|
Item 2.01.
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Completion of Acquisition or Disposition of Assets.
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On April 23,
2020, DEAC held a Special Meeting at which the DEAC stockholders considered and adopted, among other matters, the Business
Combination Agreement. On April 23, 2020, the parties to the Business Combination Agreement consummated the Transactions. The
aggregate value of the consideration paid to Old DK stockholders and SBT shareholders in the Business Combination was
approximately $2.7 billion, of which (A) approximately $2.05 billion was paid to (i) the stockholders of Old DK (the
“DK Sellers”) in the form of DraftKings Class A common stock, valued at approximately $10.12 per share (the
redemption price for DEAC’s public shares in the Business Combination) and (ii) the holders of vested options and
warrants exercisable for Old DK equity in the form of newly issued options and warrants of DraftKings exercisable for
DraftKings Class A common stock, and (B) approximately €590 million was be paid to the SBT Sellers and holders of vested
options exercisable for equity of SBTech, in the form of (i) €180 million in cash, subject to adjustments for working
capital and net debt of SBTech and certain other items and (ii) approximately €410 million in shares of DraftKings Class
A common stock, valued at the redemption price for DEAC’s public shares in the Business Combination, and in the form of
newly issued options of DraftKings exercisable for DraftKings Class A common stock. Outstanding unvested options exercisable
for Old DK or SBTech equity were converted into unvested options exercisable for shares of DraftKings Class A common stock.
In addition, in connection with the Business Combination, Mr. Robins received an additional number of shares of DraftKings
Class B common stock such that as of immediately following the completion of the Business Combination, Mr. Robins held
approximately ninety percent (90%) of the voting power of the capital stock of DraftKings on a fully-diluted basis.
Prior to the Special Meeting, holders of
8,928 shares of DEAC’s Class A common stock sold in its initial public offering (“Public Shares”) exercised their
right to redeem those shares for cash at a price of approximately $10.12 per share, for an aggregate of $90,391.89. Immediately
after giving effect to the Business Combination (including as a result of the redemptions described above), there were 312,451,027
issued and outstanding shares of DraftKings Class A common stock. Upon the Closing, DEAC’s Class A common stock and warrants
ceased trading, and DraftKings Class A common stock and warrants began trading on The Nasdaq Stock Market LLC (“Nasdaq”).
DEAC’s public units automatically separated into their component securities upon consummation of the Business Combination
and, as a result, no longer trade as a separate security and were delisted from Nasdaq. As of the Closing Date, our directors and
executive officers and affiliated entities beneficially owned approximately 32.9% of the outstanding shares of DraftKings Class
A common stock, and the former securityholders of DEAC beneficially owned approximately 14.0% of the outstanding shares of DraftKings
Class A common stock.
Forward-Looking Statements
This Current Report on Form 8-K, or some
of the information incorporated herein by reference, contains statements that are forward-looking and as such are not historical
facts. This includes, without limitation, statements regarding the financial position, business strategy and the plans and objectives
of management for future operations. These statements constitute projections, forecasts and forward-looking statements, and are
not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or
current facts. When used in this Current Report on Form 8-K, words such as “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “intend,” “may,” “might,”
“plan,” “possible,” “potential,” “predict,” “project,” “should,”
“strive,” “would” and similar expressions may identify forward-looking statements, but the absence of these
words does not mean that a statement is not forward-looking. When the Company discusses its strategies or plans, it is making projections,
forecasts or forward-looking statements. Such statements are based on the beliefs of, as well as assumptions made by and information
currently available to, DraftKings’ management. Forward-looking statements in this Current Report on Form 8-K and in any
document incorporated by reference in this Report may include, for example, statements about:
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·
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our ability to maintain the listing of our common stock on Nasdaq
following the Business Combination;
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|
·
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our ability to raise financing in the future;
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|
·
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our success in retaining or recruiting, or changes required in, our
officers, key employees or directors;
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|
·
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our ability to effectively compete in the global entertainment and
gaming industries;
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|
·
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our ability to successfully acquire and integrate new operations;
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|
·
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our ability to obtain and maintain licenses with gaming authorities;
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|
·
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our inability to recognize deferred tax assets and tax loss carryforwards;
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|
·
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market conditions and global and economic factors beyond our control,
including the potential adverse effects of the ongoing global coronavirus (COVID-19) pandemic on capital markets, general economic
conditions, unemployment and our liquidity, operations and personnel;
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|
·
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intense competition and competitive pressures from other companies
worldwide in the industries in which we operate;
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|
·
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litigation and the ability to adequately protect New DraftKings’
intellectual property rights; and
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|
·
|
other factors detailed under the section titled “Risk Factors”
beginning on page 47 of the Proxy and incorporated herein by reference.
|
The forward-looking statements contained
in this Current Report on Form 8-K and in any document incorporated by reference are based on current expectations and beliefs
concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting
the Company will be those that the Company has anticipated. These forward-looking statements involve a number of risks, uncertainties
(some of which are beyond the Company’s control) or other assumptions that may cause actual results or performance to be
materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include,
but are not limited to, those factors described in the Proxy in the section titled “Risk Factors” beginning
on page 47, which is incorporated herein by reference. Should one or more of these risks or uncertainties materialize, or should
any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking
statements. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required under applicable securities laws.
Business
The business of DEAC prior to the Business
Combination is described in the Proxy in the section titled “Other Information Related to DEAC” and that information
is incorporated herein by reference. The business of Old DK and SBTech prior to the Business Combination is described in the Proxy
in the section titled “Business of DraftKings and SBTech” and that information is incorporated herein by reference.
Risk Factors
The risk factors related to the Company’s
business and operations and the Business Combination are set forth in the Proxy in the section titled “Risk Factors”
and that information is incorporated herein by reference.
Financial Information
Reference is made to the disclosure set
forth in Item 9.01 of this Current Report on Form 8-K concerning the financial information of DEAC, Old DK and SBTech. Reference
is further made to the disclosure contained in the Proxy in the sections titled “Selected Historical Consolidated Financial
Information of DEAC,” “Selected Historical Consolidated Financial Information of DraftKings”, “Selected
Historical Consolidated Financial Information of SBT”, “DEAC’s Management’s Discussion and Analysis
of Financial Condition and Results of Operations”, “DraftKings’ Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and “SBT’s Management’s Discussion and Analysis
of Financial Condition and Results of Operations”, which are incorporated herein by reference.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Reference is made to the disclosure contained
in the Proxy in the sections titled “DEAC’s Management’s Discussion and Analysis of Financial Condition and
Results of Operations”, “DraftKings’ Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and “SBT’s Management’s Discussion and Analysis of Financial Condition
and Results of Operations”, which are incorporated herein by reference.
Quantitative and Qualitative Disclosures about Market
Risk
Reference is made to the disclosure contained
in the Proxy in the sections titled “DraftKings’ Management’s Discussion and Analysis of Financial Condition
and Results of Operations—Quantitative and Qualitative Disclosures About Market Risk” and “SBT’s
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative
Disclosures About Market Risk”, which are incorporated herein by reference.
Properties
The properties of DEAC and each of Old DK
and SBTech are described in the Proxy in the sections titled “Other Information Related to DEAC—Properties”
and “Business of DraftKings and SBTech—Property”, respectively, and that information is incorporated herein
by reference.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information
known to the Company regarding the beneficial ownership of Company common stock as of the Closing Date by:
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·
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each person known to the Company to be the beneficial owner of more
than 5% of outstanding Company common stock;
|
|
·
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each of the Company’s executive officers and directors; and
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|
·
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all executive officers and directors of the Company as a group.
|
Beneficial ownership is determined according
to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses
sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or
exercisable within 60 days. Company stock issuable upon exercise of options and warrants currently exercisable within 60 days are
deemed outstanding solely for purposes of calculating the percentage of total voting power of the beneficial owner thereof.
The beneficial ownership of Company common
stock is based on 312,451,027 shares of Company Class A common stock and 393,013,951 shares of Company Class B common stock issued
and outstanding as of the Closing Date.
Unless otherwise indicated, the Company
believes that each person named in the table below has sole voting and investment power with respect to all shares of Company common
stock beneficially owned by them.
Name and Address of Beneficial Owner
|
|
Number of Shares of Class A Common Stock
|
|
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%
|
|
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Number of Shares of Class B Common Stock
|
|
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%
|
|
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% of Total Voting Power
|
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Current Directors and Executive Officers
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
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Jason Robins (1)(2)(3)
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|
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8,453,094
|
|
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2.6
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%
|
|
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393,013,951
|
|
|
|
100
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%
|
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92.7
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%
|
Matthew Kalish (1)(3)(4)
|
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4,017,566
|
|
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1.3
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%
|
|
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—
|
|
|
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—
|
|
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*
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Paul Liberman (1)(3)(5)
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4,661,765
|
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1.5
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%
|
|
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—
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|
|
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—
|
|
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*
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M. Gavin Isaacs (6)(7)
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479,285
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|
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*
|
|
|
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—
|
|
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—
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|
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*
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Woodrow Levin (1)(3)(8)
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415,374
|
|
|
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*
|
|
|
|
—
|
|
|
|
—
|
|
|
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*
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Shalom Meckenzie (6)
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34,628,397
|
|
|
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11.1
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%
|
|
|
|
|
|
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—
|
|
|
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*
|
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Ryan R. Moore (1)(3)(9)
|
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10,825,097
|
|
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3.5
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%
|
|
|
|
|
|
|
—
|
|
|
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*
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|
Steven J. Murray (1)(3)(10)
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7,767,580
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2.5
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%
|
|
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—
|
|
|
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—
|
|
|
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*
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Hany M. Nada (1)(3)(11)
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7,211,006
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2.3
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%
|
|
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—
|
|
|
|
—
|
|
|
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*
|
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Richard Rosenblatt (1)(12)
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224,426
|
|
|
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*
|
|
|
|
|
|
|
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—
|
|
|
|
*
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John S. Salter (1)(3)(13)
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24,983,757
|
|
|
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8.0
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%
|
|
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—
|
|
|
|
—
|
|
|
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*
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Harry E. Sloan (14)
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2,718,717
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*
|
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|
|
|
|
|
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—
|
|
|
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*
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Marni M. Walden (1)(15)
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89,878
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|
|
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*
|
|
|
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—
|
|
|
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—
|
|
|
|
*
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R. Stanton Dodge (1)(16)
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1,734,232
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|
|
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*
|
|
|
|
|
|
|
|
—
|
|
|
|
*
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Jason Park (1)(17)
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|
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253,151
|
|
|
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*
|
|
|
|
—
|
|
|
|
—
|
|
|
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*
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|
All Directors and Executive Officers as a Group (15 Individuals)
|
|
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108,463,325
|
|
|
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32.9
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%
|
|
|
393,013,951
|
|
|
|
100
|
%
|
|
|
94.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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Five Percent Holders
|
|
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|
|
|
|
|
|
|
|
|
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|
Shalom Meckenzie (6)
|
|
|
34,628,397
|
|
|
|
11.1
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
*
|
|
RPII DK LLC (3)(18)
|
|
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24,983,757
|
|
|
|
8.0
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
*
|
|
TFCF Sports Enterprises, LLC (19)
|
|
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18,546,667
|
|
|
|
5.9
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
*
|
|
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(1)
|
The business address of each of these shareholders is
222 Berkeley Street, 5th Floor, Boston, MA 02116.
|
|
(2)
|
Includes 1,314,329 shares of DraftKings Class A common
stock and 7,004,943 vested options to exercise DraftKings Class A common stock beneficially owned by Mr. Robins, Jason Robins
Revocable Trust u/d/t January 8, 2014, Robins Family Trust, Jason Robins 2020 Trust and/or Robins Grantor Retained Annuity Trust
of 2020, for which Mr. Robins has sole investment and voting power. Also includes 125,752 shares of unvested DraftKings common
stock that will vest within 60 days of the Closing Date.
|
|
(3)
|
Includes such holder’s pro rata portion of DraftKings
Class A common stock underlying the private placement warrants transferred from Eagle Equity Partners and Harry Sloan to equityholders
of Old DK that will become exercisable on May 23, 2020 as follows: 8,070 shares to Mr. Robins and entities affiliated with him;
7,174 shares to Mr. Kalish and entities affiliated with him; 6,792 shares to Mr. Liberman and entities affiliated with him; 1,983
shares to Mr. Levin and entities affiliated with him; 63,450 shares to Mr. Moore through entities affiliated with him; 47,317
to Mr. Murray through an entity affiliated with him; 43,926 shares to Mr. Nada through an entity affiliated with him; 152,190
shares to RPII DK LLC, for which Mr. Salter shares investment and voting power; and 112,978 shares to TFCF Sports Enterprises,
LLC.
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|
(4)
|
Includes 1,170,446 shares of DraftKings Class A common
stock and 2,797,926 vested options to exercise DraftKings Class A common stock beneficially owned by Mr. Kalish, Kalish Family
2020 Irrevocable Trusts and Matthew P. Kalish 2020 Trust, for which Mr. Kalish has sole investment and voting power. Also includes
42,020 shares of unvested DraftKings common stock that will vest within 60 days of the Closing Date.
|
|
(5)
|
Includes 1,108,132 shares of DraftKings Class A common
stock and 3,504,821 vested options to exercise DraftKings Class A common stock beneficially owned by Mr. Liberman, Paul Liberman
2015 Revocable Trust dated May 12, 2015, Paul Liberman 2020 Trust and Liberman Grantor Retained Annuity Trust of 2020, for which
Mr. Liberman has sole investment and voting power. Also includes 42,020 shares of unvested DraftKings common stock that will vest
within 60 days of the Closing Date.
|
|
(6)
|
The business address of Messrs. Isaacs and Meckenzie
is c/o Herzog Fox & Neeman, Asia House, 4 Weizman St. Tel Aviv 6423904, Israel.
|
|
(7)
|
Represents vested options to exercise DraftKings Class
A common stock.
|
|
(8)
|
Includes 323,480 shares of DraftKings Class A common
stock and 82,802 vested options to exercise DraftKings Class A common stock beneficially owned by Mr. Levin, Levin Family 2015
Irrevocable Trust and OneSixRed LLC, for which Mr. Levin has sole investment and voting power. Also includes 7,109 shares of unvested
DraftKings common stock that will vest within 60 days of the Closing Date.
|
|
(9)
|
Represents shares of DraftKings Class A common stock
held by Accomplice Fund I, L.P., Accomplice Fund II, L.P., Accomplice Management Holdings, LLC, Accomplice DK Investors, LLC,
Atlas Venture Fund VIII, L.P. and Accomplice DK Investors, for which Mr. Moore shares investment and voting control. Mr. Moore
disclaims beneficial ownership of all shares except to the extent of his pecuniary interest, if any, therein.
|
|
(10)
|
Represents shares of DraftKings Class A common stock
held by Revolution Growth III, LP. Mr. Murray is the operating manager of the ultimate general partner of Revolution Growth III,
LP and may be deemed to have voting and dispositive power with respect to the securities held by Revolution Growth III, LP. Mr.
Murray disclaims beneficial ownership of such securities except to the extent of his pecuniary interest therein.
|
|
(11)
|
Represents shares of DraftKings Class A common stock
held by ACME SPV DK, LLC, for which Mr. Nada shares investment and voting control.
|
|
(12)
|
Represents 220,610 vested options to exercise DraftKings
Class A common stock and 3,816 shares of unvested DraftKings common stock that will vest within 60 days of the Closing Date.
|
|
(13)
|
Represents shares of DraftKings Class A common stock
held by RPII DK LLC, for which Mr. Salter shares investment and voting control.
|
|
(14)
|
Mr. Sloan’s business address is 2121 Avenue of the Stars,
Suite 2300, Los Angeles, CA 90067. Amount includes 1,789,618 shares of DraftKings Class A common stock and 929,099 shares
underlying private placement warrants and excludes 2,608,065 Earnout Shares which were placed in escrow at the Closing
pursuant to the terms of the Earnout Escrow Agreement.
|
|
(15)
|
Represents 81,001 vested options to exercise DraftKings
Class A common stock and 8,877 shares of unvested DraftKings common stock that will vest within 60 days of the Closing Date.
|
|
(16)
|
Includes 1,609,781 vested options to exercise DraftKings
Class A common stock and 124,451 shares of unvested DraftKings common stock that will vest within 60 days of the Closing Date.
|
|
(17)
|
Includes 108,329 vested options to exercise DraftKings
Class A common stock and 144,822 shares of unvested DraftKings common stock that will vest within 60 days of the Closing Date.
|
|
(18)
|
The business address of
RPII DK LLC is 65 East 55th Street, 24th Floor, New York, NY 10022.
|
|
(19)
|
The business address of
TFCF Sports Enterprises, LLC is 1211 Avenue of the Americas, New York, NY 10036.
|
Directors and Executive Officers
The Company’s directors and executive
officers after the consummation of the Transactions are described in the Proxy in the section titled “Directors and Executive
Officers of New DraftKings After the Business Combination” and that information is incorporated herein by reference.
Director Independence
Information with respect to the independence
of the Company’s directors is set forth in the Proxy in the section titled “Directors and Executive Officers of
New DraftKings After the Business Combination—Director Independence; Controlled Company Exemption” and that information
is incorporated herein by reference.
Committees of the Board of Directors
Information with respect to the composition
of the board of directors immediately after the Closing is set forth in the Proxy in the section titled “Directors and
Executive Officers of New DraftKings After the Business Combination—Board Composition” and that information is
incorporated herein by reference.
Executive Compensation
A description of the compensation of the
named executive officers of DEAC and of Old DK before the consummation of the Business Combination is set forth in the Proxy in
the sections titled “Other Information Related to DEAC—Executive Compensation and Director Compensation”
and “DraftKings’ Executive and Director Compensation”, respectively, and that information is incorporated
herein by reference.
At the Special Meeting, the DEAC stockholders
approved the Incentive Plan. The description of the Incentive Plan is set forth in the Proxy section entitled “The Incentive
Award Plan Proposal”, which is incorporated herein by reference. A copy of the full text of the Incentive Plan is filed
as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. Following the consummation of the Business
Combination, the Company expects that the Board or the Compensation Committee will make grants of awards under the Incentive Plan
to eligible participants.
Director Compensation
A description of the compensation of the
directors of DEAC and of Old DK before the consummation of the Business Combination is set forth in the Proxy in the section titled
“Other Information Related to DEAC—Executive Compensation and Director Compensation” and “DraftKings’
Executive and Director Compensation—Director Compensation”, respectively, and that information is incorporated
herein by reference.
Certain Relationships and Related Party Transactions
The certain relationships and related party
transactions of the Company are described in the Proxy in the section titled “Certain Relationships and Related Person
Transactions” and that information is incorporated herein by reference.
Legal Proceedings
Reference is made to the disclosure regarding
legal proceedings in the section of the Proxy titled “Other Information Related to DEAC—Legal Proceedings”
and “Business of DraftKings and SBTech—Legal Proceedings” and that information is incorporated herein
by reference.
Market Price of and Dividends on the Registrant’s
Common Equity and Related Stockholder Matters
Information
about the ticker symbol, number of stockholders and dividends for DEAC’s securities is set forth in the Proxy in the
section titled “Market Price, Ticker Symbol and Dividend Information” and such information is incorporated
herein by reference. As of the Closing Date, there were approximately 460 holders of record of the Company’s Class A
common stock and approximately 331 holders of record of the Company’s warrants to purchase Class A common
stock.
DraftKings’ Class A common stock and
warrants began trading on Nasdaq under the symbols “DKNG” and “DKNGW”, on April 24, 2020, subject to ongoing
review of DraftKings’ satisfaction of all listing criteria post-Business Combination. DEAC’s public units automatically
separated into their component securities upon consummation of the Business Combination and, as a result, no longer trade as a
separate security and were delisted from Nasdaq.
DraftKings has not paid any cash dividends
on shares of its Class A common stock to date. The payment of cash dividends in the future will be dependent upon our revenues
and earnings, if any, capital requirements and general financial condition. The payment of any dividends will be within the discretion
of DraftKings’ board of directors.
Recent Sales of Unregistered Securities
Reference is made to the disclosure set
forth below under Item 3.02 of this Current Report on Form 8-K concerning the issuance and sale by the Company of certain unregistered
securities, which is incorporated herein by reference.
Description of Registrant’s Securities to Be Registered
The description of the Company’s securities
is contained in the Proxy in the section titled “Description of New DraftKings Securities” and that information
is incorporated herein by reference.
Immediately
following the Closing, there were 312,451,027 shares of the Company’s Class A common stock issued and outstanding, held
of record by 460 holders, 393,013,951 shares of the Company’s Class B common stock issued and outstanding, held of
record by one holder and no shares of preferred stock outstanding, and 19,848,835 warrants outstanding held of record by 331
holders. Such amounts do not include DTC participants or beneficial owners holding shares through nominee names.
Indemnification of Directors and Officers
DraftKings has entered into indemnification
agreements with each of its directors and executive officers. Each indemnification agreement provides for indemnification and advancements
by DraftKings of certain expenses and costs relating to claims, suits or proceedings arising from his or her service to DraftKings
or, at our request, service to other entities, as officers or directors to the maximum extent permitted by applicable law.
Further information about the indemnification
of DraftKings’ directors and officers is set forth in the Proxy in the section titled “Description of New DraftKings
Securities—Limitation on Liability and Indemnification of Officers and Directors” and that information is incorporated
herein by reference.