Item 8.01 Other Events.
On July 22 and 23, 2021, Churchill Capital Corp. IV ("CCIV"), the predecessor to
Lucid Group, Inc. (the "Company"), held a special meeting of stockholders (the
"CCIV Special Meeting") to approve certain matters relating to the business
combination between CCIV and Atieva, Inc., d/b/a Lucid Motors. One of these
matters was a proposal to increase the total number of authorized shares of
CCIV's Class A common stock, par value $0.0001 per share (the "Class A common
stock"), from 400,000,000 shares to 15,000,000,000 shares (the "Share
Authorization Proposal"). The Share Authorization Proposal was approved by a
majority of the shares of Class A and Class B common stock of CCIV, voting
together as a single class, that were outstanding as of the record date for the
CCIV Special Meeting. After the CCIV Special Meeting, CCIV and Atieva, Inc.
closed the business combination, and CCIV changed its name to Lucid Group, Inc.
As of September 30, 2022, and giving effect to shares issued pursuant to equity
financings in the fourth quarter of 2022, the Company had 1,822,063,351 shares
of Class A common stock issued and outstanding, as well as a significant number
of additional shares of Class A common stock issuable upon conversion, exercise,
or settlement of outstanding convertible notes, private placement warrants,
stock options, and restricted stock units.
A recent ruling by the Court of Chancery introduces uncertainty as to whether
Section 242(b)(2) of the Delaware General Corporation Law (the "DGCL") would
have required the Share Authorization Proposal to be approved by a separate vote
of the majority of CCIV's then-outstanding shares of Class A common stock.
To date, no stockholder has given the Company notice of any allegations that the
Company's shares are unauthorized. However, to resolve potential uncertainty
with respect to the Company's capital structure, the Company has filed a
petition in the Court of Chancery under Section 205 of the DGCL to seek
validation of the Share Authorization Proposal and the shares issued thereunder.
Section 205 of the DGCL permits the Court of Chancery, in its discretion, to
ratify and validate potentially defective corporate acts.
If the Company is not successful in the Section 205 proceeding, the uncertainty
with respect to the Company's capitalization resulting from the Court of
Chancery's ruling referenced above could have a material adverse impact on the
Company, including on the Company's ability to complete equity financing
transactions or issue stock-based compensation to its employees, directors and
officers until the underlying issues are definitively resolved. This uncertainty
could impair the Company's ability to execute its business plan, attract and
retain employees, management and directors and adversely affect its commercial
relationships.
Forward-Looking Statements
This report includes "forward-looking statements" within the meaning of the
"safe harbor" provisions of the United States Private Securities Litigation
Reform Act of 1995. Forward-looking statements may be identified by the use of
words such as "estimate," "plan," "project," "forecast," "intend," "will,"
"shall," "expect," "anticipate," "believe," "seek," "target," "continue,"
"could," "may," "might," "possible," "potential," "predict" or other similar
expressions that predict or indicate future events or trends or that are not
statements of historical matters. These forward-looking statements are not
intended to serve as, and must not be relied on by any investor as, a guarantee,
an assurance, or a definitive statement of fact or probability. Actual events
and circumstances are difficult or impossible to predict and may differ from
these forward-looking statements.
In particular, no assurances can be made regarding the outcome or the timing of
the Section 205 proceeding. If the Company is unsuccessful in the Section 205
proceeding, the uncertainty with respect to the Company's capitalization could
limit its ability to complete equity financing transactions or issue stock-based
compensation to its employees, directors and officers until the underlying
issues are definitively resolved. As described above, this uncertainty could
have a material adverse effect on the Company.
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