Item 8.01 Other Events.
On March 6, 2023, Shift Technologies, Inc. (the “Company”)
filed a petition (the “Petition”) in the Delaware Court of Chancery under Section 205 of the Delaware General Corporation
Law (the “DGCL”) to resolve potential uncertainty with respect to the Company’s share capital. Such uncertainty was
introduced by a recent decision in Garfield v. Boxed, Inc., 2022 WL 17959766 (Del. Ch. Dec. 27, 2022) that potentially affects
the Company and many other similarly situated companies that were formed and became publicly traded as a special purpose acquisition company
(“SPAC”). Out of an abundance of caution, the Company has elected to pursue the remedial actions described below. Concurrently
with the filing of the Petition, the Company filed a motion to expedite the hearing on the Petition, which was subsequently granted on
March 6, 2023, as described below.
Background
On October 13, 2020, the Company, which was then a SPAC named Insurance
Acquisition Corp. (“IAC”), held a special meeting of stockholders (the “IAC Special Meeting”) to approve certain
matters relating to the merger between IAC and a privately held company then called Shift Technologies, Inc. One of these matters was
a proposal to amend and restate IAC’s Amended and Restated Certificate of Incorporation (the “SPAC Charter”) in order
to, among other things, increase the number of authorized shares of Class A common stock from 50,000,000 to 500,000,000 (such proposal,
the “Share Increase Proposal” and, together with such other amendments to the SPAC Charter, the “Charter Proposals”).
At the IAC Special Meeting, the Charter Proposals were approved by
a majority of the outstanding shares of Class A common stock and a majority of the outstanding shares of Class B common stock of IAC as
of the record date for the IAC Special Meeting, voting together as a single class. After the IAC Special Meeting, IAC and Shift Technologies,
Inc. closed the merger pursuant to which the Company became the parent of Shift Technologies, Inc. (now named Shift Platform, Inc.), and
the Company’s certificate of incorporation, as amended to give effect to the Charter Proposals and to change the Company’s
name to Shift Technologies, Inc., became effective.
The recent ruling by the Delaware Court of Chancery in the Boxed case
introduces uncertainty as to whether Section 242(b)(2) of the DGCL would have required the Share Increase Proposal to be approved by the
vote of the majority of IAC’s then-outstanding shares of Class A common stock, voting as a separate class. The Company has been
operating with the understanding that the Charter Proposals were validly approved at the IAC Special Meeting. In light of this recent
ruling, however, to resolve potential uncertainty with respect to the Company’s share capital, the Company has filed a petition
in the Delaware Court of Chancery under Section 205 of the DGCL to seek validation of the Charter Proposals. 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 could have a material adverse impact on the Company, including without
limitation on the Company’s ability to timely file its Annual Report on Form 10-K for the fiscal year ended December 31,
2022 and the potential adverse consequences resulting therefrom.
Hearing Date
On March 6, 2023, the Court of Chancery granted the motion to expedite
and set a hearing date for the Petition to be heard. The hearing has been set for March 17, 2023 at 12:00 p.m. Eastern Time at the Leonard
L. Williams Justice Center, 500 North King Street, Wilmington, Delaware 19801. As required by the Court of Chancery, the Company is filing
the Petition with this Current Report on Form 8-K. A copy of the Petition is attached hereto as Exhibit 99.1.
This Current Report on Form 8-K constitutes notice of the
hearing. If any stockholder of the Company wishes to express a position on the Petition, such stockholder may (i) appear at the hearing
or (ii) file a written submission with the Register in Chancery, Leonard L. Williams Justice Center, 500 North King Street, Wilmington,
Delaware 19801, referring to the case caption, In re Shift Technologies, Inc., C.A. No. 2023-0275-LWW (Del. Ch.),
in advance of the hearing, and any such written submission should be emailed to the Company’s counsel, Kevin M. Gallagher, Richards,
Layton & Finger, P.A., at gallagher@rlf.com
Forward-Looking Statements
Certain statements in this Current Report on Form 8-K constitute
“forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Statements contained
in this Form 8-K that are not historical facts are forward-looking statements and include, for example, statements with respect
to the pending Section 205 proceeding referenced above and the ability of the Company to timely file its Annual Report on Form 10-K.
Such forward-looking statements involve known and unknown risks and uncertainties, and the Company’s actual results could differ
materially from future results expressed or implied in these forward-looking statements. The forward-looking statements included herein
are based on the Company’s current expectations. These statements are not guarantees or indicative of future performance. Important
assumptions and other important factors that could cause actual results to differ materially from the forward-looking statements include,
but are not limited to, the Company’s ability to obtain the requested relief in the Section 205 proceeding and those additional
risks, uncertainties and factors described in more detail under the caption “Risk Factors” in the Company’s Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 2022, the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2021, and in the Company’s other filings with the Securities and Exchange Commission. The Company
disclaims any obligation or undertaking to update, supplement or revise any forward-looking statements contained in this Item 8.01. Given
these risks and uncertainties, readers are cautioned not to place undue reliance on the forward-looking statements.
