UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 14, 2021 (December 9, 2021)
SHIFT TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-38839 | 82-5325852 | ||
|
(State or other jurisdiction of
incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer
Identification No.) |
| 290 Division Street, Suite 400, San Francisco, CA | 94103 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (855) 575-6739
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Class A common stock, par value $0.0001 per share | SFT | Nasdaq Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) if the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
On December 9, 2021, Shift Technologies, Inc. (the “Company”) and its wholly-owned indirect subsidiary Shift Operations LLC (the “Borrower” and together with the Company, the “Shift Parties”) entered into an Inventory Financing and Security Agreement (the “Ally Facility”) with Ally Bank, a Utah chartered state bank (“Ally Bank”) and Ally Financial, Inc., a Delaware corporation (“Ally Financial” and together with Bank, the “Lender”), pursuant to which the Lender provides up to $100 million in financing as part of its floorplan vehicle financing program.
In addition to other customary covenants under the Ally Facility, the Shift Parties are subject to financial covenants that require the Shift Parties to maintain, on a consolidated basis, at least 20% of the maximum credit line in unrestricted cash and cash equivalents, and that require the Borrower to maintain at least 10% in vehicle inventory equity and to maintain at least 10% of the maximum credit line in a restricted cash account with Ally Bank.
Advances under the Ally Facility will bear interest at a per annum rate equal to the prime rate designated from time to time by Ally Bank plus 150 basis points and will be determined using a 365/360 simple interest method of calculation, unless expressly prohibited by law. Advances under the Ally Facility, if not demanded earlier, are due and payable for each vehicle financed under the Ally Facility as and when such vehicle is sold, leased, consigned, gifted, exchanged, transferred, or otherwise disposed of. Interest under the Ally Facility is due and payable monthly upon demand. The Borrower is also required to make monthly principal reduction payments equal to 10% of the original principal amount for each vehicle subject to the floor plan for more than 180 days until the outstanding principal amount for such vehicle is reduced to the lesser of 50% of the original principal amount of such vehicle. Additionally, the Borrower is permitted at its election to make permissive principal payments to the Lender at any time before they are due and payable without premium or penalty.
Upon any event of default (including, without limitation, the Borrower’s obligation to pay upon demand any outstanding liabilities of the Ally Facility), the Lender may, at its option and without notice to the Borrower, exercise its right to demand immediate payment of all liabilities and other indebtedness and amounts owed to the Lender and its affiliates by the Borrower.
The Ally Facility is secured by a grant of a security interest in substantially all of the assets of the Borrower, the Company and the other wholly-owned subsidiaries of the Company (together with the Company, the “Guarantors”), and payment is guaranteed by the Guarantors pursuant to a cross collateral, cross default, and guaranty agreement and joint guaranty in favor of the Lender.
The foregoing description of the Ally Facility is qualified in its entirety by reference to the full text of the Inventory Financing and Security Agreement, which will be filed, with any confidential terms redacted, as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2021.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
Item 8.01 Other Events.
On December 13, 2021, the Company issued a press release announcing the entry into the Ally Facility. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits |
| 99.1 | Press Release dated December 13, 2021. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SHIFT TECHNOLOGIES, INC. | ||
| Dated: December 14, 2021 | /s/ George Arison | |
| Name: | George Arison | |
| Title: | Chief Executive Officer and Chairman | |
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Exhibit 99.1
Shift Technologies Announces New $100 million Floorplan Facility
SAN FRANCISCO, Dec. 13, 2021 – Shift (Nasdaq: SFT), a leading end-to-end auto ecommerce platform transforming the used car industry with a technology-driven, hassle-free customer experience, announced a $100 million committed floorplan facility with Ally Financial Inc. (NYSE:ALLY), a leading digital financial services company. The new floorplan financing relationship expands the companies’ business relationship and has a two-year term, expiring December 9, 2023.
“Our business is rapidly scaling, with 2021 sales expected to more than triple compared to 2020. As a result, our financing needs have grown as well,” said Oded Shein, Shift’s CFO. “This new facility improves Shift’s capital position, doubling the availability of our previous floor plan, and increases our financial flexibility as we look to accelerate future growth. We are grateful to Ally for their support and confidence in Shift and look forward to a successful relationship.”
Doug Timmerman, president of Dealer Financial Services, Ally Financial added, “Since 2014, the Ally team has provided a broad range of services to Shift including indirect retail financing, vehicle protection products and digital remarketing services. We’re excited to deepen our relationship with inventory financing, support Shift’s growth, and expand our shared opportunities in the used vehicle market.”
About Shift
Shift is a leading end-to-end auto ecommerce platform transforming the used car industry with a technology-driven, hassle-free customer experience. Shift’s mission is to make car purchase and ownership simple — to make buying or selling a used car fun, fair, and accessible to everyone. Shift provides comprehensive, digital solutions throughout the car ownership lifecycle: finding the right car, having a test drive brought to you before buying the car, a seamless digitally-driven purchase transaction including financing and vehicle protection products, an efficient, digital trade-in/sale transaction, and a vision to provide high-value support services during car ownership. For more information please visit www.shift.com.
Forward-Looking Statements
This document 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 “forecast,” “intend,” “seek,” “target,” “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward looking statements include estimated financial information. Such forward looking statements with respect to revenues, earnings, performance, strategies, prospects and other aspects of Shift’s business are based on current expectations that are subject to risks and uncertainties. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward looking statements. These factors include, but are not limited to: (1) Shift’s ability to sustain its current rate of growth, which may be affected by, among other things, competition, Shift’s ability to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; (2) changes in applicable laws or regulations; (3) the possibility that Shift may be adversely affected by other economic, business, and/or competitive factors; (4) the operational and financial outlook of Shift; (5) the ability for Shift to execute its growth strategy; (6) Shift’s ability to purchase sufficient quantities of vehicles at attractive prices; and (7) other risks and uncertainties indicated from time to time in other documents filed or to be filed with the SEC by Shift. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Shift undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.
Contacts
Drew Haroldson, Blueshirt Group
Investor Relations Contact
drew@blueshirtgroup.com
Coralyn Lee
Media Contact
press@shift.com