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United States securities and exchange commission logo
August 3, 2021
Ian Robertson
Chief Executive Officer
Northern Genesis Acquisition Corp. II
4801 Main Street, Suite 1000
Kansas City, MO 64112
Re: Northern Genesis
Acquisition Corp. II
Registration
Statement on Form S-4
Filed July 2, 2021
File No. 333-257647
Dear Mr. Robertson:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Form S-4 filed July 2, 2021
General
1. We note that you have
not generated revenue from principal operations through March 31,
2021; however, some of
your disclosures do not appear to clearly convey this fact. For
example, the disclosure
on page 23 states you have not recognized a "material amount" of
revenue to date, but
you have successfully shipped freight using your technology and
transfer hub network.
Also, on page 155 you state that since 2017 you have refined
operations and now
conduct daily shipments between Los Angeles and Phoenix. Please
revise throughout,
including the summary, to ensure your disclosures are clear that the
company is still in the
process of developing and testing your technology, you have not
earned no revenue to
date, and all products, route models, and partners are related to
operations you expect
to begin in the future but have not yet begun.
Ian Robertson
FirstName LastNameIan Robertson
Northern Genesis Acquisition Corp. II
Comapany
August NameNorthern Genesis Acquisition Corp. II
3, 2021
August
Page 2 3, 2021 Page 2
FirstName LastName
Questions and Answers
Q: What conditions must be satisfied to complete the Business Combination?,
page xiv
2. We note that you have a minimum cash condition of $295 million and the
maximum
redemption amounts were calculated assuming that the minimum cash
condition will be
implemented, along with the $200 million in PIPE financing. Please
clarify here or in a
separate Q&A that the minimum cash condition is solely for the benefit
of Embark and
only Embark has the right to waive this condition. Disclose the
maximum number of
shares that may be redeemed in order to satisfy the Minimum Cash
Condition and the
maximum number of shares that may be redeemed if the Minimum Cash
Condition is
waived.
Q: What vote is required to approve the Proposals presented at the Special
Meeting?, page xvi
3. In light of your Support Agreement where your Sponsor and other NGA
investors agree to
vote to approve the Business Combination, please clarify the
percentage of unaffiliated
public SPAC stockholders that will be necessary to approve of Business
Combination.
Prospectus/Proxy Statement Summary, page 1
4. Please define Level 4 or L4 autonomous semi-trucks. Clarify whether
this refers to self-
driving, driverless semi-trucks or autonomous driving with a driver
present. In your
business section, please describe the varying levels and clarify in
which levels you will
operate.
5. We note that a significant number of your corporate governance
proposals contain
provisions that will not be effective until after the Trigger Date.
Clarify how each
corporate governance item subject to a Trigger Date provision will
operate prior to the
Trigger Date.
6. Please provide a description of your Sponsor, Northern Genesis Sponsor
II LLC, the PIPE
Investors, and the FPA PIPE Investors in your summary, and clarify
whether any of them
are affiliated. We note references to the institutional investors of
your Sponsor. Please
clarify whether these institutional investors are participating in
PIPE investments.
7. We note that the Embark Founders will hold up to 69% of the voting
power of Embark
Technology after the close of the business combination. Please clarify
whether Embark
Technology will avail themselves of the close company exemptions for
the corporate
governance standards for their prospective exchange.
Risk Factors, page 14
8. We note from disclosure in Northern Genesis Acquisition Corporation's
March 31,
2021 Form 10-Q that management identified a material weakness in
internal controls over
financial reporting related to the accounting for warrants issued in
connection with the
company's initial public offering, which also resulted in ineffective
disclosure controls and
Ian Robertson
Northern Genesis Acquisition Corp. II
August 3, 2021
Page 3
procedures as of this same date. Please revise to include a risk
factor addressing this
material weakness and discuss any remediation efforts taken so far and
what remains to be
completed in your remediation plan. Also, disclose how long you
estimate it will take to
complete your plan and any associated material costs that you have
incurred or expect to
incur. Lastly, tell us what impact, if any, the identified weakness
will have on your
compliance with the terms in Section 5.6(f) of Article V of the Merger
Agreement.
Embark has a limited operating history and an unproven business model in a new
market..., page
17
9. You state here that you launched your Partner Development Program in
2020; however, it
appears from your disclosures elsewhere in the filing that this
Program was launched in
April 2021. Please explain this apparent inconsistency or revise as
necessary.
Embark has identified deficiencies that together constitute a material weakness
in its internal
control over financial reporting..., page 29
10. You state that you are in the process of developing a plan to
remediate the material
weakness in internal control over financial reporting that Embark
identified as of
December 31, 2019 and 2020. Please revise to clarify what steps you
have taken so far
and what remains to be completed in your remediation plan. Also,
disclose how long you
estimate it will take to complete your plan and any associated
material costs that you have
incurred or expect to incur. Lastly, tell us what impact, if any, the
identified weakness
will have on your compliance with the terms in Section 4.8(c) of
Article IV of the Merger
Agreement.
Key Financial Metrics, page 85
11. We note that you provide key financial metric forecasts for 2024 and
2025 that
assumes you will bring your software to market and generate revenue
based on a per mile
fee and estimates of your market share. Please clarify how the board
used these metrics to
determine the fair value of the transaction and the $4.25 billion
implied equity value.
Please describe the methods of valuations used by your management.
12. Please clarify the extent to which your estimates for miles driven for
2024 and 2025 are
based on your existing agreements with your existing transportation
partners, such as AB
Inbev, versus acquiring new customers for which you currently do not
have a relationship.
13. We note that your estimates include Phase 1 penetration of approximately
1.1% of the
Sunbelt region serviceable market for the truck hauling industry, but
your estimate of
percentage of Serviceable Miles Driven triples in 2025 to 3.3%. Please
clarify whether
FirstName LastNameIan Robertson
the 2025 estimate is still confined to the Sunbelt region or if this
estimate involves
Comapany NameNorthern
expanding Genesis
your territory intoAcquisition
Phase 2, theCorp.
lowerII48 contiguous
states. Your disclosure on
Augustpage 155Page
3, 2021 indicates
3 that you will not enter into Phase 2 until 2026.
FirstName LastName
Ian Robertson
FirstName LastNameIan Robertson
Northern Genesis Acquisition Corp. II
Comapany
August NameNorthern Genesis Acquisition Corp. II
3, 2021
August
Page 4 3, 2021 Page 4
FirstName LastName
14. We note that your financial advisors presented investor presentation
materials to your
prospective PIPE investors. Please advise us as to the substance of
those investor
presentation materials, including whether they included other Embark
management
financial or operating metrics or projections that otherwise
disclosed. To the extent your
board considered these materials in its evaluation of fairness of the
Business Combination,
please clarify.
U.S . Federal Income Tax Considerations, page 116
15. We note that merger agreement states that the parties "intend" for the
business
combination to be a reorganization within the meaning of Section
368(a) of the Tax
Code. However, the disclosure does not indicate whether the parties
expect the business
combination to be tax-free to U.S. holders. Revise to make clear
whether the parties
expect the business combination to be tax-free to U.S. holders. If you
are unable to
conclude that the business combination is likely to be tax-free,
revise your disclosure to
focus on the uncertainty and the consequences of the business
combination being taxable
to U.S. holders. If you are able to conclude that the business
combination is likely to be
tax-free to U.S. holders, include a tax opinion supporting such a
conclusion. For further
guidance see Staff Legal Bulletin No. 19 (October 14, 2011) and Item
601(b)(8) of
Regulation S-K.
Notes to Unaudited Pro Forma Condensed Combined Financial Information
Basis of Presentation, page 127
16. You indicate the maximum redemption scenario is based on the maximum
number of
redemptions that may occur and still provide sufficient cash to
satisfy the minimum cash
condition. Please revise here to address what will happen if more than
31.9 million
shareholders choose to redeem their shares. To the extent that Embark
can choose to
waive the minimum cash condition or the company intends to obtain
additional financing
to fund such redemptions, please consider including a discussion of
the impact on the pro
forma financials or affected amounts within such financials should
more than 31,900,834
public shares be redeemed. Refer to Article 11-02(a)(10) of Regulation
S-X.
17. Please provide your calculations that support the 406,038,192 post-
combination shares issued to Embark stockholders as disclosed on page
129. Also, tell us
how this amount compares to the total shares to be issued as disclosed
in adjustment
(G) of 404,099,124, or revise as necessary to clarify this apparent
discrepancy.
18. You state on page 71 that immediately before the merger all Embark
warrants exercisable
for Embark common stock will be exercised in full or on a cashless
basis. On page 127
you state that the Embark warrants will be converted into restricted
stock to receive Class
A stock. Please explain to us, and revise as necessary to clarify, how
the 857,142 Embark
warrants that are outstanding at March 31, 2021 will be impacted in
the Merger.
Ian Robertson
FirstName LastNameIan Robertson
Northern Genesis Acquisition Corp. II
Comapany
August NameNorthern Genesis Acquisition Corp. II
3, 2021
August
Page 5 3, 2021 Page 5
FirstName LastName
Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet, page 130
19. Pro forma adjustment (I) refers to $50.9 million in adjustments to
retained earnings;
however, the total adjustments shown in the table and in the pro forma
balance sheet are
only $46.9 million. Please advise or revise for this apparent
inconsistency.
20. We note the $13,749 adjustment included in note (I) relates to
additional compensation
costs for to the issuance of high voting Class B common stock in the
merger; however, the
cross reference to note (AB) relates to interest income. Also, it
appears that you have not
included an adjustment for the compensation expense in the pro forma
income statement.
Please advise or revise as necessary.
Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations,
page 133
21. You appear to assume that both the restricted stock units (RSUs) and
performance
restricted stock units (PRSUs) noted in adjustments (AA) and (AC) were
granted
simultaneously with the Business Combination. Please tell us whether
these award grants
are a condition to the merger, or explain further your inclusion of
the related expense in
the pro forma adjustments for the merger transaction. To the extent
these transactions are
separate from the Business Combination, please consider including this
information in a
separate pro forma column from the merger transaction. Refer to
Article 11-02(b)(4) of
Regulation S-X.
22. Notwithstanding your response to the previous comment, please tell us
how you
determined the $52.5 million adjustment (AA) for share-based
compensation expense
related to RSUs granted after the balance sheet date. In this regard,
based on the per share
fair value of $29.87 as disclosed on page F-65, it appears that the
total fair value for the
June 2021 RSU grant, which vest over a 4-year period, is approximately
$83.7 million. To
the extent additional awards were granted after the most recent
balance sheet date, please
revise to include a discussion of such grants in the subsequent events
footnote or explain
further this pro forma adjustment.
23. We note from your disclosure on page F-65 that the total fair value of
the PRSUs granted
in June 2021 was $80.5 million, which equates to a fair value of $5.96
per PRSU. Please
tell us how you considered the market conditions for these awards in
assuming such
awards vested as of January 1, 2020. Also, explain the reason(s) for
the significant
difference between the fair value for the PRSUs and the fair value for
your RSUs of
$29.87 per share. In your response, please provide us with a breakdown
of all of
Embark's share-based compensation awards issued to date in fiscal
2021, and include the
fair value of the underlying shares used to value such grants. If
there were any significant
fluctuations in the fair values between grant dates, describe for us
the factors that
contributed to these fluctuations, including any intervening events
within the company or
changes in your valuation assumptions. In addition, explain any
significant variances
between recent grants and the value of Embark as determined for
purposes of the merger
transaction.
Ian Robertson
Northern Genesis Acquisition Corp. II
August 3, 2021
Page 6
Information About Embark
SaaS Focus, page 153
24. We note that you anticipate you will generate revenue from partners
with carriers and
private fleets on a per mile basis. Please clarify how you intend to
generate revenue from
OEMs and whether it is anticipated that they would share revenues for
vehicles sold with
your technology.
Embark's Partners and Ecosystem, page 158
25. Please discuss the material terms of the agreements or arrangements
with your Partners.
Clarify whether these agreements provide a framework or terms for
future pricing,
service, or investment. To the extent you are substantially dependent
on any of these
agreements, please file them as exhibits pursuant to Item 601(b)(10)
of Regulation S-K.
To the extent any of these agreement solely relate to your R&D fleet
and its operations,
please clarify.
Regulatory Environment for Autonomous Trucking, page 160
26. Your disclosure indicates that certain individual states allow L4
deployment and testing,
but the federal Department of Transportation has put forth a framework
for autonomous
driving and it has pre-emptive rights over state regulation. Please
clarify the current
regulatory environment regarding the levels of autonomous driving that
is legal and
commercially available outside of testing, and clarify whether your
current solutions fall
within or outside of what is commercially permitted. To the extent
your revenue
projections are based on changes to the existing regulatory
environment, please clarify
what changes are required.
Embark's Management's Discussion and Analysis of Financial Condition and
Results of
Operations
Liquidity and Capital Resources, page 173
27. Please revise here to clarify that Embark has not generated any revenue,
to date, and is
still in the process of developing and testing their autonomous driving
technology. Also,
address any uncertainty about the company's ability to generate revenue
in the future and
how this might impact future liquidity and going concern status.
FirstName LastNameIan Robertson
Beneficial Ownership of Securities, page 192
Comapany NameNorthern Genesis Acquisition Corp. II
AugustPlease
28. 3, 2021 provide
Page 6the beneficial ownership of Embark prior to the
business combination.
FirstName LastName
Ian Robertson
FirstName LastNameIan Robertson
Northern Genesis Acquisition Corp. II
Comapany
August NameNorthern Genesis Acquisition Corp. II
3, 2021
August
Page 7 3, 2021 Page 7
FirstName LastName
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Brittany Ebbertt, Senior Staff Accountant, at (202)
551-3572 or
Kathleen Collins, Accounting Branch Chief, at (202) 551-3499 if you have
questions regarding
comments on the financial statements and related matters. Please contact Edwin
Kim, Staff
Attorney, at (202) 551-3297 or Jan Woo, Accounting Branch Chief, at (202)
551-3453 with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of Technology
cc: Rebecca Taylor, Esq.