F-4/A
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As filed with the Securities and Exchange Commission on June 24, 2021.

Registration No. 333-254186

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM F-4

Amendment No. 2

to

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

OTONOMO TECHNOLOGIES LTD.

(Exact name of registrant as specified in its charter)

 

 

 

State of Israel   7372   Not applicable

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

Otonomo Technologies Ltd.

16 Abba Eban Blvd.

Herzliya Pituach 467256, Israel

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Cogency Global Inc.

122 East 42nd Street, 18th Floor

New York, NY 10168

(800) 221-0102

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies of all correspondence to:

 

Ryan J. Maierson

John M. Greer

Latham & Watkins LLP

811 Main Street, Suite 3700

Houston, Texas 77002

Tel: (713) 546-5400

 

Joshua G. Kiernan

Latham & Watkins LLP

99 Bishopsgate

London EC2M 3XF

United Kingdom

Tel: (+44) (20) 7710-1000

 

Amir Raz

Perry Wildes

Gross & Co.

One Azrieli Center

Tel Aviv 6701101, Israel

Tel: +972 (3) 607-4444

  

Christian Nagler

Brooks Antweil

Kirkland & Ellis LLP

601 Lexington Avenue

New York, New York 10022

Tel: (212) 446-4800

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this registration statement and all other conditions to the proposed Business Combination described herein have been satisfied or waived.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. Emerging growth company  ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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 7(a)(2)(B) of the Securities Act.  ☒

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of

Securities to be Registered

 

Amount
to be

Registered(1)(7)

 

Proposed
Maximum

Offering Price
per Security(2)

 

Proposed
Maximum

Aggregate
Offering Price

  Amount of
Registration Fee(3)

Ordinary shares, no par value per share(4)

  21,572,500   $10.405   $224,461,862.50   $24,488.79

Warrants to purchase ordinary shares(5)

  13,825,000      

Ordinary shares underlying warrants(6)

  13,825,000   $12.98   $179,448,500.00   $19,577.83

Total

      $403,910,362.50   $44,066.62(8)

 

 

 

(1)

The number of ordinary shares, no par value per share (“Otonomo ordinary shares”), of Otonomo Technologies Ltd. (“Otonomo”) and warrants (“Otonomo warrants”) to purchase Otonomo ordinary shares being registered is based upon an estimate of the sum of (a) the maximum number of shares of Class A common stock, par value $0.0001 per share (“Class A Stock”), of Software Acquisition Group Inc. II (“SWAG”) that will be outstanding immediately prior to the Business Combination (as defined herein) and exchanged for one Otonomo ordinary share for each such share of Class A Stock, assuming the Stock Split (as defined herein) has occurred; (b) the maximum number of shares of Class B common stock, par value $0.0001 per share of SWAG (“Class B Stock” and, together with the Class A Stock, the “SWAG Common Stock”) that will be outstanding immediately prior to the Business Combination and exchanged for one Otonomo ordinary share for each such share of Class B Stock, assuming the Stock Split occurred; and (c) the maximum number of warrants of SWAG (“SWAG warrants”) that will be outstanding immediately prior to the Business Combination and exchanged for one Otonomo warrant for each such SWAG warrant, assuming the stock split has occurred. Includes 10,000 Otonomo ordinary shares that may be issuable as a result of the provision of the Business Combination Agreement (as defined herein) that rounds up to the nearest share in lieu of issuing fractional shares.

(2)

In accordance with Rule 457(f)(1) and Rule 457(c), as applicable, based on (i) in respect of Otonomo ordinary shares to be issued to SWAG stockholders, the average of the high ($10.56) and low ($10.25) prices of the shares of Class A Stock on the Nasdaq Capital Market (“Nasdaq”) on March 9, 2021, and (ii) in respect of Otonomo warrants to be issued to SWAG warrant holders, the sum of (a) the average of the high ($1.58) and low ($1.38) prices for the SWAG warrants on Nasdaq on March 9, 2021 and (b) $11.50, the exercise price of the SWAG warrants, resulting in a combined maximum offering price per warrant of $12.98. The maximum number of Otonomo warrants and Otonomo ordinary shares issuable upon exercise of the Otonomo warrants are being simultaneously registered hereunder. Consistent with the response to Question 240.06 of the Securities Act Rules Compliance and Disclosure Interpretations, the registration fee with respect to the Otonomo warrants has been allocated to the underlying Otonomo ordinary shares and those Otonomo ordinary shares are included in the registration fee.

(3)

Calculated by multiplying the proposed maximum aggregate offering price by 0.0001091.

(4)

Represents Otonomo ordinary shares issuable in exchange for outstanding SWAG Common Stock upon the merger of Butterbur Merger Sub Inc. (“Merger Sub”) with and into SWAG pursuant to the Business Combination.

(5)

Represents warrants of Otonomo, each whole warrant entitling the holder to purchase one Otonomo ordinary share, to be issued in exchange for warrants of SWAG upon the merger of Merger Sub with and into SWAG pursuant to the Business Combination.

(6)

Represents Otonomo ordinary shares underlying warrants of Otonomo.

(7)

Pursuant to Rule 416(a), there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.

(8)

Previously paid.

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this proxy statement/prospectus is not complete and may be changed. Otonomo Technologies Ltd. may not sell these securities until the registration statement filed with the Securities and Exchange Commission, of which this proxy statement/prospectus is a part, is effective. This proxy statement/prospectus is neither an offer to sell these securities, nor a solicitation of an offer to buy these securities, in any state or jurisdiction where the offer or sale is not permitted. Any representation to the contrary is a criminal offense.

 

PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION DATED JUNE 24, 2021

PROXY STATEMENT/PROSPECTUS

 

 

 

LOGO

   LOGO

PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS

OF

SOFTWARE ACQUISITION GROUP INC. II

 

 

PROSPECTUS FOR UP TO 21,572,500 ORDINARY SHARES,

13,825,000 WARRANTS,

AND 13,825,000 ORDINARY SHARES UNDERLYING WARRANTS

OF

OTONOMO TECHNOLOGIES LTD.

 

 

The board of directors of Software Acquisition Group Inc. II, a Delaware corporation (“SWAG”), has unanimously approved the business combination agreement (“Business Combination Agreement”), dated as of January 31, 2021, by and among SWAG, Otonomo Technologies Ltd., a company organized under the laws of the State of Israel (the “Company” or “Otonomo”) and Butterbur Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”). Pursuant to the Business Combination Agreement, Merger Sub will merge with and into SWAG, with SWAG surviving the merger (the “Business Combination”). As a result of the Business Combination, and upon consummation of the Business Combination and the other transactions contemplated by the Business Combination Agreement (the “Transactions”), SWAG will become a wholly owned subsidiary of the Company, with the securityholders of SWAG becoming securityholders of the Company.

Prior to the effective time of the Business Combination (the “Effective Time”), Otonomo intends to effect a stock split to cause the value of the outstanding Otonomo ordinary shares immediately prior to the Effective Time to equal $10.00 per share (the “Stock Split”). The consideration to be issued to securityholders of SWAG will be adjusted if the Stock Split is not effected or if the Stock Split results in a price per Otonomo ordinary share other than $10.00.

Pursuant to the Business Combination Agreement and assuming the Stock Split has occurred, at the Effective Time, (a) each share of Class A Common Stock of SWAG, par value $0.0001 per share (“Class A Stock”), outstanding immediately prior to the Effective Time will be exchanged for one Otonomo ordinary share, (b) each share of Class B Common Stock of SWAG, par value $0.0001 per share (“Class B Stock” and, together with the Class A Stock, the “SWAG Common Stock”), outstanding immediately prior to the Effective Time will be exchanged for one Otonomo ordinary share, (c) each warrant of SWAG entitling the holder to purchase one share of Class A Stock per warrant at a price of $11.50 per share (each, a “SWAG warrant”) outstanding immediately prior to the Effective Time will be assumed by Otonomo and will become one warrant of Otonomo (“Otonomo warrant”), with the number of Otonomo ordinary shares underlying the Otonomo warrants and the exercise price of such Otonomo warrants subject to adjustment in accordance with the Business Combination Agreement in the event of a stock split, share dividend or distribution, or any change in Otonomo’s share capital by reason of any split-up reverse stock split, recapitalization, combination, reclassification, exchange of shares and (d) each outstanding Otonomo preferred share will be converted into one Otonomo ordinary share.

Concurrently with the execution of the Business Combination Agreement, Otonomo and certain accredited investors (the “PIPE Investors”) entered into a series of subscription agreements (“Subscription Agreements”), providing for the purchase by the PIPE Investors at the Effective Time of an aggregate of 14,250,000 Otonomo ordinary shares (“PIPE Shares”) at a price per share of $10.00 (assuming the Stock Split has been effected), for gross proceeds to Otonomo of $142,500,000 (collectively, the “PIPE Investment”). The closing of the PIPE Investment is conditioned upon the consummation of the Transactions.

In addition, concurrently with the execution of the Business Combination Agreement, Otonomo, certain Otonomo shareholders (the “Selling Shareholders”) and certain accredited investors (the “Secondary PIPE Investors”) entered into a share purchase agreement (“Share Purchase Agreement”), providing for the purchase by the Secondary PIPE Investors at the Effective Time of an aggregate of 3,000,000 Otonomo ordinary shares (“Secondary PIPE Shares”) from the Selling Shareholders at a price per share of $10.00 (assuming the Stock Split has been effected), for gross proceeds to the Selling Shareholders of $30,000,000 (collectively, the “Secondary PIPE”). The closing of the Secondary PIPE is conditioned upon the consummation of the Transactions.

This proxy statement/prospectus covers the Otonomo ordinary shares and Otonomo warrants issuable to the securityholders of SWAG as described above. Accordingly, we are registering up to an aggregate of 21,572,500 Otonomo ordinary shares, 13,825,000 Otonomo warrants, and 13,825,000 Otonomo ordinary shares issuable upon the exercise of the warrants. We are not registering the Otonomo ordinary shares issuable to the Otonomo securityholders or the PIPE Investors or the Otonomo ordinary shares that will be sold to the Secondary PIPE Investors.

Proposals to approve the Business Combination Agreement and the other matters discussed in this proxy statement/prospectus will be presented at the special meeting of SWAG stockholders scheduled to be held on                 , 2021 in virtual format.

Although Otonomo is not currently a public reporting company, following the effectiveness of the registration statement of which this proxy statement/prospectus is a part and the closing of the Business Combination, Otonomo will become subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Otonomo intends to apply for listing of the Otonomo ordinary shares and Otonomo warrants on Nasdaq under the proposed symbols “OTMO” and “OTMOW”, respectively, to be effective at the consummation of the Business Combination. It is a condition of the consummation of the Transactions that the Otonomo ordinary shares are approved for listing on Nasdaq (subject only to official notice of issuance thereof and round lot holder requirements). While trading on Nasdaq is expected to begin on the first business day following the date of completion of the Business Combination, there can be no assurance that Otonomo’s securities will be listed on Nasdaq or that a viable and active trading market will develop. See “Risk Factors” beginning on page 13 for more information.

Otonomo will be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, and is therefore eligible to take advantage of certain reduced reporting requirements otherwise applicable to other public companies.

Otonomo will also be a “foreign private issuer” as defined in the Exchange Act and will be exempt from certain rules under the Exchange Act that impose certain disclosure obligations and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, Otonomo’s officers, directors and principal shareholders will be exempt from the reporting and “short-swing” profit recovery provisions under Section 16 of the Exchange Act. Moreover, Otonomo will not be required to file periodic reports and financial statements with the U.S. Securities and Exchange Commission as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.

The accompanying proxy statement/prospectus provides SWAG stockholders with detailed information about the Business Combination and other matters to be considered at the special meeting of SWAG. We encourage you to read the entire accompanying proxy statement/prospectus, including the Annexes and other documents referred to therein, carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 13 of the accompanying proxy statement/prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the Business Combination, or determined if this proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated                , 2021, and is first being mailed to SWAG stockholders on or about                 , 2021.


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Notice of Special Meeting of Stockholders

of Software Acquisition Group Inc. II

To Be Held on                , 2021

TO THE STOCKHOLDERS OF SOFTWARE ACQUISITION GROUP INC. II:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Software Acquisition Group Inc. II, a Delaware corporation (“SWAG”), will be held at                  a.m. Eastern Time, on                 , 2021 (the “special meeting”). Due to health concerns stemming from the COVID-19 pandemic, and to support the health and well-being of our stockholders, the special meeting will be a virtual meeting. You are cordially invited to attend and participate in the special meeting online by visiting https://                . The special meeting will be held for the following purposes:

 

1.

Proposal No. 1 — The Business Combination Proposal — to consider and vote upon a proposal to approve and adopt the Business Combination Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A, and the transactions contemplated therein, including the Business Combination whereby Butterbur Merger Sub Inc., a Delaware corporation (“Merger Sub”), will merge with and into SWAG, with SWAG surviving the merger as a wholly owned subsidiary of Otonomo Technologies Ltd., a company organized under the laws of Israel (“Otonomo”) (the “Business Combination Proposal”);

 

2.

Proposal No. 2 — The Charter Proposals to approve the following material differences between SWAG’s amended and restated certificate of incorporation (the “SWAG Charter”) and Otonomo’s amended and restated articles of association (the “Otonomo Articles”) to be effective upon the consummation of the Business Combination:

i. the name of the new public entity will be “Otonomo Technologies Ltd.” as opposed to “Software Acquisition Group Inc. II”;

ii. the Otonomo Articles will provide for one class of ordinary shares as opposed to the two classes of common stock provided for in the SWAG Charter;

iii. Otonomo’s corporate existence is perpetual as opposed to SWAG’s corporate existence terminating if a business combination is not consummated within a specified period of time; and

iv. the Otonomo Articles will not include the various provisions applicable only to special purpose acquisition corporations that the SWAG Charter contains (collectively, the “Charter Proposals”);

 

3.

Proposal No. 3 — The Adjournment Proposal — to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, if the parties are not able to consummate the Business Combination (the “Adjournment Proposal”).

We also will transact any other business as may properly come before the special meeting or any adjournment or postponement thereof.

The items of business listed above are more fully described elsewhere in the proxy statement/prospectus. Whether or not you intend to attend the special meeting, we urge you to read the attached proxy statement/prospectus in its entirety, including the annexes and accompanying financial statements, before voting. IN PARTICULAR, WE URGE YOU TO CAREFULLY READ THE SECTION IN THE PROXY STATEMENT/PROSPECTUS ENTITLED “RISK FACTORS.”

Only holders of record of shares of Class A Common Stock of SWAG, par value $0.0001 per share, or shares of Class B Common Stock of SWAG, par value $0.0001 per share (collectively, “SWAG Common Stock”), at the close of business on                 , 2021 (the “record date”) are entitled to notice of the special meeting and to vote and have their votes counted at the special meeting and any adjournments or postponements of the special meeting.

After careful consideration, SWAG’s board of directors has determined that each of the proposals listed is fair to and in the best interests of SWAG and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” each of the proposals set forth above. When you consider the recommendations of SWAG’s board of directors, you should keep in mind that SWAG’s directors and officers may have interests in the Business Combination that conflict with, or are different from, your interests as a stockholder of SWAG. See the section entitled “Proposal One — The Business Combination ProposalInterests of Certain Persons in the Business Combination.”


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The closing of the Business Combination is conditioned on approval of the Business Combination Proposal and the Charter Proposals. If either of these proposals is not approved and the applicable closing condition in the Business Combination Agreement is not waived, the remaining proposals will not be presented to stockholders for a vote. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus.

All SWAG stockholders are cordially invited to attend the special meeting, which will be held virtually over the Internet at https://                . To ensure your representation at the special meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If you are a holder of record of SWAG Common Stock on the record date, you may also cast your vote at the special meeting. If your SWAG Common Stock is held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting, obtain a proxy from your broker or bank.

A complete list of SWAG stockholders of record entitled to vote at the special meeting will be available for ten days before the special meeting at the principal executive offices of SWAG for inspection by stockholders during business hours for any purpose germane to the special meeting.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting virtually or not, please complete, sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in street name or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly voted and counted.

If you have any questions or need assistance voting your SWAG Common Stock, please contact                 . Questions can also be sent by email to                . This notice of special meeting is and the proxy statement/prospectus relating to the Business Combination will be available at https://                .

Thank you for your participation. We look forward to your continued support.

By Order of the Board of Directors

Jonathan S. Huberman

Chief Executive Officer, Chief Financial Officer and

Chairman of the Board of Director

            , 2021

IF YOU RETURN YOUR SIGNED PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.

ALL HOLDERS (THE “PUBLIC STOCKHOLDERS”) OF SHARES OF CLASS A STOCK ISSUED IN SWAG’S INITIAL PUBLIC OFFERING (THE “PUBLIC SHARES”) HAVE THE RIGHT TO HAVE THEIR PUBLIC SHARES REDEEMED FOR CASH IN CONNECTION WITH THE PROPOSED BUSINESS COMBINATION. PUBLIC STOCKHOLDERS ARE NOT REQUIRED TO AFFIRMATIVELY VOTE FOR OR AGAINST THE BUSINESS COMBINATION PROPOSAL, TO VOTE ON THE BUSINESS COMBINATION PROPOSAL AT ALL, OR TO BE HOLDERS OF RECORD ON THE RECORD DATE IN ORDER TO HAVE THEIR SHARES REDEEMED FOR CASH.

THIS MEANS THAT ANY PUBLIC STOCKHOLDER HOLDING PUBLIC SHARES MAY EXERCISE REDEMPTION RIGHTS REGARDLESS OF WHETHER THEY ARE EVEN ENTITLED TO VOTE ON THE BUSINESS COMBINATION PROPOSAL.

TO EXERCISE REDEMPTION RIGHTS, HOLDERS MUST TENDER THEIR STOCK TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY, SWAG’S TRANSFER AGENT, NO LATER THAN TWO (2) BUSINESS DAYS PRIOR TO THE SPECIAL MEETING. YOU MAY


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TENDER YOUR STOCK BY EITHER DELIVERING YOUR STOCK CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DEPOSIT WITHDRAWAL AT CUSTODIAN SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “SPECIAL MEETING OF SWAG STOCKHOLDERS — REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.


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TABLE OF CONTENTS

 

ABOUT THIS PROXY STATEMENT/PROSPECTUS

     ii  

INDUSTRY AND MARKET DATA

     iii  

TRADEMARKS, TRADE NAMES AND SERVICE MARKS

     iv  

SELECTED DEFINITIONS

     v  

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE SPECIAL MEETING

     vii  

SUMMARY

     1  

RISK FACTORS

     13  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS; MARKET, RANKING AND OTHER INDUSTRY DATA

     56  

SPECIAL MEETING OF SWAG STOCKHOLDERS

     59  

PROPOSAL ONE—THE BUSINESS COMBINATION PROPOSAL

     66  

PROPOSAL TWO—THE CHARTER PROPOSALS

     85  

PROPOSAL THREE—THE ADJOURNMENT PROPOSAL

     86  

THE BUSINESS COMBINATION AGREEMENT

     87  

AGREEMENTS ENTERED INTO IN CONNECTION WITH THE BUSINESS COMBINATION AGREEMENT

     97  

INFORMATION ABOUT THE COMPANIES

     100  

SWAG’s BUSINESS

     101  

OTONOMO’S BUSINESS

     108  

SWAG’s MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     120  

OTONOMO’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     124  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     137  

DIRECTOR AND EXECUTIVE COMPENSATION

     148  

MANAGEMENT FOLLOWING THE BUSINESS COMBINATION

     154  

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

     164  

CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     168  

CERTAIN MATERIAL ISRAELI TAX CONSIDERATIONS

     183  

DESCRIPTION OF OTONOMO ORDINARY SHARES

     190  

DESCRIPTION OF OTONOMO WARRANTS

     199  

COMPARISON OF RIGHTS OF OTONOMO SHAREHOLDERS AND SWAG STOCKHOLDERS

     203  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF SWAG, OTONOMO AND THE COMBINED COMPANY

     213  

FUTURE SHAREHOLDER PROPOSALS AND NOMINATIONS

     221  

APPRAISAL RIGHTS

     221  

STOCKHOLDER COMMUNICATIONS

     222  

LEGAL MATTERS

     223  

EXPERTS

     223  

DELIVERY OF DOCUMENTS TO SHAREHOLDERS

     223  

ENFORCEABILITY OF CIVIL LIABILITY

     223  

TRANSFER AGENT AND REGISTRAR

     224  

WHERE YOU CAN FIND MORE INFORMATION

     224  

INDEX TO FINANCIAL STATEMENTS

     F-1  

ANNEX A—BUSINESS COMBINATION AGREEMENT

     A-1  

 

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms a part of a registration statement on Form F-4 filed with the Securities and Exchange Commission, or SEC, by Otonomo, constitutes a prospectus of Otonomo under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the Otonomo ordinary shares to be issued to SWAG stockholders in connection with the Business Combination, as well as the warrants to acquire Otonomo ordinary shares to be issued to SWAG warrant holders and the Otonomo ordinary shares underlying such warrants. This document also constitutes a proxy statement of SWAG under Section 14(a) of the Exchange Act, and the rules thereunder, and a notice of meeting with respect to the special meeting of SWAG stockholders to consider and vote upon the proposals to adopt the Business Combination Agreement, to adopt the Charter Proposals (as defined herein) and to adjourn the meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to adopt the Business Combination Agreement.

Unless otherwise indicated or the context otherwise requires, all references in this proxy statement/prospectus to the terms “Otonomo” and the “Company” refer to Otonomo Technologies Ltd., together with its subsidiaries. All references in this proxy statement/prospectus to “SWAG” refer to Software Acquisition Group Inc. II.

 

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INDUSTRY AND MARKET DATA

Unless otherwise indicated, information contained in this proxy statement/prospectus concerning Otonomo’s industry and the regions in which it operates, including Otonomo’s general expectations and market position, market opportunity, market share and other management estimates, is based on information obtained from various independent publicly available sources and other industry publications, surveys and forecasts. Otonomo has not independently verified the accuracy or completeness of any third-party information. Similarly, internal surveys, industry forecasts and market research, which Otonomo believes to be reliable based upon its management’s knowledge of the industry, have not been independently verified. While Otonomo believes that the market data, industry forecasts and similar information included in this proxy statement/prospectus are generally reliable, such information is inherently imprecise. In addition, assumptions and estimates of Otonomo’s future performance and growth objectives and the future performance of its industry and the markets in which it operates are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those discussed under the headings “Risk Factors,” “Cautionary Statement Regarding Forward-Looking Statements; Market, Ranking and Other Industry Data” and “Otonomos Managements Discussion and Analysis of Financial Condition and Results of Operations” in this proxy statement/prospectus.

 

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TRADEMARKS, TRADE NAMES AND SERVICE MARKS

This document contains references to trademarks, trade names and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service marks referred to in this proxy statement/prospectus may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

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SELECTED DEFINITIONS

 

Aggregate Transaction Proceeds    means an amount equal to the aggregate cash proceeds available for release to SWAG from SWAG’s trust account in connection with the transactions contemplated by the Business Combination Agreement (after, for the avoidance of doubt, giving effect to all of the SPAC Redemptions (as defined herein) but before release of any other funds) plus the aggregate purchase price under all subscription agreements entered into in respect of the PIPE Investment.
Ancillary Documents    means the Sponsor Letter Agreement (as defined herein), the Subscription Agreements (as defined herein), the Share Purchase Agreement (as defined herein), the Support Agreements (as defined herein), the Registration Rights Agreement (as defined herein), the Confidentiality and Lockup Agreement (as defined herein), the Amended and Restated Warrant Agreement (as defined herein), and each other agreement, document, instrument and/or certificate contemplated by the Business Combination Agreement executed or to be executed in connection with the transactions contemplated thereby.
Company Equity Award    means, as of any determination time, each option to purchase Otonomo ordinary shares that is outstanding and unexercised, whether granted under a Company Equity Plan or otherwise, and each other award to any current or former director, manager, officer, employee, individual independent contractor or other service provider of Otonomo or its subsidiaries of rights of any kind to receive any equity security of Otonomo or its subsidiaries under any Company Equity Plan or otherwise that is outstanding.
Company Equity Plan    means (a) Otonomo’s 2016 Share Award Plan and the 2016 U.S. Sub Plan thereunder and (b) each other plan that provides for the award to any current or former director, manager, officer, employee, individual independent contractor or other service provider of the Company or any of its subsidiaries (each, a “Group Company” and collectively “Group Companies”) of rights of any kind to receive Equity Securities of any Group Company or benefits measured in whole or in part by reference to Equity Securities of any Group Company.
DGCL    means the Delaware General Corporation Law, as amended.
Exchange Act    means the Securities Exchange Act of 1934, as amended.
Founder Shares    means the 4,312,500 shares of Class B common stock, par value $0.0001 per share, of SWAG held by the Sponsor, which were acquired for an aggregate purchase price of $25,000 prior to the SWAG IPO.
GAAP    means accounting principles generally accepted in the United States of America.

 

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Otonomo preferred shares    means, collectively, the Series Seed preferred shares of Otonomo, no par value (“Series Seed Preferred Shares”), series A convertible preferred shares of Otonomo, no par value (“Series A Preferred Shares”), series B convertible preferred shares of Otonomo, no par value (“Series B Preferred Shares”), series C convertible preferred shares of Otonomo, no par value (“Series C Preferred Shares”) and series C-1 convertible preferred shares of Otonomo, no par value (“Series C-1 Preferred Shares”).
Otonomo warrants    means the warrants to be received by warrant holders of SWAG in exchange for SWAG warrants pursuant to the Business Combination Agreement.
PCAOB    means the Public Company Accounting Oversight Board.
private placement warrants    means the warrants SWAG sold to Sponsor via private placement in connection with the SWAG IPO.
Securities Act    means the Securities Act of 1933, as amended.
Sponsor    means Software Acquisition Holdings II LLC, a Delaware limited liability company.
SWAG IPO    means the initial public offering of SWAG, which was consummated on September 17, 2020.
Transactions    means the transactions contemplated by the Business Combination Agreement and the Ancillary Documents.
units    means the 15,000,000 units sold as part of the SWAG IPO and the 2,250,000 units sold to the underwriter following the exercise of its over-allotment option, each consisting of one share of Class A common stock and one-half of one redeemable SWAG warrant.

 

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QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND

THE SPECIAL MEETING

The questions and answers below highlight only selected information set forth elsewhere in this proxy statement/prospectus and only briefly address some commonly asked questions about the special meeting and the proposals to be presented at the special meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that may be important to SWAG stockholders. SWAG stockholders are urged to carefully read this entire proxy statement/prospectus, including the annexes and the other documents referred to herein, to fully understand the proposed Business Combination and the voting procedures for the special meeting.

Q: Why am I receiving this proxy statement/prospectus?

A: SWAG and Otonomo have agreed to a business combination under the terms of the Business Combination Agreement that is described in this proxy statement/prospectus. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A, and SWAG encourages its stockholders to read it in its entirety. SWAG’s stockholders are being asked to consider and vote upon a proposal to approve the Business Combination Agreement, which, among other things, provides for Merger Sub to be merged with and into SWAG with SWAG being the surviving corporation in the Business Combination and becoming a wholly owned subsidiary of Otonomo, and the other Transactions contemplated by the Business Combination Agreement. See “Proposal One — The Business Combination Proposal.”

Q: Are there any other matters being presented to stockholders at the meeting?

A: In addition to voting on the Business Combination Proposal, the stockholders of SWAG will vote on the following proposals:

 

   

To approve the following material differences between the SWAG Charter and the Otonomo Articles to be effective upon the consummation of the Business Combination: (i) the name of the new public entity will be “Otonomo Technologies Ltd.” as opposed to “Software Acquisition Group Inc. II”; (ii) the Otonomo Articles will provide for one class of ordinary shares as opposed to the two classes of SWAG Common Stock provided for in the SWAG Charter; (iii) Otonomo’s corporate existence is perpetual as opposed to SWAG’s corporate existence terminating if a business combination is not consummated within a specified period of time; and (iv) the Otonomo Articles will not include the various provisions applicable only to special purpose acquisition corporations that the SWAG Charter contains. See the section of this proxy statement/prospectus titled “Proposal Two — The Charter Proposals.”

 

   

To consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, if the parties are not able to consummate the Business Combination for any reason. See the section of this proxy statement/prospectus titled “Proposal Three — The Adjournment Proposal.”

SWAG will hold the special meeting of its stockholders to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the proposed Business Combination and the other matters to be acted upon at the special meeting. Stockholders should read it carefully.

The vote of stockholders is important. Regardless of how many shares you own, you are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.

Q: Why is SWAG providing stockholders with the opportunity to vote on the Business Combination?

A: Pursuant to the SWAG Charter, SWAG is required to provide stockholders with an opportunity to have their shares of SWAG Common Stock redeemed for cash, either through a stockholder meeting or tender offer. Due to the structure of the Transactions, SWAG is providing this opportunity through a stockholder vote.

 

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Q: Why am I receiving this proxy statement/prospectus if I only own SWAG warrants?

A: The SWAG warrants will become exercisable following the Business Combination and will entitle holders to purchase Otonomo ordinary shares, as described in more detail herein. This proxy statement/prospectus includes important information about Otonomo and the business of Otonomo and its subsidiaries following the closing of the Business Combination. Because holders of SWAG warrants will be entitled to purchase Otonomo ordinary shares after the closing of the Business Combination, we urge you to read the information contained in this proxy statement/prospectus carefully.

Q: What will happen to SWAG’s securities upon consummation of the Business Combination?

A: SWAG’s units, Class A Stock and the SWAG warrants are currently listed on Nasdaq under the symbols SAIIU, SAII and SAIIW, respectively. SWAG’s securities will cease trading upon consummation of the Business Combination. If you own SWAG units, immediately prior to the consummation of the Business Combination, your SWAG units will split into the underlying shares of Class A stock and warrants, and you will receive Otonomo ordinary shares in exchange for your Class A stock as described herein. Otonomo intends to apply for listing of the Otonomo ordinary shares and Otonomo warrants on Nasdaq under the proposed symbols “OTMO” and “OTMOW,” respectively, to be effective upon the consummation of the Business Combination. While trading on Nasdaq is expected to begin on the first business day following the consummation of the Business Combination, there can be no assurance that Otonomo’s securities will be listed on Nasdaq or that a viable and active trading market will develop. See “Risk FactorsRisks Related to the Combined Company Following the Business Combination” for more information.

Q: Why is SWAG proposing the Business Combination?

A: SWAG was organized to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses or entities.

On September 17, 2020, SWAG consummated the SWAG IPO of units, with each unit consisting of one share of its Class A Stock and one-half of one SWAG warrant, raising total gross proceeds of approximately $150,000,000. Simultaneously with the closing of the SWAG IPO, SWAG consummated the sale of 4,750,000 private placement warrants at a price of $1.00 per warrant in a private placement to Sponsor, generating gross proceeds of $4,750,000. On September 24, 2020, B. Riley Securities, Inc., the underwriter in the SWAG IPO (the “underwriter”) exercised its over-allotment option in full. As such, the Company consummated the sale of an additional 2,250,000 units to the underwriter, at $10.00 per unit, and the sale of an additional 450,000 private placement warrants to the Sponsor, at $1.00 per private placement warrant, raising total gross proceeds of $22,950,000 and bringing the aggregate proceeds held in the trust account (the “Trust Account”) to $172,500,000. Since the SWAG IPO, SWAG’s activity has been limited to the evaluation of business combination candidates.

SWAG believes Otonomo is a company with an appealing market opportunity and growth profile, a strong position in its industry and a compelling valuation. As a result, SWAG believes that the Business Combination will provide SWAG stockholders with an opportunity to participate in the ownership of a company with significant growth potential. See the section entitled “Proposal One — The Business Combination ProposalSWAGs Board of Directors Reasons for the Business Combination and Recommendation of the Board of Directors.”

Q: Did SWAG’s board of directors obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

A: No. SWAG’s board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. Accordingly, investors will be relying solely on the judgment of SWAG’s board of directors and its advisors in valuing Otonomo and will be assuming the risk that

 

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the SWAG board of directors may not have properly valued the business. However, SWAG’s officers and directors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and have substantial experience with mergers and acquisitions. Furthermore, in analyzing the Business Combination, SWAG’s board of directors conducted significant due diligence on Otonomo. Based on the foregoing, SWAG’s board of directors concluded that its members’ collective experience and backgrounds, together with the experience and sector expertise of SWAG’s advisors, enabled it to make the necessary analyses and determinations regarding the Business Combination, including that the Business Combination was fair from a financial perspective to its stockholders and that Otonomo’s fair market value was at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the agreement to enter into the Business Combination. There can be no assurance, however, that SWAG’s board of directors was correct in its assessment of the Business Combination. For a complete discussion of the factors utilized by SWAG’s board of directors in approving the Business Combination, see the section entitled “Proposal One — The Business Combination Proposal.”

Q: Do I have redemption rights?

A: If you are a holder of public shares, you have the right to demand that SWAG redeem such shares for a pro rata portion of the cash held in SWAG’s Trust Account, calculated as of two business days prior to the consummation of the Business Combination. We sometimes refer to these rights to demand redemption of the public shares as “redemption rights.”

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of his or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption rights with respect to 15% or more of the public shares. Accordingly, all public shares in excess of 15% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be converted.

Under the SWAG Charter, the Business Combination may not be consummated if SWAG has net tangible assets of less than $5,000,001 either immediately prior to or upon consummation of the Business Combination after taking into account the redemption for cash of all public shares properly demanded to be redeemed by holders of public shares.

Q: How do I exercise my redemption rights?

A: A holder of public shares may exercise redemption rights regardless of whether it votes for or against the Business Combination Proposal or does not vote on such proposal at all, or if it is a holder of public shares on the record date. If you are a holder of public shares and wish to exercise your redemption rights, you must demand that SWAG convert your public shares into cash and deliver your public shares to SWAG’s transfer agent electronically using The Depository Trust Company’s Deposit/Withdrawal at Custodian (“DWAC”) System no later than two (2) business days prior to the special meeting. Any holder of public shares seeking redemption will be entitled to a full pro rata portion of the amount then in the Trust Account (which, for illustrative purposes, was $                , or $                 per share, as of the record date), less any owed but unpaid taxes on the funds in the Trust Account. Such amount will be paid promptly upon consummation of the Business Combination. There are currently no owed but unpaid income taxes on the funds in the Trust Account.

Any request for redemption, once made by a holder of public shares, may be withdrawn at any time prior to the time the vote is taken with respect to the Business Combination Proposal at the special meeting. If you deliver your shares for redemption to SWAG’s transfer agent and later decide prior to the special meeting not to elect redemption, you may request that SWAG’s transfer agent return the shares (physically or electronically). You may make such request by contacting SWAG’s transfer agent at the address listed at the end of this section.

 

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Any written demand of redemption rights must be received by SWAG’s transfer agent at least two (2) business days prior to the vote taken on the Business Combination Proposal at the special meeting. No demand for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to the transfer agent.

If you are a holder of public shares (including through the ownership of SWAG units) and you exercise your redemption rights, it will not result in the loss of any SWAG warrants that you may hold (including those contained in any units you hold). Your whole warrants will become exercisable to purchase one Otonomo ordinary share following consummation of the Business Combination.

Q: Do I have appraisal rights if I object to the proposed Business Combination?

A: Under Section 262 of the General Corporation Law of the State of Delaware, the holders of SWAG Common Stock and SWAG warrants will not have appraisal rights in connection with the Business Combination.

Q: What happens to the funds deposited in the Trust Account after consummation of the Business Combination?

A: The net proceeds of the SWAG IPO, together with the full exercise of the over-allotment option by the underwriter and a portion of the amount raised from the private placement of SWAG warrants for a total of $172,500,000, was placed in the Trust Account immediately following the SWAG IPO. After consummation of the Business Combination, the funds in the Trust Account will be used to pay, on a pro rata basis, holders of the public shares who exercise redemption rights, to pay fees and expenses incurred in connection with the Business Combination (including aggregate fees of approximately $6.04 million to the underwriter of the SWAG IPO as deferred underwriting commissions) and for working capital and general corporate purposes.

Q: What happens if a substantial number of public stockholders vote in favor of the Business Combination Proposal and exercise their redemption rights?

A: SWAG’s public stockholders may vote in favor of the Business Combination and still exercise their redemption rights, although they are not required to vote in any way to exercise such redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the Trust Account and the number of public stockholders are substantially reduced as a result of redemptions by public stockholders. To the extent that there are fewer public shares and public stockholders, the trading market for Otonomo ordinary shares may be less liquid than the market was for SWAG prior to the Transactions and Otonomo may not be able to meet the listing standards of a national securities exchange. In addition, to the extent of any redemptions, fewer funds from the Trust Account would be available to Otonomo to be used in its business following the consummation of the Business Combination.

Q: How will the level of redemptions by holders of SWAG’s Class A Stock affect my ownership of Otonomo upon the closing of the Business Combination?

A: Because the Business Combination is structured as an acquisition of SWAG by Otonomo, all Otonomo ordinary shares outstanding prior to the Business Combination (after giving effect to the Stock Split) will remain outstanding after the Business Combination. Accordingly, the total number of Otonomo ordinary shares to be outstanding at the closing of the Business Combination (and your relative ownership levels) will only be affected by the number of shares of Class A Stock that are redeemed in connection with the Business Combination.

Furthermore, to the extent that holders of Class A Stock redeem their shares of Class A Stock in connection with the Business Combination, their SWAG warrants will remain issued and outstanding notwithstanding the redmption of their Class A Stock. Based on the trading price of the SWAG warrants of $             per SWAG warrant as of             , 2021, the SWAG warrants owned by the holders of Class A Stock were worth

 

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approximately $             million in the aggregate, and the SWAG warrants owned by the Sponsor and its affiliates were worth approximately $             million. Following the consummation of the Business Combination and pursuant to the terms of the Amended and Restated Warrant Agreement, each whole Otonomo warrant will be exercisable for one Otonomo ordinary share.

The table below shows the relative ownership levels of holders of Otonomo ordinary shares following the Business Combination under varying redemption scenarios and assuming that all warrants to purchase Otonomo ordinary shares are exercised and that the Stock Split has occurred.

 

    Assuming No
Redemptions
    Assuming 25%
Redemptions
    Assuming 50%
Redemptions
    Assuming 75%
Redemptions
    Assuming
Maximum
Redemptions(1)
 
    Number of
Ordinary
Shares
    %     Number of
Ordinary
Shares
    %     Number of
Ordinary
Shares
    %     Number of
Ordinary
Shares
    %     Number of
Ordinary
Shares
    %  

Current Class A Stockholders

    17,250,000       11.9       12,937,500       9.2       8,625,000       6.3       4,312,500       3.3       974,970       0.8  

Sponsor and its
affiliates –
Class B Stock

    4,312,500       3.0       4,312,500       3.1       4,312,500       3.2       4,312,500       3.3       4,312,500       3.3  

Sponsor and its
affiliates – Warrants

    5,200,000       3.6       5,200,000       3.7       5,200,000       3.8       5,200,000       3.9       5,200,000       4.0  

Current Company Ordinary Shareholders

    92,576,550       63.8       92,576,550       65.7       92,576,550       67.8       92,576,550       70.0       92,576,550       71.8  

PIPE Investors

    17,250,000       11.9       17,250,000       12.2       17,250,000       12.6       17,250,000       13.0       17,250,000       13.4  

Public Warrants(2)

    8,625,000       5.9       8,625,000       6.1       8,625,000       6.3       8,625,000       6.5       8,625,000       6.7  

Total

    145,214,050       100.0       140,901,550       100.0       136,589,050       100.0       132,276,550       100.0       128,939,020       100.0  

 

(1)

Assumes that SWAG stockholders holding approximately 16,275,030 shares of Class A Stock exercise their redemption rights for approximately $162.8 million of funds in SWAG’s trust account. See “Unaudited Pro Forma Condensed Combined Financial Information.”

(2)

Other than in the no redemptions scenario, includes warrants held by former holders of Class A Stock that exercised their redemption rights.

Q: What happens if the Business Combination is not consummated?

A: If SWAG does not complete the Business Combination with Otonomo for whatever reason, SWAG would search for another target business with which to complete a business combination. If SWAG does not complete the Business Combination with Otonomo or another business combination by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter), SWAG must redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to an amount then held in the Trust Account (net of taxes payable and less up to $100,000 of interest to pay dissolution expenses) divided by the number of outstanding public shares. The Sponsor and SWAG’s officers and directors do not have redemption rights with respect to their Founder Shares in the event a business combination is not effected in the required time period, and, accordingly, their Founder Shares will be worthless. Additionally, in the event of such liquidation, there will be no distribution with respect to SWAG’s outstanding warrants. Accordingly, the warrants will expire worthless.

Q: How do the Sponsor and the officers and directors of SWAG intend to vote on the proposals?

A: The Sponsor, as well as SWAG’s officers and directors, beneficially own and are entitled to vote an aggregate of approximately 20.0% of the outstanding SWAG Common Stock. These holders have agreed to vote their shares in favor of the Business Combination Proposal. These holders have also indicated that they intend to vote their shares in favor of all other proposals being presented at the meeting. In addition to the shares of SWAG Common Stock

 

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held by the Sponsor and SWAG’s officers and directors, SWAG would need (a) 6,468,751 shares, or approximately 37.5%, of the 17,250,000 public shares to be voted in favor of the Business Combination Proposal and other proposals in order for them to be approved (assuming all outstanding shares are voted on each proposal), or (b) 1,078,126 shares, or approximately 6.3%, of the 17,250,000 public shares to be voted in favor of the Business Combination Proposal and other proposals in order for them to be approved (assuming the minimum number of shares necessary to establish a quorum are voted on each proposal).

Q: What interests do the Sponsor and the current officers and directors of SWAG have in the Business Combination?

A: In considering the recommendation of SWAG’s board of directors to vote in favor of the Business Combination, stockholders should be aware that, aside from their interests as stockholders, the Sponsor and certain of SWAG’s directors and officers have interests in the Business Combination that are different from, or in addition to, those of other stockholders generally. SWAG’s directors were aware of and considered these interests, among other matters, in evaluating the Business Combination, in recommending to stockholders that they approve the Business Combination and in agreeing to vote their shares in favor of the Business Combination. Stockholders should take these interests into account in deciding whether to approve the Business Combination. These interests include, among other things, the fact that:

 

   

If the Business Combination with Otonomo or another business combination is not consummated by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG charter), SWAG will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and SWAG’s board of directors, dissolving and liquidating. In such event, the Founder Shares held by the Sponsor, which were acquired for an aggregate purchase price of $25,000 prior to the SWAG IPO, would be worthless because the holders are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of $                 based upon the closing price of $                 per share on Nasdaq on                 , 2021. On the other hand, if the Business Combination is consummated, each outstanding share of SWAG Common Stock will be converted into one Otonomo ordinary share. As a result of the nominal price of $0.006 per share paid by the Sponsor compared to the recent market price of the Class A Stock, the Sponsor and its affiliates are likely to earn a positive rate of return on their investments in the Founder Shares even if holders of Class A Stock experience a negative rate of return on their investments in the Class A Stock.

 

   

The Sponsor purchased 5,200,000 private placement warrants from SWAG for $1.00 per private warrant. This purchase took place on a private placement basis simultaneously with the consummation of the SWAG IPO and the subsequent exercise of the underwriter’s overallotment option. All of the proceeds SWAG received from these purchases were placed in the Trust Account. Such private placement warrants had an aggregate market value of $                 based upon the closing price of $                 per warrant on Nasdaq on                 , 2021. The private placement warrants will become worthless if SWAG does not consummate a business combination by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter). On the other hand, if the Business Combination is consummated, each outstanding private placement warrant will be exchanged for one warrant of Otonomo, assuming that the stock split has been effected.

 

   

If SWAG is unable to complete a business combination within the required time period, the Sponsor will be liable under certain circumstances described herein to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by SWAG for services rendered or contracted for or products sold to SWAG. If SWAG consummates a business combination, on the other hand, SWAG will be liable for all such claims.

 

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The Sponsor and SWAG’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on SWAG’s behalf, such as identifying and investigating possible business targets and business combinations. However, if SWAG fails to consummate a business combination within the required period, they will not have any claim against the Trust Account for reimbursement. Accordingly, SWAG may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter). As of the record date, the Sponsor and SWAG’s officers and directors and their affiliates had incurred approximately $                  of unpaid reimbursable expenses.

 

   

The Business Combination Agreement provides for the continued indemnification of SWAG’s current directors and officers and the continuation of directors and officers liability insurance covering SWAG’s current directors and officers.

 

   

SWAG’s Sponsor, officers and directors (or their affiliates) may make loans from time to time to SWAG to fund certain capital requirements. On June 16, 2020, the Sponsor agreed to loan SWAG an aggregate of up to $300,000 to cover expenses related to the SWAG IPO pursuant to a promissory note that was repaid in full on September 22, 2020. Additional loans may be made after the date of this proxy statement/prospectus. If the Business Combination is not consummated, the loans will not be repaid and will be forgiven except to the extent there are funds available to SWAG outside of the Trust Account.

 

   

Jonathan Huberman will be a member of the board of directors of Otonomo following the closing of the Business Combination and, therefore, in the future Mr. Huberman will receive any cash fees, stock options or stock awards that Otonomo’s board of directors determines to pay to its non-executive directors.

Q: When do you expect the Business Combination to be completed?

A: It is currently anticipated that the Business Combination will be consummated promptly following the SWAG special meeting, which is set for                 , 2021; however, such meeting could be adjourned or postponed to a later date, as described above. The Closing is also subject to the approval of the holders of Otonomo ordinary shares and Otonomo preferred shares, as well as other customary closing conditions. For a description of the conditions for the completion of the Business Combination, see the section entitled “The Business Combination Agreement — Conditions to Closing of the Transactions.”

Q: What do I need to do now?

A: SWAG urges you to carefully read and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the Business Combination will affect you as a stockholder and/or a warrant holder of SWAG. Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.

Q: When and where will the special meeting take place?

A: The special meeting will be held on                 , 2021, at                  a.m., Eastern Time, solely over the Internet by means of a live audio webcast. You may attend the special meeting webcast by accessing the web portal located at https://                 and following the instructions set forth below. Stockholders participating in the special meeting will be able to listen only and will not be able to speak during the webcast. However, in order to maintain the interactive nature of the special meeting, virtual attendees will be able to:

 

   

vote via the web portal during the special meeting webcast; and

 

   

submit questions or comments to SWAG’s directors and officers during the special meeting.

Stockholders may submit questions or comments during the meeting through the special meeting webcast by typing in the “Submit a question” box.

 

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Q: How do I attend the Special Meeting?

A: Due to health concerns stemming from the COVID-19 pandemic and to support the health and well-being of SWAG’s stockholders, the special meeting will be held virtually. To register for and attend the special meeting, please follow these instructions as applicable to the nature of your ownership of SWAG Common Stock:

 

   

Shares Held of Record. If you are a record holder, and you wish to attend the virtual special meeting, go to https://                , enter the control number you received on your proxy card or notice of the meeting and click on the “Click here to register for the online meeting” link at the top of the page. Immediately prior to the start of the special meeting, you will need to log back into the meeting site using your control number.

 

   

Shares Held in Street Name. If you hold your shares in “street” name, which means your shares are held of record by a broker, bank or nominee, and you who wish to attend the virtual special meeting, you must obtain a legal proxy from the stockholder of record and e-mail a copy (a legible photograph is sufficient) of your proxy to proxy@continentalstock.com no later than 72 hours prior to the special meeting. Holders should contact their bank, broker or other nominee for instructions regarding obtaining a proxy. Holders who e-mail a valid legal proxy will be issued a meeting control number that will allow them to register to attend and participate in the special meeting. You will receive an e-mail prior to the meeting with a link and instructions for entering the special meeting. “Street” name holders should contact Continental Stock Transfer on or before                 , 2021.

Stockholders will also have the option to listen to the special meeting by telephone by calling:

 

   

Within the U.S. and Canada: (888) 965-8995 (toll-free)

 

   

Outside of the U.S. and Canada: (415) 655-0243 (standard rates apply)

The passcode for telephone access:                 #. You will not be able to vote or submit questions unless you register for and log in to the special meeting webcast as described above.

Q: How do I vote?

A: If you are a holder of record of SWAG Common Stock on the record date, you may vote by virtually attending the special meeting and submitting a ballot via the special meeting webcast or by submitting a proxy for the special meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in “street name,” you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly voted and counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the virtual special meeting and vote through the web portal, obtain a legal proxy from your broker, bank or nominee.

Q: If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

A: Your broker, bank or nominee can vote your shares without receiving your instructions on “routine” proposals only. Your broker, bank or nominee cannot vote your shares with respect to “non-routine” proposals unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee.

The Charter Proposal to approve the name of the public company being “Otonomo Technologies Ltd.” is considered a routine proposal. Accordingly, your broker, bank or nominee may vote your shares with respect to such proposal without receiving voting instructions.

 

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The Business Combination Proposal, each other Charter Proposal, and the Adjournment Proposal are non-routine proposals. Accordingly, your broker, bank or nominee may not vote your shares with respect to these proposals unless you provide voting instructions.

Q: May I change my vote after I have mailed my signed proxy card?

A: Yes. Stockholders of record may send a later-dated, signed proxy card to SWAG’s transfer agent at the address set forth below so that it is received prior to the vote at the special meeting or virtually attend the special meeting and submit a ballot through the web portal during the special meeting webcast. Stockholders of record also may revoke their proxy by sending a notice of revocation to SWAG’s transfer agent, which must be received prior to the vote at the special meeting. If you hold your shares in “street name,” you should contact your broker, bank or nominee to change your instructions on how to vote. If you hold your shares in “street name” and wish to virtually attend the special meeting and vote through the web portal, you must obtain a legal proxy from your broker, bank or nominee.

Q: What constitutes a quorum for the special meeting?

A: A quorum is the minimum number of shares of SWAG Common Stock that must be present to hold a valid meeting. A quorum will be present at the SWAG special meeting if a majority of the voting power of the issued and outstanding shares of SWAG Common Stock entitled to vote at the meeting are represented at the virtual special meeting or by proxy. Abstentions and broker non-votes will count as present for the purposes of establishing a quorum. The Class A Stock and Class B Stock are entitled vote together as a single class on all matters to be considered at the special meeting.

Q: What stockholder vote thresholds are required for the approval of each proposal brought before the special meeting?

 

   

Business Combination Proposal — The approval of the Business Combination Proposal will require the affirmative vote of the holders of a majority of the votes cast by the then outstanding shares of SWAG Common Stock present and entitled to vote at the special meeting. Abstentions will have no effect on the Business Combination Proposal. Brokers are not entitled to vote on the Business Combination Proposal absent voting instructions from the beneficial holder and, consequently, broker non-votes will have no effect on the Business Combination Proposal. The Transactions will not be consummated if SWAG has less than $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act) either immediately prior to or upon consummation of the Transactions.

 

   

Charter Proposals — The approval of each of the charter proposals will require the affirmative vote of the holders of a majority of the outstanding SWAG Common Stock. Abstentions will have the same effect as a vote “against” the Charter Proposals. The Charter Proposal to approve “Otonomo Technologies Ltd.” as the name of the new public entity is a routine proposal and, accordingly, your broker, bank or nominee may vote your shares with respect to such proposal without receiving voting instructions. Consequently, there should be no broker non-votes with respect to such proposal. Each other Charter Proposal is considered a non-routine proposal, and, accordingly, brokers are not entitled to vote on those proposals without receiving voting instructions, and broker non-votes will have the same effect as a vote “against” each such proposal.

 

   

Adjournment Proposal — The approval of the Adjournment Proposal will require the affirmative vote of the holders of a majority of the shares of SWAG Common Stock present and entitled to vote at the special meeting. Abstentions will have the same effect as a vote “against” on the Adjournment Proposal. Broker non-votes will have no effect on the Adjournment Proposal.

 

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Q: What happens if I fail to take any action with respect to the special meeting?

A: If you fail to take any action with respect to the meeting and the Business Combination is approved by the SWAG stockholders and consummated, you will become a shareholder and/or warrant holder of Otonomo.

If you fail to take any action with respect to the special meeting and the Business Combination is not approved, you will continue to be a stockholder and/or warrant holder of SWAG, as applicable, and SWAG will continue to search for another target business with which to complete an initial business combination. If SWAG does not complete an initial business combination by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter), SWAG must cease all operations except for the purpose of winding up, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to an amount then held in the Trust Account (net of taxes payable and less up to $100,000 of interest to pay dissolution expenses), and as promptly as reasonably possible following such redemption, subject to the approval of SWAG’s remaining stockholders and its board of directors, dissolve and liquidate.

Q: What should I do with my share and/or warrant certificates?

A: Warrant holders and those stockholders who do not elect to have their shares of SWAG Common Stock redeemed for a pro rata share of the Trust Account should wait for instructions from SWAG’s transfer agent regarding what to do with their certificates. SWAG stockholders who exercise their redemption rights must deliver their share certificates to SWAG’s transfer agent (either physically or electronically) no later than two (2) business days prior to the special meeting as described above.

Upon consummation of the Transactions, the SWAG warrants, by their terms, will entitle holders to purchase shares of Otonomo. Therefore, warrant holders need not deliver their warrants to SWAG or Otonomo at that time.

Q: What should I do if I receive more than one set of voting materials?

A: Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your shares of SWAG Common Stock.

Q: Who can help answer my questions?

A: If you have questions about the Business Combination or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact the proxy solicitor at                 .

Tel:                 

Attn:                 

Email:                 

You may also obtain additional information about SWAG from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of public shares and you intend to seek redemption of your shares, you will need to deliver your shares (either physically or electronically) to SWAG’s transfer agent at the address below at least two (2) business days prior to the vote at the special meeting. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Mr. Mark Zimkind

Continental Stock Transfer & Trust Company

1 State Street, 30th Floor

New York, New York 10004

E-mail: mzimkind@continentalstock.com

 

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SUMMARY

This summary highlights selected information from this proxy statement/prospectus. It may not contain all of the information that is important to you. You should carefully read the entire proxy statement/prospectus and the other documents referred to in this proxy statement/prospectus, including the annexes, to fully understand the Business Combination Agreement, the Business Combination and the other matters being considered at the special meeting of SWAG stockholders. For additional information, see “Where You Can Find More Information” beginning on page 224. Each item in this summary refers to the page of this proxy statement/prospectus on which that subject is discussed in more detail.

The Parties to the Business Combination

Otonomo Technologies Ltd.

Otonomo is a leading one-stop shop for vehicle data. Since its founding in 2015, Otonomo has built a Vehicle Data Platform (the “Otonomo Vehicle Data Platform”) and marketplace that fuels an ecosystem powered by data from 16 vehicle manufacturer (OEM) agreements, fleets, and other data providers, and enables the licensing of data to more than 100 service providers. The platform securely ingests over 4 billion data points per day from over 40 million connected vehicles worldwide and then reshapes and enriches the data in order to accelerate the time to market for new services that improve the in-and-around car experience. Otonomo’s platform provides OEMs the opportunity to create new revenue streams and facilitates an open ecosystem of services around the vehicle. This enables the utilization of vast amounts of data that vehicles generate daily and that OEMs store and maintain.

The mailing address of Otonomo’s principal executive office is 16 Abba Eban Blvd., Herzliya Pituach 467256, Israel and its telephone number is +(972) 52-432-9955.

Software Acquisition Group Inc. II

SWAG was formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. SWAG was incorporated under the laws of the State of Delaware on June 16, 2020.

On September 17, 2020, SWAG consummated the SWAG IPO of 15,000,000 units, with each unit consisting of one share of Class A Stock and one-half of one redeemable warrant, with each whole warrant entitling the holder to purchase one share of Class A Stock at a price of $11.50 commencing 30 days after the consummation of an initial business combination. Simultaneously with the closing of the SWAG IPO, the Company consummated the sale of 4,750,000 warrants at a price of $1.00 per private placement warrant in a private placement to the Sponsor.

On September 24, 2020, the underwriter exercised its over-allotment option in full. As a result, SWAG consummated the sale of an additional 2,250,000 units to the underwriter, at $10.00 per unit, and the sale of an additional 450,000 private placement warrants to the Sponsor, at $1.00 per private placement warrant.

SWAG’s units, the Class A Stock and the SWAG warrants are listed on the Nasdaq under the symbols SAIIU, SAII and SAIIW, respectively.

The mailing address of SWAG’s principal executive office is 1980 Festival Plaza Drive, Ste. 300, Las Vegas, Nevada 89135, and its telephone number is (310) 991-4982.


 

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Butterbur Merger Sub Inc.

Butterbur Merger Sub Inc. (“Merger Sub”) is a newly formed Delaware corporation and a wholly owned subsidiary of Otonomo. Merger Sub was formed solely for the purpose of effecting the Transactions and has not carried on any activities other than those in connection with the Transactions. The address and telephone number for Merger Sub’s principal executive offices are the same as those for Otonomo.

The Business Combination Agreement (page 87)

The terms and conditions of the merger of Merger Sub with and into SWAG, with SWAG surviving the merger as a wholly owned subsidiary of Otonomo (the “Business Combination”) are contained in the Business Combination Agreement, which is attached as Annex A to this proxy statement/prospectus. We encourage you to read the Business Combination Agreement carefully, as it is the legal document that governs the Business Combination.

Merger Consideration

Prior to the Effective Time, Otonomo intends to effect a stock split to cause the value of the outstanding Otonomo ordinary shares immediately prior to the Effective Time to equal $10.00 per share (the “Stock Split”). The consideration to be issued to securityholders of SWAG will be adjusted if the Stock Split is not effected or if the Stock Split results in a price per Otonomo ordinary share other than $10.00.

The pro forma equity valuation of the Company upon consummation of the Transactions is estimated to be approximately $1,365,000,000. We estimate that, upon consummation of the Transactions (the “Effective Time”), assuming none of SWAG’s public stockholders demand redemption (“SPAC Redemptions”) pursuant to SWAG’s amended and restated certificate of incorporation (“SWAG Charter”), the securityholders of Otonomo will own approximately 70.5% of the outstanding Otonomo ordinary shares and the securityholders of SWAG and certain accredited investors purchasing PIPE Shares and Secondary PIPE Shares will own the remaining Otonomo ordinary shares. We estimate that, at the Effective Time, assuming the maximum number of SWAG’s public stockholders demand redemption of their public shares pursuant to the SWAG Charter, the securityholders of Otonomo will own approximately 80.4% of the outstanding Otonomo ordinary shares, and the securityholders of SWAG and certain accredited investors purchasing PIPE Shares and Secondary PIPE Shares will own the remaining Otonomo ordinary shares.

Pursuant to the Business Combination Agreement and assuming the Stock Split has occurred, at the Effective Time (a) each share of Class A Common Stock of SWAG, par value $0.0001 per share (“Class A Stock”), outstanding immediately prior to the Effective Time will be exchanged for one Otonomo ordinary share, subject to adjustment described herein, (b) each share of Class B Common Stock of SWAG, par value $0.0001 per share (“Class B Stock” and, together with the Class A Stock, the “SWAG Common Stock”), outstanding immediately prior to the Effective Time will be exchanged for one Otonomo ordinary share, (c) each warrant of SWAG entitling the holder to purchase one share of Class A Stock per warrant at a price of $11.50 per share (each, a “SWAG warrant”) outstanding immediately prior to the Effective Time will be assumed by Otonomo and will become a warrant of Otonomo (each, an “Otonomo warrant”), with the number of Otonomo ordinary shares underlying the Otonomo warrants and the exercise price of such Otonomo warrants subject to adjustment in accordance with the Business Combination Agreement in the event of a stock split, share dividend or distribution, or any change in Otonomo’s share capital by reason of any split-up reverse stock split, recapitalization, combination, reclassification, exchange of shares and (d) each outstanding Otonomo preferred share will be converted into one Otonomo ordinary share, in each case less any applicable withholding taxes.


 

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Agreements Entered Into in Connection with the Business Combination Agreement (page 97)

Subscription Agreements

Concurrently with the execution of the Business Combination Agreement, Otonomo entered into subscription agreements (each, a “Subscription Agreement” and collectively, the “Subscription Agreements”) with certain parties subscribing for Otonomo ordinary shares (the “PIPE Investors”), pursuant to which the PIPE Investors have agreed to purchase, and Otonomo has agreed to sell the PIPE Investors, an aggregate of 14,250,000 Otonomo ordinary shares, at a purchase price of $10.00 per share, for an aggregate purchase price of $142,500,000, which price per share and aggregate purchase price assume that Otonomo has effected the Stock Split prior to the Effective Time. The obligations to consummate the transactions contemplated by the Subscription Agreements are conditioned upon, among other things, the consummation of the transactions contemplated by the Business Combination Agreement.

The Subscription Agreements provide for the sale of Otonomo ordinary shares rather than shares of SWAG Class A Stock because the issued and outstanding shares of Class A Stock will be exchanged for Otonomo ordinary shares at the closing of the Business Combination. There are important differences between the rights of holders of shares of Class A Stock and holders of Otonomo ordinary shares. See “Comparison of Rights of Otonomo Shareholders and SWAG Stockholders” for a discussion of the different rights associated with holding Otonomo securities. In addition, the Class A Stock was originally sold in the SWAG IPO as a component of the SWAG units for $10.00 per unit. The SWAG units consist of one share of Class A Stock and one-half of one SWAG warrant. As of                     , 2021, the closing price on Nasdaq of the SWAG units was $             per unit and the closing price of the Class A Stock was $             per share. The purchase price of $10.00 per ordinary share to the PIPE Investors reflects the expected price of the Otonomo ordinary shares after giving effect to the Stock Split. None of the Sponsor or SWAG’s officers, directors or their affiliates is a PIPE Investor.

The Subscription Agreements provide that Otonomo is required to file with the SEC, within twenty (20) business days (the “Subscription Filing Deadline”) after the closing of the Transactions (the “Closing”), a registration statement registering the resale of the shares of Otonomo ordinary shares to be issued to any such investor and to use its commercially reasonable efforts to have such registration statement declared effective as soon as practicable after the filing thereof but no later than the earlier of (i) the 75th calendar day (or 105th calendar day if the SEC notifies Otonomo that it will “review” such registration statement) following the earlier of (A) the filing of the registration statement and (B) the Subscription Filing Deadline and (ii) the 10th business day after the date Otonomo is notified (orally or in writing, whichever is earlier) by the SEC that such registration statement will not be “reviewed” or will not be subject to further review.

Share Purchase Agreement

Concurrently with the execution of the Business Combination Agreement, Otonomo and certain Otonomo shareholders (the “Selling Shareholders”) entered into a share purchase agreement (each, a “Share Purchase Agreement”) with certain purchasers (the “Secondary PIPE Investors”), pursuant to which the Secondary PIPE Investors have agreed to purchase, and the Selling Shareholders have agreed to sell to the Secondary PIPE Investors, an aggregate of 3,000,000 Otonomo ordinary shares, at a purchase price of $10.00 per share, for an aggregate purchase price of $30,000,000, which price per share and aggregate purchase price assume that Otonomo has effected the Stock Split prior to the Effective Time. The obligations to consummate the transactions contemplated by the Share Purchase Agreement are conditioned upon, among other things, the consummation of the transactions contemplated by the Business Combination Agreement.

The Share Purchase Agreement provides that Otonomo is required to file with the SEC, before the Subscription Filing Deadline, a registration statement registering the resale of the shares of Otonomo ordinary shares to be purchased by any such investor and to use its commercially reasonable efforts to have such


 

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registration statement declared effective as soon as practicable after the filing thereof but no later than the earlier of (i) the 75th calendar day (or 105th calendar day if the SEC notifies Otonomo that it will “review” such registration statement) following the earlier of (A) the filing of the registration statement and (B) the Subscription Filing Deadline and (ii) the 10th business day after the date Otonomo is notified (orally or in writing, whichever is earlier) by the SEC that such registration statement will not be “reviewed” or will not be subject to further review.

Support Agreements

Concurrently with the execution of the Business Combination Agreement, Otonomo and SWAG entered into a support agreement (each, a “Support Agreement” and collectively, the “Support Agreements”) with certain shareholders of Otonomo (each, a “Supporting Otonomo Shareholder” and collectively, the “Supporting Otonomo Shareholders”) that collectively hold Otonomo ordinary shares and Otonomo preferred shares representing the majority of the voting power of the Otonomo ordinary shares and the Otonomo preferred shares, on an as-converted basis, and a majority of the voting power of the Otonomo preferred shares. Each Support Agreement provides, among other things, that each Supporting Otonomo Shareholder will (i) vote all Otonomo ordinary shares and Otonomo preferred shares beneficially owned by them in favor of the Business Combination and each other proposal related to the Business Combination on the agenda at the meeting of Otonomo shareholders called to approve the Business Combination, (ii) appear at such shareholder meeting for the purpose of establishing a quorum, (iii) vote all such shares against any action that would reasonably be expected to materially impede, interfere with, delay, postpone, or adversely affect the Transactions and (iv) not transfer, assign, or sell such shares, except to certain permitted transferees, prior to the consummation of the Transactions.

Registration Rights Agreement

Concurrently with the execution of the Business Combination Agreement, Otonomo, certain equityholders of SWAG and certain equityholders of Otonomo entered into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which Otonomo agreed to file a shelf registration statement with respect to the registrable securities defined therein within twenty (20) business days of the Closing. Pursuant to the Registration Rights Agreement, certain Otonomo equityholders of registrable securities may collectively request to sell all or any portion of their registrable securities in an underwritten offering up to four times in any 12-month period and certain former SWAG holders of registrable securities may collectively request to sell all or any portion of their registrable securities in an underwritten offering up to two times in any 12-month period, in each case, so long as the total offering price is reasonably expected to exceed $25,000,000; provided, however, that such Otonomo equityholders and such former SWAG holders may not collectively request more than two underwritten shelf takedowns in any 12-month period. Otonomo also agreed to provide customary “piggyback” registration rights. The Registration Rights Agreement also provides that Otonomo will pay certain expenses relating to such registrations and indemnify the shareholders against certain liabilities.

Confidentiality and Lockup Agreement

Concurrently with the execution of the Business Combination Agreement, certain equityholders of Otonomo and certain equityholders of SWAG entered into a confidentiality and lockup agreement (the “Confidentiality and Lockup Agreement”). Pursuant to the Confidentiality and Lockup Agreement, the shareholder parties thereto have agreed that they will not, (i) in the case of the equityholders of Otonomo listed on Exhibit B to the Confidentiality and Lockup Agreement, during the period beginning at the Closing Date and continuing to and including the date that is 180 days after the Closing Date, and (ii) in the case of the Sponsor, the former directors and officers of SWAG and certain members of Otonomo management, during the period beginning on the Closing Date and continuing to and including the date that is the earlier of (A) one year after the Closing Date and (B) if the last sale price of the Company Ordinary Shares equals or exceeds $12.00 per share



 

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(to be adjusted appropriately in the event Otonomo does not effect the Stock Split prior to the Effective Time) (as adjusted after the Closing for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Closing Date (in each case, the “Lockup Period”), directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares, or any options or warrants to purchase any shares or any securities convertible into, exchangeable for or that represent the right to receive shares, or any interest in any of the foregoing, whether now owned or hereinafter acquired, owned directly by such shareholder (including holding as a custodian) or with respect to which such shareholder has beneficial ownership within the rules and regulations of the SEC (in each case, subject to certain exceptions set forth in the Confidentiality and Lockup Agreement).

In connection with the Confidentiality and Lockup Agreement, at the Effective Time, the transfer restrictions set forth in certain letter agreements among SWAG and the Sponsor and officers and directors of SWAG will terminate.

Amended and Restated Warrant Agreement

Upon the closing of the Business Combination, Otonomo, SWAG and Continental Stock Transfer & Trust Company (“Continental”) will enter into an amended and restated warrant agreement (the “Amended and Restated Warrant Agreement”). Such agreement will amend and restate that certain Warrant Agreement, dated as of September 14, 2020, between SWAG and Continental (the “Existing Warrant Agreement”), to provide for the assignment by SWAG of all its rights, title and interest in the outstanding warrants of SWAG to Otonomo. Pursuant to the Amended and Restated Warrant Agreement, all SWAG warrants under the Existing Warrant Agreement will no longer be exercisable for shares of Class A Stock, but instead will be exercisable for Otonomo ordinary shares.

Sponsor Letter Agreement

Concurrently with the execution of the Business Combination Agreement, the Sponsor and officers and directors of SWAG entered into a letter agreement (the “Sponsor Letter Agreement”) in favor of Otonomo and SWAG, pursuant to which they agreed to (i) vote all shares of SWAG Common Stock beneficially owned by them in favor of the Business Combination and each other proposal related to the Business Combination on the agenda at the meeting of SWAG stockholders called to approve the Business Combination, (ii) appear at such stockholder meeting for the purpose of establishing a quorum, (iii) vote all such shares against any action that would reasonably be expected to materially impede, interfere with, delay, postpone, or adversely affect the Transactions and (iv) not transfer, assign, or sell such shares, except to certain permitted transferees, prior to the consummation of the Transactions. The Sponsor and the officers and directors of SWAG beneficially own and are entitled to vote an aggregate of approximately 4,312,500 shares of SWAG Common Stock, or 20.0% of the outstanding SWAG Common Stock. In addition to the shares of SWAG Common Stock held by the Sponsor and SWAG’s officers and directors, SWAG would need (a) 6,468,751 shares, or approximately 37.5%, of the 17,250,000 public shares to be voted in favor of the Business Combination Proposal and other proposals in order for them to be approved (assuming all outstanding shares are voted on each proposal), or (b) 1,078,126 shares, or approximately 6.3%, of the 17,250,000 public shares to be voted in favor of the Business Combination Proposal and other proposals in order for them to be approved (assuming the minimum number of shares necessary to establish a quorum are voted on each proposal).

The Charter Proposals

The SWAG stockholders will vote on separate proposals to approve the following material differences between the SWAG Charter and Otonomo’s amended and restated articles of association (“Otonomo Articles”) to be effective upon the consummation of the Business Combination: (i) the name of the new public entity will



 

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be “Otonomo Technologies Ltd.” as opposed to “Software Acquisition Group Inc. II”; (ii) the Otonomo Articles provide for one class of ordinary shares as opposed to the two classes of SWAG Common Stock provided for in the SWAG Charter; (iii) Otonomo’s corporate existence is perpetual as opposed to SWAG’s corporate existence terminating if a business combination is not consummated within a specified period of time; and (iv) the Otonomo Articles do not include the various provisions applicable only to special purpose acquisition corporations that the SWAG Charter contains. The Otonomo Articles to be in effect upon consummation of the Business Combination is attached as Annex      to this proxy statement/prospectus. See the section of this proxy statement/prospectus titled “Proposal Two—The Charter Proposals.”

The Adjournment Proposal

If SWAG is unable to consummate the Business Combination at the time of the special meeting for any reason, the chairman presiding over the special meeting may submit a proposal to adjourn the special meeting to a later date or dates, if necessary. See the section of this proxy statement/prospectus titled “Proposal Three—The Adjournment Proposal.”

Date, Time and Place of Special Meeting of SWAG’s Stockholders

The special meeting will be held at                , Eastern time, on                 , 2021, via live webcast at https://                , or such other date, time and place to which such meeting may be adjourned, to consider and vote upon the proposals.

Voting Power; Record Date

SWAG stockholders will be entitled to vote or direct votes to be cast at the special meeting if they owned Class A Stock at the close of business on                 , 2021, which is the record date for the special meeting. SWAG stockholders will have one vote for each share of Class A Stock owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. SWAG warrants do not have voting rights. On the record date, there were                 shares of Class A Stock outstanding, of which                  were public shares with the rest being held by the initial stockholders and their respective affiliates (including the Sponsor).

Redemption Rights

Pursuant to the SWAG Charter, a holder of public shares may demand that SWAG convert such shares into cash if the Business Combination is consummated; provided that SWAG may not consummate the Business Combination if it has less than $5,000,001 of net tangible assets either immediately prior to or upon consummation of the Business Combination. Holders of public shares will be entitled to receive cash for these shares only if they deliver their shares to SWAG’s transfer agent no later than two (2) business days prior to the special meeting. Holders of public shares do not need to affirmatively vote on the Business Combination Proposal or be a holder of such public shares as of the record date to exercise conversion rights. If the Business Combination is not consummated, these shares will not be converted into cash. If a holder of public shares properly demands conversion, delivers his, her or its shares to SWAG’s transfer agent as described above, and the Business Combination is consummated, SWAG will convert each public share into a full pro rata portion of the Trust Account, calculated as of two (2) business days prior to the date of the special meeting. It is anticipated that this would amount to approximately $                 per share. If a holder of public shares exercises his, her or its conversion rights, then it will be exchanging its shares of SWAG Common Stock for cash and will not become a shareholder of Otonomo. See the section of this proxy statement/prospectus titled “Special Meeting of



 

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SWAG Stockholders — Conversion Rights” for a detailed description of the procedures to be followed if you wish to convert your shares into cash.

SWAG warrant holders do not have conversion rights with respect to such securities.

Appraisal Rights

SWAG stockholders and SWAG warrant holders do not have appraisal rights in connection with the Transactions under the DGCL. See the section of this proxy statement/prospectus titled “Special Meeting of SWAG Stockholders—Appraisal Rights.”

SWAG’s Board of Directors’ Reasons for the Business Combination

SWAG’s board of directors, in evaluating the Business Combination, consulted with SWAG’s management and financial and legal advisors. In reaching its unanimous resolution (i) that the Business Combination Agreement and the transactions contemplated thereby are advisable and in the best interests of SWAG and its stockholders and (ii) to recommend that the stockholders adopt the Business Combination Agreement and approve the Business Combination and the transactions contemplated thereby, SWAG’s board of directors considered a range of factors, including, but not limited to, the factors discussed in the section referenced below. In light of the number and wide variety of factors considered in connection with its evaluation of the Business Combination, SWAG’s board of directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors that it considered in reaching its determination and supporting its decision. SWAG’s board of directors viewed its decision as being based on all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors. This explanation of SWAG’s reasons for the Business Combination and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under “Cautionary Statement Regarding Forward-Looking Statements; Market, Ranking and Other Industry Data.”

In approving the Business Combination, SWAG’s board of directors determined not to obtain a fairness opinion. The officers and directors of SWAG have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and background and sector expertise enabled them to make the necessary analyses and determinations regarding the Business Combination. In addition, SWAG’s officers and directors have substantial experience with mergers and acquisitions.

SWAG’s board of directors considered a number of factors pertaining to the Business Combination as generally supporting its decision to enter into the Business Combination Agreement and the transactions contemplated thereby. SWAG’s board of directors also considered a variety of uncertainties and risks and other potentially negative factors concerning the Business Combination.

SWAG’s board of directors concluded that the potential benefits that it expected SWAG and its stockholders to achieve as a result of the Business Combination outweighed the potentially negative factors associated with the Business Combination. Accordingly, SWAG’s board of directors unanimously determined that the Business Combination Agreement and the Business Combination contemplated therein were advisable, fair to and in the best interests of SWAG and its stockholders. See the section of this proxy statement/prospectus titled Proposal One—The Business Combination Proposal—SWAG’s Board of Directors’ Reasons for the Business Combination and Recommendation of the Board of Directors.”



 

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Interests of SWAG’s Directors and Officers in the Business Combination

In considering the recommendation of SWAG’s board of directors to vote in favor of approval of the Business Combination Proposal and the Charter Proposals, stockholders should keep in mind that the Sponsor and SWAG’s directors and executive officers have interests in such proposals that are different from, or in addition to, those of SWAG’s stockholders generally. In particular:

 

   

If the Business Combination with Otonomo or another business combination is not consummated by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter), SWAG will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and SWAG’s board of directors, dissolving and liquidating. In such event, the Founder Shares held by the Sponsor, which were acquired for an aggregate purchase price of $25,000 prior to the SWAG IPO, would be worthless because the holders are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of $                 based upon the closing price of $                 per share on Nasdaq on                 , 2021. On the other hand, if the Business Combination is consummated, each outstanding share of SWAG Common Stock will be converted into one Otonomo ordinary share, subject to adjustment described herein. As a result of the nominal price of $0.006 per share paid by the Sponsor compared to the recent market price of the Class A Stock, the Sponsor and its affiliates are likely to earn a positive rate of return on their investments in the Founder Shares even if holders of Class A Stock experience a negative rate of return on their investments in the Class A Stock.

 

   

The Sponsor purchased 5,200,000 private placement warrants from SWAG for $1.00 per private warrant. This purchase took place on a private placement basis simultaneously with the consummation of the SWAG IPO and the subsequent exercise of the underwriter’s overallotment option. All of the proceeds SWAG received from these purchases were placed in the Trust Account. Such private placement warrants had an aggregate market value of $                 based upon the closing price of $                 per warrant on Nasdaq on                 , 2021. The private placement warrants will become worthless if SWAG does not consummate a business combination by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter). On the other hand, if the Business Combination is consummated, each outstanding private placement warrant will become exercisable for one Otonomo ordinary share for $11.50 per share, subject to adjustment as described herein.

 

   

If SWAG is unable to complete a business combination within the required time period, the Sponsor will be liable under certain circumstances described herein to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by SWAG for services rendered or contracted for or products sold to SWAG. If SWAG consummates a business combination, on the other hand, SWAG will be liable for all such claims.

 

   

The Sponsor and SWAG’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on SWAG’s behalf, such as identifying and investigating possible business targets and business combinations. However, if SWAG fails to consummate a business combination within the required period, they will not have any claim against the Trust Account for reimbursement. Accordingly, SWAG may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter). As of the record date, the Sponsor and SWAG’s officers and directors and their affiliates had incurred approximately $                  of unpaid reimbursable expenses.



 

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The Business Combination Agreement provides for the continued indemnification of SWAG’s current directors and officers and the continuation of directors and officers liability insurance covering SWAG’s current directors and officers.

 

   

SWAG’s Sponsor, officers and directors (or their affiliates) may make loans from time to time to SWAG to fund certain capital requirements. On June 16, 2020, the Sponsor agreed to loan SWAG an aggregate of up to $300,000 to cover expenses related to the SWAG IPO pursuant to a promissory note that was repaid in full on September 22, 2020. Additional loans may be made after the date of this proxy statement/prospectus. If the Business Combination is not consummated, the loans will not be repaid and will be forgiven except to the extent there are funds available to SWAG outside of the Trust Account.

 

   

Jonathan Huberman will be a member of the board of directors of Otonomo following the closing of the Business Combination and, therefore, in the future Mr. Huberman will receive any cash fees, stock options or stock awards that Otonomo’s board of directors determines to pay to its non-executive directors.

Recommendation to SWAG Stockholders

SWAG’s board of directors has determined that each of the proposals outlined above is fair to and in the best interests of SWAG and its stockholders and recommended that SWAG stockholders vote “FOR” the business combination proposal, “FOR” each of the charter proposals, and “FOR” the adjournment proposal, if presented.

Certain Material U.S. Federal Income Tax Considerations (page 168)

For a description of certain material U.S. federal income tax consequences of the Business Combination, the exercise of redemption rights in respect of shares of SWAG Common Stock and the ownership and disposition of Otonomo ordinary shares and/or Otonomo warrants, please see “Certain Material U.S. Federal Income Tax Considerations” beginning on page 168.

Certain Material Israeli Tax Considerations (page 183)

For a description of certain material Israeli tax consequences of the ownership and disposition of Otonomo ordinary shares and/or Otonomo warrants, please see “Certain Material Israeli Tax Considerations” beginning on page 183.

Anticipated Accounting Treatment

The Transaction is comprised of a series of transactions pursuant to the Business Combination Agreement, as described elsewhere in this proxy statement/prospectus. For accounting purposes, the Transaction will be effectuated by three main steps:

 

  1.

The exchange of shares held by Otonomo shareholders, which is accounted for as a recapitalization in accordance with US GAAP.

 

  2.

The merger of SWAG with Merger Sub, which is not within the scope of ASC 805 (“Business Combinations”) because SWAG does not meet the definition of a business in accordance with ASC 805. Any difference between the fair value of Otonomo ordinary shares issued and the fair value of SWAG’s identifiable net assets should be recorded as additional paid-in capital. For purposes of the unaudited pro forma condensed combined financial information, it is assumed that the fair value of each individual Otonomo ordinary share issued to SWAG stockholders is equal to the fair value of each individual Otonomo shareholder resulting from the $1,050.0 million equity value assigned to Otonomo in the Business Combination Agreement.

 

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  3.

The Subscription Agreements related to the PIPE, which were executed concurrently with the Business Combination Agreement, will result in the issuance of Otonomo ordinary shares, leading to an increase in share capital and share premium.

Comparison of Rights of Stockholders of SWAG and Shareholders of Otonomo (page 203)

If the Business Combination is successfully completed, holders of SWAG Common Stock will become holders of Otonomo ordinary shares and their rights as shareholders will be governed by Otonomo’s organizational documents. There are also differences between the laws governing SWAG, a Delaware corporation, and Otonomo, an Israeli company. Please see “Comparison of Rights of Otonomo Shareholders and SWAG Stockholders” on page 203 for more information.

Recent Developments

SWAG’s Restatement of Financial Statements

On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement, dated as of September 14, 2020, between SWAG and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent. As a result of the SEC Statement, SWAG reevaluated the accounting treatment of (i) the 8,625,000 redeemable warrants that were included in the units issued by SWAG in the SWAG IPO and (ii) the 5,200,000 private placement warrants that were issued to SWAG’s sponsor in a private placement that closed concurrently with the closing of the SWAG IPO, and determined to classify the SWAG warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.

On April 26, 2021, as discussed with Marcum LLP, SWAG’s independent registered public accounting firm, SWAG’s management and the Audit Committee of SWAG’s board of directors concluded that, in light of the SEC Statement, it is appropriate to restate (i) certain items on SWAG’s previously issued audited balance sheet dated as of September 17, 2020, which was related to its IPO, (ii) SWAG’s quarterly unaudited financial statements for the period ended September 30, 2020 and (iii) SWAG’s previously issued audited financial statements as of December 31, 2020 and for the period from June 16, 2020 (inception) through December 31, 2020. Considering such restatement, such financial statements should no longer be relied upon. This proxy statement/prospectus has been updated to include the restated financial statements for the period from June 16, 2020 (inception) through December 31, 2020.

Going forward, unless SWAG amends the terms of its warrant agreement, SWAG expects to continue to classify its warrants as liabilities, which would require SWAG to incur the cost of measuring the fair value of the warrant liabilities, and which may have an adverse effect on its results of operations.

Emerging Growth Company

Each of SWAG and Otonomo is, and consequently, following the Business Combination, the combined company will be, an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, the combined company will be eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the


 

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Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in their periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find the combined company’s securities less attractive as a result, there may be a less active trading market for the combined company’s securities and the prices of the combined company’s securities may be more volatile.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The combined company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the combined company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the combined company’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

The combined company will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the date on which Otonomo ordinary shares were offered in exchange for SWAG Common Stock in connection with the Transactions, (b) in which the combined company has total annual gross revenue of at least $1.07 billion, or (c) in which the combined company is deemed to be a large accelerated filer, which means the market value of the combined company’s common equity that is held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter; and (ii) the date on which the combined company has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.

Regulatory Matters

The Business Combination is not subject to any federal or state regulatory requirement or approval, except for filings with the State of Delaware necessary to effectuate the Business Combination.

Summary Risk Factors

You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus. In particular, you should consider the risk factors described under “Risk Factors” beginning on page 13. Such risks include, but are not limited to:

 

   

Otonomo has a limited operating history and may be unable to achieve or sustain profitability or accurately predict its future results;

 

   

Otonomo has a history of losses and expects to incur significant expenses and continuing losses for the foreseeable future;

 

   

Otonomo expects to invest substantially in research and development (“R&D”) for the purpose of developing and commercializing new services, and these investments could significantly reduce its profitability or increase its losses and may not generate revenue for Otonomo;

 

   

If Otonomo does not develop enhancements to its services and introduce new services that achieve market acceptance, its growth, business, results of operations and financial condition could be adversely affected;



 

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If Otonomo is unsuccessful at investing in growth opportunities, its business could be materially and adversely affected;

 

   

Otonomo may need to raise additional funds in the future in order to execute its business plan and these funds may not be available to Otonomo when it needs them. If Otonomo cannot raise additional funds when it needs them, its business, prospects, financial condition and operating results could be negatively affected;

 

   

Otonomo has experienced rapid growth, and if Otonomo fails to effectively manage its growth, then its business, results of operations and financial condition could be adversely affected;

 

   

Otonomo relies, in part, on partnerships to grow its business. The partnerships may not produce the expected financial or operating results Otonomo expects. In addition, if Otonomo is unable to enter into partnerships or successfully maintain them, its growth may be adversely impacted;

 

   

Otonomo’s business depends on expanding its base of data consumers and data consumers increasing their use of its services, and its inability to expand its base of data consumers or any loss of data consumers or decline in their use of its services could materially and adversely affect its business, results of operations and financial condition;

 

   

If Otonomo fails to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing customer needs, requirements or preferences, its products may become less competitive;

 

   

The market for Otonomo’s services and platform is new and unproven, may decline or experience limited growth and is dependent in part on consumers continuing to adopt its platform and use its services;

 

   

Otonomo relies on the ability to access data from external providers at reasonable terms and prices. Otonomo’s data providers might restrict its use of, or refuse to license, data, which could lead to its inability to access certain data or provide certain services and, as a result, materially and adversely affect its operating results and financial condition;

 

   

If Otonomo is unable to expand its relationships with existing OEMs and vehicle fleet operators and add new OEMs and vehicle fleet operators and data providers, its business, results of operations and financial condition could be adversely affected;

 

   

If SWAG’s stockholders fail to properly demand redemption rights, they will not be entitled to convert their SWAG Common Stock into a pro rata portion of the Trust Account;

 

   

SWAG’s board of directors did not obtain a third-party fairness opinion in determining whether or not to proceed with the Business Combination;

 

   

The financial and other interests of SWAG’s board of directors may have influenced SWAG’s board of directors’ decision to approve the Business Combination;

 

   

The Otonomo securities to be received by SWAG’s securityholders as a result of the Business Combination will have different rights from SWAG securities, and SWAG’s stockholders will have a reduced ownership and voting interest of the combined company after consummation of the Business Combination; and

 

   

The other matters described in the section titled “Risk Factors” beginning on page 13.



 

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RISK FACTORS

If the Business Combination is completed, the combined company will operate in a market environment that is difficult to predict and that involves significant risks, many of which will be beyond its control. You should carefully consider the risks described below before voting your shares. Additional risks and uncertainties not presently known to Otonomo and SWAG or that they do not currently believe are important to an investor, if they materialize, also may adversely affect the Business Combination. If any of the events, contingencies, circumstances or conditions described in the following risks actually occur, the combined company’s business, financial condition or results of operations could be seriously harmed. If that happens, the trading price of Otonomo ordinary shares or, if the Business Combination is not consummated, SWAG Common Stock could decline, and you may lose part or all of the value of any Otonomo ordinary shares or, if the Business Combination is not consummated, you may lose part or all of the value of any shares of SWAG Common Stock that you hold.

Risks Related to the Combined Company Following the Business Combination

Any of the following risk factors could cause the combined company’s actual results to differ materially from anticipated results. These risks and uncertainties are not the only ones that the combined company faces.

Risks Related to Otonomo’s Business and Industry

Otonomo has a limited operating history and may be unable to achieve or sustain profitability or accurately predict its future results.

Otonomo has been focused on developing a platform to provide vehicle data services since its formation in 2015. Otonomo’s limited operating history makes it difficult to evaluate its current business and future prospects and may increase the risk of its investment. Further, because Otonomo has limited historical financial data and operates in a rapidly evolving market, any predictions about its future revenue and expenses may not be as accurate as they would be if it had a longer operating history or operated in a more predictable market.

Otonomo’s losses in prior periods and accumulated deficit reflect the investments it has made to date to grow its business. Otonomo expects to have significant operating expenses in the future to further support and grow its business, including expanding the range of integrations between its platform and third-party applications and platforms, expanding its direct and indirect sales capabilities, investing in its infrastructure and R&D, and as a result it may be unable to achieve or sustain profitability or accurately predict its future results. You should not consider Otonomo’s recent growth in revenue as indicative of its future performance. Otonomo cannot assure you that it will achieve profitability in the future, or that if Otonomo does become profitable, that Otonomo will sustain profitability.

If Otonomo fails to address the risks and difficulties that it faces, including those described elsewhere in this “Risk Factors” section, its business, financial condition and results of operations could be adversely affected. Otonomo has encountered in the past, and will encounter in the future, risks and uncertainties frequently experienced by growing companies with limited operating histories in rapidly changing industries. If Otonomo’s assumptions regarding these risks and uncertainties, which it uses to plan and operate its business, are incorrect or change, or if it does not address these risks successfully, its results of operations could differ materially from its expectations and its business, financial condition and results of operations could be adversely affected.

Otonomo has a limited operating history with a history of losses and expects to incur significant expenses and continuing losses for the foreseeable future.

Otonomo has incurred net losses on an annual basis since its inception. Otonomo incurred net losses of approximately $20.0 million and $19.1 million for the years ended December 31, 2020 and 2019, respectively. Otonomo believes that it will continue to incur operating and net losses each quarter for the foreseeable future.

 

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Otonomo expects continue to expend substantial financial and other resources on, among other things:

 

   

investments in its engineering team, the development of new products, features and functionality and enhancements to its platform;

 

   

expansion of its operations and infrastructure;

 

   

increases in its investment in research and development;

 

   

increases in its sales and marketing activities and expanding its sales force to cover additional geographies, including outside the U.S.; and

 

   

general administration, including legal, accounting and other expenses related to being a public company.

These investments may not result in increased revenue or growth of its business. Otonomo also expects that its revenue growth rate will decline over time. Accordingly, Otonomo may not be able to generate sufficient revenue to offset its expected cost increases, and achieve and sustain profitability. If Otonomo fails to achieve and sustain profitability, then its business, results of operations and financial condition would be adversely affected.

Otonomo expects to invest substantially in research and development for the purpose of developing and commercializing new services, and these investments could significantly reduce its profitability or increase its losses and may not generate revenue for Otonomo.

Otonomo’s future growth depends on its ability to enhance its services and introduce new services that achieve market acceptance and penetrate new markets. Therefore, Otonomo plans to incur substantial research and development costs as part of its efforts to develop and commercialize new services and enhance existing services. Otonomo’s research and development expenses were approximately $8.6 million and $8.2 million during the years ended December 31, 2020 and 2019, respectively and are likely to grow in the future. Future research and development expenses will adversely affect Otonomo’s future results of operations. In addition, Otonomo’s research and development program may not produce successful results, and even if it does successfully produce new services, those services may not achieve market acceptance, create additional revenue or become profitable.

If Otonomo does not develop enhancements to its services and introduce new services that achieve market acceptance, its growth, business, results of operations and financial condition could be adversely affected.

Otonomo’s ability to attract new data consumers and increase revenue from existing data consumers depends in part on its ability to enhance and improve its existing services, increase adoption and usage of its services, and introduce new services. The success of any enhancements or new services depends on several factors, including timely completion, adequate quality testing, actual performance quality, market accepted pricing levels and overall market acceptance.

Enhancements, such as additional technology features, and new services, such as software licenses and data services, that Otonomo develops may not be introduced in a timely or cost-effective manner, may contain errors or defects, may have interoperability difficulties with its platform or other services or may not achieve the broad market acceptance necessary to generate significant revenue. Furthermore, Otonomo’s ability to increase the usage of its services depends, in part, on the development of new uses for its services, which may be outside of its control. Its ability to generate usage of additional services by its data consumers may also require increasingly sophisticated and more costly sales efforts and result in a longer sales cycle. If Otonomo is unable to successfully enhance its existing services to meet evolving data consumer requirements, increase adoption and usage of its services, develop new services, or if its efforts to increase the usage of its services are more expensive than Otonomo expects, then its business, results of operations and financial condition would be adversely affected.

 

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If Otonomo is unsuccessful at investing in growth opportunities, its business could be materially and adversely affected.

Otonomo continues to invest significantly in growth opportunities, including the development of new technologies and services to meet its clients’ needs. For example, Otonomo is expanding its service offerings by providing additional services along the data value chain in the form of data storage, enrichment and visualization, and adding additional technology features for licensing to OEM’s and data consumers. Otonomo also continues to invest significantly in growth opportunities outside the U.S., and in particular Latin America and the Asia-Pacific. Otonomo considers its presence in these markets to be an important component of its growth strategy.

There is no assurance that Otonomo’s growth strategy will be successful or will produce a sufficient or any return on its investments. Further, if Otonomo is unable to develop new technologies and services, data consumers do not use or license its new technologies and services, its new technologies and services do not work as intended or there are delays in the availability or adoption of its new technologies and services, then Otonomo may not be able to grow its business or growth may occur slower than anticipated. Additionally, although Otonomo expects continued growth in the vehicle data market, such growth may occur more slowly or not at all, and Otonomo may not benefit from its investments.

Otonomo plans to fund growth opportunities with cash from operations or from future financings. There can be no assurance that those sources will be available in sufficient amounts to fund future growth opportunities when needed.

Any of the foregoing could have a material and adverse effect on its operating results and financial condition.

Otonomo may need to raise additional funds in the future in order to execute its business plan and these funds may not be available to Otonomo when it needs them. If Otonomo cannot raise additional funds when it needs them, its business, prospects, financial condition and operating results could be negatively affected.

Otonomo may require additional capital in the future in order to fund its growth strategy or to respond to technological advancements, competitive dynamics or technologies, data consumer demands, business opportunities, challenges, acquisitions or unforeseen circumstances. It may also determine to raise equity or debt financing for other reasons. For example, in order to further enhance business relationships with current or potential customers or partners, Otonomo may issue equity or equity-linked securities to such current or potential customers or partners.

Otonomo may not be able to timely secure additional debt or equity financing on favorable terms, or at all. If Otonomo raises additional funds through the issuance of equity or convertible debt or other equity-linked securities, its existing shareholders could experience significant dilution. In addition, any debt financing obtained by Otonomo in the future, whether in the form of a credit facility or otherwise, could involve restrictive covenants relating to its capital raising activities and other financial and operational matters, which may make it more difficult for Otonomo to obtain additional capital and to pursue business opportunities, including potential acquisitions. If Otonomo is unable to obtain adequate financing or financing on terms satisfactory to Otonomo when Otonomo requires it, Otonomo’s ability to continue to grow or support its business and to respond to business challenges could be significantly limited. In addition, because Otonomo’s decision to issue debt or equity in the future will depend on market conditions and other factors beyond its control, it cannot predict or estimate the amount, timing, nature or success of its future capital raising efforts.

Otonomo has experienced rapid growth, and if Otonomo fails to effectively manage its growth, then its business, results of operations and financial condition could be adversely affected.

Otonomo has experienced substantial growth in its business since inception. For example, Otonomo has also experienced significant growth in the number of data consumers, usage and amount of data that its platform and

 

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associated infrastructure support. This growth has placed and may continue to place significant demands on its corporate culture, operational infrastructure and management. Any failure to manage its anticipated growth and organizational changes in a manner that preserves the key aspects of its culture could hurt its chance for future success, including its ability to recruit and retain personnel, and effectively focus on and pursue its corporate objectives. This, in turn, could adversely affect its business, results of operations and financial condition.

In addition, Otonomo’s ability to manage its operations and future growth will require Otonomo to continue to improve its operational, financial and management controls, compliance programs and reporting systems. Otonomo is currently in the process of strengthening its compliance programs, including its compliance programs related to export controls, privacy and cybersecurity and anti-corruption. Otonomo may not be able to implement improvements in an efficient or timely manner and may discover deficiencies in existing controls, programs, systems and procedures, which could have an adverse effect on its business, reputation and financial results.

Otonomo relies, in part, on partnerships to grow its business. The partnerships may not produce the expected financial or operating results Otonomo expects. In addition, if Otonomo is unable to enter into partnerships or successfully maintain them, its growth may be adversely impacted.

Historically, Otonomo has relied, in part, on a variety of partnerships covering different focus areas and data to grow its business. The majority of the partnerships allow Otonomo to provide data or data services as part of services provided by the partners, thereby increasing Otonomo’s customer base without the need to address the customers directly.

Any partnerships Otonomo enters into may not be on favorable terms, and the expected benefits and growth from these partnerships may not materialize as planned. Otonomo may have difficulty assimilating new partnerships and their services, technologies, IT systems and personnel into its operations. IT and data security profiles of partners may not meet its technological standards and may take longer to integrate and remediate than planned. This may result in significantly greater transaction and integration costs for future partnerships than Otonomo has experienced historically, or it could mean that Otonomo will not pursue certain partnerships where the costs of integration and remediation are too significant. These difficulties could disrupt its ongoing business, increase its expenses and adversely affect its operating results and financial condition.

Despite its past experience, opportunities to grow its business through partnerships may not be available to Otonomo in the future.

Historically, a single customer has accounted for a material portion of Otonomo’s revenues and, therefore, the loss of that customer could materially and adversely affect its business, results of operations and financial condition.

One of Otonomo’s customers, Mitsubishi Motors Corporation (“Mitsubishi”), accounted for approximately 30% of its revenue in 2020. The loss of this customer could result in a significant reduction of Otonomo’s anticipated revenues, which could materially and adversely affect its business, results of operations and financial condition.

Otonomo’s business depends on expanding its base of data consumers and data consumers increasing their use of its services, and its inability to expand its base of data consumers or any loss of data consumers or decline in their use of its services could materially and adversely affect its business, results of operations and financial condition.

Otonomo’s ability to grow and generate revenue growth depends, in part, on its ability to expand its base of data consumers and maintain and grow its relationships with existing data consumers and to have them increase their usage of its platform. If Otonomo is not successful in attracting new data consumers or its existing data

 

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consumers do not increase their use of its services, then its revenue growth may decline, and its results of operations may be harmed. Data consumers are charged based on the usage of its services. Many of Otonomo’s data consumers do not have long-term contractual financial commitments to Otonomo and, therefore, most of its data consumers may reduce or cease their use of its services at any time without penalty or termination charges. Data consumers may terminate or reduce their use of its services for any number of reasons, including if they are not satisfied with its services, the value proposition of its services or its ability to meet their needs and expectations. Otonomo cannot accurately predict data consumers’ usage levels and its inability to attract new data consumers or the loss of data consumers or reductions in their usage levels of its services may each have a negative impact on its business, results of operations and financial condition and may slow its growth in the future if customers are not satisfied with its products, the value proposition of its products or its ability to meet their needs and expectations. If a significant number of data consumers cease using, or reduce their usage of its services, then Otonomo may be required to spend significantly more on sales and marketing than it currently plans to spend in order to maintain or increase revenue from data consumers. Such additional sales and marketing expenditures could adversely affect its business, results of operations and financial condition.

If Otonomo fails to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing customer needs, requirements or preferences, its products may become less competitive.

The market for communications in general, and vehicle data, is subject to rapid technological change, evolving industry standards, changing regulations, as well as changing customer needs, requirements and preferences. The success of Otonomo’s business will depend, in part, on its ability to adapt and respond effectively to these changes on a timely basis. If Otonomo is unable to develop new services that satisfy its data consumers and provide enhancements and new features for its existing services that keep pace with rapid technological and industry change, its business, results of operations and financial condition could be adversely affected. If new technologies emerge that are able to deliver competitive services at lower prices, more efficiently, more conveniently or more securely, such technologies could adversely impact its ability to compete effectively.

Its platform must integrate with a variety of network, hardware, mobile and software platforms and technologies, and Otonomo needs to continuously modify and enhance its services and platform to adapt to changes and innovation in these technologies. If data providers, partners or data consumers adopt new software platforms or infrastructure, Otonomo may be required to develop new or enhanced versions of its services to work with those new platforms or infrastructure. This development effort may require significant resources, which would adversely affect its business, results of operations and financial condition. Any failure of its services and platform to operate effectively with evolving or new platforms and technologies could reduce the demand for its services. If Otonomo is unable to respond to these changes in a cost-effective manner, its services may become less marketable and less competitive or obsolete, and its business, results of operations and financial condition could be adversely affected.

The market for Otonomo’s services and platform is new and unproven, and may decline or experience limited growth and is dependent in part on data consumers continuing to adopt its platform and use its services.

Otonomo has been developing and providing a cloud based platform, through which it serves as a vehicle data marketplace, and which enables car manufacturers, drivers and service providers to be part of a connected ecosystem. This market is relatively new and unproven and is subject to a number of risks and uncertainties. Otonomo believes that its future success will significantly depend in large part on the growth, if any, of this market. The utilization of a data marketplace to obtain data on vehicles, drivers and the environment is still relatively new, and consumers may not recognize the need for, or benefits of, its services and platform. Moreover, if they do not recognize the need for and benefits of its services and platform, they may decide to adopt alternative services to satisfy some portion of their business needs. In order to grow its business and extend its market position, Otonomo intends to focus on educating potential customers about the benefits of its services

 

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and platform, expanding the range of Otonomo’s services and bringing new technologies to market to increase market acceptance and use of its platform. Otonomo’s ability to expand the market that its services and platform address depends upon a number of factors, including the cost, performance and perceived value associated with such services and platform. The market for its services and platform could fail to grow significantly or there could be a reduction in demand for its services as a result of a lack of acceptance, technological challenges, competing services, decreases in spending by current and prospective customers, weakening economic conditions and other causes. If Otonomo’s market does not experience significant growth, or demand for its services decreases, then its business, results of operations, and financial condition could be adversely affected.

Otonomo relies on the ability to access data from external providers at reasonable terms and prices. Otonomo’s data providers might restrict its use of, or refuse to license, data, which could lead to its inability to access certain data or provide certain services and, as a result, materially and adversely affect its operating results and financial condition.

Otonomo relies extensively upon vehicle data from a variety of external providers to provide its services, including data from vehicle manufacturers (“OEMs”), vehicle fleet operators and telematics service providers (“TSPs”). Otonomo’s data providers could increase restrictions on its use of such data, increase the price they charge Otonomo for data, or refuse altogether to license the data to Otonomo. In addition, during the term of any data supply contract, providers may fail to adhere to its data quality control standards or fail to deliver data. Further, although no single individual data provider is material to Otonomo’s business, if a number of providers collectively representing a significant amount of data that it uses for one or more of its services were to impose additional contractual restrictions on its use of or access to data, fail to adhere to its quality-control standards, repeatedly fail to deliver data or refuse to provide data, now or in the future, its ability to provide those services to its clients could be materially adversely impacted, which may harm its operating results and financial condition. In addition, if a number of providers collectively representing a significant amount of data that Otonomo uses are no longer able or are unwilling to provide Otonomo with certain data, it may need to find alternative providers.

If Otonomo is unable to identify and contract with suitable alternative data providers and efficiently and effectively integrate these data sources into its service offerings, Otonomo could experience service disruptions, increased costs, and reduced quality and availability of its services. Moreover, some of Otonomo’s data providers compete with it in certain service offerings, which may make it vulnerable to unpredictable price increases from them and they may elect to stop providing data to us. Significant price increases could have a material adverse effect on Otonomo’s operating margins and its financial position, in particular if Otonomo is unable to arrange for substitute replacement data suppliers on favorable economic terms. There can be no assurance that Otonomo would be able to obtain data from alternative suppliers if its current suppliers become unavailable. Loss of such access or the availability of data in the future on commercially reasonable terms, or at all, may reduce the quality and availability of its services, which could have a material adverse effect on its business, financial condition, and results of operations.

Some of Otonomo’s data suppliers face similar regulatory requirements as Otonomo does and, consequently, they may cease to be able to provide data to Otonomo or may substantially increase the fees they charge Otonomo for this data, which may make it financially burdensome or impossible for Otonomo to acquire data that is necessary to offer services. Many consumer advocates, privacy advocates, and government regulators believe that existing laws and regulations do not adequately protect privacy or ensure the accuracy of personal data. As a result, such advocates and regulators are seeking further restrictions on the dissemination or commercial use of personal information to the public and private sectors, as well as contemplating requirements relative to data accuracy and the ability of consumers to opt to have their personal data removed from databases such as Otonomo’s. Any future laws, regulations, or other restrictions limiting the dissemination or use of personal information may reduce the quality and availability of the data necessary for its products and services, which could have a material adverse effect on its business, financial condition, and results of operations.

 

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If Otonomo is unable to expand its relationships with existing OEMs and vehicle fleet operators and add new OEMs and vehicle fleet operators and data providers, its business, results of operations and financial condition could be adversely affected.

Otonomo believes that the continued growth of its business depends in part upon developing and expanding strategic relationships with OEM’s and vehicle fleet operators and other data providers. OEM’s and vehicle fleet operators provide much of the data Otonomo provides as part of its services. As demand grows for data-driven products and services and customer groups join the ecosystem and expand their usage of external data, Otonomo will need to be able to provide the data in order to meet increasing market needs. Its strategy also includes contracting with other data providers to provide commercial vehicle, environmental and micro-mobility data.

If Otonomo fails to expand its relationships with existing OEM’s and vehicle fleet operators or establish relationships with new OEM’s and vehicle fleet operators and other data providers in a timely and cost effective manner, or at all, Otonomo will be unable to grow its business and meet its customers’ needs, which would adversely affect its business, results of operations and financial condition.

Any failure to offer high quality data user support may adversely affect Otonomo’s relationships with its data consumers and prospective data consumers, and adversely affect its business, results of operations and financial condition.

Many of Otonomo’s customers depend on its customer support team to assist them in deploying its services effectively to help them to resolve post-deployment issues quickly, and to provide ongoing support. If Otonomo does not devote sufficient resources or is otherwise unsuccessful in assisting its data consumers effectively, it could adversely affect its ability to retain existing data consumers and could prevent prospective data consumers from adopting its services. Otonomo may be unable to respond quickly enough to accommodate short-term increases in demand for customer support. It also may be unable to modify the nature, scope and delivery of its customer support to compete with changes in the support services provided by its competitors. Increased demand for customer support, without corresponding revenue, could increase costs and adversely affect its business, results of operations and financial condition. Otonomo’s revenues are highly dependent on its business reputation. Any failure to maintain high quality customer support, or a market perception that it does not maintain high quality customer support, could erode customer trust and adversely affect its reputation, business, results of operations and financial condition.

Adverse conditions in the automotive industry or the global economy more generally could have adverse effects on Otonomo’s results of operations.

Otonomo’s business is directly affected by, and significantly dependent on, business cycles and other factors affecting the global automobile industry and global economy generally. Automotive production and sales are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences, changes in interest rates and credit availability, consumer confidence, fuel costs, fuel availability, environmental impact, governmental incentives and regulatory requirements and political volatility, especially in energy-producing countries and growth markets. In addition, automotive production and sales can be affected by Otonomo’s automotive OEM customers’ ability to continue operating in response to challenging economic conditions and in response to regulatory requirements and other factors. The volume of automotive production in North America, Europe and the rest of the world has fluctuated, sometimes significantly, from year to year.

Otonomo expects any such fluctuations to give rise to fluctuations in the demand for its products. Reductions in automotive sales could slow the increasing connectivity of vehicles, as new vehicles have greater connectivity that older ones, and would slow the demand for data-driven products and services. In addition, a reduction in the number of vehicles would reduce the potential number of data consumers for Otonomo’s services. Any significant adverse change in automotive production and sales could have a material adverse effect on Otonomo’s business, results of operations and financial condition.

 

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The market in which Otonomo participates is intensely competitive, and if Otonomo does not compete effectively, its business, results of operations and financial condition could be harmed.

The market for vehicle data is rapidly evolving and highly competitive, with relatively low barriers to entry in some areas. Otonomo’s future success will depend on its ability to maintain its lead by continuing to develop and protect from infringement advanced technology in a timely manner and to stay ahead of existing and new competitors. Otonomo currently faces competition from a range of companies seeking to establish and develop relationships with OEMs and other data providers. Its competitors are also working to advance technology, performance and innovation in their development of new and improved solutions.

Otonomo’s direct competitors focus on data provision, services to manage and structure data and consent management. Its indirect competitors include service providers and personal use case companies, which focus on enabling services via APIs and connecting service providers with customers’ personally identifiable information (“PII”), as well as industry-specific data and service providers for location-based services, fleet management and repair-and maintenance. Additionally, technology companies, such as Google and Alibaba, and vehicle operating system providers, such as Huawei and Baidu, are potential competitors to its platform, as are companies providing cloud computing platforms and APIs, such as Amazon Web Services and Microsoft. In addition, Otonomo faces potential competition from its vertically integrated data providers which may elect to directly provide more data-related services as part of their business.

The principal competitive factors in its market include completeness of offering, ease of integration and programmability, product features, platform scalability, and performance and cost.

Some of its competitors and potential competitors are larger and have greater name recognition, longer operating histories, more established customer relationships, larger budgets and significantly greater resources than Otonomo does. In addition, some have the operating flexibility to bundle competing products and services at little or no perceived incremental cost, including offering them at a lower price as part of a larger sales transaction. As a result, its competitors may be able to respond more quickly and effectively than Otonomo can to new or changing opportunities, technologies, standards or customer requirements.

With the introduction of new services and new market entrants, Otonomo expects competition to intensify in the future. Increased competition may result in pricing pressure and reduced margins and may impede Otonomo’s ability to increase the sales of its products or cause it to lose market share, any of which will adversely affect its business, results of operations and financial condition.

Otonomo expects its results of operations to fluctuate on a quarterly and annual basis, which could cause the share price of the combined company to fluctuate or decline.

Otonomo’s quarterly results of operations have fluctuated in the past and may vary significantly in the future. As such, historical comparisons of its operating results may not be meaningful. Accordingly, the results of any one quarter should not be relied upon as an indication of future performance. Otonomo’s quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of its control and may not fully reflect the underlying performance of Otonomo’s business. These fluctuations could adversely affect Otonomo’s ability to meet its expectations or those of securities analysts or investors. If Otonomo does not meet these expectations for any period, the value of its business and its securities, or those of the combined company, could decline significantly. Factors that may cause these quarterly fluctuations include, without limitation, those listed below:

 

   

The timing of revenues generated in any quarter;

 

   

Pricing changes Otonomo may adopt to drive market adoption or in response to competitive pressure;

 

   

Otonomo’s ability to retain its existing customers and attract new customers;

 

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Otonomo’s ability to develop, introduce and sell services and products in a timely manner that meet customer requirements;

 

   

Disruptions in Otonomo’s sales channels or termination of its relationship with partners;

 

   

Delays in customers’ purchasing cycles or deferments of customers’ purchases in anticipation of new services or updates from Otonomo or its competitors;

 

   

Fluctuations in demand pressures for Otonomo’s products;

 

   

The mix of services sold in any quarter;

 

   

The duration of the global COVID-19 pandemic and the time it takes for economic recovery;

 

   

The timing and rate of broader market adoption of Otonomo’s data service platform;

 

   

Market acceptance of Otonomo’s services and further technological advancements by Otonomo’s competitors and other market participants;

 

   

Any change in the competitive dynamics of Otonomo’s markets, including consolidation of competitors, regulatory developments and new market entrants;

 

   

Changes in the source, cost, availability of and regulations pertaining to materials Otonomo uses;

 

   

Adverse litigation, judgments, settlements or other litigation-related costs, or claims that may give rise to such costs; and

 

   

General economic, industry and market conditions, including trade disputes.

Changes in tax laws or exposure to additional income tax liabilities could affect Otonomo’s future profitability.

Factors that could materially affect Otonomo’s future, effective tax rates, include but are not limited to:

 

   

Changes in tax laws or the regulatory environment;

 

   

Changes in accounting and tax standards or practices;

 

   

Changes in the composition of operating income by tax jurisdiction; and

 

   

Otonomo’s operating results before taxes.

Because Otonomo does not have a long history of operating at its present scale and it has significant expansion plans, Otonomo’s effective tax rate may fluctuate in the future. Future effective tax rates could be affected by operating losses in jurisdictions where no tax benefit can be recorded under U.S. GAAP, changes in the composition of earnings in countries with differing tax rates, changes in deferred tax assets and liabilities, or changes in tax laws.

Changes in Otonomo’s product mix may impact its financial performance.

Otonomo’s financial performance can be affected by the mix of services it sells during a given period. If Otonomo’s sales include more of the lower gross margin services than higher gross margin products, its results of operations and financial condition may be adversely affected. There can be no guarantees that Otonomo will be able to successfully alter its service mix so that it is selling more of its high gross margin products. In addition, Otonomo’s earnings forecasts and guidance after the Business Combination are expected to include assumptions about product sales mixes. If actual results vary from this projected product mix of sales, Otonomo’s results of operations and financial condition could be adversely affected.

Otonomo is highly dependent on the services of its CEO and founder, Ben Volkow.

Otonomo is highly dependent on its CEO and founder, Ben Volkow. Mr. Volkow has acted as Otonomo’s Chief Executive Officer since its inception, and as such, is deeply involved in all aspects of Otonomo’s business,

 

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including product development. The loss of Mr. Volkow would adversely affect Otonomo’s business because this could make it more difficult to, among other things, compete with other market participants, manage Otonomo’s R&D activities and retain existing customers or cultivate new ones. Negative public perception of, or negative news related to, any of Mr. Volkow may adversely affect Otonomo’s brand, relationship with customers or standing in the industry.

Otonomo’s management team has limited experience managing a public company.

Otonomo’s management team has limited experience managing a publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies. Otonomo’s management team may not successfully or efficiently manage their new roles and responsibilities, Otonomo’s transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from Otonomo’s senior management and could divert their attention away from the day-to-day management of Otonomo’s business, which could adversely affect Otonomo’s business, financial condition and operating results.

Otonomo’s business depends on its ability to attract and retain highly skilled personnel and senior management. Failure to effectively retain, attract and motivate key employees could diminish the anticipated benefits of the Business Combination.

Competition for highly-skilled personnel is often intense, especially in Israel, where Otonomo’s principal office is located, and it may incur significant costs to attract them. Otonomo may face challenges in attracting or retaining qualified personnel to fulfill its current or future needs. Otonomo has, from time to time, experienced, and it expects to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. In addition, job candidates and existing employees often consider the value of the equity awards they receive in connection with their employment. If the perceived value of Otonomo’s equity or equity awards declines, including after Closing, it may adversely affect Otonomo’s ability to retain highly skilled employees. The success of the Business Combination will depend in part on the attraction, retention and motivation of executive personnel critical to the business and operations of Otonomo. If Otonomo fails to attract new personnel or fails to retain and motivate its current personnel, Otonomo could face disruptions in its operations, strategic relationships, key information, expertise or know-how and unanticipated recruitment and onboarding costs, and its business and future growth prospects could be adversely affected.

Otonomo’s sales and operations in international markets expose it to operational, financial and regulatory risks.

A core component of Otonomo’s growth strategy is international expansion. While it has committed resources to expanding its international operations and sales channels, these efforts may not be successful. International operations are subject to a number of other risks, including:

 

   

Exchange rate fluctuations;

 

   

Political and economic instability, international terrorism and anti-American sentiment, particularly in emerging markets;

 

   

Global or regional health crises, such as the COVID-19 pandemic;

 

   

Potential for violations of anti-corruption laws and regulations, such as those related to bribery and fraud;

 

   

Preference for locally branded products, and laws and business practices favoring local competition;

 

   

Potential consequences of, and uncertainty related to, the “Brexit” process in the United Kingdom, which could lead to additional expense and complexity in doing business there;

 

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Increased difficulty in managing inventory;

 

   

Delayed revenue recognition;

 

   

Less effective protection of intellectual property;

 

   

Stringent regulation of the autonomous or other systems, or products using Otonomo’s products and rigorous consumer protection and product compliance regulations, including but not limited to General Data Protection Regulation in the European Union, European competition law, the Restriction of Hazardous Substances directive, the Waste Electrical and Electronic Equipment directive and the European Ecodesign directive that are costly to comply with, and may vary from country to country;

 

   

Difficulties and costs of staffing and managing foreign operations;

 

   

Import and export laws and the impact of tariffs; and

 

   

Changes in local tax and customs duty laws or changes in the enforcement, application or interpretation of such laws.

As a result of these and other factors, international expansion may be more difficult, take longer and not generate the results Otonomo anticipates, which could negatively impact its growth and business.

Otonomo’s business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events, global pandemics, and interruptions by man-made problems, such as network security breaches, computer viruses or terrorism. Material disruptions of Otonomo’s business or information systems resulting from these events could adversely affect its operating results.

A significant natural disaster, such as an earthquake, fire, flood or significant power outage or other similar events, such as infectious disease outbreaks or pandemic events, including the COVID-19 pandemic, could have an adverse effect on Otonomo’s business and operating results. The COVID-19 pandemic has produced meaningful operational challenges and Otonomo expects to continue to experience disruptions in its business during the first half of 2021. COVID-19 has heightened many of the other risks described herein, such as the demand for Otonomo’s products, its ability to achieve or maintain profitability and its ability to raise additional capital in the future. Despite the implementation of network security measures, Otonomo’s networks also may be vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with its solutions. In addition, natural disasters, acts of terrorism or war could cause disruptions in Otonomo’s remaining business operations, Otonomo’s or its customers’ or partners’ businesses, Otonomo’s data providers or the economy as a whole. Otonomo also relies on information technology systems to communicate among its workforce and with third parties. Any disruption to Otonomo’s communications, whether caused by a natural disaster or by man-made problems, such as power disruptions, could adversely affect its business. Otonomo does not have a formal disaster recovery plan or policy in place and does not currently require that its suppliers’ partners have such plans or policies in place. To the extent that any such disruptions result in delays or cancellations of orders or impede its suppliers’ ability to timely deliver product components, or the deployment of its products, Otonomo’s business, operating results and financial condition would be adversely affected.

Otonomo has been, and may in the future be, adversely affected by the global COVID-19 pandemic, the duration and economic, governmental and social impact of which is difficult to predict, which may significantly harm Otonomo’s business, prospects, financial condition and operating results.

The ongoing COVID-19 pandemic as well as other possible health epidemics and outbreaks could result in a material adverse impact on Otonomo’s or its customers’ business operations including reduction or suspension of operations in the U.S. or certain parts of the world. Otonomo’s engineering operations, among others, cannot all be conducted in a remote working structure and often require on-site access to materials and equipment. Otonomo has customers with international operations in varying industries. Depending upon the duration of the ongoing COVID-19 pandemic and the associated business interruptions, its data consumers, data suppliers and

 

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partners may suspend or delay their engagement with Otonomo, which could result in a material adverse effect on its financial condition. Otonomo’s response to the ongoing COVID-19 pandemic may prove to be inadequate and it may be unable to continue its operations in the manner it had prior to the outbreak, and may endure interruptions, reputational harm, delays in its product development and shipments, all of which could have an adverse effect on its business, operating results, and financial condition. In addition, when the pandemic subsides, Otonomo cannot assure you as to the timing of any economic recovery, which could continue to have a material adverse effect on its target markets and its business.

Breaches of Otonomo’s networks or systems, or those of its data providers or partners, could degrade Otonomo’s ability to conduct its business, compromise the integrity of its products, platform and data, result in significant data losses and the theft of its intellectual property, damage its reputation, expose it to liability to third parties and require it to incur significant additional costs to maintain the security of its networks and data.

Otonomo depends upon its IT systems to conduct virtually all of its business operations, ranging from its internal operations and research and development activities to its marketing and sales efforts and communications with its customers and business partners. Individuals or entities may attempt to penetrate Otonomo’s network security, or that of its platform, and to cause harm to its business operations, including by misappropriating proprietary information or that of its data suppliers, data consumers, partners and employees or to cause interruptions of its products and platform. In general, cyberattacks and other malicious internet-based activity continue to increase in frequency and magnitude, and cloud-based companies have been targeted in the past and are likely to continue to be targeted in the future. In addition to threats from traditional computer hackers, malicious code (such as malware, viruses, worms, and ransomware), employee theft or misuse, password spraying, phishing, credential stuffing, and denial-of-service attacks, Otonomo also faces threats from sophisticated organized crime, nation-state, and nation-state supported actors who engage in attacks (including advanced persistent threat intrusions) that add to the risk to its systems (including those hosted on AWS or other cloud services), internal networks, its customers’ systems and the information that they store and process.

While Otonomo devotes significant financial and personnel resources to implement and maintain security measures, because the techniques used by such individuals or entities to access, disrupt or sabotage devices, systems and networks change frequently and may not be recognized until launched against a target, Otonomo may be required to make further investments over time to protect data and infrastructure as cybersecurity threats develop, evolve and grow more complex over time. Otonomo may also be unable to anticipate these techniques, and Otonomo may not become aware in a timely manner of security breaches, which could exacerbate any damage Otonomo experiences. Additionally, Otonomo depends upon its employees and contractors to appropriately handle confidential and sensitive data, including customer data, and to deploy its IT resources in a safe and secure manner that does not expose its network systems to security breaches or the loss of data. Any data security incidents, including internal malfeasance or inadvertent disclosures by its employees or a third party’s fraudulent inducement of its employees to disclose information, unauthorized access or usage, introduction of a virus or similar breach or disruption of Otonomo or its service providers, such as AWS, could result in loss of confidential information, damage to its reputation, erosion of customer trust, loss of customers, litigation, regulatory investigations, fines, penalties and other liabilities. Accordingly, if Otonomo’s cybersecurity measures or its service providers, fail to protect against unauthorized access, attacks (which may include sophisticated cyberattacks), or the mishandling of data by its employees and contractors, then its reputation, business, results of operations and financial condition could be adversely affected. While Otonomo maintains errors, omissions, and cyber liability insurance policies covering certain security and privacy damages, Otonomo cannot be certain that its existing insurance coverage will continue to be available on acceptable terms or will be available in sufficient amounts to cover the potentially significant losses that may result from a security incident or breach or that the insurer will not deny coverage as to any future claim.

 

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Any disruption of service at the Cloud Service Providers that host our platform could harm our business.

Otonomo currently hosts its platform primarily using AWS, Microsoft Azure and Google Cloud, referred to as its Cloud Service Providers. Its continued growth depends on the ability of its customers to access its platform at any time and within an acceptable amount of time.

Although Otonomo has disaster recovery plans, including the use of multiple Cloud Service Provider locations, any incident affecting its Cloud Service Provider infrastructure that may be caused by fire, flood, severe storm, earthquake or other natural disasters, cyber-attacks, terrorist or other attacks, and other similar events beyond its control could negatively affect Otonomo’s platform and its ability to deliver its services to its customers. A prolonged Cloud Service Provider disruption affecting Otonomo’s platform for any of the foregoing reasons would negatively impact its ability to serve its customers and could damage its reputation with current and potential customers, expose it to liability, cause Otonomo to lose customers or otherwise harm its business. Otonomo may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the Cloud Service Providers Otonomo use.

In the event that its Cloud Service Provider service agreements are terminated, or there is a lapse of service, Otonomo would experience interruptions in access to its platform as well as significant delays and additional expense in arranging new facilities and services and/or re-architecting its solutions for deployment on a different cloud infrastructure, which would adversely affect its business, operating results and financial condition.

Risks Related to Otonomo’s Intellectual Property

Otonomo may not be able to adequately protect or enforce its intellectual property rights or prevent unauthorized parties from copying or reverse engineering its solutions. Otonomo’s efforts to protect and enforce its intellectual property rights and prevent third parties from violating its rights may be costly.

The success of Otonomo’s services and its business depends in part on Otonomo’s ability to obtain patents and other intellectual property rights and maintain adequate legal protection for its products in the United States and other international jurisdictions. Otonomo relies on a combination of patent, copyright, service mark, and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect its proprietary rights, all of which provide only limited protection. Otonomo cannot assure you that any patents will be issued with respect to its currently pending patent applications, including in a manner that gives Otonomo adequate defensive protection or competitive advantages, if at all, or that any of Otonomo’s patents will not be challenged, invalidated or circumvented. Otonomo has filed for patents in the United States and in certain international jurisdictions, but such protections may not be available in all countries in which it operates or in which Otonomo seeks to enforce its intellectual property rights or may be difficult to enforce in practice. Otonomo cannot be certain that the steps it has taken will prevent unauthorized use of its technology or the reverse engineering of its technology. Moreover, others may independently develop technologies that are competitive to Otonomo or infringe Otonomo’s intellectual property.

Protecting against the unauthorized use of Otonomo’s intellectual property, products and other proprietary rights is expensive and can be difficult, particularly with respect to international jurisdictions. Unauthorized parties may attempt to copy or reverse engineer Otonomo’s solutions or certain aspects of Otonomo’s solutions that are considered proprietary. Litigation may be necessary in the future to enforce or defend Otonomo’s intellectual property rights, to prevent unauthorized parties from copying or reverse engineering its solutions, to determine the validity and scope of the proprietary rights of others or to block the importation of infringing products into the U.S. Any such litigation, regardless of merit, could be costly, divert the attention of management and may not ultimately be resolved in Otonomo’s favor.

Effective patent, trademark, service mark, copyright and trade secret protection may not be available in every country in which Otonomo’s products are available and competitors based in other countries may sell infringing products in one or more markets. An inability to adequately protect and enforce Otonomo’s

 

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intellectual property and other proprietary rights or an inability to prevent authorized parties from copying or reverse engineering its smart vision solutions or certain aspects of its solutions that Otonomo considers proprietary could adversely affect its business, operating results, financial condition and prospects.

In addition to patented technology, Otonomo relies on its unpatented proprietary technology, trade secrets, processes and know-how.

Otonomo relies on proprietary information (such as trade secrets, know-how and confidential information) to protect intellectual property that may not be patentable or subject to copyright, trademark, trade dress or service mark protection, or that Otonomo believes is best protected by means that do not require public disclosure.

Otonomo generally seeks to protect this proprietary information by entering into confidentiality agreements, or consulting, services or employment agreements that contain non-disclosure and non-use provisions with its employees, consultants, contractors and third parties. However, Otonomo may fail to enter into the necessary agreements, and even if entered into, these agreements may be breached or may otherwise fail to prevent disclosure, third-party infringement or misappropriation of its proprietary information, may be limited as to their term and may not provide an adequate remedy in the event of unauthorized disclosure or use of proprietary information. Otonomo has limited control over the protection of trade secrets used by its current or future manufacturing partners and suppliers and could lose future trade secret protection if any unauthorized disclosure of such information occurs. In addition, Otonomo’s proprietary information may otherwise become known or be independently developed by its competitors or other third parties. To the extent that its employees, consultants, contractors, advisors and other third parties use intellectual property owned by others in their work for Otonomo, disputes may arise as to the rights in related or resulting know-how and inventions. Costly and time-consuming litigation could be necessary to enforce and determine the scope of Otonomo’s proprietary rights, and failure to obtain or maintain protection for its proprietary information could adversely affect its competitive business position. Furthermore, laws regarding trade secret rights in certain markets where Otonomo operates may afford limited or no protection to its trade secrets.

Otonomo also relies on physical and electronic security measures to protect its proprietary information, but it cannot provide assurance that these security measures will not be breached or that these measures will provide adequate protection. There is a risk that third parties may obtain and improperly utilize Otonomo’s proprietary information to its competitive disadvantage. Otonomo may not be able to detect or prevent the unauthorized use of such information or take appropriate and timely steps to enforce its intellectual property rights.

Third-party claims that Otonomo is infringing intellectual property, whether successful or not, could subject it to costly and time-consuming litigation or expensive licenses, and its business could be adversely affected.

Although Otonomo has pending patents related to its products, a number of companies, both within and outside of the vehicle data service industry, hold other patents covering systems and methods for processing vehicle requests. In addition to these patents, participants in this industry typically also protect their technology, especially embedded software, through copyrights and trade secrets. As a result, there is frequent litigation based on allegations of infringement, misappropriation or other violations of intellectual property rights. Otonomo may receive, in the future inquiries, from other intellectual property holders and may become subject to claims that it infringes their intellectual property rights, particularly as Otonomo expands its presence in the market. In addition, third parties may claim that the names and branding of Otonomo’s products infringe their trademark rights in certain countries or territories. If such a claim were to prevail, Otonomo may be liable for damages, be forced to change the branding of its products in the affected territories, or may be required to pay royalties for a license (if a license is available at all).

Otonomo currently has a number of agreements in effect pursuant to which it has agreed to defend, indemnify and hold harmless its customers, suppliers, and partners from damages and costs which may arise

 

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from the infringement by Otonomo’s products of third-party patents or other intellectual property rights. The scope of these indemnity obligations varies, but may, in some instances, include indemnification for damages and expenses, including attorneys’ fees. Otonomo’s insurance may not cover all intellectual property infringement claims. A claim that its products infringe a third party’s intellectual property rights, even if without merit, could adversely affect Otonomo’s relationships with its customers, may deter future customers from purchasing its products and could expose Otonomo to costly litigation and settlement expenses. Even if Otonomo is not a party to any litigation between a customer and a third party relating to infringement by its products, an adverse outcome in any such litigation could make it more difficult for Otonomo to defend its products against intellectual property infringement claims in any subsequent litigation in which it is a named party. Any of these results could adversely affect Otonomo’s brand and operating results.

Otonomo’s defense of intellectual property rights claims brought against it or its customers, suppliers and channel partners, with or without merit, could be time-consuming, expensive to litigate or settle, divert management resources and attention and force Otonomo to acquire intellectual property rights or licenses, which may involve substantial royalty or other payments and may not be available on acceptable terms or at all. Further, a party making such a claim, if successful, could secure a judgment that requires Otonomo to pay substantial damages or obtain an injunction. An adverse determination also could invalidate Otonomo’s intellectual property rights and adversely affect its ability to offer its products to its customers and may require that Otonomo procure or develop substitute products that do not infringe, which could require significant effort and expense. Any of these events could adversely affect Otonomo’s business, operating results, financial condition and prospects.

Legal and Regulatory Risks Related to Otonomo’s Business

Otonomo’s operations and platform are subject to a variety of U.S. and international laws and regulations, including those regarding privacy, data protection and information security, and its data consumers may be subject to regulations related to the handling and transfer of certain types of sensitive and confidential information. Any failure of Otonomo’s platform and operations to comply with or enable data consumers to comply with applicable laws and regulations would harm its business, results of operations and financial condition.

Privacy is at the core of Otonomo’s technology. As a result, the platform and marketplace were designed to take into consideration the requirements of the General Data Protection Regulation 2016/679 (“GDPR”) and CCPA. Otonomo has and continues to invest time and resources, including the review of its technology and systems to ensure its taking into consideration the requirements of applicable data privacy laws.

Otonomo and its data providers and data consumers may be subject to privacy and data protection-related laws and regulations that impose obligations in connection with the collection, processing and use of personal data. The U.S. federal and various state and foreign governments have adopted or proposed limitations on, or requirements regarding, the collection, distribution, use, security and storage of personal data of individuals. The U.S. Federal Trade Commission and numerous state attorneys general are applying federal and state consumer protection laws to impose standards on the online collection, use and dissemination of data, and to the security measures applied to such data.

Similarly, many foreign countries and governmental bodies, including the EU member states, have laws and regulations concerning the collection and use of personal data obtained from EU residents or by businesses operating within their jurisdiction. For example, from 1 January 2021, we are subject to the GDPR and also the UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure and security of personal data that identifies or may be used to identify an individual, such as names, telephone numbers, email addresses, vehicle identification number, GPS location and, in some jurisdictions, IP addresses and other online identifiers.

For example, the GDPR, and national implementing legislation in the European Economic Area (“EEA”) member states and the United Kingdom, impose a strict data protection compliance regime including: providing

 

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detailed disclosures about how personal data is collected and processed (in a concise, intelligible and easily accessible form); demonstrating that an appropriate legal basis is in place or otherwise exists to justify data processing activities; granting new rights for data subjects in regard to their personal data (including the right to be “forgotten” and the right to data portability), as well as enhancing current rights (e.g., data subject access requests); introducing the obligation to notify data protection regulators or supervisory authorities (and in certain cases, affected individuals) of significant data breaches; defining for the first time pseudonymized (i.e., key-coded) data; imposing limitations on retention of personal data; maintaining a record of data processing; and complying with the principal of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit.

Noncompliance with GDPR and the UK GDPR can respectively trigger fines equal to or greater of €20 million or 4% of global annual revenues. In addition to the foregoing, a breach of the GDPR or UK GDPR could result in regulatory investigations, reputational damage, orders to cease/ change our processing of our data, enforcement notices, and/ or assessment notices (for a compulsory audit). We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources, and reputational harm. Although Otonomo believes that its Otonomo Vehicle Data Platform currently meets the material requirements of GDPR, to the extent the requirements of GDPR change or are expanded, Otonomo may need to invest significant time and resources, including a review of its technology and systems currently in use against such changed or expanded requirements of GDPR. There are also additional EU laws and regulations (and member states implementations thereof) which govern the protection of consumers and of electronic communications. If Otonomo’s efforts to comply with GDPR or other applicable EU laws and regulations are not successful, Otonomo may be subject to penalties and fines, as well as the other action as noted above, that would adversely impact Otonomo’s business and results of operations, and its ability to conduct business in the EU could be significantly impaired.

We are also subject to European Union rules with respect to cross-border transfers of personal data out of the EEA and the United Kingdom. Recent legal developments in Europe have created complexity and compliance uncertainty regarding certain transfers of information from the EU to the United States. On July 16, 2020, the Court of Justice of the European Union (the “CJEU”) invalidated the EU-US Privacy Shield Framework. The CJEU also imposed substantial requirements upon the continued use of standard contractual clauses for data transfers from the EU to the United States, which may make the use of standard contractual clauses difficult or impossible to use under some circumstances. These recent developments may require us to review and amend the legal mechanisms by which we make and/ or receive personal data transfers to/ in the United States. As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the standard contractual clauses cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results. We and our customers are at risk of enforcement actions taken by European regulators until such point in time that we are able to ensure that all data transfers to the United States (and other countries deemed to be “third countries”) from the EU are legitimized.

In addition, we also may encounter additional complexity with respect to data privacy and data transfers in relation to the U.K. Following the U.K.’s withdrawal from the EU, the U.K. will become a “third country” for the purposes of data transfers from the EU to the United Kingdom following the expiration of the four to six-month personal data transfer grace period (from 1 January 2021) set out in the EU and UK Trade and Cooperation Agreement, unless a relevant adequacy decision is adopted in favor of the U.K. (which would allow data transfers without additional measures).. If we are unable to transfer personal data between and among countries and regions in which we operate or may operate in the future, it could affect the manner in which we provide our services or could adversely affect our financial results.

We are also subject to evolving EU and U.K. privacy laws on cookies and e-marketing. In the EU and the U.K., regulators are increasingly focusing on compliance with requirements in the online behavioral advertising

 

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ecosystem, and current national laws that implement the European Directive 2002/58/EC, (the “ePrivacy Directive”) are highly likely to be replaced by an EU regulation known as the ePrivacy Regulation which will significantly increase fines for non-compliance. In the EU and the UK, informed consent is required for the placement of a cookie or similar technologies on a user’s device and for direct electronic marketing. The GDPR also imposes conditions on obtaining valid consent, such as a prohibition on pre-checked consents and a requirement to ensure separate consents are sought for each type of cookie or similar technology. While the text of the ePrivacy Regulation is still under development, a recent European court decision and regulators’ recent guidance are driving increased attention to cookies and tracking technologies. If regulators start to enforce the strict approach in recent guidance, this could lead to substantial costs, require significant systems changes, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, increase costs and subject us to additional liabilities. Regulation of cookies and similar technologies, and any decline of cookies or similar online tracking technologies as a means to identify and potentially target users, may lead to broader restrictions and impairments on our marketing and personalization activities and may negatively impact our efforts to understand users.

Furthermore, outside of the EU, Otonomo continues to see increased regulation of data privacy and security, including the adoption of more stringent subject matter specific state laws in the United States. For example, on July 8, 2019, Brazil enacted the General Data Protection Law (Lei Geral de Proteção de Dados Pessoais) (Law No. 13,709/2018) (“LGPD”) regulating the processing of personal data, which was enacted in August 2020. Also, on June 28, 2018, California enacted the California Consumer Privacy Act (“CCPA”), which took effect on January 1, 2020. The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. Although Otonomo believes that its Otonomo Vehicle Data Platform currently meets the requirements of the CCPA, to the extent the requirements of CCPA change or are expanded may increase Otonomo’s compliance costs and potential liability. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent state privacy legislation in the U.S., which could increase Otonomo’s potential liability and adversely affect its business. Furthermore, California voters approved the California Privacy Rights Act (“CPRA”) on November 3, 2020, which will amend and expand the CCPA, including by providing consumers with additional rights with respect to their personal data. The CPRA will come into effect on January 1, 2023, applying to information collected by businesses on or after January 1, 2022. Otonomo continues to invest time and resources in reviewing our technology and systems to meet the evolving data privacy regulations, be they GDPR, CCPA or others. Restrictions on the collection, use, sharing or disclosure of personal data or additional requirements and liability for security and data integrity may require us to modify our business practices, limit our ability to develop new products and features and subject us to increased compliance obligations and regulatory scrutiny.

In addition, additional jurisdictions may impose data localization laws, which require personal information, or certain subcategories of personal information to be stored in the jurisdiction of origin. These regulations may inhibit Otonomo’s ability to expand into those markets or prohibit Otonomo from continuing to offer its marketplace in those markets without significant additional costs.

The uncertainty and changes in the requirements of multiple jurisdictions may increase the cost of compliance, delay or reduce demand for Otonomo’s platform, restrict its ability to offer its marketplace in certain locations, limit its ability to transfer data between jurisdictions or subject Otonomo to sanctions, by national data protection regulators, all of which could harm its business, financial condition and results of operations. Any such regulations may also restrict OEMs or other data providers from collecting, processing and sharing vehicle data which may adversely impact Otonomo’s business. Additionally, although Otonomo endeavors to have its platform and operations comply with applicable laws and regulations, Otonomo expects that there will continue to be new proposed laws, rules of self-regulatory bodies, regulations and industry standards concerning privacy, data protection and information security in the United States, the European Union and other jurisdictions, and Otonomo cannot yet determine the impact such future laws, rules, regulations and standards may have on its

 

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business or that of its data providers and data consumers, which may indirectly impact Otonomo. Furthermore, these and other obligations may be modified, they may be interpreted and applied in an inconsistent manner from one jurisdiction to another, and they may conflict with one another, other regulatory requirements, contractual commitments or its internal practices. As a result, it is possible that Otonomo or its platform or operations or the businesses of its data providers and data consumers, may not be, or may not have been, compliant with each such applicable law, regulation and industry standard and compliance with such new laws or to changes to existing laws may impact Otonomo’s business and practices, require Otonomo to expend significant resources to adapt to these changes and modify its platform and business, or to stop offering its platform in certain countries. These developments could adversely affect Otonomo’s business, results of operations and financial condition.

Otonomo also may be bound by contractual obligations relating to its collection, use and disclosure of personal and other data or may find it necessary or desirable to join industry or other self-regulatory bodies or other privacy or data protection-related organizations that require compliance with their rules pertaining to privacy and data protection.

Any failure or perceived failure by Otonomo, its platform or operations, or Otonomo’s data providers and data consumers, to comply with new or existing U.S., EU or other applicable privacy or data security laws, regulations, policies, industry standards or legal obligations, or any security incident that results in the unauthorized access to, or acquisition, share or transfer of, personal data or other customer data may result in governmental investigations, inquiries, enforcement actions and prosecutions, private litigation, fines and penalties, adverse publicity or potential loss of business.

Risks Related to Being a Public Company

Otonomo will incur increased costs as a result of operating as a public company, and its management will devote substantial time to new compliance initiatives.

Upon the completion of the Business Combination, Otonomo will become a public company subject to reporting requirements in the United States, and it will incur significant legal, accounting and other expenses that it did not incur as a private company, and these expenses may increase even more after Otonomo is no longer an emerging growth company, as defined in Section 2(a) of the Securities Act. As a public company, Otonomo will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules adopted, and to be adopted, by the SEC and Nasdaq. Otonomo’s management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, Otonomo expects these rules and regulations to substantially increase its legal and financial compliance costs and to make some activities more time-consuming and costly. The increased costs will increase Otonomo’s net loss. For example, Otonomo expects these rules and regulations to make it more difficult and more expensive for it to obtain director and officer liability insurance and it may be forced to accept reduced policy limits or incur substantially higher costs to maintain the same or similar coverage. Otonomo cannot predict or estimate the amount or timing of additional costs it may incur to respond to these requirements. The impact of these requirements could also make it more difficult for Otonomo to attract and retain qualified persons to serve on its board of directors, its board committees or as executive officers.

A market for Otonomo’s securities may not develop or be sustained, which would adversely affect the liquidity and price of SWAG’s securities.

Following the Business Combination, the price of Otonomo’s securities may fluctuate significantly due to the market’s reaction to the Business Combination and general market and economic conditions. An active trading market for Otonomo’s securities following the Business Combination may never develop or, if developed, it may not be sustained. In addition, the price of Otonomo’s securities after the Business Combination can vary due to general economic conditions and forecasts, SWAG’s general business condition and the release of SWAG’s financial reports. Additionally, if Otonomo’s securities become delisted from Nasdaq and are quoted

 

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on the OTC Bulletin Board (an inter-dealer automated quotation system for equity securities that is not a national securities exchange) or the combined company’s securities are not listed on Nasdaq and are quoted on the OTC Bulletin Board, the liquidity and price of Otonomo’s securities may be more limited than if Otonomo was quoted or listed on the NYSE, Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.

Otonomo’s internal controls over financial reporting may not be effective and its independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on Otonomo’s business and reputation.

After the Business Combination, the combined company will carry out Otonomo’s business and will be subject to the reporting requirements of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of Nasdaq. Otonomo expects that the requirements of these rules and regulations will continue to increase its legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place significant strain on its personnel, systems and resources.

The Sarbanes-Oxley Act requires, among other things, that Otonomo maintain effective disclosure controls and procedures and internal control over financial reporting. Otonomo is continuing to develop and refine its disclosure controls, internal control over financial reporting and other procedures that are designed to ensure that information required to be disclosed by it in the reports that it will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to Otonomo’s principal executive and financial officers.

Otonomo’s current controls and any new controls that it develops may become inadequate because of changes in conditions in its business. Further, weaknesses in Otonomo’s internal controls may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could adversely affect Otonomo’s operating results or cause it to fail to meet its reporting obligations and may result in a restatement of Otonomo’s financial statements for prior periods. Any failure to implement and maintain effective internal controls also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of Otonomo’s internal control over financial reporting that it is required to include in its periodic reports Otonomo will file with the SEC under Section 404 of the Sarbanes-Oxley Act. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in Otonomo’s reported financial and other information.

In order to maintain and improve the effectiveness of its disclosure controls and procedures and internal control over financial reporting, Otonomo has expended and anticipates that it will continue to expend significant resources, including accounting-related costs, and provide significant management oversight. Any failure to maintain the adequacy of its internal controls, or consequent inability to produce accurate financial statements on a timely basis, could increase Otonomo’s operating costs and could materially and adversely affect its ability to operate its business. In the event that Otonomo’s internal controls are perceived as inadequate or that it is unable to produce timely or accurate financial statements, investors may lose confidence in Otonomo’s operating results and the stock price of the combined company could decline. In addition, if Otonomo is unable to continue to meet these requirements, the combined company may not be able to obtain or maintain listing on Nasdaq.

The combined company’s independent registered public accounting firm is not required to formally attest to the effectiveness of its internal control over financial reporting until after the combined company is no longer an emerging growth company. At such time, the combined company’s independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which Otonomo’s controls are documented, designed or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on the combined company’s business and operating results.

 

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Risks Related to Ownership of the Combined Company’s Shares

The Otonomo Articles and Israeli law could prevent a takeover that shareholders consider favorable and could also reduce the market price of Otonomo ordinary shares.

Certain provisions of Israeli law and the Otonomo Articles could have the effect of delaying or preventing a change in control and may make it more difficult for a third party to acquire Otonomo or for Otonomo’s shareholders to elect different individuals to its board of directors, even if doing so would be beneficial to its shareholders, and may limit the price that investors may be willing to pay in the future for the Otonomo ordinary shares. For example, Israeli corporate law regulates mergers and requires that a tender offer be effected when certain thresholds of percentage ownership of voting power in a company are exceeded (subject to certain conditions). Further, Israeli tax considerations may make potential transactions undesirable to Otonomo or to some of its shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders from Israeli tax. See the section titled “Certain Material Israeli Tax Considerations—Taxation of SWAGs shareholders.”

Otonomo does not intend to pay dividends for the foreseeable future. Accordingly, you may not receive any return on investment unless you sell your Otonomo ordinary shares for a price greater than the price you paid for the SWAG Common Stock.

Otonomo has never declared or paid any cash dividends on its shares. It currently intends to retain all available funds and any future earnings for use in the operation of its business and does not anticipate paying any dividends on the Otonomo ordinary shares in the foreseeable future. Consequently, you may be unable to realize a gain on your investment except by selling sell such shares after price appreciation, which may never occur.

Otonomo’s board of directors has sole discretion whether to pay dividends. If Otonomo’s board of directors decides to pay dividends, the form, frequency, and amount will depend upon its future, operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that its directors may deem relevant. The Israeli Companies Law, 1999 (the “Companies Law”) imposes restrictions on Otonomo’s ability to declare and pay dividends. See the section titled “Description of Otonomo ordinary shares—Dividend and Liquidation Rights for additional information. Payment of dividends may also be subject to Israeli withholding taxes. See the section titled “Certain Material Israeli Tax Considerations” for additional information.

The Otonomo ordinary shares and Otonomo warrants may not be listed on a national securities exchange after the Business Combination, which could limit investors’ ability to make transactions in such securities and subject Otonomo to additional trading restrictions.

Otonomo intends to apply to have the Otonomo ordinary shares and Otonomo warrants approved for listing on Nasdaq after the consummation of the Business Combination. Otonomo will be required to meet certain initial listing requirements to be listed, including having a minimum number of round lot shareholders. Otonomo may not be able to meet the initial listing requirements in connection with the Business Combination. Further, even if the Otonomo ordinary shares and Otonomo warrants are so listed, Otonomo may be unable to maintain the listing of such securities in the future. If Otonomo fails to meet the initial listing requirements and Nasdaq does not list the Otonomo ordinary shares and Otonomo warrants (and the related closing condition with respect to the listing of the Otonomo ordinary shares is waived by the parties), Otonomo could face significant material adverse consequences, including:

 

   

a limited availability of market quotations for the Otonomo ordinary shares and Otonomo warrants;

 

   

a reduced level of trading activity in the secondary trading market for the Otonomo ordinary shares and Otonomo warrants;

 

   

a limited amount of news and analyst coverage for Otonomo;

 

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a decreased ability to issue additional securities or obtain additional financing in the future; and

 

   

Otonomo’s securities would not be “covered securities” under the National Securities Markets Improvement Act of 1996, which is a federal statute that prevents or pre-empts the states from regulating the sale of certain securities, including securities listed on Nasdaq, in which case Otonomo’s securities would be subject to regulation in each state where Otonomo offers and sells securities.

The market price and trading volume of the Otonomo ordinary shares may be volatile and could decline significantly following the Business Combination.

The stock markets, including Nasdaq on which Otonomo intends to list the Otonomo ordinary shares and Otonomo warrants to be issued in the Business Combination under the symbol “OTMO,” and “OTMOW,” respectively, have from time to time experienced significant price and volume fluctuations. Even if an active, liquid and orderly trading market develops and is sustained for the Otonomo ordinary shares and Otonomo warrants following the Business Combination, the market price of the Otonomo ordinary shares and Otonomo warrants ordinary shares may be volatile and could decline significantly. In addition, the trading volume in the Otonomo ordinary shares and Otonomo warrants may fluctuate and cause significant price variations to occur. If the market price of the Otonomo ordinary shares and Otonomo warrants ordinary shares declines significantly, you may be unable to resell your shares or warrants at or above the market price of the ordinary shares Otonomo ordinary shares and Otonomo warrants as of the date immediately following the consummation of the Business Combination. Otonomo and SWAG cannot assure you that the market price of the Otonomo ordinary shares and Otonomo warrants ordinary shares will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following:

 

   

the realization of any of the risk factors presented in this proxy statement/prospectus;

 

   

actual or anticipated differences in Otonomo’s estimates, or in the estimates of analysts, for Otonomo’s revenues, Adjusted EBITDA, results of operations, level of indebtedness, liquidity or financial condition;

 

   

additions and departures of key personnel;

 

   

failure to comply with the requirements of Nasdaq;

 

   

failure to comply with the Sarbanes-Oxley Act or other laws or regulations;

 

   

future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases, of SWAG’s securities including due to the expiration of contractual lock-up agreements;

 

   

publication of research reports about Otonomo;

 

   

the performance and market valuations of other similar companies;

 

   

failure of securities analysts to initiate or maintain coverage of Otonomo, changes in financial estimates by any securities analysts who follow Otonomo or Otonomo’s failure to meet these estimates or the expectations of investors;

 

   

new laws, regulations, subsidies, or credits or new interpretations of existing laws applicable to Otonomo;

 

   

commencement of, or involvement in, litigation involving Otonomo;

 

   

broad disruptions in the financial markets, including sudden disruptions in the credit markets;

 

   

speculation in the press or investment community;

   

actual, potential or perceived control, accounting or reporting problems;

 

   

changes in accounting principles, policies and guidelines; and

 

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other events or factors, including those resulting from infectious diseases, health epidemics and pandemics (including the ongoing COVID-19 public health emergency), natural disasters, war, acts of terrorism or responses to these events.

In the past, securities class-action litigation has often been instituted against companies following periods of volatility in the market price of their shares. This type of litigation could result in substantial costs and divert SWAG’s management’s attention and resources, which could have a material adverse effect on us.

Otonomo’s quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to seasonality and other factors, some of which are beyond its control, resulting in a decline in its stock price.

Otonomo’s quarterly operating results may fluctuate significantly because of several factors, including:

 

   

labor availability and costs for hourly and management personnel;

 

   

profitability of Otonomo’s products, especially in new markets and due to seasonal fluctuations;

 

   

changes in interest rates;

 

   

impairment of long-lived assets;

 

   

macroeconomic conditions, both internationally and locally;

 

   

changes in consumer preferences and competitive conditions;

 

   

expansion to new markets; and

 

   

fluctuations in commodity prices.

If, following the Business Combination, securities or industry analysts do not publish or cease publishing research or reports about Otonomo, its business, or its market, or if they change their recommendations regarding the Otonomo ordinary shares adversely, then the price and trading volume of the Otonomo ordinary shares could decline.

The trading market for the Otonomo ordinary shares will be influenced by the research and reports that industry or financial analysts publish about its business. Otonomo does not control these analysts, or the content and opinions included in their reports. As a new public company, Otonomo may be slow to attract research coverage and the analysts who publish information about the Otonomo ordinary shares will have had relatively little experience with Otonomo, which could affect their ability to accurately forecast Otonomo’s results and make it more likely that Otonomo fails to meet their estimates. In the event Otonomo obtains industry or financial analyst coverage, if any of the analysts who cover Otonomo issues an inaccurate or unfavorable opinion regarding it, Otonomo’s share price would likely decline. In addition, the share prices of many companies in the technology industry have declined significantly after those companies have failed to meet, or significantly exceed, the financial guidance publicly announced by the companies or the expectations of analysts. If Otonomo’s financial results fail to meet, or significantly exceed, its announced guidance or the expectations of analysts or public investors, analysts could downgrade the Otonomo ordinary shares or publish unfavorable research about it. If one or more of these analysts cease coverage of Otonomo or fail to publish reports on it regularly, Otonomo’s visibility in the financial markets could decrease, which in turn could cause its share price or trading volume to decline.

Otonomo’s failure to meet the continued listing requirements of Nasdaq could result in a delisting of its Securities.

If, after listing, Otonomo fails to satisfy the continued listing requirements of Nasdaq such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist its

 

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securities. Such a delisting would likely have a negative effect on the price of the securities and would impair your ability to sell or purchase the securities when you wish to do so. In the event of a delisting, Otonomo can provide no assurance that any action taken by it to restore compliance with listing requirements would allow its securities to become listed again, stabilize the market price or improve the liquidity of its securities, prevent its securities from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements. Additionally, if Otonomo’s securities are not listed on, or become delisted from, Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of Otonomo’s securities may be more limited than if it were quoted or listed on Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.

Otonomo will qualify as an emerging growth company within the meaning of the Securities Act, and if Otonomo takes advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make Otonomo’s securities less attractive to investors and may make it more difficult to compare Otonomo’s performance with other public companies.

Otonomo is eligible to be treated as an emerging growth company, as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised financial accounting standards until such time as those standards apply to private companies. Otonomo intends to take advantage of this extended transition period under the JOBS Act for adopting new or revised financial accounting standards.

For as long as Otonomo continues to be an emerging growth company, it may also take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including presenting only limited selected financial data and not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. As a result, its shareholders may not have access to certain information that they may deem important. Otonomo could be an emerging growth company for up to five years, although circumstances could cause it to lose that status earlier, including if its total annual gross revenue exceeds $1.07 billion, if it issues more than $1.0 billion in non-convertible debt securities during any three-year period, or if before that time it is a “large accelerated filer” under U.S. securities laws.

Otonomo cannot predict if investors will find Otonomo ordinary shares less attractive because it may rely on these exemptions. If some investors find Otonomo ordinary shares less attractive as a result, there may be a less active trading market for Otonomo ordinary shares and Otonomo’s share price may be more volatile. Further, there is no guarantee that the exemptions available to Otonomo under the JOBS Act will result in significant savings. To the extent that Otonomo chooses not to use exemptions from various reporting requirements under the JOBS Act, it will incur additional compliance costs, which may impact Otonomo’s financial condition.

Otonomo will be a foreign private issuer and, as a result, it will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.

Upon the closing of the Business Combination, Otonomo will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because Otonomo qualifies as a foreign private issuer under the Exchange Act, it is exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (1) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (2) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (3) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, although it is subject to Israeli laws and regulations with regard to certain of these matters and

 

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intend to furnish comparable quarterly information on Form 6-K. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year and U.S. domestic issuers that are large accelerated filers are required to file their annual report on Form 10-K within 60 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation FD, which is intended to prevent issuers from making selective disclosures of material information. As a result of all of the above, you may not have the same protections afforded to shareholders of a company that is not a foreign private issuer.

Otonomo may lose its foreign private issuer status in the future, which could result in significant additional costs and expenses.

As discussed above, Otonomo is a foreign private issuer, and therefore is not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to Otonomo on June 30, 2021. In the future, Otonomo would lose its foreign private issuer status if (1) more than 50% of its outstanding voting securities are owned by U.S. residents and (2) a majority of its directors or executive officers are U.S. citizens or residents, or it fails to meet additional requirements necessary to avoid loss of foreign private issuer status. If Otonomo loses its foreign private issuer status, it will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. Otonomo would also have to mandatorily comply with U.S. federal proxy requirements, and its officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, it would lose its ability to rely upon exemptions from certain corporate governance requirements under the listing rules of Nasdaq. As a U.S. listed public company that is not a foreign private issuer, Otonomo would incur significant additional legal, accounting and other expenses that it will not incur as a foreign private issuer.

As Otonomo is a “foreign private issuer” and intends to follow certain home country corporate governance practices, its shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

As a foreign private issuer, Otonomo has the option to follow certain home country corporate governance practices rather than those of Nasdaq, provided that it discloses the requirements it is not following and describes the home country practices it is following. Otonomo intends to rely on this “foreign private issuer exemption” with respect to the Nasdaq rules for shareholder meeting quorums and Nasdaq rules requiring shareholder approval. Otonomo may in the future elect to follow home country practices with regard to other matters. As a result, its shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

Risks Related to Otonomo’s Incorporation and Location in Israel

Conditions in Israel could materially and adversely affect Otonomo’s business.

Many of Otonomo’s employees, including certain management members operate from its offices that are located in Herzliya Pituach, Israel. In addition, a number of Otonomo’s officers and directors are residents of Israel. Accordingly, political, economic, and military conditions in Israel and the surrounding region may directly affect Otonomo’s business and operations. In recent years, Israel has been engaged in sporadic armed conflicts with Hamas, an Islamist terrorist group that controls the Gaza Strip, with Hezbollah, an Islamist terrorist group that controls large portions of southern Lebanon, and with Iranian-backed military forces in Syria. In addition, Iran has threatened to attack Israel and may be developing nuclear weapons. Some of these hostilities were accompanied by missiles being fired from the Gaza Strip against civilian targets in various parts of Israel,

 

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including areas in which Otonomo’s employees are located, and negatively affected business conditions in Israel. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its trading partners could adversely affect Otonomo’s operations and results of operations.

Otonomo’s commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, Otonomo cannot assure you that this government coverage will be maintained or that it will sufficiently cover Otonomo’s potential damages. Any losses or damages incurred by Otonomo could have a material adverse effect on its business. Any armed conflicts or political instability in the region would likely negatively affect business conditions and could harm Otonomo’s results of operations.

Further, in the past, the State of Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict business with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on Otonomo’s results of operations, financial condition or the expansion of its business. A campaign of boycotts, divestment, and sanctions has been undertaken against Israel, which could also adversely affect Otonomo’s business. Actual or perceived political instability in Israel or any negative changes in the political environment, may individually or in the aggregate adversely affect the Israeli economy and, in turn, Otonomo’s business, financial condition, results of operations, and prospects.

In addition, many Israeli citizens are obligated to perform several weeks of annual military reserve duty each year until they reach the age of 40 (or older, for reservists who are military officers or who have certain occupations) and, in the event of a military conflict, may be called to active duty. In response to increases in terrorist activity, there have been periods of significant call-ups of military reservists. It is possible that there will be military reserve duty call-ups in the future. Otonomo’s operations could be disrupted by such call-ups, which may include the call-up of members of its management. Such disruption could materially adversely affect its business, prospects, financial condition, and results of operations.

Otonomo may become subject to claims for remuneration or royalties for assigned service invention rights by Otonomo’s employees, which could result in litigation and adversely affect Otonomo’s business.

A significant portion of Otonomo’s intellectual property has been developed by its employees in the course of their employment by Otonomo. Under the Israeli Patents Law, 5727-1967 (the “Patents Law”), inventions conceived by an employee during and as a result of his or her employment with a company are regarded as “service inventions,” which belong to the employer, absent an agreement between the employee and employer providing otherwise. The Patents Law also provides that if there is no agreement between an employer and an employee determining whether the employee is entitled to receive consideration for service inventions and on what terms, this will be determined by the Israeli Compensation and Royalties Committee (the “Committee”), a body constituted under the Patents Law. Case law clarifies that the right to receive consideration for “service inventions” can be waived by the employee and that in certain circumstances, such waiver does not necessarily have to be explicit. The Committee will examine, on a case-by-case basis, the general contractual framework between the parties, using interpretation rules of the general Israeli contract laws. Further, the Committee has not yet determined one specific formula for calculating this remuneration, but rather uses the criteria specified in the Patents Law. Although Otonomo generally enters into agreements with its employees pursuant to which such individuals assign to it all rights to any inventions created during and as a result of their employment with Otonomo, Otonomo may face claims demanding remuneration in consideration for assigned inventions. As a consequence of such claims, Otonomo could be required to pay additional remuneration or royalties to its current and/or former employees, or be forced to litigate such monetary claims (which will not affect Otonomo’s proprietary rights), which could negatively affect its business.

 

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Certain tax benefits that may be available to Otonomo, if obtained by Otonomo, would require it to continue to meet various conditions and may be terminated or reduced in the future, which could increase Otonomo’s costs and taxes.

Otonomo may be eligible for certain tax benefits provided to “Preferred Technological Enterprises” under the Israeli Law for the Encouragement of Capital Investments, 5719-1959, referred to as the Investment Law. If Otonomo obtains tax benefits under the “Preferred Technological Enterprises” regime then, in order to remain eligible for such tax benefits, it will need to continue to meet certain conditions stipulated in the Investment Law and its regulations, as amended. If these tax benefits are reduced, cancelled or discontinued, Otonomo’s Israeli taxable income may be subject to the Israeli corporate tax rate of 23% in 2018 and thereafter. Additionally, if Otonomo increase its activities outside of Israel through acquisitions, for example, its activities might not be eligible for inclusion in future Israeli tax benefit programs. See “Certain Material Israeli Tax Considerations.”

It may be difficult to enforce a U.S. judgment against Otonomo, its officers and directors and the Israeli experts named in this proxy statement/prospectus in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on Otonomo’s officers and directors and these experts.

Most of Otonomo’s directors or officers are not residents of the United States and most of their and Otonomo’s assets are located outside the United States. Service of process upon Otonomo or its non-U.S. resident directors and officers and enforcement of judgments obtained in the United States against Otonomo or its non-U.S. directors and executive officers may be difficult to obtain within the United States. Otonomo have been informed by its legal counsel in Israel that it may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities laws. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against Otonomo or its non-U.S. officers and directors because Israel may not be the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing the matters described above. Israeli courts might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments rendered against Otonomo or its non-U.S. officers and directors.

Moreover, among other reasons, including but not limited to, fraud or absence of due process, or the existence of a judgment which is at variance with another judgment that was given in the same matter if a suit in the same matter between the same parties was pending before a court or tribunal in Israel, an Israeli court will not enforce a non-Israeli judgment if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases) or if its enforcement is likely to prejudice the sovereignty or security of the State of Israel. For more information, see “Enforceability of Civil Liabilities.”

Your rights and responsibilities as a shareholder of Otonomo will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations.

Otonomo is incorporated under Israeli law. The rights and responsibilities of holders of the Otonomo ordinary shares are governed by the Otonomo Articles and the Companies Law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical U.S. corporations. In particular, pursuant to the Companies Law each shareholder of an Israeli company has to act in good faith in exercising his or her rights and fulfilling his or her obligations toward the company and other shareholders and to refrain from abusing his or her power in the company, including, among other things, in voting at the general meeting of shareholders and class meetings, on amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers, and transactions requiring shareholders’ approval under the Companies Law. In addition, a controlling shareholder of an Israeli company or a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or who has the power to appoint or prevent

 

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the appointment of a director or officer in the Company, or has other powers toward the Company has a duty of fairness toward the Company. However, Israeli law does not define the substance of this duty of fairness. There is limited case law available to assist in understanding the implications of these provisions that govern shareholder behavior.

Otonomo’s amended and restated articles of association to be effective upon the closing of the Business Combination will provide that, unless Otonomo consents otherwise, the District Court (Economic Division), located in Tel Aviv, Israel shall be the sole and exclusive forum for substantially all disputes between Otonomo and its shareholders under the Companies Law and the Israeli Securities Law, which could limit its shareholders ability to bring claims and proceedings against, as well as obtain favorable judicial forum for disputes with, Otonomo, its directors, officers and other employees.

The District Court (Economic Division), located in Tel Aviv, Israel shall be the exclusive forum for (i) any derivative action or proceeding brought on behalf of Otonomo, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of Otonomo to Otonomo or Otonomo’s shareholders, or (iii) any action asserting a claim arising pursuant to any provision of the Companies Law or the Israeli Securities Law. This exclusive forum provision is intended to apply to claims arising under Israeli Law and would not apply to claims brought pursuant to the Securities Act or the Exchange Act or any other claim for which U.S. federal courts would have exclusive jurisdiction. Such exclusive forum provision in Otonomo’s amended and restated articles of association will not relieve Otonomo of its duties to comply with federal securities laws and the rules and regulations thereunder, and shareholders of Otonomo will not be deemed to have waived Otonomo’s compliance with these laws, rules and regulations. This exclusive forum provision may limit a shareholders’ ability to bring a claim in a judicial forum of its choosing for disputes with Otonomo or its directors, officers or other employees, which may discourage lawsuits against Otonomo, its directors, officers and other employees.

If Otonomo or any of its subsidiaries are characterized as a Passive Foreign Investment Company (“PFIC”) for U.S. federal income tax purposes, U.S. Holders may suffer adverse tax consequences.

A non-U.S. corporation generally will be treated as a PFIC for U.S. federal income tax purposes, in any taxable year if either (1) at least 75% of its gross income for such year is passive income or (2) at least 50% of the value of its assets (generally based on an average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production of passive income. Based on the current and anticipated composition of the income, assets and operations of Otonomo and its subsidiaries, Otonomo does not believe it will be treated as a PFIC for the taxable year that includes the Business Combination, however there can be no assurances in this regard or any assurances that Otonomo will not be treated as a PFIC in any future taxable year. Moreover, the application of the PFIC rules is subject to uncertainty in several respects, and Otonomo cannot assure you that the IRS will not take a contrary position or that a court will not sustain such a challenge by the IRS.

Whether Otonomo or any of its subsidiaries are a PFIC for any taxable year is a factual determination that depends on, among other things, the composition of Otonomo’s income and assets, and the market value of its and its subsidiaries’ shares and assets. Changes in the composition of our income or composition of Otonomo or any of its subsidiaries assets may cause us to be or become a PFIC for the current or subsequent taxable years. Whether Otonomo is treated as a PFIC for U.S. federal income tax purposes is a factual determination that must be made annually at the close of each taxable year and, thus, is subject to significant uncertainty.

If Otonomo is a PFIC for any taxable year, a U.S. Holder of Otonomo ordinary shares may be subject to adverse tax consequences and may incur certain information reporting obligations. For a further discussion, see “Certain Material U.S. Federal Income Tax Considerations—U.S. Holders—Passive Foreign Investment Company Rules.” U.S. Holders of Otonomo ordinary shares and Otonomo warrants are strongly encouraged to consult their own advisors regarding the potential application of these rules to Otonomo and the ownership of Otonomo ordinary shares and/or Otonomo warrants.

 

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If a U.S. Holder is treated as owning at least 10% of the Otonomo ordinary shares, such U.S. Holder may be subject to adverse U.S. federal income tax consequences.

For U.S. federal income tax purposes, if a U.S. Holder is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of the Otonomo ordinary shares, such person may be treated as a “United States shareholder” with respect to Otonomo, or any of its subsidiaries, if Otonomo or such subsidiary is a “controlled foreign corporation.” If Otonomo has one or more U.S. subsidiaries, certain of Otonomo’s non-U.S. subsidiaries could be treated as a controlled foreign corporation regardless of whether Otonomo is treated as a controlled foreign corporation (although there are recently promulgated final and currently proposed Treasury regulations that may limit the application of these rules in certain circumstances).

Certain United States shareholders of a controlled foreign corporation may be required to report annually and include in their U.S. federal taxable income their pro rata share of the controlled foreign corporation’s “Subpart F income” and, in computing their “global intangible low-taxed income,” “tested income” and a pro rata share of the amount of certain U.S. property (including certain stock in U.S. corporations and certain tangible assets located in the United States) held by the controlled foreign corporation regardless of whether such controlled foreign corporation makes any distributions. The amount includable by a United States shareholder under these rules is based on a number of factors, including potentially, but not limited to, the controlled foreign corporation’s current earnings and profits (if any), tax basis in the controlled foreign corporation’s assets, and foreign taxes paid by the controlled foreign corporation on its underlying income. Failure to comply with these reporting obligations (or related tax payment obligations) may subject such United States shareholder to significant monetary penalties and may extend the statute of limitations with respect to such United States shareholder’s U.S. federal income tax return for the year for which reporting (or payment of tax) was due. Otonomo cannot provide any assurances that it will assist U.S. Holders in determining whether Otonomo or any of its subsidiaries are treated as a controlled foreign corporation for U.S. federal income tax purposes or whether any U.S. Holder is treated as a United States shareholder with respect to any of such controlled foreign corporations or furnish to any holder information that may be necessary to comply with reporting and tax paying obligations if Otonomo, or any of its subsidiaries, is treated as a controlled foreign corporation for U.S. federal income tax purposes.

Risks Related to the Business Combination

SWAG may not have sufficient funds to consummate the Business Combination.

As of December 31, 2020, SWAG had $1,003,468 available to it outside the Trust Account to fund its working capital requirements. If SWAG is required to seek additional capital, it would need to borrow funds from the Sponsor, its management team or other third parties to operate or it may be forced to liquidate. None of such persons is under any obligation to advance funds to SWAG in such circumstances. Any such advances would be repaid only from funds held outside the Trust Account or from funds released to SWAG upon completion of the Business Combination. If SWAG is unable to consummate the Business Combination because it does not have sufficient funds available, SWAG will be forced to cease operations and liquidate the Trust Account. Consequently, SWAG’s public stockholders may receive less than $10 per share and their warrants will expire worthless.

If SWAG’s stockholders fail to properly demand redemption rights, they will not be entitled to convert their SWAG Common Stock into a pro rata portion of the Trust Account.

SWAG stockholders holding public shares may demand that SWAG convert their public shares into a pro rata portion of the Trust Account, calculated as of two (2) business days prior to the special meeting. To demand redemption rights, SWAG stockholders must deliver their shares (either physically or electronically) to SWAG’s transfer agent no later than two (2) business days prior to the special meeting. Any stockholder who fails to properly demand redemption rights by delivering his, her or its shares will not be entitled to convert his, her or its shares into a pro rata portion of the Trust Account. See the section of this proxy statement/prospectus titled

 

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Special Meeting of SWAG Stockholders—Redemption Rights” for the procedures to be followed if you wish to convert your shares to cash.

The Business Combination remains subject to conditions that SWAG cannot control and if such conditions are not satisfied or waived, the Business Combination may not be consummated.

The Business Combination is subject to a number of conditions, including the condition that SWAG have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-5(g)(1) of the Exchange Act) either immediately prior to or upon consummation of the Business Combination, that there is no legal prohibition against consummation of the Business Combination, that the Otonomo ordinary shares be approved for listing on Nasdaq subject only to official notice of issuance thereof and the requirement to have a sufficient number of round lot holders, receipt of securityholder approvals, continued effectiveness of the registration statement of which this proxy statement/prospectus is a part, the truth and accuracy of SWAG’s and Otonomo’s representations and warranties made in the Business Combination Agreement, the non-termination of the Business Combination Agreement and consummation of certain ancillary agreements. There are no assurances that all conditions to the Business Combination will be satisfied or that the conditions will be satisfied in the time frame expected.

If the conditions to the Business Combination are not met (and are not waived, to the extent waivable), either SWAG or Otonomo may, subject to the terms and conditions of the Business Combination Agreement, terminate the Business Combination Agreement. See the section of this proxy statement/prospectus titled “The Business Combination Agreement—Termination.”

The exercise of SWAG’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in SWAG’s stockholders’ best interest.

In the period leading up to the closing of the Business Combination, events may occur that, pursuant to the Business Combination Agreement, would require SWAG to agree to amend the Business Combination Agreement, to consent to certain actions taken by Otonomo or to waive rights that SWAG is entitled to under the Business Combination Agreement. Waivers may arise because of changes in the course of Otonomo’s business, a request by Otonomo to undertake actions that would otherwise be prohibited by the terms of the Business Combination Agreement or the occurrence of other events that would have a material adverse effect on Otonomo’s business and would entitle SWAG to terminate the Business Combination Agreement. In any of such circumstances, it would be at SWAG’s discretion, acting through its board of directors, to grant its consent or waive those rights. The existence of the financial and personal interests of the directors and officers described in the following risk factors may result in a conflict of interest on the part of one or more of the directors or officers between what he or they may believe is best for SWAG and what he or they may believe is best for himself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, SWAG does not believe there will be any changes or waivers that SWAG’s directors and officers would be likely to make after stockholder approval of the Business Combination Proposal has been obtained. While certain changes could be made without further stockholder approval, SWAG will circulate a new or amended proxy statement/prospectus and resolicit SWAG’s stockholders if changes to the terms of the Business Combination that would have a material impact on its stockholders or represent a fundamental change in the proposals being voted upon.

Future resales of the Otonomo ordinary shares issued in connection with the Business Combination may cause the market price of the Otonomo to drop significantly, even if Otonomo’s business is doing well.

Certain equityholders of Otonomo and certain equityholders of SWAG entered into the Confidentiality and Lockup Agreement with Otonomo. Pursuant to the Confidentiality and Lockup Agreement, such Otonomo

 

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equityholders and SWAG equityholders have agreed that, during the Lockup Period, they will not, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares, or any options or warrants to purchase any share or any securities convertible into, exchangeable for or that represent the right to receive shares, or any interest in any of the foregoing, whether now owned or hereinafter acquired, owned directly by such shareholder (including holding as a custodian) or with respect to which such shareholder has beneficial ownership within the rules and regulations of the SEC (in each case, subject to certain exceptions set forth in the Confidentiality and Lockup Agreement). See the section of this proxy statement/prospectus titled “Agreements Entered Into in Connection with the Business Combination—Confidentiality and Lockup Agreement.”

Further, concurrently with the execution of the Business Combination Agreement, Otonomo, certain equityholders of Otonomo and certain equityholders of SWAG entered into the Registration Rights Agreement, providing such stockholders with customary demand registration rights and piggy-back registration rights with respect to registration statements filed by Otonomo after the closing. See the section of this proxy statement/prospectus titled “Agreements Entered Into in Connection with the Business Combination—Registration Rights Agreement.”

Upon expiration of the applicable Lockup Period and upon the effectiveness of any registration statement Otonomo files pursuant to the above-referenced Registration Rights Agreement, in a registered offering of securities pursuant to the Securities Act or otherwise in accordance with Rule 144 under the Securities Act, the Otonomo shareholders may sell large amounts of Otonomo ordinary shares and warrants in the open market or in privately negotiated transactions, which could have the effect of increasing the volatility in the trading price of the Otonomo ordinary shares or the Otonomo warrants or putting significant downward pressure on the price of the Otonomo ordinary shares or warrants. Additionally, downward pressure on the market price of the Otonomo ordinary shares or Otonomo warrants likely will result from sales of Otonomo ordinary shares issued in connection with the exercise of warrants. Further, sales of Otonomo ordinary shares or warrants upon expiration of the applicable Lockup Period could encourage short sales by market participants. Generally, short selling means selling a security, contract or commodity not owned by the seller. The seller is committed to eventually purchase the financial instrument previously sold. Short sales are used to capitalize on an expected decline in the security’s price. Short sales of Otonomo ordinary shares or warrants could have a tendency to depress the price of the Otonomo ordinary shares or the Otonomo warrants, respectively, which could increase the potential for short sales.

Additionally, through the Subscription Agreements and the Share Purchase Agreement, Otonomo has agreed with the PIPE Investors and the Secondary PIPE Investors to register the PIPE Shares and the Secondary PIPE Shares on a resale registration statement following the closing of the Transactions. These shares will be freely tradable without restriction or further registration under the Securities Act, unless the shares are held by any of SWAG’s “affiliates” as such term is defined in Rule 144 under the Securities Act. This additional liquidity in the market for Otonomo ordinary shares may lead to downward pressure on the market price of the Otonomo ordinary shares.

We cannot predict the size of future issuances of Otonomo ordinary shares or warrants or the effect, if any, that future issuances and sales of shares of Otonomo ordinary shares or warrants will have on the market price of the Otonomo ordinary shares or warrants. Sales of substantial amounts of Otonomo ordinary shares (including those shares issued in connection with the Business Combination), or the perception that such sales could occur, may adversely affect prevailing market prices of Otonomo ordinary shares or warrants.

SWAG’s board of directors did not obtain a third-party fairness opinion in determining whether or not to proceed with the Business Combination.

SWAG’s board of directors did not obtain a third-party fairness opinion in connection with their determination to approve the Business Combination. In analyzing the Business Combination, SWAG’s board of

 

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directors and management conducted due diligence on Otonomo and researched the industry in which Otonomo operates and concluded that the Business Combination was fair to and in the best interest of SWAG and its stockholders. Accordingly, investors will be relying solely on the judgment of SWAG’s board of directors and management in valuing Otonomo’s business, and SWAG’s board of directors and management may not have properly valued such business. The lack of a third-party fairness opinion may lead an increased number of stockholders to vote against the proposed Business Combination or demand redemption of their shares for cash, which could potentially impact SWAG’s ability to consummate the Business Combination or adversely affect Otonomo’s liquidity following the consummation of the Business Combination.

SWAG and Otonomo will incur significant transaction and transition costs in connection with the Business Combination.

SWAG and Otonomo have both incurred and expect to incur significant, non-recurring costs in connection with consummating the Transactions and operating as a public company following the consummation of the Transactions. Otonomo may also incur additional costs to retain key employees. All expenses incurred in connection with the Business Combination, including all legal, accounting, consulting, investment banking and other fees, expenses and costs, will be for the account of the party incurring such fees, expenses and costs or paid by Otonomo following the Closing.

Subsequent to the completion of the Business Combination, the combined company may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and the combined company’s ordinary share price, which could cause you to lose some or all of your investment.

Although SWAG has conducted extensive due diligence on Otonomo, SWAG cannot assure you that this diligence will surface all material issues that may be present in Otonomo’s business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Otonomo’s business and outside of its control will not later arise. As a result of these factors, the combined company may be forced to later write-down or write-off assets, restructure its operations, or incur impairment or other charges that could result in its reporting losses. Even if SWAG’s due diligence successfully identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with SWAG’s preliminary risk analysis. Even though these charges may be non-cash items and would not have an immediate impact on the combined company’s liquidity, the fact that the combined company reports charges of this nature could contribute to negative market perceptions of the combined company or its securities. In addition, charges of this nature may cause the combined company to violate net worth or other covenants to which the combined company may be subject as a result of assuming pre-existing debt held by Otonomo’s business or by virtue of the combined company obtaining post-combination debt financing. Accordingly, any stockholders who choose to remain shareholders following the Business Combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value.

The Otonomo securities to be received by SWAG’s securityholders as a result of the Business Combination will have different rights from SWAG securities.

Following completion of the Business Combination, SWAG’s securityholders will no longer be securityholders of SWAG but will instead be securityholders of Otonomo. There will be important differences between your current rights as a SWAG securityholder and your rights as an Otonomo securityholder. See “Comparison of Rights of Otonomo Shareholders and SWAG Stockholders” for a discussion of the different rights associated with the Otonomo securities.

SWAG’s stockholders will have a reduced ownership and voting interest after consummation of the Business Combination and will exercise less influence over management.

After the completion of the Business Combination, SWAG’s stockholders will own a smaller percentage of the combined company than they currently own of SWAG. At the Closing, existing Otonomo shareholders would

 

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hold approximately 70.5% of the issued and outstanding Otonomo ordinary shares and current stockholders of SWAG (including the Sponsor) would hold approximately 16.4% of the issued and outstanding Otonomo ordinary shares (assuming no holder of SWAG Common Stock exercises redemption rights as described in this proxy statement/prospectus, and based on current estimates of transaction expenses). Consequently, SWAG’s stockholders, as a group, will have reduced ownership and voting power in the combined company compared to their ownership and voting power in SWAG.

Otonomo may issue additional Otonomo ordinary shares or other equity securities without seeking approval of the Otonomo shareholders, which would dilute your ownership interests and may depress the market price of the Otonomo ordinary shares.

Upon consummation of the Business Combination, Otonomo will have warrants outstanding to purchase up to an aggregate of 13,825,000 Otonomo ordinary shares. Further, Otonomo may choose to seek third party financing to provide additional working capital for the Otonomo business, in which event Otonomo may issue additional equity securities. Following the consummation of the Business Combination, Otonomo may also issue additional Otonomo ordinary shares or other equity securities of equal or senior rank in the future for any reason or in connection with, among other things, future acquisitions, the redemption of outstanding warrants or repayment of outstanding indebtedness, without shareholder approval, in a number of circumstances.

The issuance of additional Otonomo ordinary shares or other equity securities of equal or senior rank would have the following effects:

 

   

Otonomo’s existing shareholders’ proportionate ownership interest in Otonomo will decrease;

 

   

the amount of cash available per share, including for payment of dividends in the future, may decrease;

 

   

the relative voting strength of each previously outstanding Otonomo ordinary share may be diminished; and

 

   

the market price of the Otonomo ordinary shares may decline.

Even if we consummate the Business Combination, there is no guarantee that the Otonomo warrants will ever be in the money, and they may expire worthless and the terms of SWAG’s warrants may be amended.

The exercise price for the Otonomo warrants will be $11.50 per ordinary share. Upon consummation of the Business Combination, each SWAG warrant will become one Otonomo warrant, and the exercise price and number of shares issuable upon exercise of such warrants may change if the Stock Split is not effected or does not result in a price per Otonomo ordinary share of $10.00. There is no guarantee that the Otonomo warrants, following the Business Combination, will ever be in the money prior to their expiration, and as such, the warrants may expire worthless.

SWAG’s current directors’ and executive officers’ affiliates own shares of SWAG Common Stock and private placement warrants that will be worthless if the Business Combination is not approved. Such interests may have influenced their decision to approve the Business Combination.

If the Business Combination or another business combination is not consummated by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter), SWAG will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, the 4,312,000 shares of Class B Stock held by the Sponsor, which is affiliated with certain of SWAG’s directors and officers and other certain officers, that were acquired for an aggregate purchase price of $25,000 prior to the SWAG IPO, would be worthless because the holders are not entitled to participate in any redemption or distribution with respect to such shares. Further, the Sponsor purchased an aggregate of 5,200,000 private placement warrants at a price of $1.00 per warrant, simultaneously with the consummation of

 

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the SWAG IPO and the subsequent exercise of the underwriter’s overallotment option, for an aggregate purchase price of $5,200,000. The Class B Stock and the private placement warrants will become worthless if SWAG does not consummate a business combination by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter). On the other hand, if the Business Combination is consummated, each outstanding share of Class B Stock will convert into one Otonomo ordinary share, subject to adjustment described herein, at the closing and each outstanding SWAG warrant will become an Otonomo warrant. Such shares and warrants had an aggregate market value of $                 and $            , respectively, based upon the closing price of $                 per share and $                 per warrant on Nasdaq on                    , 2021.

These financial interests may have influenced the decision of SWAG’s directors and officers to approve the Business Combination and to continue to pursue the Business Combination. In considering the recommendations of SWAG’s board of directors to vote for the Business Combination Proposal and other proposals, its stockholders should consider these interests. See the section of this proxy statement/prospectus titled “Proposal One—The Business Combination Proposal—Interests of Certain Persons in the Transactions.”

The Sponsor, an affiliate of current officers and directors of SWAG, is liable to ensure that proceeds of the Trust Account are not reduced by vendor claims in the event the Business Combination is not consummated. Such liability may have influenced SWAG’s board of directors’ decision to pursue the Business Combination and SWAG’s board of directors’ decision to approve it.

If the Business Combination or another business combination is not consummated by SWAG on or before March 17, 2022, the Sponsor, an affiliate of current officers and directors of SWAG, will be liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by SWAG for services rendered or contracted for or for products sold to SWAG, but only if such a vendor or target business has not executed a waiver agreement. If SWAG consummates a business combination, on the other hand, SWAG will be liable for all such claims. SWAG has no reason to believe that the Sponsor will not be able to fulfill its indemnity obligations to SWAG.

These obligations of the Sponsor may have influenced SWAG’s board of directors’ decision to pursue the Business Combination with Otonomo or SWAG’s board of directors’ decision to approve the Business Combination. In considering the recommendations of SWAG’s board of directors to vote for the Business Combination Proposal and other proposals, stockholders should consider these interests. See the section of this proxy statement/prospectus titled “Proposal One—The Business Combination Proposal—Interests of Certain Persons in the Transactions.”

SWAG’s directors may decide not to enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to SWAG’s public stockholders in the event a business combination is not consummated.

If proceeds in the Trust Account are reduced below $10.00 per public share and the Sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, SWAG’s independent directors would determine whether to take legal action against the Sponsor to enforce its indemnification obligations. While SWAG currently expects that its independent directors would take legal action on SWAG’s behalf against the Sponsor to enforce the Sponsor’s indemnification obligations, it is possible that SWAG’s independent directors in exercising their business judgment may choose not to do so in any particular instance. If SWAG’s independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to SWAG’s public stockholders may be reduced below $10.00 per share.

 

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Activities taken by existing SWAG stockholders to increase the likelihood of approval of the Business Combination Proposal and other proposals could have a depressive effect on the SWAG Common Stock.

At any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding SWAG or its securities, SWAG, the Sponsor, SWAG’s officers and directors, Otonomo, the Otonomo officers and directors and/or their respective affiliates may purchase SWAG Common Stock from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of SWAG Common Stock or vote their shares of SWAG Common Stock in favor of the Business Combination Proposal. The purpose of such purchases and other transactions would be to increase the likelihood of approval of the Business Combination Proposal by the holders of a majority of the outstanding shares of SWAG Common Stock and ensure that SWAG has in excess of $5,000,001 of net assets to consummate the Business Combination where it appears that such requirement would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares owned by the Sponsor for nominal value. Entering into any such arrangements may have a depressive effect on the SWAG Common Stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares of SWAG Common Stock at a price lower than market and may therefore be more likely to sell the SWAG Common Stock he owns, either prior to or immediately after the special meeting.

In addition, if such purchases are made, the public “float” of the Otonomo ordinary shares following the Business Combination and the number of beneficial holders of Otonomo securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of Otonomo securities on Nasdaq or another national securities exchange or reducing the liquidity of the trading market for the Otonomo ordinary shares.

The Business Combination may be completed even though material adverse effects may result from the announcement of the Business Combination, industry-wide changes and other causes.

In general, either SWAG or Otonomo may refuse to complete the Business Combination if there is a material adverse effect affecting the other party between the signing date of the Business Combination Agreement and the planned closing. However, certain types of changes do not permit either party to refuse to consummate the Business Combination, even if such change could be said to have a material adverse effect on Otonomo or SWAG, including the following events (except, in certain cases where the change has a disproportionate effect on a party):

 

   

changes generally affecting the economy and the financial or securities markets, including the COVID-19 pandemic;

 

   

the outbreak or escalation of war or any act of terrorism, civil unrest or natural disasters;

 

   

changes (including changes in law) or general conditions in the industry in which the party operates;

 

   

changes in GAAP, or the authoritative interpretation of GAAP; or

 

   

changes attributable to the public announcement or pendency of the Transactions or the execution or performance of the Business Combination Agreement.

Furthermore, SWAG or Otonomo may waive the occurrence of a material adverse effect affecting the other party. If a material adverse effect occurs and the parties still consummate the Business Combination, the market trading price of the Otonomo ordinary shares and Otonomo warrants may suffer.

 

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Delays in completing the Business Combination may substantially reduce the expected benefits of the Business Combination.

Satisfying the conditions to, and completion of, the Business Combination may take longer than, and could cost more than, SWAG expects. Any delay in completing or any additional conditions imposed in order to complete the Business Combination may materially adversely affect the benefits that SWAG expects to achieve from the Business Combination.

SWAG and Otonomo have no history operating as a combined company. The unaudited pro forma condensed combined financial information may not be an indication of Otonomo’s financial condition or results of operations following the Business Combination, and accordingly, you have limited financial information on which to evaluate Otonomo and your investment decision.

Otonomo has a limited operating history and Otonomo and SWAG have no prior history as a combined entity and their operations have not been previously managed on a combined basis. The unaudited pro forma condensed combined financial information contained in this proxy statement/prospectus has been prepared using the consolidated historical financial statements of SWAG and Otonomo, and is presented for illustrative purposes only and should not be considered to be an indication of the results of operations including, without limitation, future revenue, or financial condition of SWAG following the Business Combination. Certain adjustments and assumptions have been made regarding SWAG after giving effect to the Business Combination. Otonomo and SWAG believe these assumptions are reasonable, however, the information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments are difficult to make with accuracy. These assumptions may not prove to be accurate, and other factors may affect SWAG’s results of operations or financial condition following the consummation of the Business Combination. For these and other reasons, the historical and pro forma condensed combined financial information included in this proxy statement/prospectus does not necessarily reflect Otonomo’s results of operations and financial condition and the actual financial condition and results of operations of Otonomo following the Business Combination may not be consistent with, or evident from, this pro forma financial information.

The projections and forecasts presented in this proxy statement/prospectus may not be an indication of the actual results of the transaction or Otonomo’s future results.

This proxy statement/prospectus contains projections and forecasts prepared by Otonomo. None of the projections and forecasts included in this proxy statement/prospectus have been prepared with a view toward public disclosure other than to certain parties involved in the Business Combination or toward complying with SEC guidelines or GAAP. The projections and forecasts were prepared based on numerous variables and assumptions which are inherently uncertain and may be beyond the control of Otonomo and SWAG and exclude, among other things, transaction-related expenses. Important factors that may affect actual results and results of Otonomo’s operations following the Business Combination, or could lead to such projections and forecasts not being achieved include, but are not limited to: client demand for Otonomo’s products, an evolving competitive landscape, rapid technological change, margin shifts in the industry, regulation changes in a highly regulated environment, successful management and retention of key personnel, unexpected expenses and general economic conditions. As such, these projections and forecasts may be inaccurate and should not be relied upon as an indicator of actual past or future results.

If SWAG is unable to complete the Business Combination or another business combination by March 17, 2022 (or such other date as approved by SWAG stockholders through approval of an amendment to the SWAG Charter), SWAG will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, SWAG public stockholders may only receive $10 per share (or less than such amount in certain circumstances) and SWAG warrants will expire worthless.

If SWAG is unable to complete the Business Combination or another business combination within the required time period, SWAG will (i) cease all operations except for the purpose of winding up, (ii) as promptly

 

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as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to SWAG to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding SWAG public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of SWAG’s remaining stockholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to SWAG’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such case, SWAG public stockholders may only receive $10 per share, and SWAG warrants will expire worthless. In certain circumstances, SWAG public stockholders may receive less than $10 per share on the redemption of their shares.

If the Business Combination is not completed, potential target businesses may have leverage over SWAG in negotiating a business combination, SWAG’s ability to conduct due diligence on a business combination as it approaches its dissolution deadline may decrease, and it may have insufficient working capital to continue to pursue potential target businesses, each of which could undermine its ability to complete a business combination on terms that would produce value for SWAG stockholders.

Any potential target business with which SWAG enters into negotiations concerning an initial business combination will be aware that, unless SWAG amends its existing charter to extend its life and amend certain other agreements it has entered into, then SWAG must complete its initial business combination by March 17, 2022. Consequently, if SWAG is unable to complete this Business Combination, a potential target business may obtain leverage over it in negotiating an initial business combination, knowing that if SWAG does not complete its initial business combination with that particular target business, it may be unable to complete its initial business combination with any target business. This risk will increase as SWAG gets closer to the timeframe described above. In addition, SWAG may have limited time to conduct due diligence and may enter into its initial business combination on terms that it would have rejected upon a more comprehensive investigation. Additionally, SWAG may have insufficient working capital to continue efforts to pursue a business combination.

In the event of liquidation by SWAG, third parties may bring claims against SWAG and, as a result, the proceeds held in the Trust Account could be reduced and the per-share liquidation price received by stockholders could be less than $10 per share.

Under the terms of the SWAG Charter, SWAG must complete the Business Combination or another business combination by March 17, 2022 (unless such date is extended by SWAG’s stockholders) or SWAG must cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, third parties may bring claims against SWAG. Although SWAG has obtained waiver agreements from certain vendors and service providers it has engaged and owes money to, and the prospective target businesses it has negotiated with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse against the Trust Account notwithstanding such agreements. Furthermore, there is no guarantee that a court will uphold the validity of such agreements. Accordingly, the proceeds held in the Trust Account could be subject to claims which could take priority over those of SWAG’s public stockholders. If SWAG is unable to complete a business combination within the required time period, the Sponsor has agreed that it will be liable to SWAG if and to the extent any claims by a vendor for services rendered or products sold to it, or a prospective target business with which it has discussed entering into a transaction agreement, reduces the amount of funds in the Trust Account to below $10.00 per public share, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under SWAG’s indemnity of the underwriter of the initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event

 

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that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third party claims. Furthermore, the Sponsor will not be liable to public stockholders and instead will only have liability to SWAG. SWAG has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and, therefore, the Sponsor may not be able to satisfy those obligations. SWAG has not asked the Sponsor to reserve for such eventuality. Therefore, the per-share distribution from the Trust Account in such a situation may be less than the approximately $                 estimated to be in the Trust Account as of two business days prior to the special meeting date, due to such claims.

Additionally, if SWAG is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, or if SWAG otherwise enters compulsory or court supervised liquidation, the proceeds held in the Trust Account could be subject to applicable bankruptcy law and may be included in its bankruptcy

Because Otonomo is not conducting an underwritten offering of its securities, no underwriter has conducted due diligence of Otonomo’s business, operations or financial condition or reviewed the disclosure in this proxy statement/prospectus.

Section 11 of the Securities Act (“Section 11”) imposes liability on parties, including underwriters, involved in a securities offering if the registration statement contains a materially false statement or material omission. To effectively establish a due diligence defense against a cause of action brought pursuant to Section 11, a defendant, including an underwriter, carries the burden of proof to demonstrate that he or she, after reasonable investigation, believed that the statements in the registration statement were true and free of material omissions. In order to meet this burden of proof, underwriters in a registered offering typically conduct extensive due diligence of the registrant and vet the registrant’s disclosure. Such due diligence may include calls with the issuer’s management, review of material agreements, and background checks on key personnel, among other investigations.

Because Otonomo intends to become publicly traded through a business combination with a special purpose acquisition company rather through an underwritten offering of its ordinary shares, no underwriter is involved in the transaction. As a result, no underwriter has conducted diligence on Otonomo in order to establish a due diligence defense with respect to the disclosure presented in this proxy statement/prospectus. If such investigation had occurred, certain information in this prospectus may have been presented in a different manner or additional information may have been presented at the request of such underwriter.

SWAG’s stockholders may be held liable for claims by third parties against SWAG to the extent of distributions received by them.

If SWAG is unable to complete the Business Combination or another business combination within the required time period, SWAG will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to SWAG to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding SWAG public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of SWAG’s remaining stockholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to SWAG’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. SWAG cannot assure you that it will properly assess all claims that may be potentially brought against SWAG. As a result, SWAG’s stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of its stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, SWAG cannot assure you that third parties will not seek to recover from its stockholders amounts owed to them by SWAG.

 

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Additionally, if SWAG is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by SWAG’s stockholders. Because SWAG intends to distribute the proceeds held in the Trust Account to its public stockholders promptly after the expiration of the time period to complete a business combination, this may be viewed or interpreted as giving preference to its public stockholders over any potential creditors with respect to access to or distributions from its assets. Furthermore, SWAG’s board of directors may be viewed as having breached their fiduciary duties to its creditors and/or may have acted in bad faith, and thereby exposing itself and SWAG to claims of punitive damages, by paying public stockholders from the Trust Account prior to addressing the claims of creditors. SWAG cannot assure you that claims will not be brought against it for these reasons.

SWAG may be a target of securities class action and derivative lawsuits which could result in substantial costs and may delay or prevent the Business Combination from being completed.

Securities class action lawsuits and derivative lawsuits are often brought against companies that have entered into business combination agreements or similar agreements. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on SWAG’s liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting consummation of the Transactions, then that injunction may delay or prevent the Transactions from being completed. Currently, SWAG is not aware of any securities class action lawsuits or derivative lawsuits being filed in connection with the Transactions.

The Sponsor has agreed to vote in favor of the Business Combination, regardless of how SWAG’s public stockholders vote.

The Sponsor owns and is entitled to vote an aggregate of approximately 20% on an as-converted basis of the outstanding SWAG Common Stock. These holders have agreed to vote their shares in favor of the Business Combination Proposal. These holders have also indicated that they intend to vote their shares in favor of all other proposals being presented at the meeting. Accordingly, it is more likely that the necessary stockholder approval for the Business Combination Proposal and the other proposals will be received than would be the case if these holders agreed to vote their Founder Shares in accordance with the majority of the votes cast by SWAG’s public stockholders.

The ongoing COVID-19 pandemic may adversely affect SWAG’s and Otonomo’s ability to consummate the Transactions.

The COVID-19 pandemic has resulted in governmental authorities worldwide implementing numerous measures to contain the virus, including travel restrictions, quarantines, shelter-in-place orders and business limitations and shutdowns. More generally, the pandemic raises the possibility of an extended global economic downturn and has caused volatility in financial markets. The pandemic may also amplify many of the other risks described in this proxy statement/prospectus.

SWAG and Otonomo may be unable to complete the Transactions if continued concerns relating to COVID-19 restrict travel and limit the ability to have meetings with potential investors or the Otonomo personnel. The extent to which COVID-19 impacts SWAG’s and Otonomo’s ability to consummate the Transactions will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extended period of time, SWAG’s and Otonomo’s ability to consummate the Transactions may be materially adversely affected.

 

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The Business Combination may not qualify as a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”) or may be taxable under Section 367(a) of the Code, potentially causing U.S. Holders of SWAG Common Stock and/or SWAG warrants to recognize gain or loss for U.S. federal income tax purposes.

It is intended that the Business Combination (i) qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and (ii) does not result in gain being recognized by U.S. Holders (as defined in “Certain Material U.S. Federal Income Tax Considerations”) of SWAG Common Stock and SWAG warrants immediately prior to the Effective Time under Section 367(a) of the Code (other than with respect to any such holder that would own, actually or constructively, 5% or more (by vote or value) of the outstanding Otonomo ordinary shares immediately after the Business Combination that fails to enter into a valid “gain recognition agreement” with respect to the transferred SWAG Common Stock) (collectively, the “Intended Tax Treatment”). The parties intend to report the Business Combination in a manner consistent with the Intended Tax Treatment. However, there are significant factual and legal uncertainties as to whether the Business Combination will qualify for the Intended Tax Treatment. For example, under Section 368(a) of the Code, the acquiring corporation must continue, either directly or indirectly through certain controlled corporations, either a significant line of the acquired corporation’s historic business or use a significant portion of the acquired corporation’s historic business assets in a business. However, there is an absence of guidance directly on point as to how the provisions of Section 368(a) of the Code apply in the case of an acquisition of a corporation with only investment-type assets, such as SWAG. Moreover, Section 367(a) of the Code and the applicable Treasury regulations promulgated thereunder provide that where a U.S. Holder exchanges stock in a U.S. corporation for stock in a non-U.S. corporation in a transaction that would otherwise qualify as a reorganization within the meaning of Section 368(a) of the Code, the U.S. Holder is required to recognize gain, but not loss, realized on such exchange unless certain requirements are met. There are significant factual and legal uncertainties concerning the determination of certain of these requirements. Moreover, the closing of the Business Combination is not conditioned upon the receipt of an opinion of counsel that the Business Combination will qualify for the Intended Tax Treatment, and neither SWAG nor Otonomo intends to request a ruling from the Internal Revenue Service (the “IRS”) regarding the U.S. federal income tax treatment of the Business Combination. Accordingly, no assurance can be given that the IRS will not challenge the Intended Tax Treatment or that a court will not sustain a challenge by the IRS.

If, as of the Closing Date, any requirement for Section 368(a) of the Code is not met, then a U.S. Holder of SWAG Common Stock and/or SWAG warrants may recognize gain or loss in an amount equal to the difference, if any, between the fair market value (as of the Closing Date) of Otonomo ordinary shares and/or Otonomo warrants received in the Business Combination, over such U.S. Holder’s aggregate tax basis in the corresponding SWAG Common Stock and/or SWAG warrants surrendered by such U.S. Holder in the Business Combination.

If, as of the Closing Date, the Business Combination qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, but any requirement for Section 367(a) of the Code is not satisfied, then a U.S. Holder of SWAG Common Stock would recognize gain (but not loss) in an amount equal to the excess, if any, of the fair market value as of the Closing Date of Otonomo ordinary shares (and, if U.S. Holder’s SWAG warrants convert to Otonomo warrants, the fair market value of the Otonomo warrants) received in the Business Combination, over such U.S. Holder’s aggregate tax basis in the SWAG Common Stock (and SWAG warrants, if any) surrendered by such U.S. Holder in the Business Combination.

U.S. Holders of SWAG Common Stock and/or SWAG warrants are urged to consult their own tax advisors to determine the tax consequences if the Business Combination does not qualify for the Intended Tax Treatment.

The IRS may not agree that Otonomo should be treated as a non-U.S. corporation for U.S. federal income tax purposes.

Under current U.S. federal income tax law, a corporation generally will be considered to be a U.S. corporation for U.S. federal income tax purposes if it is created or organized in the United States or under the law of the United States or of any State. Accordingly, under generally applicable U.S. federal income tax rules,

 

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Otonomo, which is incorporated and tax resident in Israel, would generally be classified as a non-U.S. corporation for U.S. federal income tax purposes. Section 7874 of the Code and the Treasury regulations promulgated thereunder, however, contain specific rules that may cause a non-U.S. corporation to be treated as a U.S. corporation for U.S. federal income tax purposes. If it were determined that Otonomo is treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code and the Treasury regulations promulgated thereunder, Otonomo would be liable for U.S. federal income tax on its income in the same manner as any other U.S. corporation and certain distributions made by Otonomo to Non-U.S. Holders (as defined in “Certain Material U.S. Federal Income Tax Considerations”) of Otonomo may be subject to U.S. withholding tax.

As more fully described in the section titled “Certain Material U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Treatment of Otonomo—Tax Residence of Otonomo for U.S. Federal Income Tax Purposes,” based on the terms of the Business Combination and certain factual assumptions, Otonomo does not currently expect to be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code after the Business Combination. However, the application of Section 7874 of the Code is complex, subject to detailed regulations (the application of which is uncertain in various respects and would be impacted by changes in such U.S. Treasury regulations with possible retroactive effect) and subject to certain factual uncertainties, some of which must be finally determined after the completion of the Business Combination. Accordingly, there can be no assurance that the IRS will not challenge the status of Otonomo as a non-U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code or that such challenge would not be sustained by a court.

If the IRS were to successfully challenge under Section 7874 of the Code Otonomo’s status as a non-U.S. corporation for U.S. federal income tax purposes, Otonomo and certain Otonomo shareholders may be subject to significant adverse tax consequences, including a higher effective corporate income tax rate on Otonomo and future withholding taxes on certain Otonomo shareholders, depending on the application of any applicable income tax treaty that may apply to reduce such withholding taxes.

See “Certain Material U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Treatment of Otonomo—Tax Residence of Otonomo for U.S. Federal Income Tax Purposes” for a more detailed discussion of the application of Section 7874 of the Code to Otonomo. You should consult your own advisors regarding the application of Section 7874 of the Code to the Business Combination and the tax consequences if the classification of Otonomo as a non-U.S. corporation is not respected.

Risks Related to the Adjournment Proposal

If the Adjournment Proposal is not approved, SWAG’s board of directors will not have the ability to adjourn the special meeting to a later date.

If, at the special meeting, the chairman presiding over the special meeting determines that it would be in the best interests of SWAG to adjourn the special meeting to give SWAG more time to consummate the Business Combination for whatever reason (such as if the Business Combination Proposal is not approved, or if SWAG would have net tangible assets of less than $5,000,001 either immediately prior to or upon the consummation of the Transactions, or if additional time is needed to fulfil other closing conditions), the chairman presiding over the special meeting will seek approval to adjourn the special meeting to a later date or dates. If the Adjournment Proposal is not approved, the chairman will not have the ability to adjourn the special meeting to a later date in order to solicit further votes. In such event, the Business Combination would not be completed.

Risks Related to SWAG’s Accounting of its Warrants

SWAG has identified a material weakness in its internal control over financial reporting. This material weakness could continue to adversely affect SWAG’s ability to report its results of operations and financial condition accurately and in a timely manner.

SWAG’s management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and

 

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the preparation of financial statements for external purposes in accordance with GAAP. SWAG’s management is likewise required, on a quarterly basis, to evaluate the effectiveness of its internal controls and to disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of SWAG’s annual or interim financial statements will not be prevented or detected on a timely basis.

As described elsewhere in this proxy statement/prospectus, SWAG identified a material weakness in its internal control over financial reporting related to the accounting for the warrants it issued in connection with the SWAG IPO. As a result of this material weakness, SWAG’s management concluded that its internal control over financial reporting was not effective as of December 31, 2020. This material weakness resulted in a material misstatement of SWAG’s warrant liabilities, Class A common stock subject to possible redemption, change in fair value of warrant liabilities, additional paid-in capital, accumulated deficit and related financial disclosures.

To respond to this material weakness, SWAG has devoted, and plans to continue to devote, significant effort and resources to the remediation and improvement of its internal control over financial reporting. While SWAG has processes to identify and appropriately apply applicable accounting requirements, SWAG plans to enhance these processes to better evaluate its research and understanding of the nuances of the complex accounting standards that apply to its financial statements. SWAG’s plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among its personnel and third-party professionals with whom SWAG consults regarding complex accounting applications. The elements of SWAG’s remediation plan can only be accomplished over time, and SWAG can offer no assurance that these initiatives will ultimately have the intended effects. For a discussion of management’s consideration of the material weakness identified related to SWAG’s accounting for the warrants SWAG issued in connection with the SWAG IPO, see “Note 2—Restatement of Previously Issued Financial Statements” to the financial statements of SWAG included elsewhere in this proxy statement/prospectus.

Any failure to maintain such internal control could adversely impact SWAG’s ability to report its financial position and results from operations on a timely and accurate basis. If SWAG’s financial statements are not accurate, investors may not have a complete understanding of its operations. Likewise, if SWAG’s financial statements are not filed on a timely basis, SWAG could be subject to sanctions or investigations by the stock exchange on which its common stock is listed, the SEC or other regulatory authorities. In either case, it could result in a material adverse effect on SWAG’s business. Failure to timely file will cause SWAG to be ineligible to utilize short form registration statements on Form S-3 or Form S-4, which may impair its ability to obtain capital in a timely fashion to execute SWAG’s business strategies or issue shares to effect an acquisition. Ineffective internal controls could also cause investors to lose confidence in SWAG’s reported financial information, which could have a negative effect on the trading price of its stock.

We can give no assurance that the measures SWAG has taken and plans to take in the future will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if SWAG is successful in strengthening its controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of SWAG’s financial statements.

SWAG’s warrants are required to be accounted for as liabilities rather than as equity and such requirement resulted in a restatement of SWAG’s previously issued financial statements.

On April 12, 2021, the SEC staff issued the SEC Statement. In the SEC Statement, the SEC staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to equity. Since issuance, SWAG’s warrants were accounted for as equity within its balance sheet, and after discussion and evaluation, including with its independent

 

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auditors, SWAG has concluded that its warrants should be presented as liabilities with subsequent fair value remeasurement. Therefore, SWAG conducted a valuation of its warrants and restated its previously issued financial statements, which resulted in unanticipated costs and diversion of management resources and may result in potential loss of investor confidence. Although SWAG has now completed the restatement, it cannot guarantee that it will have no further inquiries from the SEC or Nasdaq regarding its restated financial statements or matters relating thereto.

Any future inquiries from the SEC or Nasdaq as a result of the restatement of SWAG’s historical financial statements will, regardless of the outcome, likely consume a significant amount of its resources in addition to those resources already consumed in connection with the restatement itself.

The restatement of SWAG’s financial statements in May 2021 has subjected it to additional risks and uncertainties, including increased professional costs and the increased possibility of legal proceedings.

As a result of the restatement of its financial statements, SWAG has become subject to additional risks and uncertainties, including, among others, increased professional fees and expenses and time commitment that may be required to address matters related to the restatements, and scrutiny of the SEC and other regulatory bodies, which could cause investors to lose confidence in SWAG’s reported financial information and could subject it to civil or criminal penalties or shareholder litigation. SWAG could face monetary judgments, penalties or other sanctions that could have a material adverse effect on its business, financial condition and results of operations and could cause its stock price to decline.

Certain of SWAG’s warrants are accounted for as a warrant liability and are recorded at fair value upon issuance with changes in fair value each period to be reported in earnings, which may have an adverse effect on the market price of the SWAG Common Stock.

Following the restatement of its historical financial statements, SWAG accounted for its warrants as a warrant liability and recorded at fair value upon issuance any changes in fair value each period reported in earnings as it determined based upon a valuation report obtained from its independent third party valuation firm. The impact of changes in fair value on earnings may have an adverse effect on the market price of the SWAG Common Stock.

Risks Related to Redemption

The ability of SWAG public stockholders to exercise redemption rights with respect to a large number of SWAG Shares could increase the probability that the Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem SWAG stock.

The obligations of Otonomo and Merger Sub to consummate the Business Combination is conditioned upon, among other things, SWAG having an amount of available cash in its Trust Account, following payment by SWAG to its stockholders who have validly elected to redeem their shares of SWAG Common Stock, plus proceeds from the PIPE Investment and the Secondary PIPE, of no less than approximately $172,500,000. If the Business Combination is not consummated, you would not receive your pro rata portion of the Trust Account until the Trust Account is liquidated. If you are in need of immediate liquidity, you could attempt to sell your SWAG Shares in the open market; however, at such time SWAG Shares may trade at a discount to the pro rata amount per share in the Trust Account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with SWAG’s redemption until SWAG liquidates or you are able to sell your SWAG Shares in the open market.

 

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Public stockholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a “group,” will be restricted from seeking redemption rights with respect to more than 15% of the public shares.

A public stockholder, together with any affiliate or any other person with whom such stockholder is acting in concert or as a “group,” will be restricted from seeking redemption rights with respect to more than 15% of the public shares. Accordingly, if you hold more than 15% of the public shares and the Business Combination Proposal is approved, you will not be able to seek redemption rights with respect to the full amount of your shares and may be forced to hold the shares in excess of 15% or sell them in the open market. SWAG cannot assure you that the value of such excess shares will appreciate over time following a business combination or that the market price of SWAG Shares will exceed the per-share redemption price.

There is no guarantee that a SWAG stockholder’s decision to redeem its shares for a pro rata portion of the Trust Account will put the stockholder in a better future economic position.

There is no assurance as to the price at which an SWAG stockholder may be able to sell its Otonomo ordinary shares in the future following the completion of the Transactions or shares with respect to any alternative business combination. Certain events following the consummation of any initial business combination, including the Transactions, may cause an increase in the share price, and may result in a lower value realized now than a stockholder of SWAG might realize in the future had the stockholder not redeemed his, her or its shares. Similarly, if a stockholder does not redeem its shares, the stockholder will bear the risk of ownership of the public shares after the consummation of any initial business combination, and there can be no assurance that a stockholder can sell its shares in the future for a greater amount than the redemption price set forth in this proxy statement/prospectus. A stockholder should consult the stockholder’s tax and/or financial advisor for assistance on how this may affect his, her or its individual situation.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS; MARKET, RANKING AND OTHER INDUSTRY DATA

This proxy statement/prospectus contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this proxy statement/prospectus, including statements regarding Otonomo’s, SWAG’s or the combined company’s future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential” or the negative of these terms or other similar expressions. Forward-looking statements include, without limitation, Otonomo’s or SWAG’s expectations concerning the outlook for their or the combined company’s business, productivity, plans and goals for future operational improvements and capital investments, operational performance, future market conditions or economic performance and developments in the capital and credit markets and expected future financial performance, as well as any information concerning possible or assumed future results of operations of the combined company as set forth in the sections of this proxy statement/prospectus titled “Proposal One—The Business Combination Proposal—SWAGs Board of Directors Reasons for the Business Combination and Recommendation of Its Board of Directors.” Forward-looking statements also include statements regarding the expected benefits of the proposed Business Combination between Otonomo and SWAG.

Forward-looking statements involve a number of risks, uncertainties and assumptions, and actual results or events may differ materially from those projected or implied in those statements. Important factors that could cause such differences include, but are not limited to:

 

   

Otonomo has a limited operating history and may be unable to achieve or sustain profitability or accurately predict its future results;

 

   

Otonomo has a history of losses and expects to incur significant expenses and continuing losses for the foreseeable future;

 

   

Otonomo expects to invest substantially in research and development for the purpose of developing and commercializing new services, and these investments could significantly reduce its profitability or increase its losses and may not generate revenue for Otonomo;

 

   

If Otonomo does not develop enhancements to its services and introduce new services that achieve market acceptance, its growth, business, results of operations and financial condition could be adversely affected;

 

   

If Otonomo is unsuccessful at investing in growth opportunities, its business could be materially and adversely affected;

 

   

Otonomo may need to raise additional funds in the future in order to execute its business plan and these funds may not be available to Otonomo when it needs them. If Otonomo cannot raise additional funds when it needs them, its business, prospects, financial condition and operating results could be negatively affected;

 

   

Otonomo has experienced rapid growth, and if Otonomo fails to effectively manage its growth, then its business, results of operations and financial condition could be adversely affected;

 

   

Otonomo relies, in part, on partnerships to grow its business. The partnerships may not produce the expected financial or operating results Otonomo expects. In addition, if Otonomo is unable to enter into partnerships or successfully maintain them, its growth may be adversely impacted;

 

   

Otonomo’s business depends on expanding its base of data consumers and data consumers increasing their use of its services, and its inability to expand its base of data consumers or any loss of data consumers or decline in their use of its services could materially and adversely affect its business, results of operations and financial condition;

 

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If Otonomo fails to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing customer needs, requirements or preferences, its products may become less competitive;

 

   

The market for Otonomo’s services and platform is new and unproven, may decline or experience limited growth and is dependent in part on consumers continuing to adopt its platform and use its services;

 

   

Otonomo relies on the ability to access data from external providers at reasonable terms and prices. Otonomo’s data providers might restrict its use of or refuse to license data, which could lead to its inability to access certain data or provide certain services and, as a result, materially and adversely affect its operating results and financial condition;

 

   

If Otonomo is unable to expand its relationships with existing OEMs and vehicle fleet operators and add new OEMs and vehicle fleet operators and data providers, its business, results of operations and financial condition could be adversely affected;

 

   

If SWAG’s stockholders fail to properly demand redemption rights, they will not be entitled to convert their SWAG Common Stock into a pro rata portion of the Trust Account;

 

   

SWAG’s board of directors did not obtain a third-party fairness opinion in determining whether or not to proceed with the Business Combination;

 

   

The financial and other interests of SWAG’s board of directors may have influenced SWAG’s board of directors’ decision to approve the Business Combination;

 

   

The Otonomo securities to be received by SWAG’s securityholders as a result of the Business Combination will have different rights from SWAG securities and SWAG’s stockholders will have a reduced ownership and voting interest of the combined company after consummation of the Business Combination; and

 

   

The other matters described in the section titled “Risk Factors” beginning on page 13.

In addition, the Business Combination is subject to the satisfaction of the conditions to the completion of the Business Combination set forth in the Business Combination Agreement and the absence of events that could give rise to the termination of the Business Combination Agreement, the possibility that the Business Combination does not close, and risks that the proposed Business Combination disrupts current plans and operations and business relationships, or poses difficulties in attracting or retaining employees for Otonomo.

Otonomo and SWAG caution you against placing undue reliance on forward-looking statements, which reflect current beliefs and are based on information currently available as of the date a forward-looking statement is made. Forward-looking statements set forth herein speak only as of the date of this proxy statement/prospectus. Neither Otonomo nor SWAG undertakes any obligation to revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs. In the event that any forward-looking statement is updated, no inference should be made that Otonomo or SWAG will make additional updates with respect to that statement, related matters, or any other forward-looking statements. Any corrections or revisions and other important assumptions and factors that could cause actual results to differ materially from forward-looking statements, including discussions of significant risk factors, may appear, up to the consummation of the Business Combination, in SWAG’s public filings with the SEC or, upon and following the consummation of the Business Combination, in Otonomo’s public filings with the SEC, which are or will be (as appropriate) accessible at www.sec.gov, and which you are advised to consult. For additional information, please see the section titled “Where You Can Find More Information” beginning on page 224.

Market, ranking and industry data used throughout this proxy statement/prospectus, including statements regarding market size and technology adoption rates, is based on the good faith estimates of Otonomo’s management, which in turn are based upon Otonomo’s management’s review of internal surveys, independent

 

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industry surveys and publications, and other third party research and publicly available information. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While Otonomo is not aware of any misstatements regarding the industry data presented herein, its estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” and “Otonomos Managements Discussion and Analysis of Financial Condition and Results of Operations” in this proxy statement/prospectus.

 

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SPECIAL MEETING OF SWAG STOCKHOLDERS

General

SWAG is furnishing this proxy statement/prospectus to its stockholders as part of the solicitation of proxies by its board of directors for use at the special meeting of SWAG stockholders and at any adjournment or postponement thereof. This proxy statement/prospectus provides you with information you need to know to be able to vote or instruct your vote to be cast at the special meeting.

Date, Time and Place of Special Meeting of SWAG’s Stockholders

The special meeting will be held on                 , 2021, at                  a.m., Eastern Time, solely over the Internet by means of a live audio webcast. You may attend the special meeting webcast by accessing the web portal located at https://                 and following the instructions set forth on your proxy card.

Purpose of the SWAG Special Meeting

At the special meeting, SWAG is asking its stockholders:

 

1.

Proposal No. 1 — The Business Combination Proposal — to consider and vote upon a proposal to approve and adopt the Business Combination Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A, and the transactions contemplated therein, including the Business Combination;

 

2.

Proposal No. 2 — The Charter Proposalsto approve the following material differences between the SWAG Charter and Otonomo Articles to be effective upon the consummation of the Business Combination:

i. the name of the new public entity will be “Otonomo Technologies Ltd.” as opposed to “Software Acquisition Group Inc. II”;

ii. the Otonomo Articles will provide for one class of ordinary shares as opposed to the two classes of SWAG Common Stock provided for in the SWAG Charter;

iii. Otonomo’s corporate existence is perpetual as opposed to SWAG’s corporate existence terminating if a business combination is not consummated within a specified period of time;

iv. the Otonomo Articles will not include the various provisions applicable only to special purpose acquisition corporations that the SWAG Charter contains;

 

3.

Proposal No. 3 — The Adjournment Proposalto consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, if the parties are not able to consummate the Business Combination.

Recommendation of SWAG’s Board of Directors

SWAG’s board of directors has determined that each of the proposals outlined above is fair to and in the best interests of SWAG and its stockholders and recommended that SWAG stockholders vote “FOR” the Business Combination Proposal, “FOR” each of the Charter Proposals, and “FOR” the Adjournment Proposal, if presented.

Record Date; Persons Entitled to Vote

SWAG Stockholders will be entitled to vote or direct votes to be cast at the special meeting if they owned shares of SWAG Common Stock at the close of business on                 , 2021, which is the record date for the special meeting. Stockholders will have one vote for each share of SWAG Common Stock owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. SWAG’s warrants do not have voting rights. On the record date, there were                  shares of SWAG Common Stock outstanding, of which 17,250,000 were public shares.

 

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Quorum

A quorum is the minimum number of shares of SWAG Common Stock that must be present to hold a valid meeting. A quorum will be present at the SWAG special meeting if a majority of the voting power of the issued and outstanding shares of SWAG Common Stock entitled to vote at the meeting are represented at the virtual special meeting or by proxy. Abstentions and broker non-votes will count as present for the purposes of establishing a quorum. The Class A Stock and Class B Stock are entitled vote together as a single class on all matters to be considered at the special meeting.

Vote Required

The proposals to be presented at the special meeting will require the following votes:

Business Combination ProposalThe approval of the Business Combination Proposal will require the affirmative vote of the holders of a majority of the votes cast by the then outstanding shares of SWAG Common Stock present and entitled to vote at the special meeting. Abstentions will have no effect on the Business Combination Proposal. Brokers are not entitled to vote on the Business Combination Proposal absent voting instructions from the beneficial holder and, consequently, broker non-votes will have no effect on the Business Combination Proposal. The Transactions will not be consummated if SWAG has less than $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) either immediately prior to or upon consummation of the Transactions.

Charter ProposalsThe approval of each of the Charter Proposals will require the affirmative vote of the holders of a majority of the outstanding SWAG Common Stock. Abstentions will have the same effect as a vote “against” the Charter Proposals. The Charter Proposal to approve “Otonomo Technologies Ltd.” as the name of the new public entity is a routine proposal and, accordingly, your broker, bank or nominee may vote your shares with respect to such proposal without receiving voting instructions. Consequently, there should be no broker non-votes with respect to such proposal. Each other Charter Proposal is considered a non-routine proposal, and, accordingly, brokers are not entitled to vote on those proposals without receiving voting instructions, and broker non-votes will have the same effect as a vote “against” each such proposal.

Adjournment ProposalThe approval of the Adjournment Proposal will require the affirmative vote of the holders of a majority of the shares of SWAG Common Stock present and entitled to vote at the special meeting. Abstentions will have the same effect as a vote “against” on the Adjournment Proposal. Broker non-votes will have no effect on the Adjournment Proposal.

Voting Your Shares

If you are a holder of record of SWAG Common Stock, there are two ways to vote your shares of SWAG Common Stock at the special meeting:

 

   

By Mail. You may vote by proxy by completing the enclosed proxy card and returning it in the postage-paid return envelope. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted “FOR” all of the proposals in accordance with the recommendation of SWAG’s board of directors. Proxy cards received after a matter has been voted upon at the special meeting will not be counted.

 

   

In Person. You may attend the special meeting webcast and vote electronically using the ballot provided to you during the webcast. You may attend the special meeting webcast by accessing the web portal located at https://                 and following the instructions set forth on your proxy card. See “Questions and Answers about the Business Combination and the Special Meeting —When and where will the special meeting take place?” for more information.

 

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Revoking Your Proxy

If you are a holder of record of SWAG Common Stock and you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:

 

   

you may send another proxy card to SWAG’s secretary with a later date so that it is received prior to the vote at the special meeting or attend the live webcast of the special meeting and vote electronically;

 

   

you may notify SWAG’s secretary in writing, prior to the vote at the special meeting, that you have revoked your proxy; or

 

   

you may attend the live webcast of the special meeting and vote electronically or revoke your proxy electronically, although your attendance alone will not revoke any proxy that you have previously given.

If you hold your SWAG Common Stock in “street name,” you may submit new instructions on how to vote your shares by contacting your broker, bank or other nominee.

Who Can Answer Your Questions About Voting Your Shares

If you are a SWAG stockholder and have any questions about how to vote or direct a vote in respect of your shares of SWAG Common Stock, you may call                 , SWAG’s proxy solicitor, at                 .

Redemption Rights

Holders of public shares may seek to redeem their shares for cash, regardless of whether they vote for or against, or whether they abstain from voting on, the Business Combination Proposal. Any stockholder holding public shares may demand that SWAG redeem such shares for a full pro rata portion of the Trust Account (which, for illustrative purposes, was $                 per share as of                 , 2021, the special meeting record date), calculated as of two (2) business days prior to the anticipated consummation of the merger. If a holder properly seeks redemption as described in this section and the merger with Otonomo is consummated, SWAG will redeem these shares for a pro rata portion of funds deposited in the Trust Account and the holder will no longer own these shares following the merger.

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption rights with respect to more than 15% of the public shares. Accordingly, all public shares in excess of 15% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed for cash.

Holders of Founder Shares will not have redemption rights with respect to such shares.

Holders may demand redemption by delivering their stock, either physically or electronically using Depository Trust Company’s DWAC System, to SWAG’s transfer agent prior to the vote at the Special Meeting. If you hold the shares in “street name,” you will have to coordinate with your broker to have your shares certificated or delivered electronically. Certificates that have not been tendered (either physically or electronically) in accordance with these procedures will not be redeemed for cash. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming stockholder. In the event the proposed merger is not consummated this may result in an additional cost to stockholders for the return of their shares.

 

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SWAG’s transfer agent can be contacted at the following address:

Continental Stock Transfer & Trust Company

1 State Street — 30th Floor

New York, New York 10004

Attn: Mark Zimkind

Email: mzimkind@continentalstock.com

Any request to redeem such shares, once made, may be withdrawn at any time up to the vote on the Business Combination Proposal. Furthermore, if a holder of a public share delivered its certificate in connection with an election of its redemption and subsequently decides prior to the applicable date not to elect to exercise such rights, it may simply request that the transfer agent return the certificate (physically or electronically).

If the merger is not approved or completed for any reason, then SWAG’s public stockholders who elected to exercise their redemption rights will not be entitled to redeem their shares for a full pro rata portion of the Trust Account, as applicable. In such case, SWAG will promptly return any shares delivered by public holders. If SWAG would be left with less than $5,000,001 of net tangible assets as a result of the holders of public shares properly demanding redemption of their shares for cash, SWAG will not be able to consummate the merger.

The closing price of Class A Stock on                 , 2021, the special meeting record date, was $                . The cash held in the Trust Account on such date was approximately $                 million ($                 per public share). Prior to exercising redemption rights, stockholders should verify the market price of Class A Stock as they may receive higher proceeds from the sale of their common stock in the public market than from exercising their redemption rights if the market price per share is higher than the redemption price. SWAG cannot assure its stockholders that they will be able to sell their shares of Class A Stock in the open market, even if the market price per share is higher than the redemption price stated above, as there may not be sufficient liquidity in its securities when its stockholders wish to sell their shares.

If a holder of public shares exercises his, her or its redemption rights, then he, she or it will be exchanging its shares of Class A Stock for cash and will no longer own those shares. You will be entitled to receive cash for these shares only if you properly demand redemption no later than the close of the vote on the Business Combination Proposal by delivering your stock certificate (either physically or electronically) to SWAG’s transfer agent prior to the vote at the Special Meeting, and the merger is consummated.

For a detailed discussion of the material U.S. federal income tax considerations for stockholders with respect to the exercise of these redemption rights, see “Certain Material U.S. Federal Income Tax ConsequencesU.S. Holders Exercising Redemption Rights with Respect to SWAG Common Stock” beginning on page 174. The consequences of a redemption to any particular stockholder will depend on that stockholder’s particular facts and circumstances. Accordingly, you are urged to consult your tax advisor to determine your tax consequences from the exercise of your redemption rights, including the applicability and effect of U.S. federal, state, local and non-U.S. income and other tax laws in light of your particular circumstances.

Appraisal Rights

SWAG stockholders and holders of SWAG warrants do not have appraisal rights in connection with the Transactions under the DGCL.

Proxy Solicitation Costs

SWAG is soliciting proxies on behalf of its board of directors. This solicitation is being made by mail but also may be made by telephone. SWAG and its directors, officers and employees may also solicit proxies online. SWAG will file with the SEC all scripts and other electronic communications as proxy soliciting materials. SWAG will bear the cost of the solicitation.

SWAG has hired                  to assist in the proxy solicitation process. SWAG will pay to                  a fee of $                , plus disbursements.

 

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SWAG will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. SWAG will reimburse them for their reasonable expenses.

Other Matters

As of the date of this proxy statement/prospectus, SWAG’s board of directors does not know of any business to be presented at the special meeting other than as set forth in the notice accompanying this proxy statement/prospectus. If any other matters should properly come before the special meeting, it is intended that the shares represented by proxies will be voted with respect to such matters in accordance with the judgment of the persons voting the proxies.

Interests of SWAG’s Officers and Directors in the Transactions

In considering the recommendation of SWAG’s board of directors to vote in favor of approval of the Business Combination Proposal and the Charter Proposals, stockholders should keep in mind that the Sponsor and SWAG’s directors and executive officers have interests in such proposals that are different from, or in addition to, those of SWAG’s stockholders generally. In particular:

 

   

If the Business Combination with Otonomo or another business combination is not consummated by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter), SWAG will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and SWAG’s board of directors, dissolving and liquidating. In such event, the Founder Shares held by the Sponsor, which were acquired for an aggregate purchase price of $25,000 prior to the SWAG IPO, would be worthless because the holders are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of $                 based upon the closing price of $                 per share on Nasdaq on                 , 2021. On the other hand, if the Business Combination is consummated, each outstanding share of SWAG Common Stock will be converted into one Otonomo ordinary share, subject to adjustment described herein. As a result of the nominal price of $0.006 per share paid by the Sponsor compared to the recent market price of the Class A Stock, the Sponsor and its affiliates are likely to earn a positive rate of return on their investments in the Founder Shares even if holders of Class A Stock experience a negative rate of return on their investments in the Class A Stock.

 

   

The Sponsor purchased 5,200,000 private placement warrants from SWAG for $1.00 per private warrant. This purchase took place on a private placement basis simultaneously with the consummation of the SWAG IPO and the subsequent exercise of the underwriter’s overallotment option. All of the proceeds SWAG received from these purchases were placed in the Trust Account. Such private placement warrants had an aggregate market value of $                 based upon the closing price of $                 per warrant on Nasdaq on                 , 2021. The private placement warrants will become worthless if SWAG does not consummate a business combination by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter). On the other hand, if the Business Combination is consummated, each outstanding private placement warrant will become exercisable for one Otonomo ordinary share for $11.50 per share, subject to adjustment as described herein.

 

   

If SWAG is unable to complete a business combination within the required time period, the Sponsor will be liable under certain circumstances described herein to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by SWAG for services rendered or contracted for or products sold to SWAG. If SWAG consummates a business combination, on the other hand, SWAG will be liable for all such claims.

 

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The Sponsor and SWAG’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on SWAG’s behalf, such as identifying and investigating possible business targets and business combinations. However, if SWAG fails to consummate a business combination within the required period, they will not have any claim against the Trust Account for reimbursement. Accordingly, SWAG may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter). As of the record date, the Sponsor and SWAG’s officers and directors and their affiliates had incurred approximately $                  of unpaid reimbursable expenses.

 

   

The Business Combination Agreement provides for the continued indemnification of SWAG’s current directors and officers and the continuation of directors and officers liability insurance covering SWAG’s current directors and officers.

 

   

SWAG’s Sponsor, officers and directors (or their affiliates) may make loans from time to time to SWAG to fund certain capital requirements. On June 16, 2020, the Sponsor agreed to loan SWAG an aggregate of up to $300,000 to cover expenses related to the SWAG IPO pursuant to a promissory note that was repaid in full on September 22, 2020. Additional loans may be made after the date of this proxy statement/prospectus. If the Business Combination is not consummated, the loans will not be repaid and will be forgiven except to the extent there are funds available to SWAG outside of the Trust Account.

 

   

Jonathan Huberman will be a member of the board of directors of Otonomo following the closing of the Business Combination and, therefore, in the future Mr. Huberman will receive any cash fees, stock options or stock awards that Otonomo’s board of directors determines to pay to its non-executive directors.

Purchases of SWAG Shares

At any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding SWAG or its securities, the Sponsor, SWAG’s officers and directors, Otonomo, Otonomo shareholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal, or execute agreements to purchase shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of SWAG Common Stock or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements to consummate the Business Combination where it appears that such requirements would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and, with Otonomo’s consent, the transfer to such investors or holders of shares or warrants owned by the Sponsor for nominal value.

Entering into any such arrangements may have a depressive effect on SWAG Common Stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the special meeting.

If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the Business Combination Proposal and other proposals and would likely increase the chances that such proposals would be approved. No agreements dealing with the above arrangements or purchases have been entered into as of the date

 

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of this proxy statement/prospectus by the Sponsor, SWAG officers and directors, Otonomo, Otonomo shareholders or any of their respective affiliates. SWAG will file a Current Report on Form 8-K to disclose arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the Business Combination Proposal or the satisfaction of any closing conditions. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

 

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PROPOSAL ONE—THE BUSINESS COMBINATION PROPOSAL

The following is a discussion of the proposed Business Combination and the Business Combination Agreement. This is a summary only and may not contain all of the information that is important to you. This summary is subject to, and qualified in its entirety by reference to, the Business Combination Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A. SWAG stockholders are urged to read this entire proxy statement/prospectus carefully, including the Business Combination Agreement, for a more complete understanding of the Business Combination.

General

Transaction Structure

The Business Combination Agreement provides for the merger of Merger Sub with and into SWAG, with SWAG surviving the Business Combination as a wholly owned subsidiary of Otonomo.

Pro Forma Capitalization

The pro forma equity valuation of Otonomo upon consummation of the Transactions is estimated to approximately $1,365,000,000. We estimate that, at the Effective Time, assuming none of SWAG’s public stockholders demand redemption of their public shares pursuant to the SWAG Charter, the securityholders of Otonomo will own approximately 70.5% of the outstanding Otonomo ordinary shares, and the securityholders of SWAG and certain accredited investors purchasing PIPE Shares will own the remaining Otonomo ordinary shares. We estimate that, at the Effective Time, assuming the maximum number of SWAG’s public stockholders demand redemption of their public shares pursuant to the SWAG Charter, the securityholders of Otonomo will own approximately 80.4% of the outstanding Otonomo ordinary shares, and the securityholders of SWAG and certain accredited investors purchasing PIPE Shares and Secondary PIPE Shares will own the remaining Otonomo ordinary shares.

Merger Consideration

Prior to the Effective Time, Otonomo intends to effect a stock split to cause the value of the outstanding Otonomo ordinary shares immediately prior to the Effective Time to equal $10.00 per share. The consideration to be issued to securityholders of SWAG will be adjusted if the Stock Split is not effected or if the Stock Split results in a price per Otonomo ordinary share other than $10.00.

Pursuant to the Business Combination Agreement and assuming the Stock Split has occurred, at the Effective Time (a) each share of Class A Stock outstanding immediately prior to the Effective Time will be exchanged for one Otonomo ordinary share, subject to adjustment described herein, (b) each share of Class B Stock outstanding immediately prior to the Effective Time will be exchanged for one Otonomo ordinary share, subject to adjustment described herein, (c) each SWAG warrant outstanding immediately prior to the Effective Time will be assumed by Otonomo and will become an Otonomo warrant, with the number of Otonomo ordinary shares underlying the Otonomo warrants and the exercise price of such Otonomo warrants subject to adjustment in accordance with the Business Combination Agreement in the event of a stock split, share dividend or distribution, or any change in Otonomo’s share capital by reason of any split-up reverse stock split, recapitalization, combination, reclassification, exchange of shares and (d) each outstanding Otonomo preferred share will be converted into one Otonomo ordinary share, in each case less any applicable withholding taxes.

Background of the Business Combination

SWAG is a Delaware corporation formed on June 16, 2020, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or

 

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more businesses. The Business Combination with Otonomo is the result of an active search for a potential transaction utilizing the network and investing and transaction experience of SWAG’s management team and board of directors. The terms of the Business Combination Agreement are the result of arm’s-length negotiations between representatives of Otonomo and SWAG. The following is a brief discussion of the background of these negotiations, the Business Combination Agreement and the Business Combination.

The following chronology summarizes the key meetings and events that led to the signing of the Business Combination Agreement, but it does not purport to catalogue every conversation and correspondence among representatives of SWAG, Otonomo and their respective advisors.

On June 24, 2020, SWAG engaged B. Riley Securities, Inc. (“B. Riley”) pursuant to a non-exclusive engagement letter to provide investment advisory services in connection with the SWAG IPO. In advance of SWAG’s IPO, members of the SWAG management team engaged in discussions with other investment bankers regarding a potential engagement related to the IPO. Over the course of these discussions, the SWAG management team ultimately decided to move forward with B. Riley due to its extensive experience with Special Purpose Acquisition Companies (“SPACs”), its knowledge and experience in the small cap technology space, and the success of the Software Acquisition Group I IPO and deSPAC merger transaction.

The registration statement for the SWAG IPO was declared effective on September 14, 2020. On September 17, 2020, SWAG consummated the SWAG IPO of 15,000,000 units, at $10.00 per unit, generating gross proceeds of $150,000,000. Simultaneously with the closing of the SWAG IPO, SWAG consummated the sale of 4,750,000 private placement warrants at a price of $1.00 per warrant in a private placement to Sponsor, generating gross proceeds of $4,750,000. Following the closing of the SWAG IPO on September 17, 2020, an amount of $150,000,000 from the net proceeds of the sale of the units in the SWAG IPO and the sale of the private placement warrants was placed into the Trust Account.

On September 24, 2020, the underwriters exercised their over-allotment option in full. As a result, SWAG consummated the sale of an additional 2,250,000 units to the underwriter, at $10.00 per unit, and the sale of an additional 450,000 private placement warrants to the Sponsor, at $1.00 per warrant, generating total gross proceeds of $22,950,000. A total of $22,500,000 of the net proceeds was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to approximately $172,500,000.

Prior to the consummation of the SWAG IPO, neither SWAG, nor anyone on its behalf, contacted any prospective target businesses or had any substantive discussions, formal or otherwise, with respect to a transaction with SWAG.

From the date of the SWAG IPO through the execution of the Business Combination Agreement with Otonomo on January 31, 2021, representatives of SWAG, including B. Riley, commenced an active search for prospective acquisition targets. During this period, these representatives of SWAG reviewed self-generated ideas, initiated contact and were contacted by a number of individuals and entities with respect to business combination opportunities. SWAG’s officers and directors ultimately identified and evaluated over 40 potential target businesses from a wide range of industry segments during this period. In connection with such evaluation, representatives of SWAG had discussions regarding potential transactions with members of management or the boards of directors of certain potential acquisition targets. From the date of the SWAG IPO through December 7, 2020, representatives of SWAG met with and engaged in substantive discussions with a number of potential acquisition targets with respect to a potential business combination and discussed potential valuations and structures.

After the SWAG IPO, SWAG initiated contact with representatives of more than forty (40) potential targets, including privately held assets and assets or divisions owned by publicly traded companies, with revenues ranging from approximately $0.4 million to $400 million. Of those potential targets, SWAG conducted additional legal and financial due diligence with respect to five (5).

 

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One of the potential targets, Company A, is a software services and solutions provider. SWAG conducted substantial due diligence of Company A, including review of historic and budgeted financial statements. Representatives of SWAG met with representatives of Company A via Zoom on three (3) separate occasions and via conference call an additional four (4) times to discuss deal terms to exchange and due diligence questions. Company A and its representatives engaged a number of SPACs in connection with their strategic search and ultimately selected one that had substantially more cash in trust than SWAG, and Company A’s business combination was later announced publicly.

The second target, Company B, is an internet commerce infrastructure provider. SWAG legal and financial conducted due diligence via conference calls and Zoom sessions with the management, owners and representatives of Company B. SWAG provided the owners of Company B with an indication of interest in the business. The owners of Company B subsequently determined to sell their Company B to a private equity firm instead of pursuing a transaction with a SPAC.

SWAG’s third potential target, Company C, is a software company that delivers improved reception and reach for telecommunication signals. Representatives of SWAG conducted substantial due diligence on Company C and met with Company C’s management in person, on teleconference calls and via Zoom on more than six (6) occasions to discuss terms of a potential business combination. SWAG management determined that while Company C has a very interesting technology and good market opportunity, its business required additional proof of market demand in order to be an appropriate partner for a business combination with SWAG.

The fourth potential target, Company D, is an identity management company. Representatives of SWAG conducted discussions via Zoom with the management and principal owners of Company D on six (6) occasions. After significant legal and financial due diligence, SWAG management determined that the current enterprise value of Company D was insufficient on a stand-alone basis to be an attractive for SWAG’s initial business combination.

All discussions with representatives of Company A, Company B, Company C and Company D ceased on or before December 5, 2020.

On October 12, 2020 Ben Volkow, the CEO of Otonomo, contacted Jonathan Huberman to inquire if he had an interest in discussing Otonomo as a potential target for SWAG’s initial business combination. Mr. Huberman, who has extensive experience in the technology sector, agreed to an initial discussion to determine whether there was mutual interest in a business combination. On the same day, Mr. Huberman and Mr. Volkow spoke via telephone to discuss Otonomo’s business.

On October 13, 2020, Otonomo and SWAG signed a non-disclosure agreement. Also on that day, Mr. Huberman spoke with Mr. Volkow via Zoom to discuss Otonomo and its market in greater detail.

On October 16, 2020 and again on October 20, 2020, Messrs. Huberman, Nikzad and Volkow and Bonnie Moav, the Chief Financial Officer of Otonomo, with representatives from B. Riley in attendance, engaged in further due diligence via Zoom focused on Otonomo’s historical and prospective financials as well as its business plan, strategy and market dynamics.

Also on October 20, 2020, Mr. Huberman delivered to Mr. Volkow a non-binding letter of intent describing a potential transaction between the two companies. The valuation for a transaction was to be based on public market comparables but no additional detail was provided in the document at that time.

On November 3, 2020, Mr. Huberman spoke via Zoom with Otonomo’s full board of directors to discuss SWAG’s investment philosophy, and management in light of the progressing discussions with and interest in pursuing an initial business combination with Otonomo. That meeting was followed the next day by a call during which Mr. Volkow and Mr. Huberman discussed Otonomo’s board of directors’ interest in pursuing a business combination between Otonomo and SWAG.

 

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On November 23, 2020, Mr. Huberman spoke with Mr. Volkow to follow up on certain legal and financial due diligence items.

On December 2 and 3, 2020, Messrs. Huberman and. Nikzad and representatives from B. Riley engaged with members of Otonomo’s management team and certain representatives from Citigroup regarding additional due diligence items.

On December 3, 2020, a special committee of the board of directors of SWAG was established to review the potential initial business combination with Otonomo (the “Special Committee”). That committee was comprised of Matt Olton and Steven Guggenheimer.

On December 5, 2020, Mr. Huberman discussed the structure of and due diligence efforts regarding the potential transaction with the Special Committee and the Special Committee began its review. Also on that day, Mr. Huberman discussed the Otonomo’s board of directors’ valuation expectations as well as SWAG’s perspectives with Mr. Volkow. After that call, representatives from SWAG delivered a revised letter of intent to Otonomo, with the equity value of Otonomo for purposes of the Transaction to be between $1 billion and $1.1 billion based on current market comparables. Otonomo’s management countersigned that letter of intent and delivered it to SWAG’s management on December 7, 2020.

On December 11, 2020, Otonomo formally engaged Citigroup pursuant to an engagement letter to provide financial advisory services in connection with the potential business combination with SWAG.

On December 18, 2020, the parties each of SWAG and Otonomo came to a general agreement on the size of the private placement equity investment SWAG was contemplating and authorized B. Riley to reach out to certain institutional investors.

On January 6, 2021, Mr. Huberman updated the Special Committee to update them on the due diligence that had been concluded, the valuation analysis as well as the PIPE process.

On January 7, 2021, Latham & Watkins LLP, counsel to Otonomo (“Latham”), distributed an initial draft of the Business Combination Agreement to Kirkland & Ellis LLP (“Kirkland”).

On January 14, 2021, Kirkland commenced confirmatory legal due diligence.

On January 20, 2021, Kirkland returned a revised draft of the Business Combination Agreement that proposed various revisions to the terms of the Business Combination, including revisions to the representations and warranties and the interim operating covenants of both Otonomo and SWAG. Also on that date, Latham distributed initial drafts of the other agreements necessary to consummate the proposed Business Combination.

On January 26, 2021, after having reviewed each of Kirkland’s proposed changes, Latham sent Kirkland a revised draft of the Business Combination Agreement.

During January 2021, Latham and Gross & Co., Israeli counsel to Otonomo, and Kirkland and Gornitzky & Co., Israeli counsel to SWAG, negotiated and finalized various terms of the Business Combination Agreement and ancillary agreements.

On January 29, 2021, Latham and Kirkland agreed on what became substantially the final form of the Business Combination Agreement. On the same day, the board of directors of SWAG met, received a report from the Special Committee, reviewed the Business Combination Agreement and Ancillary Documents, reviewed the SWAG board of directors’ fiduciary duties under Delaware law in the context of consideration of the proposed business combination transaction with Otonomo, and unanimously adopted resolutions (i) determining that it is in the best interests of SWAG and its stockholders for SWAG to enter into the Business Combination

 

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Agreement, (ii) adopting the Business Combination Agreement and approving SWAG’s execution, delivery and performance of the same and the consummation of the transactions contemplated by the Business Combination Agreement including the issuance of the PIPE Shares and entry into the Ancillary Documents, and (iii) approving the filing of the proxy statement with the SEC, subject, in each case, to changes to the Business Combination Agreement and documentation acceptable to the Chairman of SWAG.

On January 31, 2021, the parties executed the Business Combination Agreement.

On February 1, 2021, a press release was issued announcing the Business Combination. Later that day, SWAG filed a current report on Form 8-K that included the press release and an investor presentation as exhibits.

SWAG’s Board of Directors’ Reasons for the Business Combination and The Recommendation of the Board of Directors

SWAG’s board of directors, in evaluating the Business Combination, consulted with SWAG’s management and financial and legal advisors. In reaching its unanimous resolution (i) that the Business Combination Agreement and the transactions contemplated thereby are advisable and in the best interests of SWAG and its stockholders and (ii) to recommend that the stockholders adopt the Business Combination Agreement and approve the Business Combination and the transactions contemplated thereby, SWAG’s board of directors considered a range of factors, including, but not limited to, the factors discussed below. In light of the number and wide variety of factors considered in connection with its evaluation of the Business Combination, SWAG’s board of directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors that it considered in reaching its determination and supporting its decision. SWAG’s board of directors viewed its decision as being based on all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors. This explanation of SWAG’s reasons for the Business Combination and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under “Cautionary Statement Regarding Forward-Looking Statements; Market, Ranking and Other Industry Data.”

In approving the Business Combination, SWAG’s board of directors determined not to obtain a fairness opinion. The officers and directors of SWAG have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and background and sector expertise enabled them to make the necessary analyses and determinations regarding the Business Combination. In addition, SWAG’s officers and directors have substantial experience with mergers and acquisitions.

SWAG’s board of directors considered a number of factors pertaining to the Business Combination as generally supporting its decision to enter into the Business Combination Agreement and the transactions contemplated thereby, including, but not limited to, the following material factors:

 

   

Unique Market Position. Otonomo is a marketplace leader in the vehicle data services sector and is uniquely positioned to enable, rather than compete, with end customers;

 

   

Stockholder Liquidity. The obligation in the Business Combination Agreement to have ordinary shares of Otonomo issued as consideration listed on the NASDAQ, a major U.S. stock exchange, which SWAG’s board of directors believes has the potential to offer stockholders greater liquidity;

 

   

Existing Data Customer and Data Providers. Otonomo has established key strategic relationships with 16 OEM agreements and approximately 100 commercial engagements with marquee industry participants;

 

   

Unique Position at the Heart of the Vehicle data Ecosystem. Rather than working with a handful of partners in a select industry, Otonomo partners with leading companies across industries, including technology companies, vehicle manufacturers, transportation companies, and data processing companies;

 

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Potential Customers in a Wide Variety of Industries. Otonomo’s services relating to personally identifiable information is used in industries ranging from insurance to fleet services to dealership sales while Otonomo’s aggregate data can be used to make smarter cities and more efficient transportation;

 

   

Competitive Advantage. Otonomo operates on a global scale with significantly more OEM partnerships, integrated cars, and use cases than its nearest competitors and Otonomo operates on a global scale, while the majority of its competitors operate more regionally;

 

   

Experienced Leadership Team with a Proven Track Record. Otonomo is led by an experienced management team in Otonomo’s industry;

 

   

Platform for Future Development and Expansion. A public company status, combined with the capital to be provided from the PIPE and the Trust Account, is anticipated to provide Otonomo with an optimal platform for further developing and expanding its current programs, systems and software;

 

   

Attractive Valuation. SWAG’s board of directors believes Otonomo’s implied valuation following the Business Combination relative to the current valuations experienced by comparable publicly traded companies in the vehicle data services sector is favorable for SWAG;

 

   

Due Diligence. SWAG’s due diligence examinations of Otonomo and discussions with Otonomo’s management and financial and legal advisors;

 

   

Lock-Up. Certain equityholders of Otonomo have agreed to be subject to a one-hundred and eighty (180) day lockup in respect of their Otonomo ordinary shares;

 

   

Other Alternatives. SWAG’s board of directors believes, after a thorough review of other business combination opportunities reasonably available to SWAG, that the Business Combination represents the best potential business combination for SWAG and the most attractive opportunity for SWAG’s management to accelerate its business plan based upon the process utilized to evaluate and assess other potential combination targets, and SWAG’s board of directors’ belief that such process has not presented a better alternative; and

 

   

Negotiated Transaction. The financial and other terms of the Business Combination Agreement and the fact that such terms and conditions are reasonable and were the product of arm’s-length negotiations between SWAG and Otonomo.

SWAG’s board of directors also considered a variety of uncertainties and risks and other potentially negative factors concerning the Business Combination, including, but not limited to, the following:

 

   

Market Adoption. Whether the adoption of integrated cars will continue to occur and be widespread, and whether such adoption will continue open access to data;

 

   

Limited Operating History, Otonomo’s limited operating history makes evaluating its business and future prospects difficult;

 

   

Systems Update. The need to update Otonomo’s financial systems and operations necessary for a public company;

 

   

Regulation. Regulation in Otonomo’s industry could increase, which may limit Otonomo’s ability to harness vehicle data value, thereby potentially lowering Otonomo’s profits;

 

   

Loss of Key Personnel. Key personnel in Otonomo’s industry is vital and competition for such personnel is intense. The loss of any key personnel could be detrimental to Otonomo’s operations;

 

   

Macroeconomic Risks. Macroeconomic uncertainty and the effects it could have on the combined company’s revenues;

 

   

Benefits Not Achieved. The risk that the potential benefits of the Business Combination may not be fully achieved or may not be achieved within the expected timeframe;

 

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Redemption Risk. The potential that a significant number of SWAG stockholders elect to redeem their shares prior to the consummation of the merger and pursuant to SWAG’s existing charter, which would potentially make the merger more difficult or impossible to complete;

 

   

Stockholder Vote. The risk that SWAG’s stockholders may fail to provide the respective votes necessary to effect the merger;

 

   

Closing Conditions. The fact that the completion of the merger is conditioned on the satisfaction of certain closing conditions that are not within SWAG’s control;

 

   

Litigation. The possibility of litigation challenging the merger or that an adverse judgment granting permanent injunctive relief could indefinitely enjoin consummation of the merger;

 

   

No Third-Party Valuation. The risk that SWAG did not obtain a third-party valuation or fairness opinion in connection with the merger;

 

   

Liquidation of SWAG. The risks and costs to SWAG if the merger is not completed, including the risk of diverting management focus and resources from other business combination opportunities, which could result in SWAG being unable to effect a business combination by March 17, 2022;

 

   

SWAG Stockholders Receiving Minority Position. The fact that existing SWAG stockholders will hold a minority position in the combined company; and

 

   

Fees and Expenses. The fees and expenses associated with completing the merger.

In addition to considering the factors described above, SWAG’s board of directors also considered other factors including, without limitation:

 

   

Interests of Certain Persons. Some officers and directors of SWAG may have interests in the merger. See the section titled “Proposal One—The Business Combination Proposal—Interests of Certain Persons in the Business Combination” beginning on page 80 of this proxy statement/prospectus; and

 

   

Waiver of Corporate Opportunity Doctrine. SWAG’s certificate of incorporation contains a waiver of the corporate opportunity doctrine, and there could have been business combination targets that have been appropriate for a combination with SWAG but were not offered due to a SWAG director’s duties to another entity. SWAG does not believe that the waiver of the corporate opportunity doctrine in its certificate of incorporation interfered with its ability to identify an acquisition target.

 

   

Other Risks. Various other risks associated with Otonomo’s business, as described in the section entitled “Risk Factors” appearing elsewhere in this proxy statement/prospectus.

SWAG’s board of directors concluded that the potential benefits that it expected SWAG and its stockholders to achieve as a result of the Business Combination outweighed the potentially negative factors associated with the Business Combination. Accordingly, SWAG’s board of directors unanimously determined that the Business Combination Agreement and the Business Combination contemplated therein were advisable, fair to and in the best interests of SWAG and its stockholders.

Unaudited Prospective Financial Information of Otonomo

Otonomo does not as a matter of course make public projections as to future sales, earnings, or other results. However, Otonomo management prepared and provided to the Otonomo board of directors, Otonomo’s financial advisors, SWAG and potential PIPE investors certain internal, unaudited prospective financial information in connection with the evaluation of the Business Combination. Otonomo management prepared such financial information based on their judgment and assumptions regarding the future financial performance of Otonomo. The inclusion of the below information should not be regarded as an indication that Otonomo or any other recipient of this information considered—or now considers—it to be necessarily predictive of actual future results.

 

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The unaudited prospective financial information is subjective in many respects. As a result, there can be no assurance that the prospective results will be realized or that actual results will not be significantly higher or lower than estimated. Since the unaudited prospective financial information covers multiple years, that information by its nature becomes less predictive with each successive year.

While presented in this proxy statement/prospectus with numeric specificity, the information set forth in the summary below was based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of Otonomo management, including, among other things, the matters described in the sections entitled “Cautionary Statement Regarding Forward-Looking Statements; Market, Ranking and Other Industry Data” and “Risk Factors.” Otonomo believes the assumptions in the prospective financial information were reasonable at the time the financial information was prepared, given the information Otonomo had at the time. However, important factors that may affect actual results and cause the results reflected in the prospective financial information not to be achieved include, among other things, risks and uncertainties relating to the Otonomo business, industry performance, the regulatory environment, and general business and economic conditions. The prospective financial information also reflects assumptions as to certain business decisions that are subject to change. The unaudited prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines of the SEC, or the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of Otonomo management, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of Otonomo management’s knowledge and belief, the expected course of action and the expected future financial performance of Otonomo. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement/prospectus are cautioned not to place undue reliance on the prospective financial information.

Neither Otonomo’s independent auditors, nor any other independent accountants, have complied, examined or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information. The audit reports included in this proxy statement/prospectus relate to historical financial information. They do not extend to the prospective financial information and should not be read to do so.

EXCEPT AS REQUIRED BY APPLICABLE SECURITIES LAWS, OTONOMO DOES NOT INTEND TO MAKE PUBLICLY AVAILABLE ANY UPDATE OR OTHER REVISION TO THE PROSPECTIVE FINANCIAL INFORMATION. THE PROSPECTIVE FINANCIAL INFORMATION DOES NOT TAKE INTO ACCOUNT ANY CIRCUMSTANCES OR EVENTS OCCURRING AFTER THE DATE THAT THE INFORMATION WAS PREPARED. READERS OF THIS PROXY STATEMENT/PROSPECTUS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION SET FORTH BELOW. NONE OF OTONOMO, SWAG NOR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, ADVISORS OR OTHER REPRESENTATIVES HAS MADE OR MAKES ANY REPRESENTATION TO ANY OTONOMO SHAREHOLDER, SWAG STOCKHOLDER OR ANY OTHER PERSON REGARDING ULTIMATE PERFORMANCE COMPARED TO THE INFORMATION CONTAINED IN THE PROSPECTIVE FINANCIAL INFORMATION OR THAT FINANCIAL AND OPERATING RESULTS WILL BE ACHIEVED.

Certain of the measures included in the prospective financial information may be considered non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Otonomo may not be comparable to similarly titled amounts used by other companies. Financial measures provided to a financial advisor in connection with a business combination transaction are excluded from the definition of non-GAAP financial measures and therefore are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial

 

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measure to a GAAP financial measure. Accordingly, we have not provided a reconciliation of such financial measures.

The following table sets forth certain summarized prospective financial information regarding Otonomo for the years 2020, 2021, 2022, 2023, 2024 and 2025:

 

     Forecast Year Ended December 31,  
(USD in millions)    2020E(2)     2021E(3)     2022E     2023E     2024E      2025E  

Revenue

   $ *   $ 3     $ 24     $ 98     $ 264      $ 574  

Gross Profit (loss)

   $ (1   $ (2   $ 4     $ 37     $ 134      $ 347  

Adjusted EBITDA(1)

   $ (11   $ (22   $ (43   $ (45   $ 4      $ 118  

 

*)

Represents an amount lower than $1 million.

(1)

Adjusted EBITDA is defined as Gross Profit (loss) from operations adjusted for depreciation, amortization and stock-based compensation. We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers calculate Adjusted EBITDA in the same manner. Adjusted EBITDA should not be considered as an alternative to net loss or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity.

(2)

As disclosed in “Consolidated Financial Statements of Otonomo Technologies Ltd.” beginning on page F-2 of this proxy statement/prospectus, for the year ended December 31, 2020, Otonomo had revenue of approximately $0.4 million and Gross Profit (loss) of approximately $(0.8) million. In addition, Otonomo’s Adjusted EBITDA for the year ended December 31, 2020 was $(15.6) million. Adjusted EBITDA of $(15.6) million was calculated by taking Otonomo’s nearest comparable GAAP measure, Gross Profit (loss) from operations of $(17.2) million, and subtracting depreciation and amortization expense of $0.1 million and stock-based compensation of $1.4 million.

(3)

Based on its results of operations to date and its best estimates for its financial performance for the remainder of the fiscal year, Otonomo expects that it will achieve the projected 2021 financial results provided in this proxy statement/prospectus in all material respects. Investors are cautioned, however, to not place undue reliance on such expectation for 2021 results. There can be no assurance the projected results for 2021 will be realized or that actual results will not be significantly higher or lower than estimated.

The Otonomo prospective financial information was prepared using several assumptions, including the following assumptions that Otonomo management believed to be material:

 

   

projected revenue is based on a variety of operational assumptions including, among others, continued development of connected vehicle platforms by the auto industry and other market segments, commercialization timing for new products under development, growth in the number of connected cars sold and product mix, the average selling price per system and resulting sales of systems;

 

   

projected gross profit is driven by a multitude of factors including, among others, efficiencies gained through increasing volumes of data ingestion and consumption and cost reductions of components (primarily cloud services); and

 

   

other key assumptions impacting profitability projections including headcount, third party contractors, engineering consulting and excluding costs associated with public company operations and compliance.

In making the foregoing assumptions, which imply a revenue compound annual growth rate of 329% between 2020 and 2025, Otonomo management relied on a number of factors, including:

 

   

its estimates of market maturity over the projected period;

 

   

its best estimates of the timing for new product releases and overall product development process;

 

   

the relevant uses of Otonomo products for different applications and market segments;

 

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the historical system usage patterns of Otonomo customers; and

 

   

third party forecasts for industry growth.

To date, Otonomo has not generated a significant amount of revenue and Otonomo does not expect to generate significant revenue until 2023.

In recent years, Otonomo has focused on building the supply side of its marketplace through 16 OEM agreements, building a platform that securely ingests over 4 billion data points per day from 40 million connected vehicles worldwide. Otonomo has concurrently developed the technology platform that aggregates and normalizes the data from its OEM partners in order to make the data ‘consumption ready’ for various enterprises and data customers across different industries.

Otonomo is currently in the process of increasing its channel partnerships as well as its direct sales force in the U.S., EMEA and APAC that will enable it to further expand its customer base and establish the demand side of its marketplace. Otonomo currently has approximately 100 commercial engagements with potential data customers and a large growing pipeline of new prospects.

The majority of Otonomo’s revenue is expected to be derived from fees charged to data customers on a per use or per data record accessed basis according to the volume and type of data they consume from Otonomo’s marketplace. Otonomo is expanding its offerings to provide additional software modules that offer industry specific functionality on top of the data, including, for example, ready-made modules for fleet management and usage-based insurance telematics. These modules will be provided on a subscription basis and will be particularly attractive to small and medium-sized enterprises and smaller data customers that are not currently served by Otonomo’s channel partners or have their own research and development functions that can develop functionality on top of Otonomo’s data marketplace. Otonomo expects this will drive further addressable market expansion by lowering barriers for customers; therefore, Otonomo projects that approximately 50% of its revenue in 2025 will be derived from its SaaS modules.

Otonomo’s revenue estimates are based upon the expected number of connected vehicles on its platform, the number of data customers (estimated by vertical), estimated transaction volume per customer and average price per transaction.

 

   

Otonomo assumed the number of connected vehicles on its platform would grow from approximately 40 million in 2020 to 86 million in 2021, 132 million in 2022, 166 million in 2023, 207 million in 2024, and 258 million in 2025. The growth in installed base will, in turn, be driven by an increasing number of OEMs (and, to a lesser extent, service providers) providing data to the platform.

 

   

The number of data customers was estimated by end market (e.g., insurance, fleets, dealerships, financial services, smart cities and transportation) and by channel (direct, channel and self serve) and was forecasted based on “top-down” analysis with an assumed penetration rate curve by each target vertical.

 

   

The number of transactions was modeled by considering the growing availability of data on the marketplace, which is a product of the number of vehicles on the platform and the type and volume of cars captured by Otonomo. As more cars become connected, more data per car will be available.

Otonomo also assumed that average pricing per transaction would increase over time as the quality of the data improves and new data insights are determined, specifically from approximately $1.0 in 2020, to $1.0 in 2021, approximately $1.8 in 2022, approximately $2.3 in 2023, approximately $2.6 in 2024, and approximately $2.8 in 2025.

The assumed growth in the installed base is supported by estimates by automotive industry analysts that include SBD Automotive and McKinsey Center for Future Mobility. SBD Automotive’s 2019 Connected Car

 

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Forecast estimates that 95% of new cars sold in the U.S. and 100% of new cars sold in the EU will be connected by 2022 and 2024, respectively. McKinsey’s Monetizing Car Data report published in September 2018 estimated there will be approximately 850 million connected vehicles by 2030. Further, according to a study conducted by McKinsey’s Center for Future Mobility, the growth in connected cars, increase in volume of the data and pricing of the data will lead to increases in the total value of car generated data to between $120 billion and $160 billion by 2025 and to between $250 billion and $400 billion by 2030.

The projected growth in revenue through 2025 assumes Otonomo succeeds in increasing its sales and marketing efforts and deepening OEM relationships. Otonomo intends to engage new customer segments, expand existing customer segments and continue to leverage outbound sales and lead generation activities. Otonomo also intends to bolster its salesforce to target existing markets, including expanding its activity in Asia-Pacific, penetrating new regions such as Latin America, and expanding its segment-dedicated salesforce. To deepen its OEM relationships, Otonomo intends to onboard new vehicles, makes and models. The projected revenue growth also assumes Otonomo will continue to add data providers to further differentiate its platform from others in the market, including through the diversification and deepening of data sources, and that it will continue to develop additional technology products for licensing to both OEMs and service providers in order to diversify its revenue through a mix of marketplace services and software licensing. Otonomo believes that market adoption of its offerings and revenue growth will be dependent upon the growth of Otonomo’s direct sales organization across relevant verticals and geographies as well as the development of its indirect go-to-market model approach. Otonomo has commenced establishing its direct salesforce and expects to rapidly grow the number of sales representatives over the next few years. Furthermore, Otonomo has established partnerships with a number of key industry participants, including LeasePlan, and became a partner of large software vendors, including Salesforce, SAP and Capgemini, and cloud vendors, including Amazon and Microsoft. However, as the development of its direct sales force and its relationships with these industry partners are in relatively early stages of development, Otonomo does not expect to realize the full impact of such development and relationships until 2024 and 2025. Otonomo’s limited operating history and its operation in a rapidly evolving market make it difficult to evaluate future prospects. The projected revenues may not be as accurate as they would be if Otonomo had a longer operating history, had more experience with customers or operated in a more predictable market.

Otonomo assumed that its contracts during the periods for which projections were provided will charge its customers based on the activated cars per year subject to each contract. Otonomo assumed 366,863 activated cars in 2020, 3,045,886 in 2021, 13,762,772 in 2022, 42,880,000 in 2023, 99,831,250 in 2024, and 202,732,500 in 2025. Otonomo assumed that it would recognize $1.07 in revenue per activated car in 2020, $1.02 in 2021, $1.78 in 2022, $2.28 in 2023, $2.64 in 2024 and $2.83 in 2025.

The market for vehicle data is rapidly evolving and highly competitive, with relatively low barriers to entry in some areas. Otonomo’s future success will depend on its ability to maintain its market share by continuing to develop and protect from infringement advanced technology in a timely manner and to stay ahead of existing and new competitors. Otonomo currently faces competition from multiple companies seeking to establish and develop relationships with OEMs and other data providers. Its competitors are also working to advance technology, performance and innovation in their development of new and improved solutions. With the introduction of new services and new market entrants, Otonomo expects competition to intensify in the future. Increased competition may result in pricing pressure and reduced margins and may impede Otonomo’s ability to increase the sales of its products or cause it to lose market share, any of which will adversely affect its business, results of operations and financial condition. In light of its expectations for intensifying competition, Otonomo assumed it would maintain only a modest share of the total addressable market during the periods for which projections were prepared.

In addition, the foregoing assumptions regarding gross profit and Adjusted EBITDA are based on Otonomo management’s plan for continued use of resellers and third-party contract manufacturers as well as Otonomo’s estimate of future operating expenses.

 

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Otonomo estimated its operating expenses based on a review of expenses of comparable publicly traded companies. Otonomo believes these estimates are reasonable because they are consistent with the expenses incurred by comparable publicly traded companies in the vehicle data services sector that have required significant scaling of sales infrastructure and research and development activities. Otonomo assumed that its operating expenses would grow more than 20x during the years 2020-2025, driven predominantly by growth in sales and marketing expenses and research and development expenses as well as in general and administrative expenses.

Research and development expenses consist primarily of personnel-related expenses associated with Otonomo’s research and development and product development teams, including salaries, benefits, bonuses, and share-based compensation. Research and development expenses also include contractor or professional services fees, third-party cloud infrastructure expenses incurred in developing Otonomo’s platform, and computer equipment, software, and subscription services dedicated for use by its research and development and organization. Otonomo estimated that its research and development expenses would grow at a compound annual growth rate of 63% between 2020 and 2025.

Sales and marketing expenses consist primarily of personnel-related expenses associated with Otonomo’s sales and marketing staff, including salaries, benefits, bonuses, share-based compensation and travel. Marketing expenses also include third-party software tools required for marketing automation and consulting and advertising costs. Otonomo estimated that its sales and marketing expenses would grow at a compound annual growth rate of 121% between 2020 and 2025.

General and administrative expenses consist primarily of personnel-related expenses for Otonomo’s finance, legal, human resources, facilities and administrative personnel, including salaries, benefits, bonuses and share-based compensation. General and administrative expenses also include external legal, accounting, bookkeeping and other professional services fees, software and subscription services dedicated for use by Otonomo’s general and administrative functions, and other corporate expenses. General and administrative expenses also include allocated overhead costs. Following the closing of the Business Combination, Otonomo expects to incur additional expenses as a result of becoming a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations, and increased expenses for insurance, investor relations, and professional services. Otonomo estimated that its general and administrative expenses would grow at a compound annual growth rate of 79% between 2020 and 2025.

Otonomo assumed that its existing cash, cash equivalents, and short-term and long-term investments will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. Otonomo’s future capital requirements will depend on many factors, including its revenue growth rate, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the price at which Otonomo is able to purchase public cloud capacity, expenses associated with its international expansion, the introduction of platform enhancements, and the continuing market adoption of its platform. Such future capital requirements were assumed to be funded by the cash in trust and PIPE proceeds.

Certain Financial Analysis

SWAG’s management primarily relied upon a discounted future valuation methodology based on a comparable company analysis to assess the value that the public markets would likely ascribe to SWAG following a business combination with Otonomo, and this analysis was presented to the SWAG board of directors. The relative valuation analysis was based on selected companies with publicly available information and with businesses similar or adjacent to Otonomo’s business. The selected companies were chosen because they were determined by SWAG’s management to be the most relevant in their particular sector (but, for the avoidance of doubt, each of the selected companies is not necessarily a direct competitor of Otonomo). SWAG

 

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management presented data from comparable companies in three subsectors of the technology industry: high-growth enterprise software, high-growth data infrastructure and transaction processors and data marketplaces.

The comparable companies SWAG’s management presented to the SWAG board of directors were:

 

   

High-growth Enterprise Software Companies:

 

   

Cerence Inc., a company that builds AI powered virtual assistants for the mobility/transportation market;

 

   

Cloudflare, Inc., cloud data management company;

 

   

DocuSign, Inc., an electronic signature company;

 

   

JFrog Ltd., an Israeli software development platform;

 

   

Okta, Inc., an enterprise identity management platform;

 

   

Workday, Inc., an enterprise cloud platform for finance and human resources;

 

   

Twilio Inc., a cloud communication platform; and

 

   

Zoom Video Communications, Inc., a videoconferencing service.

 

   

High Growth Data Infrastructure Companies:

 

   

Alteryx, Inc., a data analytic process automation company;

 

   

Datadog, Inc., a cloud data monitoring and analytics platform;

 

   

Elastic N.V, a data search and processing company;

 

   

MongoDB, Inc., a database platform;

 

   

Snowflake Inc., a cloud data management company; and

 

   

Splunk Inc., a cloud software platform.

 

   

Transaction Processors and Data Marketplaces:

 

   

Ayden NV, a Dutch digital payment processing company;

 

   

Amadeus IT Group, S.A., a technology travel ecosystem company;

 

   

CoStar Group, Inc., an online analytics and marketplace company for commercial real estate;

 

   

Equifax Inc., a data analytics company;

 

   

Square, Inc., an online payment processing and cash transfer company;

 

   

StoneCo. Ltd., an e-commerce company; and

 

   

Verisk Analytics, Inc., a data analytics provider.

These companies were selected by SWAG as the companies with publicly available data having businesses with similar end markets, business models, go-to-market strategies, margins and growth rates. While these companies may share certain characteristics that are similar to those of Otonomo, the SWAG board of directors recognized that no company was identical in nature to Otonomo.

 

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Using publicly available information, SWAG’s management reviewed with the SWAG board of directors, among other things, operational and financial metrics of each of the comparable companies on an individual and average basis. The averages of the operational and financial metrics for the selected comparable companies based on data available from Factset as of January 29, 2021 are summarized in the table below:

 

     High-Growth
Enterprise
Software
    High-Growth
Data
Infrastructure
    Transaction
Processors and
Data
Marketplaces
 

Operational Metrics

   2020-2022E Revenue CAGR(1)      30.6     25.4     27.9
   2022E Gross Margin(1)      77.9     77.1     73.4
   2022E EBITDA Margin(1)      14.2     12.8     39.1

Financial Metrics

   Enterprise Value/2022E Revenue(1)      19.3     20.0     10.6
   Enterprise Value/2022E Gross Profit(1)      27.9     27.0     18.3
   Enterprise Value/2022E EBITDA(1,2)      31.4     (*)       23.7

 

(*)

Not meaningful.

(1)

Based upon data available as of December 31, 2020 on a trailing twelve months basis.

(2)

Excludes companies with negative EBITDA or over 60x EBITDA.

Of the above metrics, SWAG management presented the SWAG board of directors with the following comparable data for Otonomo based on data received from Otonomo management as of January 29, 2021:

 

     Otonomo  

Operational Metrics

   2023E-2025E Revenue CAGR      142.1
   2025E Gross Margin      60.4

Financial Metrics

   Enterprise Value/2025E Revenue      1.9
   Enterprise Value/2025E Gross Profit      3.2

In addition, SWAG management presented the SWAG board of directors with a discounted future valuation based on the revenue multiples of the selected comparable companies. In determining its valuation, SWAG management applied the multiple range of 10-12x based on the Transaction Processor and Data Marketplace peers and 17.5-22.5x based on the Enterprise Software peers to Otonomo’s projected 2025 revenues to derive a future firm value. SWAG management then applied a customary 20% discount rate per year over four years to derive a present intrinsic value. In order to reflect the inherent risk in the long term projections SWAG management applied a discount ranging from 65 - 80% to the present intrinsic value analysis in order to determine its valuation of Otonomo, which are customary ranges that have been applied in similar recent SPAC transactions.

The SWAG board of directors viewed Otonomo’s projected revenue compound annual growth rate, projected gross margin, ratio of enterprise value to projected revenue and ratio of enterprise value to projected gross profit as the most relevant financial and operational measures on which to evaluate Otonomo’s performance relative to comparable companies based on Otonomo’s sector and stage of growth. Furthermore, the SWAG board of directors viewed the discounted projected future valuation as the most relevant valuation measure on which to evaluate Otonomo’s value based on their belief that this analysis represents a conservative valuation of a company in Otonomo’s industry and stage of growth.

Satisfaction of 80% Test

It is a requirement under the SWAG Charter and Nasdaq rules that any business acquired by SWAG have a fair market value equal to at least 80% of the balance of the funds in the Trust Account (excluding the deferred underwriting commissions and taxes payable) at the time of the execution of a definitive agreement for an initial business combination. The balance of the funds in the Trust Account (excluding deferred underwriting

 

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commissions and taxes payable) at the time of the execution of the Business Combination Agreement with Otonomo was approximately $172,500,000 and 80% thereof represents approximately $138,000,000. In determining whether the 80% requirement was met, rather than relying on any one factor, SWAG’s board of directors concluded that it was appropriate to base such valuation all of the qualitative factors described in this section and the section of this proxy statement entitled “SWAGs Board of Directors Reasons for the Business Combination and Recommendation of Its Board of Directors” as well as quantitative factors, such as the anticipated implied equity value of the combined company being approximately $1.05 billion with no material debt expected to be outstanding. Based on the qualitative and quantitative information used to approve the Business Combination described herein, SWAG’s board of directors determined that the foregoing 80% fair market value requirement was met. SWAG’s board of directors believes that the financial skills and background of its members qualify it to conclude that the acquisition met the 80% requirement.

Interests of Certain Persons in the Business Combination

In considering the recommendation of SWAG’s board of directors to vote in favor of approval of the Business Combination Proposal and the Charter Proposals stockholders should keep in mind that the Sponsor and SWAG’s directors and executive officers have interests in such proposals that are different from, or in addition to, those of SWAG’s stockholders generally. In particular:

 

   

If the Business Combination with Otonomo or another business combination is not consummated by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter), SWAG will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and SWAG’s board of directors, dissolving and liquidating. In such event, the Founder Shares held by the Sponsor, which were acquired for an aggregate purchase price of $25,000 prior to the SWAG IPO, would be worthless because the holders are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of $                 based upon the closing price of $                 per share on Nasdaq on                 , 2021. On the other hand, if the Business Combination is consummated, each outstanding share of SWAG Common Stock will be converted into one Otonomo ordinary share subject to adjustment described herein. As a result of the nominal price of $0.006 per share paid by the Sponsor compared to the recent market price of the Class A Stock, the Sponsor and its affiliates are likely to earn a positive rate of return on their investments in the Founder Shares even if holders of Class A Stock experience a negative rate of return on their investments in the Class A Stock.

 

   

The Sponsor purchased 5,200,000 private placement warrants from SWAG for $1.00 per private warrant. This purchase took place on a private placement basis simultaneously with the consummation of the SWAG IPO and the subsequent exercise of the underwriter’s overallotment option. All of the proceeds SWAG received from these purchases were placed in the Trust Account. Such private placement warrants had an aggregate market value of $                 based upon the closing price of $                 per warrant on Nasdaq on                 , 2021. The private placement warrants will become worthless if SWAG does not consummate a business combination by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter). On the other hand, if the Business Combination is consummated, each outstanding private placement warrant will become exercisable for one Otonomo ordinary share for $11.50 per share, subject to adjustment as described herein.

 

   

If SWAG is unable to complete a business combination within the required time period, the Sponsor will be liable under certain circumstances described herein to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by SWAG for services rendered or contracted for or products sold to SWAG. If SWAG consummates a business combination, on the other hand, SWAG will be liable for all such claims.

 

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The Sponsor and SWAG’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on SWAG’s behalf, such as identifying and investigating possible business targets and business combinations. However, if SWAG fails to consummate a business combination within the required period, they will not have any claim against the Trust Account for reimbursement. Accordingly, SWAG may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter). As of the record date, the Sponsor and SWAG’s officers and directors and their affiliates had incurred approximately $                  of unpaid reimbursable expenses.

 

   

The Business Combination Agreement provides for the continued indemnification of SWAG’s current directors and officers and the continuation of directors and officers liability insurance covering SWAG’s current directors and officers.

 

   

SWAG’s Sponsor, officers and directors (or their affiliates) may make loans from time to time to SWAG to fund certain capital requirements. On June 16, 2020, the Sponsor agreed to loan SWAG an aggregate of up to $300,000 to cover expenses related to the SWAG IPO pursuant to a promissory note that was repaid in full on September 22, 2020. Additional loans may be made after the date of this proxy statement/prospectus. If the Business Combination is not consummated, the loans will not be repaid and will be forgiven except to the extent there are funds available to SWAG outside of the Trust Account.

 

   

Jonathan Huberman will be a member of the board of directors of Otonomo following the closing of the Business Combination and, therefore, in the future Mr. Huberman will receive any cash fees, stock options or stock awards that Otonomo’s board of directors determines to pay to its non-executive directors.

Anticipated Accounting Treatment

The Transaction is comprised of a series of transactions pursuant to the Business Combination Agreement, as described elsewhere in this proxy statement/prospectus. For accounting purposes, the Transaction will be effectuated by three main steps:

 

  1.

The exchange of shares held by Otonomo shareholders, which is accounted for as a recapitalization in accordance with US GAAP.

 

  2.

The merger of SWAG with Merger Sub, which is not within the scope of ASC 805 (“Business Combinations”) because SWAG does not meet the definition of a business in accordance with ASC 805. Any difference between the fair value of Otonomo ordinary shares issued and the fair value of SWAG’s identifiable net assets should be recorded as additional paid-in capital. For purposes of the unaudited pro forma condensed combined financial information, it is assumed that the fair value of each individual Otonomo ordinary share issued to SWAG stockholders is equal to the fair value of each individual Otonomo shareholder resulting from the $1,050.0 million equity value assigned to Otonomo in the Business Combination Agreement.

 

  3.

The Subscription Agreements related to the PIPE, which were executed concurrently with the Business Combination Agreement, will result in the issuance of Otonomo ordinary shares, leading to an increase in share capital and share premium.

Regulatory Matters

The Business Combination is not subject to any federal or state regulatory requirement or approval, except for filings with the State of Delaware necessary to effectuate the Business Combination.

 

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Vote Required for Approval

The approval of the Business Combination Proposal will require the affirmative vote of the holders of a majority of the votes cast by the then outstanding shares of SWAG Common Stock present and entitled to vote at the special meeting. Abstentions will have no effect on the Business Combination Proposal. Brokers are not entitled to vote on the Business Combination Proposal absent voting instructions from the beneficial holder and, consequently, broker non-votes will have no effect on the Business Combination Proposal. The Transactions will not be consummated if SWAG has less than $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act) either immediately prior to or upon consummation of the Transactions.

The approval of the Business Combination Proposal is a condition to the consummation of the Transactions. If the Business Combination Proposal is not approved, the other proposals (except an Adjournment Proposal, as described below) will not be presented to the SWAG stockholders for a vote.

Resolution

RESOLVED, as an ordinary resolution, that SWAG’s entry into the Business Combination Agreement, dated as of January 31, 2021, by and among SWAG, Otonomo, and Merger Sub, a Delaware corporation and wholly owned subsidiary of Otonomo, a copy of which is attached to this proxy statement/prospectus as Annex A, pursuant to which, among other things, the merger of Merger Sub with and into SWAG, with SWAG surviving the merger as a wholly owned subsidiary of Otonomo, in accordance with the terms and subject to the conditions of the Business Combination Agreement, be approved, ratified and confirmed in all respects.”

Recommendation of SWAG’s Board of Directors

SWAG’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SWAG STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE BUSINESS COMBINATION PROPOSAL.

No Appraisal Rights

Under Section 262 of the General Corporation Law of the State of Delaware, the holders of SWAG Common Stock will not have appraisal rights in connection with the Business Combination.

Resale of Otonomo Ordinary Shares

The Otonomo ordinary shares to be issued in connection with the Business Combination will be freely transferable under the Securities Act except for shares issued to any shareholder who may be deemed for purposes of Rule 144 under the Securities Act an “affiliate” of SWAG immediately prior to the Effective Time or an “affiliate” of Otonomo following the Business Combination. Persons who may be deemed to be affiliates include individuals or entities that control, are controlled by, or are under common control with, Otonomo or SWAG (as appropriate) and may include the executive officers, directors and significant shareholders of Otonomo or SWAG (as appropriate).

Stock Exchange Listing of Otonomo Ordinary Shares

Otonomo will use commercially reasonable efforts to cause, prior to the Effective Time, the Otonomo ordinary shares and warrants issuable pursuant to the Business Combination Agreement to be approved for listing on Nasdaq under the symbols “OTMO” and “OTMOW,” respectively, subject to official notice of issuance. Approval of the listing on Nasdaq of the Otonomo ordinary shares and warrants (subject to official notice of issuance) is a condition to each party’s obligation to complete the Business Combination.

 

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Delisting and Deregistration of SWAG Common Stock

If the Business Combination is completed, shares of Class A Stock, SWAG warrants and SWAG’s units will be delisted from Nasdaq and will be deregistered under the Exchange Act.

Combined Company Status as a Foreign Private Issuer under the Exchange Act

Otonomo expects to remain a “foreign private issuer” (under SEC rules). Consequently, upon consummation of the Business Combination, the combined company will be subject to the reporting requirements under the Exchange Act applicable to foreign private issuers. The combined company will be required to file its annual report on Form 20-F for the year ending December 31, 2021 with the SEC by April 30, 2022. In addition, the combined company will furnish reports on Form 6-K to the SEC regarding certain information required to be publicly disclosed by the combined company in Israel or that is distributed or required to be distributed by the combined company to its shareholders.

Based on its foreign private issuer status, the combined company will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as a U.S. company whose securities are registered under the Exchange Act. The combined company will also not be required to comply with Regulation FD, which addresses certain restrictions on the selective disclosure of material information. In addition, among other matters, the combined company officers, directors and principal shareholders will be exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of the Otonomo ordinary shares.

Given the substantial number of Otonomo ordinary shares that Otonomo will issue in the Business Combination to SWAG stockholders who are U.S. residents and the prospective, increased U.S.-oriented profile of the combined company’s officers and directors, assets and business administration, it is possible that the combined company will lose its status as a foreign private issuer after the Business Combination, potentially as soon as January 1, 2022. If that happens the combined company will no longer be exempt from such rules and, among other things, will be required to file quarterly reports on Form 10-Q containing interim financial statements as if it were a company incorporated in the United States, as well as annual reports on Form 10-K. The combined company’s qualification for foreign private issuer status will be tested again as of June 30, 2021, (the final business day of the second fiscal quarter in 2021) to determine whether the combined company will instead be subject to the reporting requirements applicable to U.S. companies registered under the Exchange Act beginning at the start of 2022. If it no longer meets the definition of a “foreign private issuer” as of that test date, the combined company will begin to be required to file a quarterly report on Form 10-Q for the quarter ending March 31, 2022, and will be required to continue to file quarterly reports with the SEC thereafter.

Despite its initial exemption due to its foreign private issuer status, Otonomo, and following the consummation of the Business Combination, the combined company, nevertheless expects to issue interim quarterly financial information publicly and to furnish it to the SEC on Form 6-K.

Combined Company Status as an Emerging Growth Company under U.S. Federal Securities Laws and Related Implications

Each of SWAG and Otonomo is, and consequently, following the Business Combination, the combined company will be, an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, the combined company will be eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in their periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on

 

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executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find the combined company’s securities less attractive as a result, there may be a less active trading market for the combined company’s securities and the prices of the combined company’s securities may be more volatile.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The combined company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the combined company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the combined company’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

The combined company will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the combined company’s initial public offering, (b) in which the combined company’s has total annual gross revenue of at least $1.07 billion, or (c) in which the combined company is deemed to be a large accelerated filer, which means the market value of the combined company’s common equity that is held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter; and (ii) the date on which the combined company has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.

 

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PROPOSAL TWO—THE CHARTER PROPOSALS

The Charter Proposals, if approved, will approve the following material differences between the SWAG Charter and Otonomo Articles to be in effect following the Business Combination:

 

   

the name of the new public entity will be “Otonomo Technologies Ltd.” as opposed to “Software Acquisition Group Inc. II”;

 

   

the Otonomo Articles provide for one class of ordinary shares as opposed to the two classes of SWAG Common Stock provided for in the SWAG Charter;

 

   

Otonomo’s corporate existence is perpetual as opposed to SWAG’s corporate existence terminating if a business combination is not consummated within a specified period of time; and

 

   

the Otonomo Articles do not include the various provisions applicable only to special purpose acquisition corporations that the SWAG Charter contains.

In the judgment of SWAG’s board of directors, the Charter Proposals are desirable for the following reasons:

 

   

the name of the new public entity is desirable to reflect the Business Combination and the combined business going forward;

 

   

the single class of ordinary shares is desirable because all shares of Class B Stock will be exchanged for Otonomo ordinary shares upon the closing of the Business Combination and because it will allow Otonomo to have a streamlined capital structure; and

 

   

the provisions that relate to the operation of SWAG as a blank check company prior to the consummation of its initial business combination would not be applicable after the Business Combination (such as the obligation to dissolve and liquidate if a business combination is not consummated in a certain period of time).

For a comparison of the SWAG Charter and Otonomo Articles, see “Comparison of Rights of Otonomo Shareholders and SWAG Stockholders.”

Under the Business Combination Agreement, the approval of the Charter Proposals is a condition to the adoption of the Business Combination Proposal and vice versa. Accordingly, if the Business Combination Proposal is not approved, the Charter Proposals will not be presented at the special meeting.

A copy of the Otonomo Articles, as will be in effect assuming approval of all of the Charter Proposals and upon consummation of the Transactions, is attached to this proxy statement/prospectus as Annex A.

Required Vote

The approval of each of the Charter Proposals will require the affirmative vote of the holders of a majority of the outstanding SWAG Common Stock. Abstentions will have the same effect as a vote “against” the Charter Proposals. The Charter Proposal to approve “Otonomo Technologies Ltd.” as the name of the new public entity is a routine proposal and, accordingly, your broker, bank or nominee may vote your shares with respect to such proposal without receiving voting instructions. Consequently, there should be no broker non-votes with respect to such proposal. Each other Charter Proposal is considered a non-routine proposal, and, accordingly, brokers are not entitled to vote on those proposals without receiving voting instructions, and broker non-votes will have the same effect as a vote “against” each such proposal.

Recommendation

SWAG’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SWAG STOCKHOLDERS VOTE “FOR” THE APPROVAL OF EACH OF THE CHARTER PROPOSALS.

 

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PROPOSAL THREE—THE ADJOURNMENT PROPOSAL

The Adjournment Proposal, if adopted, will allow SWAG’s board of directors to adjourn the special meeting to a later date or dates, if necessary. In no event will SWAG solicit proxies to adjourn the special meeting or consummate the Transactions beyond the date by which it may properly do so under the SWAG Charter and Delaware law. The purpose of the Adjournment Proposal is to provide more time to meet the requirements that are necessary to consummate the Transactions. See the section titled “Proposal One—The Business Combination ProposalInterests of Certain Persons in the Transactions.”

Consequences If the Adjournment Proposal Is Not Approved

If the Adjournment Proposal is presented to the meeting and is not approved by the stockholders, SWAG’s board of directors may not be able to adjourn the special meeting to a later date or dates. In such event, the Transactions would not be completed.

Required Vote

The approval of the Adjournment Proposal will require the affirmative vote of the holders of a majority of the shares of SWAG Common Stock present and entitled to vote at the special meeting. Abstentions will have the same effect as a vote “against” on the Adjournment Proposal. Broker non-votes will have no effect on the Adjournment Proposal.

Recommendation

SWAG’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SWAG STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT PROPOSAL.

 

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THE BUSINESS COMBINATION AGREEMENT

For a discussion of the Business Combination structure and merger consideration provisions of the Business Combination Agreement, see the section entitled “Proposal One – The Business Combination Agreement Proposal.” Such discussion and the following summary of other material provisions of the Business Combination Agreement is qualified by reference to the complete text of the Business Combination Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus. All SWAG stockholders are encouraged to read the Business Combination Agreement in its entirety for a more complete description of the terms and conditions of the Business Combination.

The Business Combination Agreement summary below is included in this proxy statement/prospectus only to provide you with information regarding the terms and conditions of the Business Combination Agreement and not to provide any other factual information regarding SWAG, Otonomo or their respective businesses. Accordingly, the representations and warranties and other provisions of the Business Combination Agreement should not be read alone, but instead should be read only in conjunction with the information provided elsewhere in this proxy statement/prospectus.

Closing and Effective Time of the Transactions

The Closing will take place as promptly as reasonably practicable, but in no event later than the third business day following the satisfaction of the conditions set forth in the Business Combination Agreement (the “Closing Date”) and summarized below under the subsection entitled The Business Combination Agreement—Conditions to Closing of the Transactions,” unless SWAG and Otonomo agree in writing to another time or unless the Business Combination Agreement is terminated pursuant to its terms. The Transactions are expected to be consummated promptly after the special meeting of SWAG’s stockholders described in this proxy statement/prospectus.

Representations and Warranties

The Business Combination Agreement contains representations and warranties of SWAG relating, among other things, to:

 

   

corporate organization and qualification;

 

   

the authorization, delivery and enforceability of the Business Combination Agreement and the Ancillary Documents;

 

   

governmental approvals and no conflicts;

 

   

brokers’ fees;

 

   

information supplied;

 

   

capitalization;

 

   

SEC filings;

 

   

Trust Account;

 

   

indebtedness;

 

   

transactions with affiliates;

 

   

litigation and proceedings;

 

   

compliance with laws;

 

   

business activities;

 

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internal controls;

 

   

Nasdaq listing;

 

   

financial statements;

 

   

absence of undisclosed liabilities;

 

   

taxes;

 

   

material contracts;

 

   

absence of certain changes;

 

   

employee benefits;

 

   

Sponsor Letter Agreement;

 

   

Investment Company Act;

 

   

charter provisions;

 

   

anti-corruption compliance;

 

   

non-Israeli residency; and

 

   

independent investigation and absence of outside reliance.

The Business Combination Agreement contains representations and warranties of Otonomo relating, among other things, to:

 

   

organization and qualification;

 

   

capitalization;

 

   

the authorization, delivery and enforceability of the Business Combination Agreement and the Ancillary Documents;

 

   

financial statements;

 

   

internal controls;

 

   

absence of undisclosed liabilities;

 

   

governmental approvals and no conflicts;

 

   

permits;

 

   

material contracts;

 

   

absence of certain changes;

 

   

litigation and proceedings;

 

   

compliance with laws;

 

   

employee benefits;

 

   

environmental matters;

 

   

intellectual property;

 

   

privacy;

 

   

labor matters;

 

   

insurance;

 

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taxes;

 

   

brokers’ fees;

 

   

real and personal property;

 

   

transactions with affiliates;

 

   

anti-corruption compliance;

 

   

PIPE Investment;

 

   

information supplied; and

 

   

independent investigation and absence of outside reliance.

Covenants

The parties have each agreed to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary or advisable to consummate and make effective as promptly as reasonably practicable the transactions contemplated by the Business Combination Agreement. SWAG and Otonomo have each also agreed to use commercially reasonable efforts to conduct and operate their respective businesses in the ordinary course in all material respects through the earlier of the Closing or the valid termination of the Business Combination Agreement pursuant to its terms.

SWAG and Otonomo have agreed that, unless otherwise required or permitted under the Business Combination Agreement, and subject to certain disclosed exceptions, neither Otonomo nor its subsidiaries will take the following actions during the interim period from the date of the Business Combination Agreement through the earlier of the Closing or the valid termination of the Business Combination Agreement pursuant to its terms, among others, except as consented to in writing by SWAG (such consent, not to be unreasonably withheld, conditioned or delayed):

 

   

declare, set aside, make or pay a dividend on, or make any other distribution or payment (whether in cash, stock or property) in respect of, any equity securities of Otonomo or its subsidiaries or repurchase, redeem or otherwise acquire, offer to repurchase, redeem or otherwise acquire, any outstanding equity securities of Otonomo or its subsidiaries, other than (x) dividends or distributions, declared, set aside or paid by any of Otonomo’s subsidiaries to Otonomo or any subsidiary that is, directly or indirectly, wholly owned by Otonomo and (y) any dividends or distributions required under the governing documents of any joint venture of any subsidiaries of Otonomo;

 

   

(A) merge, consolidate, combine or amalgamate Otonomo or any of its subsidiaries with any person or (B) purchase or otherwise acquire (whether by merging or consolidating with, purchasing any equity security in or a substantial portion of the assets of, or by any other manner) any corporation, partnership, association or other business entity or organization or division thereof, other than such acquisitions and purchases that would not require financial statements of the acquired business to be included in this proxy statement/prospectus pursuant to Rule 3-05 of Regulation S-X under the Securities Act;

 

   

adopt any amendments, supplements, restatements or modifications to Otonomo’s or any of its subsidiaries’ governing documents;

 

   

transfer, issue, sell, grant or otherwise directly or indirectly dispose of, or subject to a lien, (A) any equity securities of Otonomo or any of its subsidiaries or (B) any options, restricted stock, warrants, rights of conversion or other rights, agreements, arrangements or commitments obligating Otonomo or any of its subsidiaries to issue, deliver or sell any equity securities of Otonomo or any of its subsidiaries, other than the issuance of shares of capital stock of Otonomo upon the exercise of any Company Equity Award outstanding on the date of the Business Combination Agreement in accordance with the terms of the applicable Company Equity Plan and the underlying grant, award or similar agreement;

 

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incur, create or assume any indebtedness in excess of $500,000, other than (x) ordinary course trade payables, (y) between Otonomo and any of its wholly owned subsidiaries or between any of such wholly owned subsidiaries or (z) in connection with borrowings, extensions of credit and other financial accommodations under Otonomo’s and its subsidiaries’ existing credit facilities, notes and other existing indebtedness and, in each case, any refinancings thereof;

 

   

make any loans, advances or capital contributions to, or guarantees for the benefit of, or any investments in, any person, other than (A) intercompany loans or capital contributions between Otonomo and any of its wholly owned subsidiaries, (B) the reimbursement of expenses of employees in the ordinary course of business and consistent with past practice, (C) prepayments and deposits paid to suppliers of Otonomo or its subsidiaries in the ordinary course of business, (D) trade credit extended to customers of Otonomo or its subsidiaries in the ordinary course of business and (E) advances to wholly owned subsidiaries of Otonomo;

 

   

except (x) as required under the existing terms of any Employee Benefit Plan of Otonomo or its subsidiaries or (y) as required by any applicable law (A) amend, modify, adopt, enter into or terminate any material employee benefit plan of Otonomo or its subsidiaries or any other material benefit or compensation plan, policy, program, agreement, trust, fund or contract that would be an employee benefit plan if in effect as of the date of the Business Combination Agreement, (B) increase or decrease the compensation or benefits payable to any current or former director, manager, officer, employee, individual independent contractor or other service provider of Otonomo or its subsidiaries, (C) accelerate, by any action or omission of any Group Company, any payment, right to payment, vesting or benefit, or the funding of any payment, right to payment, vesting or benefit, payable or to become payable to any current or former director, manager, officer, employee, individual independent contractor or other service provider of Otonomo or its subsidiaries or (D) waive or release any noncompetition, non-solicitation, no-hire, nondisclosure or other restrictive covenant obligation of any current or former director, manager, officer, employee, individual independent contractor or other service provider of Otonomo or its subsidiaries;

 

   

(i) modify, extend, terminate, negotiate, or enter into any collective bargaining agreement or (ii) recognize or certify any labor union, works council, or other labor organization or group of employees of the Group Companies as the bargaining representative for any employees of Otonomo or its subsidiaries;

 

   

hire, engage, terminate (without cause), furlough, or temporarily lay off any employee or independent contractor with annual target compensation in excess of $200,000;

 

   

implement or announce any closings, employee layoffs, furloughs, reductions-in-force, reduction in terms and conditions of employment, or other personnel actions that could implicate the Worker Adjustment and Retraining Notification Act;

 

   

make, change or revoke any election concerning taxes (including, for the avoidance of doubt, making any U.S. federal income tax entity classification election pursuant to Treasury Regulations Section 301.7701-3(c) with respect to Otonomo or its subsidiaries not otherwise contemplated by the Business Combination Agreement), change or otherwise modify any method of accounting as such relates to taxes, amend any income or other material tax return, surrender any right to claim a refund of income or other material taxes, enter into any tax closing agreement, settle any tax claim or assessment, change its jurisdiction of tax residence, or consent to any extension or waiver of the limitation period applicable to or relating to any tax claim or assessment;

 

   

enter into any settlement, conciliation or similar contract outside of the ordinary course of business the performance of which would involve the payment by Otonomo or its subsidiaries in excess of $500,000, in the aggregate, or that imposes, or by its terms will impose at any point in the future, any material, non-monetary obligations on Otonomo or its subsidiaries (or SWAG or any of its affiliates after the Closing);

 

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authorize, recommend, propose or announce an intention to adopt, or otherwise effect, a plan of complete or partial liquidation, dissolution, restructuring, recapitalization, reorganization or similar transaction involving Otonomo or its subsidiaries;

 

   

change Otonomo’s or its subsidiaries’ methods of accounting in any material respect, other than changes that are made in accordance with PCAOB standards;

 

   

enter into any contract with any broker, finder, investment banker or other person under which such person is or will be entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by the Business Combination Agreement;

 

   

except for entries, modifications, amendments, waivers, terminations or non-renewals in the ordinary course of business, enter into, materially modify, materially amend, waive any material right under, terminate (excluding any expiration in accordance with its terms) or fail to renew, any material contract (excluding, for the avoidance of doubt, any expiration or automatic extension or renewal of any such material contract pursuant to its terms) or any real property lease;

 

   

fail to maintain the leased real property in substantially the same condition as of the date of the Business Combination Agreement, other than ordinary wear and tear, casualty and condemnation;

 

   

abandon, sell, assign, or exclusively license any material company owned intellectual property to any person (other than in the ordinary course of business);

 

   

sell, lease, license, encumber or otherwise dispose of any properties or assets except for the sale, lease, license, or disposition in the ordinary course of business;

 

   

close any facility or discontinue any material line of business or material business operations;

 

   

(y) suffer any lien on or transfer, let lapse, abandon or dispose of any material company owned intellectual property or (z) license any company owned intellectual property, except for non-exclusive licenses granted in the ordinary course of business; or

 

   

enter into any contract to take, or cause to be taken, any of the foregoing actions.

SWAG and Otonomo have agreed that, unless otherwise required or permitted under the Business Combination Agreement, and subject to certain disclosed exceptions, SWAG will not take the following actions during the interim period from the date of the Business Combination Agreement through the earlier of the Closing or the valid termination of the Business Combination Agreement pursuant to its terms, among others, except as consented to in writing by Otonomo (such consent not to be unreasonably withheld, conditioned or delayed):

 

   

adopt any amendments, supplements, restatements or modifications to the Existing Warrant Agreement, the investment management trust agreement dated as of September 14, 2020 between SWAG and Continental or the governing documents of SWAG;

 

   

declare, set aside, make or pay a dividend on, or make any other distribution or payment (whether in cash, stock or property) in respect of, any equity securities of SWAG or repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any outstanding equity securities of SWAG;

 

   

(A) merge, consolidate, combine or amalgamate SWAG with any person or (B) purchase or otherwise acquire (whether by merging or consolidating with, purchasing any equity security in or a substantial portion of the assets of, or by any other manner) any corporation, partnership, association or other business entity or organization or division thereof;

 

   

split, combine or reclassify any of its capital stock or other equity securities or issue any other security in respect of, in lieu of or in substitution for shares of its capital stock;

 

   

incur, create, assume, refinance, guarantee or otherwise become liable for (whether directly, contingently, or otherwise) any indebtedness or other liability;

 

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make any loans or advances to, or capital contributions to, or guarantees for the benefit of, or any investment in, any other person, other than to, of, or in, SWAG;

 

   

issue any equity securities of SWAG or grant any additional options, warrants or stock appreciation rights with respect to equity securities of the foregoing of SWAG;

 

   

enter into, renew, modify or revise any SWAG related-party transaction (or any contract or agreement that if entered into prior to the execution and delivery of the Business Combination Agreement would be a SWAG related-party transaction);

 

   

engage in any activities or business, other than activities or business (i) in connection with or incident or related to SWAG’s incorporation or continuing corporate (or similar) existence, (ii) contemplated by, or incident or related to, the Business Combination Agreement, any Ancillary Document, the performance of covenants or agreements thereunder or the consummation of the Transactions or (iii) those that are administrative or ministerial, in each case, which are immaterial in nature

 

   

make, change or revoke any election concerning taxes (including, for the avoidance of doubt, making any U.S. federal income tax entity classification election pursuant to Treasury Regulations Section 301.7701-3(c) with respect to SWAG not otherwise contemplated by the Business Combination Agreement), change or otherwise modify any method of accounting as such relates to taxes, amend any income or other material tax return, surrender any right to claim a refund of income or other material taxes, enter into any tax closing agreement, settle any tax claim or assessment, change its jurisdiction of tax residence, or consent to any extension or waiver of the limitation period applicable to or relating to any tax claim or assessment;

 

   

enter into any settlement, conciliation or similar contract that would require any payment from the Trust Account or that would impose non-monetary obligations on SWAG (or Otonomo or any of its subsidiaries after the Closing);

 

   

authorize, recommend, propose or announce an intention to adopt, or otherwise effect, a plan of complete or partial liquidation, dissolution, restructuring, recapitalization, reorganization or similar transaction involving SWAG;

 

   

change SWAG’s methods of accounting in any material respect, other than changes that are made in accordance with PCAOB standards;

 

   

enter into any contract with any broker, finder, investment banker or other person under which such person is or will be entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by the Business Combination Agreement;

 

   

except for entries, modifications, amendments, waivers, terminations or non-renewals in the ordinary course of business, enter into, materially modify, materially amend, waive any material right under, terminate (excluding any expiration in accordance with its terms) or fail to renew, any material contract (excluding, for the avoidance of doubt, any expiration or automatic extension or renewal of any such material contract pursuant to its terms);

 

   

enter into or adopt any SWAG benefit plan or any benefit or compensation plan, policy, program or arrangement that would be a SWAG benefit plan if in effect as of the date of the Business Combination Agreement; or

 

   

enter into any contract to take, or cause to be taken, any of the foregoing actions.

The Business Combination Agreement also contains additional covenants of the parties, including, among other things:

 

   

notifying the other party in writing promptly after learning of any shareholder demands or other shareholder proceedings relating to the Business Combination Agreement, any Ancillary Document or any matters relating thereto and reasonably cooperate with one another in connection therewith;

 

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keeping certain information confidential in accordance with the existing non-disclosure agreements; and

 

   

making relevant public announcements.

In addition, SWAG and Otonomo agreed that SWAG and Otonomo will prepare and mutually agree upon and Otonomo will file with the SEC, this registration statement/proxy statement on Form F-4 relating to the Business Combination.

Conditions to Closing of the Transactions

Conditions to Each Party’s Obligations

The respective obligations of each party to the Business Combination Agreement to consummate the transactions contemplated by the Business Combination Agreement are subject to the satisfaction or waiver, if permitted by applicable law, in writing by the party for whose benefit such condition exists, of the following conditions:

 

   

there shall not have been entered, enacted or promulgated any law or order enjoining or prohibiting the consummation of the Transactions;

 

   

this registration statement/proxy statement becoming effective in accordance with the provisions of the Securities Act, no stop order suspending the effectiveness of this proxy statement/prospectus being issued by the SEC and remaining in effect with respect to this proxy statement/prospectus, and no proceeding seeking such a stop order being threatened or initiated by the SEC and remaining pending;

 

   

the receipt of the required approval by the preferred shareholders of Otonomo and the required approval by the ordinary and preferred shareholders of Otonomo;

 

   

the approval of the Business Combination by the affirmative vote of the holders of the requisite number of SWAG Common Stock being obtained in accordance with SWAG’s governing documents and applicable law;

 

   

after giving effect to the transactions contemplated by the Business Combination Agreement (including the PIPE), SWAG having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) immediately after SWAG’s public shareholders had their outstanding SWAG shares redeemed for the consideration and on the terms and subject to the conditions and limitations, set forth in SWAG’s governing documents and the trust agreement;

 

   

Otonomo’s initial listing application with Nasdaq in connection with the Transactions having been approved and Otonomo not having received any notice of non-compliance therewith that has not been cured or would not be cured at or immediately following the Effective Time of the Business Combination and Otonomo’s shares (including, for the avoidance of doubt, the Otonomo ordinary shares to be issued pursuant to the Business Combination) having been approved for listing on Nasdaq, subject only to official notice of issuance thereof and the requirement to have a sufficient number of round lot holders; and

 

   

each Ancillary Document (other than the Subscription Agreements and the Share Purchase Agreement) having been executed and delivered by the parties thereto and being in full force and effect.

Other Conditions to the Obligations of SWAG

The obligations of SWAG to consummate the transactions contemplated by the Business Combination Agreement are subject to the satisfaction or waiver, if permitted by applicable law, waiver by SWAG of the following further conditions:

 

   

certain representations and warranties of Otonomo regarding the organization of Otonomo and its subsidiaries, the capitalization of Otonomo’s subsidiaries, the authority of Otonomo to, among other

 

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things, execute and deliver the Business Combination Agreement and each of the Ancillary Documents to which it is or will be a party and to consummate the transactions contemplated thereby, the absence of certain changes and brokers’ fees being true and correct (without giving effect to any limitation of “materiality” or “Otonomo Material Adverse Effect” or any similar limitation set forth in the Business Combination Agreement) in all material respects as of the Closing Date as if made at and as of such date (or, if given as of an earlier date, as of such earlier date);

 

   

the representations and warranties set forth in Section 3.2 of the Business Combination Agreement regarding the capitalization of Otonomo being true and correct in all respects (except for de minimis inaccuracies) as of the Closing Date (or, if given as of an earlier date, as of such earlier date);

 

   

the other representations and warranties of Otonomo set forth in Article III of the Business Combination Agreement being true and correct (without giving effect to any limitation as to “materiality” or “Otonomo Material Adverse Effect” or any similar limitation set forth in the Business Combination Agreement) in all respects as of the Closing Date (or, if given as of an earlier date, as of such earlier date, in which case such representation and warranty shall be true and correct in all respects), except where the failure of such representations and warranties to be true and correct, taken as a whole, does not cause an Otonomo Material Adverse Effect;

 

   

Otonomo having performed and complied in all material respects with the covenants and agreements required to be performed or complied with by it under the Business Combination Agreement prior to the Closing;

 

   

since the date of the Business Combination Agreement, no Otonomo Material Adverse Effect has occurred that is continuing;

 

   

SWAG having received a certificate executed by an authorized officer of Otonomo confirming that the conditions specified in Section 6.2(a), Section 6.2(b) and Section 6.2(c) of the Business Combination Agreement have been satisfied;

 

   

SWAG having received a certificate of the secretary or equivalent officer of each of the Company and Merger Sub certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors or equivalent body of each of the Company and Merger Sub authorizing the execution, delivery, and performance of the Business Combination Agreement and the Transactions, and that all such resolutions are in full force and effect and are all of the resolutions adopted in connection with the Transactions; and

 

   

the Otonomo board of directors consisting of the number of directors, and being comprised of the individuals, determined pursuant to the Business Combination Agreement.

Other Conditions to the Obligations of the Otonomo Parties

The obligations of each of Otonomo and Merger Sub (together, the “Otonomo Parties”) to consummate the transactions contemplated by the Business Combination Agreement are subject to the satisfaction or waiver, if permitted by applicable law, by the Otonomo Parties of the following further conditions:

 

   

certain representations and warranties regarding the organization and qualification of SWAG, the authority of SWAG to, among other things, execute and deliver the Business Combination Agreement and each of the Ancillary Documents to which it is or will be a party and to consummate the transactions contemplated thereby, brokers’ fees and the absence of certain changes being true and correct, in all material respects as of the Closing Date, as though made on and as of the Closing Date (or, if given as of an earlier date, as of such earlier date);

 

   

the representations and warranties set forth in Section 4.6 of the Business Combination Agreement regarding the capitalization of SWAG being true and correct in all respects, (except for de minimis inaccuracies) as of the Closing Date (or, if given as of an earlier date, as of such earlier date);

 

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the other representations and warranties of SWAG set forth in Article IV of the Business Combination Agreement being true and correct (without giving effect to any limitation of “materiality” or “material adverse effect” or any similar limitation set forth in the Business Combination Agreement) in all respects as of the Closing Date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct in all respects as of such earlier date), except where the failure of such representations and warranties to be true and correct in all respects, taken as a whole, does not cause a material adverse effect;

 

   

SWAG having performed and complied in all material respects with the covenants and agreements required to be performed or complied with by them under the Business Combination Agreement;

 

   

the Aggregate Transaction Proceeds being equal to or greater than $150,000,000;

 

   

Otonomo having received resignations of all of the directors and officers of SWAG, effective as of or prior to the Closing;

 

   

Otonomo having received a certificate of the secretary or equivalent officer of SWAG certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors of SWAG authorizing the execution, delivery, and performance of the Business Combination Agreement and the Transactions, and that all such resolutions are in full force and effect and are all of the resolutions of the board of directors of SWAG adopted in connection with the Transactions; and

 

   

Otonomo having received a certificate executed by an authorized officer of SWAG confirming that the conditions set forth in Section 6.3(a) and Section 6.3(b) of the Business Combination Agreement have been satisfied.

Termination

The Business Combination Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including, among others, the following:

 

   

by the mutual written consent of SWAG and Otonomo;

 

   

by SWAG, subject to certain exceptions, if any of the representations or warranties made by either Otonomo Party are not true and correct or if either Otonomo Party fails to perform any of their respective covenants or agreements under the Business Combination Agreement (including an obligation to consummate the Closing) such that certain conditions to the obligations of SWAG as described in the section entitled “The Business Combination AgreementConditions to Closing of the Transactions” above could not be satisfied and the breach (or breaches) of such representations or warranties or failure (or failures) to perform such covenants or agreements is (or are) not cured or cannot be cured within the earlier of (i) thirty (30) days after written notice thereof, and (ii) July 31, 2021 (the “Termination Date”); provided, however, SWAG is not then in breach of the Business Combination Agreement so as to prevent such condition to Closing from being satisfied;

 

   

by Otonomo, subject to certain exceptions, if any of the representations or warranties made by SWAG are not true and correct or if SWAG fails to perform any of its covenants or agreements under the Business Combination Agreement (including an obligation to consummate the Closing) such that certain conditions to the obligations of Otonomo, as described in the section entitled “The Business Combination AgreementConditions to Closing of the Transactions above could not be satisfied and the breach (or breaches) of such representations or warranties or failure (or failures) to perform such covenants or agreements is (or are) not cured or cannot be cured within the earlier of (i) thirty (30) days after written notice thereof, and (ii) the Termination Date; provided, however, Otonomo is not then in breach of the Business Combination Agreement so as to prevent such condition to Closing from being satisfied;

 

   

by either SWAG or Otonomo if the transactions contemplated by the Business Combination Agreement are not consummated on or prior to the Termination Date, unless the breach of any covenants or

 

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obligations under the Business Combination Agreement by the party seeking to terminate proximately caused the failure to consummate the transactions contemplated by the Business Combination Agreement or a Supporting Otonomo Shareholder’s breach of its covenants or obligations under a Support Agreement shall have proximately caused the failure to consummate the transactions contemplated by the Business Combination Agreement on or before the Termination Date;

 

   

by either SWAG or Otonomo:

 

   

if any governmental entity shall have issued an order, promulgated a law or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated by the Business Combination Agreement and such order or other action shall have become final and nonappealable; provided, however, that (i) the right to terminate the Business Combination Agreement pursuant to such provision shall not be available to SWAG if (A) SWAG’s failure to fulfill any obligation under the Business Combination Agreement has been the primary cause of, or primarily resulted in, the failure of the Closing to occur on or before such date or (B) SWAG is in material breach of its obligations under the Business Combination Agreement on such date and (ii) the right to terminate the Business Combination Agreement pursuant to such provision shall not be available to Otonomo if (A) an Otonomo Party’s failure to fulfill any obligation under the Business Combination Agreement has been the primary cause of, or primarily resulted in, the failure of the Closing to occur on before such date or (B) Otonomo is in material breach of its obligations under Business Combination Agreement on such date;

 

   

if the approval of the Business Combination is not obtained at the SWAG special meeting (including any adjournment thereof); or

 

   

by Otonomo if, prior to obtaining the required approval by the stockholders of SWAG (the “SWAG Stockholder Approval”), the SWAG board of directors shall have made a change in recommendation or shall have failed to include the SWAG board of directors recommendation in this proxy statement/prospectus.

Fees and Expenses

The fees and expenses incurred in connection with the Business Combination Agreement and the Ancillary Documents, and the Transactions, including the fees and disbursements of counsel, financial advisors and accountants, will be paid by the party incurring such fees or expenses; provided that (i) if the Business Combination Agreement is terminated in accordance with its terms, Otonomo shall pay, or cause to be paid, all unpaid Otonomo expenses and SWAG shall pay, or cause to be paid, all unpaid SWAG expenses and (ii) if the Closing occurs, then Otonomo shall pay, or cause to be paid, all unpaid Otonomo expenses and all unpaid SWAG expenses.

Amendments

The Business Combination Agreement may be amended or modified in whole or in part, only by a duly authorized agreement in writing executed by each of the parties thereto in the same manner as the Business Combination Agreement and which makes reference to the Business Combination Agreement.

Governing Law

The Business Combination Agreement, and all claims or causes of action based upon, arising out of, or related to the Business Combination Agreement or the Transactions, is governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware.

 

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AGREEMENTS ENTERED INTO IN CONNECTION WITH THE BUSINESS COMBINATION AGREEMENT

Subscription Agreements

Concurrently with the execution of the Business Combination Agreement, Otonomo entered into the Subscription Agreements with certain parties subscribing for Otonomo ordinary shares, pursuant to which the PIPE Investors have agreed to purchase, and Otonomo has agreed to sell the PIPE Investors, an aggregate of 14,250,000 Otonomo ordinary shares at a purchase price of $10.00 per share, for an aggregate purchase price of $142,500,000, which price per share and aggregate purchase price assume that Otonomo has effected the Stock Split prior to the Effective Time. The obligations to consummate the transactions contemplated by the Subscription Agreements are conditioned upon, among other things, the consummation of the transactions contemplated by the Business Combination Agreement.

The Subscription Agreements provide for the sale of Otonomo ordinary shares rather than shares of SWAG Class A Stock because the issued and outstanding shares of Class A Stock will be exchanged for Otonomo ordinary shares at the closing of the Business Combination. There are important differences between the rights of holders of shares of Class A Stock and holders of Otonomo ordinary shares. See “Comparison of Rights of Otonomo Shareholders and SWAG Stockholders” for a discussion of the different rights associated with holding Otonomo securities. In addition, the Class A Stock was originally sold in the SWAG IPO as a component of the SWAG units for $10.00 per unit. The SWAG units consist of one share of Class A Stock and one-half of one SWAG warrant. As of                 , 2021, the closing price on Nasdaq of the SWAG units was $             per unit and the closing price of the Class A Stock was $             per share. The purchase price of $10.00 per ordinary share to the PIPE Investors reflects the expected price of the Otonomo ordinary shares after giving effect to the Stock Split. None of the Sponsor or SWAG’s officers, directors or their affiliates is a PIPE Investor.

The Subscription Agreements provide that Otonomo is required to file with the SEC, within twenty (20) business days after the Closing, a registration statement registering the resale of the shares of Otonomo ordinary shares to be issued to any such investor and to use its commercially reasonable efforts to have such registration statement declared effective as soon as practicable after the filing thereof but no later than the earlier of (i) the 75th calendar day (or 105th calendar day if the SEC notifies Otonomo that it will “review” such registration statement) following the earlier of (A) the filing of the registration statement and (B) the Subscription Filing Deadline and (ii) the 10th business day after the date Otonomo is notified (orally or in writing, whichever is earlier) by the SEC that such registration statement will not be “reviewed” or will not be subject to further review.

Share Purchase Agreement

Concurrently with the execution of the Business Combination Agreement, Otonomo and the Selling Shareholders entered into the Share Purchase Agreement with the Secondary PIPE Investors, pursuant to which the Secondary PIPE Investors have agreed to purchase, and the Selling Shareholders have agreed to sell to the Secondary PIPE Investors, an aggregate of 3,000,000 Otonomo ordinary shares at a purchase price of $10.00 per share, for an aggregate purchase price of $30,000,000, which price per share and aggregate purchase price assume that Otonomo has effected the Stock Split prior to the Effective Time. The obligations to consummate the transactions contemplated by the Share Purchase Agreement are conditioned upon, among other things, the consummation of the transactions contemplated by the Business Combination Agreement.

The Share Purchase Agreement provides that Otonomo is required to file with the SEC, before the Subscription Filing Deadline, a registration statement registering the resale of the shares of Otonomo ordinary shares to be purchased by any such investor and to use its commercially reasonable efforts to have such registration statement declared effective as soon as practicable after the filing thereof but no later than the earlier of (i) the 75th calendar day (or 105th calendar day if the SEC notifies Otonomo that it will “review” such

 

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registration statement) following the earlier of (A) the filing of the registration statement and (B) the Subscription Purchase Filing Deadline and (ii) the 10th business day after the date Otonomo is notified (orally or in writing, whichever is earlier) by the SEC that such registration statement will not be “reviewed” or will not be subject to further review.

Support Agreements

Concurrently with the execution of the Business Combination Agreement, Otonomo and SWAG entered into the Support Agreements with the Supporting Otonomo Shareholders that collectively hold Otonomo ordinary shares and Otonomo preferred shares representing the majority of the voting power of the Otonomo ordinary shares and the Otonomo preferred shares, on an as-converted basis, and a majority of the voting power of the Otonomo preferred shares. Each Support Agreement provides, among other things, that each Supporting Otonomo Shareholder will (i) vote all Otonomo ordinary shares and Otonomo preferred shares beneficially owned by them in favor of the Business Combination and each other proposal related to the Business Combination on the agenda at the meeting of Otonomo shareholders called to approve the Business Combination, (ii) appear at such shareholder meeting for the purpose of establishing a quorum, (iii) vote all such shares against any action that would reasonably be expected to materially impede, interfere with, delay, postpone, or adversely affect the Transactions and (iv) not transfer, assign, or sell such shares, except to certain permitted transferees, prior to the consummation of the Transactions.

Registration Rights Agreement

Concurrently with the execution of the Business Combination Agreement, Otonomo, certain equityholders of SWAG and certain equityholders of Otonomo, entered into the Registration Rights Agreement, pursuant to which Otonomo agreed to file a shelf registration statement with respect to the registrable securities defined therein within twenty (20) business days of the Closing. Pursuant to the Registration Rights Agreement, certain Otonomo equityholders of registrable securities may collectively request to sell all or any portion of their registrable securities in an underwritten offering up to four times in any 12-month period and certain former SWAG holders of registrable securities may collectively request to sell all or any portion of their registrable securities in an underwritten offering up to two times in any 12-month period, in each case, so long as the total offering price is reasonably expected to exceed $25,000,000; provided, however, that such Otonomo equityholders and such former SWAG holders may not collectively request more than two underwritten shelf takedowns in any 12-month period. Otonomo also agreed to provide customary “piggyback” registration rights. The Registration Rights Agreement also provides that Otonomo will pay certain expenses relating to such registrations and indemnify the shareholders against certain liabilities.

Confidentiality and Lockup Agreement

Concurrently with the execution of the Business Combination Agreement, certain equityholders of Otonomo and certain equityholders of SWAG entered into a Confidentiality and Lockup Agreement. Pursuant to the Confidentiality and Lockup Agreement, the shareholder parties to the Confidentiality and Lockup Agreement have agreed that, during the Lockup Period, they will not, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares, or any options or warrants to purchase any shares, or any securities convertible into, exchangeable for or that represent the right to receive shares, or any interest in any of the foregoing, whether now owned or hereinafter acquired, owned directly by such shareholder (including holding as a custodian) or with respect to which such shareholder has beneficial ownership within the rules and regulations of the SEC (in each case, subject to certain exceptions set forth in the Confidentiality and Lockup Agreement).

In connection with the Confidentiality and Lockup Agreement, at the Effective Time, the transfer restrictions set forth in certain letter agreements among SWAG and the Sponsor and officers and directors of SWAG will terminate.

 

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Amended and Restated Warrant Agreement

Upon the closing of the Business Combination, Otonomo, SWAG and Continental will enter into the Amended and Restated Warrant Agreement. Such agreement will amend and restate the Existing Warrant Agreement to provide for the assignment by SWAG of all its rights, title and interest in the outstanding warrants of SWAG to Otonomo. Pursuant to the Amended and Restated Warrant Agreement, all SWAG warrants under the Existing Warrant Agreement will no longer be exercisable for shares of Class A Stock, but instead will be exercisable for Otonomo ordinary shares.

Sponsor Letter Agreement

Concurrently with the execution of the Business Combination Agreement, the Sponsor and officers and directors of SWAG entered into the Sponsor Letter Agreement in favor of Otonomo and SWAG, pursuant to which they agreed to (i) vote all shares of SWAG Common Stock beneficially owned by them in favor of the Business Combination and each other proposal related to the Business Combination on the agenda at the meeting of SWAG stockholders called to approve the Business Combination, (ii) appear at such stockholder meeting for the purpose of establishing a quorum, (iii) vote all such shares against any action that would reasonably be expected to materially impede, interfere with, delay, postpone, or adversely affect the Transactions and (iv) not transfer, assign, or sell such shares, except to certain permitted transferees, prior to the consummation of the Transactions. The Sponsor, as well as SWAG’s officers and directors, beneficially own and are entitled to vote an aggregate of approximately 4,312,500 shares of SWAG Common Stock, or 20.0% of the outstanding SWAG Common Stock. In addition to the shares of SWAG Common Stock held by the Sponsor and SWAG’s officers and directors, SWAG would need (a) 6,468,751 shares, or approximately 37.5%, of the 17,250,000 public shares to be voted in favor of the Business Combination Proposal and other proposals in order for them to be approved (assuming all outstanding shares are voted on each proposal), or (b) 1,078,126 shares, or approximately 6.3%, of the 17,250,000 public shares to be voted in favor of the Business Combination Proposal and other proposals in order for them to be approved (assuming the minimum number of shares necessary to establish a quorum are voted on each proposal).

 

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INFORMATION ABOUT THE COMPANIES

Software Acquisition Group Inc. II

SWAG was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. SWAG was incorporated under the laws of the State of Delaware on June 16, 2020.

On September 17, 2020, SWAG consummated the SWAG IPO of 15,000,000 units, with each unit consisting of one share of Class A Stock and one-half of one redeemable warrant, with each whole warrant entitling the holder to purchase one share of Class A Stock at a price of $11.50 commencing 30 days after the consummation of an initial business combination. The units from the SWAG IPO were sold at an offering price of $10.00 per unit, generating total gross proceeds of $150,000,000. Simultaneously with the closing of the SWAG IPO, the Company consummated the sale of 4,750,000 private placement warrants at a price of $1.00 per private placement warrant in a private placement to the Sponsor, generating gross proceeds of $4,750,000.

On September 24, 2020, the underwriter exercised its over-allotment option in full. As such, the Company consummated the sale of an additional 2,250,000 units to the underwriter, at $10.00 per unit, and the sale of an additional 450,000 private placement warrants to the Sponsor, at $1.00 per private placement warrant, generating total gross proceeds of $22,950,000. A total of $22,500,000 of the net proceeds were deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $172,500,000, net of underwriting discounts and commissions and other costs and expenses, became available to be used as working capital to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses. The SWAG IPO was conducted pursuant to a registration statement on Form S-1 (Registration No. 333-248214) that became effective on September 14, 2020. As of the record date, there was approximately $                 held in the Trust Account.

SWAG’s units, the Class A Stock and the SWAG warrants are listed on the Nasdaq Capital Market under the symbols SAIIU, SAII and SAIIW, respectively.

The mailing address of SWAG’s principal executive office is 1980 Festival Plaza Drive, Ste. 300, Las Vegas, Nevada 89135, and its telephone number is (310) 991-4982. After the consummation of the Business Combination, SWAG’s principal executive office will be that of Otonomo.

Otonomo Technologies Ltd.

Otonomo is a leading one-stop shop for vehicle data. Since its founding in 2015, Otonomo has built the Otonomo Vehicle Data Platform and marketplace that fuels an ecosystem powered by data from 16 vehicle manufacturer (OEM) agreements, fleets, and other data providers, and enables the licensing of data to more than 100 service providers. The platform securely ingests over 4 billion data points per day from over 40 million connected vehicles worldwide and then reshapes and enriches the data in order to accelerate the time to market for new services that improve the in-and-around car experience. Otonomo’s platform provides OEMs the opportunity to create new revenue streams and facilitates an open ecosystem of services around the vehicle. This enables the utilization of vast amounts of data that vehicles generate daily and that OEMs store and maintain.

The mailing address of Otonomo’s principal executive office is 16 Abba Eban Blvd., Herzliya Pituach 467256, Israel and its telephone number is +(972) 52-432-9955.

Merger Sub

Butterbur Merger Sub Inc. is a newly formed Delaware corporation and a wholly owned subsidiary of Otonomo. Merger Sub was formed solely for the purpose of effecting the Transactions and has not carried on any activities other than those in connection with the Transactions. The address and telephone number for Merger Sub’s principal executive offices are the same as those for Otonomo.

 

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SWAG’S BUSINESS

Introduction

SWAG was incorporated on June 16, 2020 for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. SWAG’s efforts to identify a prospective target business were not limited to any particular industry or geographic region, although it initially focused its search for target businesses on software companies, especially those targeting enterprise vertical sectors owned by private equity and venture capital firms as well as corporate carve-outs. Prior to executing the Business Combination Agreement, SWAG’s efforts were limited to organizational activities, completion of its initial public offering and the evaluation of possible business combinations.

Initial Public Offering and Simultaneous Private Placement

On September 17, 2020, SWAG consummated the SWAG IPO of 15,000,000 units. The units sold in the SWAG IPO were sold at an offering price of $10.00 per unit, generating total gross proceeds of $150,000,000. B. Riley Securities, Inc. acted as sole book-running manager. The securities in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-236798). The SEC declared the registration statement effective on September 14, 2020.

Simultaneously with the consummation of the SWAG IPO, SWAG consummated the private placement of an aggregate of 4,750,000 warrants at a price of $1.00 per private placement warrant, generating total proceed of $4,750,000. The issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

On September 24, 2020, the underwriter exercised its over-allotment option in full. As such, the Company consummated the sale of an additional 2,250,000 units to the underwriter, at $10.00 per unit, and the sale of an additional 450,000 private placement warrants to the Sponsor, at $1.00 per private placement warrant, generating total gross proceeds of $22,950,000.

The private placement units and private placement warrants are identical to the units and warrants underlying the units sold in the SWAG IPO, except that the private placement warrants are not transferable, assignable or salable until 30 days after the completion of a business combination, subject to certain limited exceptions.

Of the gross proceeds received from the SWAG IPO, the underwriter’s subsequent exercise of the over-allotment option in full, and the sale of private securities, $172,500,000 was placed in the Trust Account.

SWAG may withdraw from the Trust Account interest earned on the funds held therein necessary to pay its income taxes, if any. Except as described in the prospectus for the SWAG IPO and described in the subsection below entitled “SWAG’s Managements Discussion and Analysis of Financial Condition and Results of Operations,” these proceeds will not be released until the earlier of the completion of an initial business combination and SWAG’s redemption of 100% of the outstanding public shares upon its failure to consummate a business combination within the required time period.

The remaining proceeds from the SWAG IPO and simultaneous private placement, net of underwriting discounts and commissions and other costs and expenses, became available to be used as working capital to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses.

Fair Market Value of Target Business

The target business or businesses that SWAG acquires must collectively have a fair market value equal to at least 80% of the balance of the funds in the Trust Account (excluding the amount of deferred underwriting

 

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commissions held in trust and taxes payable) at the time of the execution of a definitive agreement for its initial business combination, although SWAG may acquire a target business whose fair market value significantly exceeds 80% of the Trust Account balance. SWAG’s board of directors determined that this test was met in connection with the proposed business combination with Otonomo as described in the section entitled “Proposal One — The Business Combination ProposalSatisfaction of 80% Test” above.

Stockholder Approval of Business Combination

Under the SWAG Charter, SWAG must seek stockholder approval of an initial business combination at a meeting called for such purpose at which public stockholders may seek to have their public shares converted into cash, regardless of whether they vote for or against the proposed Business Combination or do not vote at all, subject to the limitations described in the prospectus for the SWAG IPO. Accordingly, in connection with the Business Combination, the SWAG public stockholders may seek to have their public shares redeemed for cash in accordance with the procedures set forth in this proxy statement/prospectus. See Special Meeting of SWAG Stockholders — Conversion Rights.

Voting in Connection with the Stockholder Meeting

In connection with any vote for a proposed business combination, including the vote with respect to the Business Combination Proposal, the Sponsor has agreed to vote its SWAG shares in favor of such proposed Business Combination.

At any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding SWAG or its securities, the SWAG officers and directors, Otonomo shareholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal, or execute agreements to purchase such shares from them in the future, or they may enter into transactions with such persons and others to provide them with incentives to acquire common stock or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirement that the holders of a majority of the shares entitled to vote at the special meeting to approve the Business Combination Proposal vote in its favor and that the conditions to the closing of the Business Combination otherwise will be met, where it appears that such requirements or conditions would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, include arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares for nominal value.

Entering into any such arrangements may have a depressive effect on the shares of SWAG Common Stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the special meeting.

If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the Business Combination Proposal and the other proposals to be presented at the special meeting and would likely increase the chances that such proposals would be approved. Moreover, any such purchases may make it more likely that the conditions to the closing of the Business Combination are met.

No agreements dealing with the above arrangements or purchases have been entered into as of the date of this proxy statement/prospectus. SWAG will file a Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the

 

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Business Combination Proposal or the satisfaction of any closing conditions. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

Liquidation if No Business Combination

Under the SWAG Charter, if SWAG does not complete the Business Combination with Otonomo or another initial business combination by March 17, 2022 (or such later date as may be approved by SWAG’s stockholders in an amendment to the SWAG Charter), SWAG will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to SWAG to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding SWAG public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of SWAG’s remaining stockholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to SWAG’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. At such time, the SWAG warrants will expire. Holders of warrants will receive nothing upon a liquidation and the warrants will be worthless.

The Sponsor is not entitled to participate in any distribution from the Trust Account or other assets with respect to the shares held by them prior to the SWAG IPO. There will be no distribution from the Trust Account with respect to the SWAG warrants, which will expire worthless if SWAG is liquidated.

The proceeds deposited in the Trust Account could, however, become subject to the claims of SWAG’s creditors which would be prior to the claims of the SWAG public stockholders. Although SWAG has obtained waiver agreements from certain vendors and service providers it has engaged and owes money to, and the prospective target businesses SWAG has negotiated with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account, and although SWAG will seek such waivers from vendors it engages in the future, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse against the Trust Account notwithstanding such agreements. The Sponsor has agreed that it will be liable under certain circumstances to pay debts and obligations to target businesses or vendors or other entities that are owed money by SWAG for services rendered or contracted for or products sold to it, but SWAG cannot ensure that the Sponsor will be able to satisfy its indemnification obligations if it is required to do so. Additionally, there are two exceptions to the Sponsor’s indemnity: the Sponsor will have no liability (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed an agreement with SWAG waiving any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account, or (2) as to any claims under the indemnity with the underwriter of the SWAG IPO against certain liabilities, including liabilities under the Securities Act. Moreover, the Sponsor will not be liable to the SWAG public stockholders and instead will only have liability to SWAG. Furthermore, SWAG has not asked the Sponsor to reserve for such indemnification obligations, nor has SWAG independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations; therefore, the Sponsor may not be able to satisfy its indemnification obligations if it is required to as the Sponsor’s only assets are securities of SWAG and SWAG has not taken any further steps to ensure that the Sponsor will be able to satisfy any indemnification obligations that arise. Accordingly, the actual per-share redemption price could be less than approximately $10.00, plus interest, due to claims of creditors. Additionally, if SWAG is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in SWAG’s bankruptcy estate and subject to the claims of third parties with priority over the claims of SWAG’s stockholders. To the extent any bankruptcy claims deplete the Trust Account, SWAG cannot assure you it will be able to return to the SWAG public stockholders at least approximately $10.00 per share. SWAG’s public stockholders are entitled to receive funds from the Trust Account only in the event of its failure to complete a business combination within

 

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the required time period or if the stockholders properly seek to have SWAG redeem their respective shares for cash upon a business combination which is actually completed by SWAG. In no other circumstances does a stockholder have any right or interest of any kind to or in the Trust Account. None of the SWAG officers or directors will indemnify SWAG for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

If SWAG is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor, creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by SWAG’s stockholders. Because SWAG intends to distribute the proceeds held in the Trust Account to its public stockholders promptly after the expiration of the time period to complete a business combination, this may be viewed or interpreted as giving preference to its public stockholders over any potential creditors with respect to access to or distributions from its assets. Furthermore, by paying public stockholders from the Trust Account prior to addressing the claims of creditors, SWAG’s board of directors may be viewed as having breached its fiduciary duty to SWAG’s creditors and/or may be viewed as having acted in bad faith, which may subject SWAG and Otonomo to claims of punitive damages. SWAG cannot assure you that such claims will not be brought against it.

SWAG will pay the costs of any subsequent liquidation from its remaining assets outside of the Trust Account plus the up to $100,000 of interest earned on the funds in the Trust Account that SWAG may use for liquidation and dissolution expenses.

Employees

SWAG has four executive officers. These individuals are not obligated to devote any specific number of hours to SWAG’s matters and devote only as much time as they deem necessary to its affairs. SWAG does not intend to have any full time employees prior to the closing of the Business Combination.

Facilities

Upon the closing of the Business Combination, the principal executive offices of SWAG will be those of Otonomo.

Directors and Executive Officers

SWAG’s current directors and executive officers are as follows:

 

Name    Age    Position
Jonathan S. Huberman    55    Chairman, Chief Executive Officer and Chief Financial Officer
Mike Nikzad    56    Vice President of Acquisitions and Director
Andrew K. Nikou    44    Director
C. Matthew Olton    54    Director
Stephanie Davis    57    Director
Steven Guggenheimer    55    Director
Dr. Peter H. Diamandis    59    Director

Jonathan Huberman, SWAG’s Chairman, Chief Executive Officer and Chief Financial Officer since inception, has over 25 years of high-tech business leadership experience. Previously, Mr. Huberman served as an officer and director of Software Acquisition Group Inc., a blank check company, which in October 2020 successfully closed its business combination with CuriosityStream Inc. (Nasdaq: CURI) (“CuriosityStream”), a global streaming media service that provides factual content on demand. Mr. Huberman currently serves on the

 

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board of directors of CuriosityStream. From 2017 to 2019 Mr. Huberman was Chief Executive Officer of Ooyala, a provider of media workflow automation, delivery and monetization solutions, which he and Mike Nikzad, SWAG’s Vice President of Acquisitions and Director, acquired from Telstra in 2018. Together with Mr. Nikzad, they turned around an underperforming company and sold Ooyala’s three core business units to Invidi Technologies, Brightcove (NASDA: BCOV) and Dalet (EPA: DLT), major players in the same sector. Previously, Mr. Huberman served as the Chief Executive Officer of Syncplicity, a SaaS enterprise data management company, which he sourced and acquired from EMC and engineered an exit to Axway (EPA: AXW). Prior to this, from 2013 to 2015, Mr. Huberman was the Chief Executive Officer of Tiburon, an enterprise software company serving the public safety sector which he sold to Tritech Systems, and before that he was the Chief Executive Officer at Iomega Corporation (NYSE: IOM), a consumer and distributed enterprise storage solutions provider. After Iomega was acquired by EMC Corporation in 2008, Mr. Huberman served as President of the Consumer and Small Business Division of EMC. In addition to his experience leading turnarounds and exits at five technology companies, Mr. Huberman spent nine years as an investor for the Bass Family interests where he led investments in private and public companies. He also had senior roles leading the operations of the technology investments of the Gores Group and Skyview Capital. In the last five years he has served as a director of Aculon, Inc., a privately held provider of easy-to-apply nanotech surface-modification technologies, as well as Venture Corporation Limited (SGX: V03) a high-tech design and manufacture firm based in Singapore. Mr. Huberman holds a Bachelor of Arts in Computer Science from Princeton University and an MBA from The Wharton School at the University of Pennsylvania.

Mike Nikzad, SWAG’s Vice President of Acquisitions, has over two decades of business leadership experience in software, technology and consumer electronics, where he has worked on many corporate turnarounds and exits. Previously, Mr. Nikzad served as an officer and director of Software Acquisition Group Inc., which in October 2020 successfully closed its business combination with CuriosityStream (Nasdaq: CURI), a global streaming media service that provides factual content on demand. Mr. Nikzad currently serves on the board of directors of CuriosityStream. Mr. Nikzad was President and Chief Operating Officer at Ooyala from 2017 until its sale in 2019. Prior to Ooyala, Mr. Nikzad has held C-suite positions, led company operations at Syncplicity, a SaaS enterprise data management company and NewNet Communication Technologies, a telecommunications company, as well as serving as an Operating Partner at SilverStream Capital. Prior to this, he also held executive positions in EMC Corp’s (NYSE: EMC) Consumer and Small Business division and at Iomega Corporation, a consumer and distributed enterprise storage solutions provider. Mr. Nikzad has a Bachelor of Science degree in Mechanical Engineering from Utah State University and has completed the Stanford GSB Strategic Marketing Management Program.

Andrew K. Nikou, who has served as one of SWAG’s directors since September 2020, is the Founder and Chief Executive Officer of OpenGate Capital Management, LLC (“OpenGate”), a global private equity firm specializing in the acquisition and operation of businesses to create new value through operational improvements, innovation and growth. To date, OpenGate, through its legacy and fund investments, has executed more than 30 acquisitions including corporate carve-outs, management buy-outs, special situations and transactions with private sellers across North America and Europe. As of March 31, 2020, OpenGate (the firm’s registered investment advisor) managed approximately $1.1 billion in client assets on a discretionary basis. Prior to this, from 2001 to 2004, Mr. Nikou worked in business development for Platinum Equity, where he established their European Business Development operations in Paris, France. Of the nearly 20 pre-fund investments made by affiliates of OpenGate, a few were in distressed entities that subsequently filed for bankruptcy. Mr. Nikou is currently named as a defendant in one adversarial proceeding related to a bankruptcy case alleging various claims, which Mr. Nikou vigorously disputes, believes to be meritless, and is aggressively contesting. From 2019 to 2020, Mr. Nikou served as a director of Software Acquisition Group Inc., which in October 2020 successfully closed its business combination with CuriosityStream (Nasdaq: CURI), a global streaming media service that provides factual content on demand. In addition, as part of his role with OpenGate, Mr. Nikou is a director and officer of several private companies. He is also a member of the XPRIZE Foundation Innovation Board. Mr. Nikou holds a Bachelor of Science in Finance from the Marshall School of Business at the University of Southern California.

 

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C. Matthew Olton, who has served as one of SWAG’s directors since September 2020, has been Senior Vice President, Strategy and Corporate Development at Tenable Holdings, Inc. (Nasdaq: TENB), a cyber exposure protection provider, since August 2019. Prior to this, he was Senior Vice President, Corporate Development and Ventures, at Symantec Corporation (Nasdaq: SYMC). In this role, Mr. Olton oversaw Symantec’s global mergers and acquisitions activity and managed Symantec’s corporate venture investments. He also led Symantec’s integration management function. Prior to joining Symantec, he was Senior Vice President, Corporate Development at Dell Technologies Capital from 2016 to 2018, and was responsible for global mergers and acquisitions and related activity for the family of companies that comprise Dell Technologies including Dell, Dell EMC, Pivotal, RSA, Secureworks, Virtustream and Boomi. Prior to Dell Technologies Capital, Matt was Senior Vice President, Corporate Development at EMC Corporation from 1999 to 2016. Mr. Olton started his career as an M&A attorney at Skadden, Arps, Slate, Meagher & Flom. Previously, Mr. Olton served as a director of Software Acquisition Group Inc., a blank check company, which in October 2020 successfully closed its business combination with CuriosityStream (Nasdaq: CURI), a global streaming media service that provides factual content on demand. Mr. Olton has a Bachelor of Arts from Wesleyan University, a J.D. from Boston University School of Law and an MBA from Northeastern University.

Stephanie Davis, who has served as one of SWAG’s directors since September 2020, has since 2017 served as a Senior Client Partner at Korn Ferry where she leads the Private Equity/Technology practice in North America and is a member of the CEO & Board practices and the Global Technology Practice. She is an expert in executive talent and leadership and has spent over two decades working with Chief Executive Officers to build their leadership capabilities and teams. Ms. Davis works extensively with public and private company board of directors on succession and board recruitment. She is a frequent speaker on board governance and women in the boardroom. Since 2019, Ms. Davis has been a member of the board of directors of biopharmaceutical company, Athenex (Nasdaq: ATNX). Prior to joining Korn Ferry in 2017, Ms. Davis spent 17 years at Spencer Stuart where she was a member of the CEO & Board Practice. During her tenure, she co-founded the Business/ Technology Services practice, led the Software practice, and managed global private equity relationships. Previously, Ms. Davis served as a director of Software Acquisition Group Inc., a blank check company, which in October 2020 successfully closed its business combination with CuriosityStream (Nasdaq: CURI), a global streaming media service that provides factual content on demand. Ms. Davis has a Bachelor of Science in Engineering from Princeton University and an MBA from Harvard Business School.

Steven Guggenheimer, who has served as one of SWAG’s directors since September 2020, has over 26 years of experience as a former executive at Microsoft Corporation (Nasdaq: MSFT) and served as Corporate Vice President of Microsoft from 2018 to 2020. In addition, Mr. Guggenheimer has served as a non-executive board member of HSBC Holdings plc (OTC: HBCYF) since May 2020, Forrit Technology Ltd., a private cloud technology company, since 2019, an advisor to Tensility Venture Partners, a seed stage venture capital firm, since 2017 as well as an advisor to the 5G Open Innovation Lab since May 2020. Previously, Mr. Guggenheimer served as a director of Software Acquisition Group Inc., a blank check company, which in October 2020 successfully closed its business combination with CuriosityStream (Nasdaq: CURI), a global streaming media service that provides factual content on demand. Over his 26 years at Microsoft, Mr. Guggenheimer held leadership positions in a broad range of key business areas which include close to a decade helping to manage Microsoft’s hardware and software ecosystems as the head of the Developer & ISV Evangelism (DPE/DX) and OEM divisions. He also spent the last 3 years working with customers and partners on the adoption of artificial intelligence and helping ISV’s migrate to SaaS based offerings built on the Dynamics, Power Platform, Office and Azure Cloud platforms. During the first half of his time at Microsoft, Mr. Guggenheimer worked on the product teams for Microsoft’s Application Platform, Windows, IE, MSN, SQL Server, Visual Studio and more. Mr. Guggenheimer received a Bachelor’s degree in Applied Physics from the University of California, Davis, and a Master’s Degree in Engineering Management from Stanford University.

Peter H. Diamandis, MD, who has served as one of SWAG’s directors since September 2020, has been the Chief Executive Officer of PHD Ventures, Inc., which is his personal holding company for his writing, speaking, and consulting activities, since 1993. He is the Founder and Executive Chairman of the XPRIZE Foundation, a

 

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non-profit foundation which, since 1996, has designed and operated large-scale incentive competitions intended to encourage technological development for the benefit of humanity. In 2014, Dr. Diamandis founded and served as Vice-Chairman of Human Longevity, Inc., an advanced health diagnostic company committed to delivering data driven health diagnostics; he resigned from the board of directors in 2018 and remains a shareholder. He is also the Executive Founder of Singularity University, a graduate-level Silicon Valley institution founded in 2008 that counsels the world’s leaders on exponentially growing technologies. He is the Vice-Chairman and co-Founder of Celularity Inc., founded in 2017, a commercial-stage cell therapeutics company delivering allogenic cellular therapies engineered from the postpartum human placenta. Dr. Diamandis is also a founder and board member of Fountain Therapeutic Services Inc., which was formed in 2018 to increase lifespan and optimize healthspan by harnessing regenerative medicine technologies and integrating extensive wellness solutions. In March 2020, Dr. Diamandis co-founded and is the Vice-Chairman of Covaxx, Inc., a pharmaceutical company that has developed a COVID-19 lgG antibody test and which has a vaccine candidate in clinical trials. As an entrepreneur, Dr. Diamandis has started over 20 companies in the areas of longevity, space, venture capital and education. Dr. Diamandis also co-founded BOLD Capital Partners, a venture fund investing in early stage and growth technology companies, in 2015, and is a New York Times Bestselling author. He earned degrees in Molecular Engineering and Aerospace Engineering from MIT and holds an M.D. from Harvard Medical School. Previously, Mr. Diamandis was a director of Software Acquisition Group Inc., a blank check company, which in October 2020 successfully closed its business combination with CuriosityStream (Nasdaq: CURI), a global streaming media service that provides factual content on demand.

Legal Proceedings

There is no material litigation, arbitration, governmental proceeding or any other legal proceeding currently pending or known to be contemplated against SWAG, and SWAG has not been subject to any such proceeding in the 10 years preceding the date of this proxy statement/prospectus.

Periodic Reporting and Audited Financial Statements

SWAG has registered its securities under the Exchange Act and has reporting obligations, including the requirement to file annual and quarterly reports with the SEC. SWAG has filed with the SEC its Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

 

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OTONOMO’S BUSINESS

In this section “we,” “us” and “our” refer to Otonomo.

Otonomo is a leading one-stop shop for vehicle data. Since its founding in 2015, Otonomo has built the Otonomo Vehicle Data Platform and marketplace that fuels an ecosystem powered by data from 16 vehicle manufacturer (OEM) agreements, fleets, and other data providers, and enables the licensing of data to more than 100 service providers. The platform securely ingests over 4 billion data points per day from over 40 million connected vehicles worldwide and then reshapes and enriches the data in order to accelerate the time to market for new services that improve the in-and-around car experience. Otonomo’s platform provides OEMs the opportunity to create new revenue streams and facilitates an open ecosystem of services around the vehicle. This enables the utilization of vast amounts of data that vehicles generate daily and that OEMs store and maintain.

As part of its proprietary data platform, Otonomo has developed a robust suite of software-as-a-service (“SaaS”) offerings that provide both OEMs and service providers with additional capabilities, and that incorporate vertically specific applications to meet different privacy, regulation, storage, visualization and data insight needs.

Privacy by design and neutrality are at the core of Otonomo’s platform, which enables compliance with regulations such as GDPR, CCPA, and other vehicle specific regulations, such as the EU requirement/directive that OEMs share connected car data with third parties or the Massachusetts’ Right to Repair Act allowing access to vehicle data for maintenance and repair purposes.

The Otonomo Vehicle Data Platform is utilized by organizations and businesses across diverse areas, including, but not limited to smart cities, transportation companies, fleet services, insurance companies, financial institutions and dealerships. Otonomo’s headquarters and research and development center are based in Herzliya, Israel. Otonomo delivers near-real-time and historical data, accelerates time to market and paves the way for new applications and services that make transportation safer, more convenient and truly rewarding.

An Overview of the Otonomo Platform and Marketplace

Otonomo delivers the Otonomo Vehicle Data Platform and marketplace that enables car manufacturers, drivers and service providers to be part of a connected ecosystem. Otonomo’s vehicle data marketplace is a neutral intermediary between vehicle data providers and data consumers. It provides secure and equal access to hundreds of data attributes that reveal insights into driver behavior, vehicle health, road hazards, environmental conditions and traffic trends.

The vehicle data Otonomo delivers is rich and may include, among other data, status attributes for:

 

   

cabin data, including the state of doors and windows, ADAS, and infotainment data;

 

   

engine-related information such as fuel, oil, error codes or battery voltage and state of charge;

 

   

maintenance data such as time or distance traveled and diagnostic trouble codes (DTC);

 

   

data related to the specific vehicle, like make, model, year and fuel type;

 

   

driving data such as location, distance travelled, odometer, heading and speed; and

 

   

environmental data ranging from external weather and temperature, to road hazards and road signs.

The Otonomo Vehicle Data Platform uses proprietary technology to ingest, secure, cleanse, normalize, aggregate, and enrich vehicle data from 16 vehicle manufacturer (OEM) agreements, as well as fleets, other data providers and enables the licensing of data to more than 100 service providers. It focuses on data structuring and preparation, including consent management, transmission to marketplace, data cleaning, filtering, validating,

 

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consolidating, blurring, normalizing and indexing, and also offers services to process, store, enrich and visualize data. Otonomo believes that the Otonomo Vehicle Data Platform is the first neutral vehicle data platform that provides straightforward and secure data access and transforms data into actionable insights for services such as preventative maintenance, EV management, emergency services, on-demand fueling, insurance and smart cities. Privacy by design is at the core of the platform, which enables EU General Data Protection Regulation (GDPR) and other privacy-regulation-compliant solutions using both personal and aggregate data.

Understanding the Data

Otonomo collects vehicle-specific and aggregated data from vehicle data providers, such as OEMs, fleets and TSPs. Personal or vehicle specific data refers to data that is collected from a specific vehicle or group of vehicles and includes personally identifiable information (“PII”), such as vehicle identification number (“VIN”). Aggregated data refers to data that is collected from multiple sources and compiled into data summaries or summary reports.

The Otonomo Vehicle Data Platform connects to our data providers’ respective data centers via application programming interfaces (“APIs”), and provides data consumers with application-ready, enriched datasets and insights. This eliminates the need for data consumers to invest the significant amount of development work required to utilize connected vehicle data in applications and services. OEMs, other data providers and data consumers use the Otonomo Vehicle Data Platform and marketplace to efficiently share and utilize vehicle data and offer drivers advanced in-car services, while meeting security, privacy and data regulation requirements. Otonomo generates revenue for these data providers by the utilization of the data by data consumers in various segments, primarily smart cities, transportation companies, fleet services, insurance companies, financial institutions and dealerships.

Otonomo customers use vehicle data depending on their specific needs and purposes. The data can be shared in personalized or blurred form, and on an individual, aggregate, or fleet level. Additionally, the data can be delivered in a near real-time or as historical data. Aggregate data is used for, among other things, traffic flow optimization, mapping, infrastructure planning, road hazard identification, congestion management, preventative maintenance, R&D optimization, location intelligence and media measurement. Vehicle specific data is used for, among other things, services delivering roadside assistance, electric vehicle charging services, occupant safety, subscription-based fueling, usage-based insurance, remote diagnostics and parking payments.

Key Trends in Connected Cars and Vehicle Data

Since the introduction of the first embedded telematics systems in the mid-1990s, OEMs have gradually added data systems and connectivity features to their vehicles and have offered drivers a growing variety of data-driven products and services. Technological advancements in recent years have increased the volume and quality of the data captured by vehicles. The value of this new data opened opportunities for OEMs to integrate more sensors and connectivity features, resulting in expanded offerings to drivers and a more diverse portfolio of in-vehicle and remote data-driven services.

Vehicles are now able to generate, monitor and share many types of data, including geolocation, performance and driver behavior. As OEMs continue to develop application-based tools to monitor key maintenance statistics, uses for vehicle health data and operational functionality are expanding. While the use of advanced biometric data is still in its infancy, new sensors in the cockpit can allow vehicles to monitor key attributes of their occupants, including stress levels, heart rhythms, alcohol consumption levels and fatigue.

The growth of connectivity in vehicles has increased the demand for data-driven products and services, and provides for ample data utilization opportunities, which expand with every customer who integrates into the connected car ecosystem. Vehicles with greater connectivity levels also generate higher value per vehicle. According to the McKinsey Center for Future Mobility, vehicle connectivity levels (as defined herein) are

 

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projected to reach 850 million vehicles by 2030. The growing data availability leads to an increasing market size as well as to an increased importance of vehicle data marketplaces that facilitate data exchange.

According to the McKinsey Center for Future Mobility, vehicle connectivity can be classified into five levels based on the in-car experience of car riders:

(1) General hardware connectivity—driver tracks basic vehicle usage and monitors technical status;

(2) Individual connectivity—driver uses personal profile to access digital services via external digital ecosystems and platforms;

(3) Preference-based personalization—allows for personalized controls, individual infotainment content, and targeted contextual advertising for all vehicle occupants;

(4) Multi-model live dialogue—all occupants interact live with the vehicle and receive proactive recommendations on services and functions; and

(5) Virtual chauffeur - all occupants’ explicit and unstated needs are fulfilled by cognitive artificial intelligence that predicts and performs complex, unprogrammed tasks.

According to the McKinsey Center for Future Mobility, by 2030, more than 10% of new vehicles sold globally are expected to include the most advanced connectivity level and approximately 95% are expected to include at least the basic level of general hardware connectivity. The greater the connectivity, the more seamless a rider’s experience becomes, and the more opportunities for generating data-based revenue are created. User expectations will continue to evolve in parallel with available technology and will incentivize OEMs and service providers to deliver higher-value, data-driven user experiences.

Regulatory developments in recent years are also expected to contribute to the expanding vehicle data ecosystem. By introducing new concepts that promote greater and more equal access to OEM data, regulators have been creating a favorable environment for data utilization. Examples include the “extended vehicle” concept which is being strengthened by the obligations imposed on OEMs under Regulation (EU) 2018/858 and the Massachusetts Right to Repair Act extending to vehicle data. See “—Regulation.”

Vehicle data marketplaces are expected to also benefit from autonomous vehicles (“AVs”), which, while still early in their development and adoption, are rapidly advancing. Companies developing AVs, or autonomous driving systems, rely on highly customized, real-world, real-time and historical vehicle data to develop and deploy autonomous driving systems. As AVs are increasingly adopted, OEMs and vehicle fleet operators will require extensive and reliable data platforms to efficiently manage the data requirements of AVs and AV fleets, and to ensure their safe and efficient operation.

Market Opportunity

 

   

Growing ecosystem and data pool. There are dozens of potential customer groups and thousands of potential data consumers for vehicle data utilization. These include product-related players, such as OEMs and Tier 1 suppliers, vehicle-related service providers, such as fleet operators, and other organizations in the extended ecosystem, such as smart cities, insurance companies and telecom operators. Overall, Otonomo believes many customer groups will join the ecosystem and expand their usage of external vehicle data. A growing number of service providers actively use external vehicle data, and Otonomo believes that the number of service providers using such data is likely to continue to increase moving forward. As 4G/5G mobile network ubiquity increases, the volume of data and parameters being sent from vehicles to OEM clouds is growing exponentially. According to the McKinsey Center for Future Mobility, the total value pool from car generated data is projected to increase to $120 billion to $160 billion by 2025 and to $250 billion to $400 billion by 2030.

 

   

Unique technological needs and high onboarding costs for data providers. The increasing volume and scope of vehicle data requires data providers to integrate complex data processing, cleaning,

 

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accounting, consent, multiple APIs and data structuring technologies. OEMs often lack the capabilities to implement these technologies and do not have the desire to develop them internally due to the substantial investments required for building and maintaining the data infrastructure. Tapping into the vast potential of data utilization also requires data providers to individually contract and integrate with multiple data consumers, which results in high marginal costs per each new data consumer acquired. Onboarding each new consumer also requires the involvement of multiple organizational functions, such as IT, legal and procurement. The onboarding process is often too expensive to justify the investment for data providers, especially when data consumers are small or medium-sized businesses. Without significant reduction of onboarding costs, the ability of data providers to efficiently scale their utilization efforts is limited.

 

   

Technological and cost constraints on data consumers. Lack of consistent formats or data standards across OEMs, or even across different models manufactured by the same OEM, requires data consumers to work with multiple stakeholders in different data formats and on different APIs. In addition, contracting with multiple OEMs involves conducting lengthy and costly negotiation and integration efforts by legal, privacy and technology resources with multiple parties. For some use cases, data consumers require certain levels of vehicle coverage in a specific area (e.g., smart city applications may need at least 2% coverage) and contracting OEMs directly would not be sufficient for their needs.

 

   

Regulatory-driven opportunities. Recent developments in regulation of vehicle data and connected cars, such as Regulation (EU) 2018/858 requiring OEMs to share connected car data with third parties, as well as emerging industry standards (such as NEVADA Share & Secure, which are intended to enable the secure transmission of data generated in the vehicle and make it usable for public authorities and industry), promote open access to vehicle data and neutrality, while also challenging OEMs by requiring them to supply the scale and ability to technically and legally align with the hundreds of service providers seeking access to vehicle data. With the removal of barriers to vehicle data accessibility, more organizations will be able to access and utilize vehicle data, and more data-driven services are expected to become available.

 

   

Compliance challenges. Data providers collecting, processing or sharing vehicle data must ensure that their collection, processing and use of vehicle data is compliant with personal data protection regulations, such as GDPR and CCPA, which often require prior consent. While free, informed and specific consents may be required from every vehicle user whose personal data is collected, obtaining compliant consents from drivers and passengers not related to the vehicle’s legal owner involves practical concerns for OEMs. The need for explicit consent for sharing data with separate service providers requires OEMs to provide advanced consent flows and consent management capabilities that can be seamlessly integrated. It has proven to be challenging for the OEMs to manage data compliance on very large scale with no consent management standards available.

Advantages of vehicle data marketplaces

Existing platforms for consuming vehicle data are limited and inefficient. For example, on-board diagnostics (“OBD II”) aftermarket dongles, which are commonly used by TSPs in order to perform fleet and vehicle tracking, only provide selected data points and no data streaming. OBD II onboard devices require separate installation in every vehicle and their use may be further limited in the future due to regulatory changes. Furthermore, OBD II onboard devices may be easily vandalized and removed. Smartphone data is used by many data consumers to monitor vehicle usage, but the data it provides is limited and subject to manipulation and inaccuracy.

Vehicle data marketplaces:

 

   

allow data providers and consumers to efficiently outsource consent management, data processing and data structuring, allowing them to benefit from vehicle data while remaining focused on their core business;

 

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present significant cost reductions for data providers that only need to integrate with one partner instead of multiple data consumers;

 

   

present significant cost reductions for data consumers by allowing them to work with one integration partner. This provides data consumers with data in a structured and usable format, instead of dealing with the challenges of contracting multiple OEMs and managing multiple stakeholders and formats;

 

   

facilitate use cases of aggregate data that require certain coverage levels;

 

LOGO

 

   

eliminate reliance on OBD II aftermarket devices in favor of data marketplaces that provide the same data and other data points continuously and in a more user-friendly format; and

 

   

ensure data quality and accuracy for data consumers by replacing smartphone data with more sanitized data, thereby lowering risk of fraud and inaccuracy.

The Otonomo Vehicle Data Platform

A connected car may generate up to 25 gigabytes of data per hour. As it is produced, most of this data leaves the car via in-vehicle cellular devices. The data is initially stored in data centers or cloud platforms owned by OEMs, and in some cases by Tier-1 suppliers or the third parties which own the OBD II onboard devices installed after vehicle purchase.

Due to the lack of consistent connected car data formats or standards, connected car data must undergo additional processing before it can be useful for applications and services. Otonomo’s platform aggregates and normalizes data from multiple OEMs and other data providers and processes the data to make it usable and valuable to data providers and data consumers as shown in the diagram below.

Otonomo API and Delivery Methods

Otonomo provides a rich, flexible API to serve the unique needs of diverse applications and services. Different data use cases may require different data delivery types. For example, an emergency car service may require real-time data when an accident takes place. On the other hand, usage-based insurance may pull a car’s odometer once a week. Lastly, a data analytics company might opt for historical car data to understand traffic trends.

 

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Otonomo provides different data delivery methods to cater to these different use case requirements:

 

   

Historical data reports: CSV reports contain historical, aggregated vehicle data. Historical data reports are triggered by a RESTful API call with parameters that define a region (e.g., city), and time span for the report. Report generation may take minutes or hours to complete. Several historical reports exist for different data types (e.g., vehicle data points and vehicle trips).

 

   

Vehicle status: A near-real time RESTful API returns the last known status of a specific vehicle. Vehicle data information is used by personal driver applications, such as fueling and parking. Additionally, Otonomo provides bulk vehicle status for receiving the last known status of one or more vehicles. This interface can be particularly useful for fleets.

 

   

Streaming: This is a “push” mechanism that continuously streams real-time data to data consumers. Streaming uses HTTP POST requests and can send both aggregate and personal vehicle data. A stream is created upon subscribing. Stream subscription defines one or more data filters such as desired vehicle area (i.e., city), and maximal point latency. Streaming is optimal for applications that require real-time, rich vehicle data.

 

   

Events: An event is defined by a logical rule on a vehicle data point. When a rule is evaluated to be true, an event message is triggered and sent to the data consumer. For example, an event message would be sent to the data consumer through a fueling application whenever a vehicle travels in a certain radius from a gas station while below the 10% fuel level. Events receive the data they need in real-time, enabling applications to save processing power and network bandwidth. Events can be used for both personal and aggregated data. This capability is currently under development.

Otonomo Dynamic Blurring Engine

The Otonomo Dynamic Blurring Engine is a SaaS capability that protects personal data by using sophisticated blurring techniques to blur personal data while preserving the data’s value for a diverse range of mobility and other applications and services. These services may include assisting smart cities with traffic management and HD mapping, road safety, parking and media research.

Otonomo Consent Management Hub

The Otonomo Consent Management Hub is an integral element of the Otonomo Vehicle Data Platform and provides an efficient way for connected car drivers to take control over the sharing of their vehicle data by providing a networked architecture to simplify setup and integration and deliver high scalability for automotive OEMs and service providers.

As the transportation ecosystem advances its use of vehicle data, the information flows around driver consent can become complex. For example, in-vehicle delivery from retailers may require drivers to provide consent to both the retailer and a third-party courier service. With the Otonomo Consent Management Hub, each party has a single integration point through which they can validate driver consent and deliver the approved personal data to other parties in the ecosystem. OEMs also do not need to directly support integration with multiple parties, including companies such as courier services with which they may not have a contractual relationship. Service providers can innovate faster by eliminating point-to-point integrations with multiple OEMs. Any new OEM or service provider integration will open new opportunities to numerous organizations in the ecosystem.

The Otonomo Consent Management Hub allows drivers to grant or revoke access for specific services at any time and provides drivers full transparency as to what personal vehicle data will be shared with specific services. The Otonomo Consent Management Hub differentiates the Otonomo Vehicle Data Platform by enabling driver-specific consent rather than per-vehicle consent. Each vehicle (identified by its VIN) can have multiple drivers, and each driver can use multiple VINs.

 

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Vehicle Management Application

Otonomo’s Vehicle Management application is designed for fleets to easily and efficiently manage the data of their fleet vehicles. The vehicle management app streamlines data operations and can be used in conjunction with, or independently from, existing transportation management systems.

IoT Hub

Otonomo’s IoT Hub enables OEMs to make vehicle data available in the Otonomo marketplace through a direct car-to-Otonomo integration, removing the need for an OEM cloud in the middle. By utilizing Otonomo’s IoT Hub, OEMs can expedite the utilization of connected vehicle data and offer their vehicle owners an extended vehicle ownership experience through Otonomo.

Otonomo Self-Serve Platform

The Otonomo Self-Serve Platform offers many features, such as easy-to-use geofencing, filtering, configurable APIs and data report generation capabilities, giving developers, analysts and product leaders online access to real-time and historical, aggregated car-generated data and tailors this data to their needs.

External Third-Party Connectors

Otonomo is working with leading third party platforms to enable out-of-the-box integration to vehicle data. Such connectors will enable service providers to integrate vehicle data into their existing CRM and business workflows in order to provide state of the art service to their customers.

Competitive Advantage

Otonomo believes that the following strengths differentiate it and will enable the company to successfully compete and maintain its leadership position in its target markets. Unlike other market players, Otonomo is unique in its ability to support all data domains: B2B, B2B2C, and aggregate, as well as having the required supporting technologies such as the Dynamic Blurring Engine and Consent Management Hub.

 

   

Technologies. Otonomo possesses strong, market-unique technology specifically tuned to vehicle data needs, which it has been providing to multiple data providers and data consumers since 2015. Otonomo’s solution is intended to cover all of the vehicle data needs of data providers and data consumers. While some market players focus only on aggregate data or personal data, Otonomo offers services for both. Otonomo also provides data consumers with a larger variety of data points and offers more personalized data sets compared to other market players. In addition to its marketplace offerings, Otonomo offers unique SaaS features not found elsewhere, such as the Otonomo Consent Management Hub and the Otonomo Dynamic Blurring Engine.

 

   

Large fleet size and strong relationships with OEMs and other data providers. Otonomo’s early and broad engagement with OEMs and other data providers has resulted in strong relationships with OEMs and other data providers that differentiate it from its competitors. Otonomo is a market leader among vehicle data companies with the market’s largest vehicle installed base.

 

   

Neutrality. Otonomo is a pure marketplace player. Unlike others in the market, Otonomo does not offer services that compete with its customers. In addition, while some market players count OEMs and Tier-1 suppliers among their largest investors, Otonomo’s investor base is comprised of both financial and strategic investors, and the Otonomo board of directors’ members are not affiliated with any industry players. Otonomo expects that this neutrality will continue to make it more attractive to OEMs and other automotive businesses compared to other market players, enabling it to cater to a broader range of customer segments.

 

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Global coverage and large ecosystem. While some of the other market players are focused on specific regions, Otonomo offers global coverage and a large ecosystem of data providers and consumers. Otonomo’s global ecosystem makes its platform attractive to data providers and consumers. It enables them to address a large share of the market without the need to connect with multiple other partners, which can provide for faster scaling and reduce connection costs.

Growth Strategies

 

   

Ramp up sales and marketing efforts. To accelerate its growth, Otonomo intends to engage new customer segments, expand existing customer segments and continue to leverage outbound sales and lead generation activities. Otonomo also intends to bolster its salesforce to target existing markets, including expanding its activity in Asia-Pacific, penetrating new regions such as Latin America, and expanding its segment-dedicated salesforce.

 

   

Deepen OEM relationships. Otonomo intends to expand existing OEM relationships with the onboarding of new vehicles, makes and models and entering new geographies, which is expected to help Otonomo to deepen its existing relationships with current OEMs.