable, the Company may redeem the Public Warrants:
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·
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in whole and not in part;
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·
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at $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 Class A ordinary shares;
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·
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if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like); and
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·
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if the Reference Value is less than $18.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.
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If and when the Public Warrants become
redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying
securities for sale under all applicable state securities laws.
The exercise price and number of ordinary
shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share
dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below,
the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in
no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination
within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not
receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s
assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.
II
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
In addition, if (x) the Company
issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the
closing of a Business Combination at an issue price or effective issue price of less than $9.20 per Class A ordinary share
(with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in
the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor
or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross
proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding
of a Business Combination on the date of the completion of a Business Combination (net of redemptions), and (z) the volume
weighted average trading price of the Company’s ordinary shares during the 20 trading day period starting on the trading
day prior to the day on which the Company consummates a Business Combination (such price, the “Market Value”) is below
$9.20 per share, the exercise price of the Public Warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher
of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger prices described above will be adjusted
(to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
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 Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable
or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally,
the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable as described above so long as they
are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other
than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and
exercisable by such holders on the same basis as the Public Warrants.
NOTE 8. SUBSEQUENT EVENTS
The Company evaluated subsequent events
and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Other than
as described in these financial statements, the Company did not identify any subsequent events that would have required adjustment
or disclosure in the financial statements.