Filed by ECARX
Holdings, Inc.
Pursuant to Rule 425
under the Securities Act of 1933,
as amended, and
deemed filed pursuant to Rule 14a-12
under the Securities
Exchange Act of 1934, as amended
Subject Company:
COVA Acquisition Corp.
Commission File
No.: 001-40012
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e r
ight to take legal action against such violations.
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Investor Presentation
November 2022
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e r
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Disclaimer
THIS PRESENTATION AND ITS CONTENTS ARE CONFIDENTIAL AND ARE NOT FOR RELEASE,
REPRODUCTION, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO
ANY OTHER PERSON OR IN OR INTO OR FROM ANY JURISDICTION WHERE SUCH RELEASE,
REPRODUCTION, PUBLICATION OR DISTRIBUTION IS UNLAWFUL. PERSONS INTO WHOSE POSSESSION
THIS PRESENTATION COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE, ANY SUCH
RESTRICTIONS. THIS PRESENTATION IS NOT AN OFFER OR AN INVITATION TO BUY, SELL OR
SUBSCRIBE FOR SECURITIES.
About this Presentation
This Presentation has been prepared by COVA Acquisition Corp ("SPAC") and ECARX Holdings Inc. (the
"Company") in connection with a potential business combination involving SPAC and the Company (the
"Transaction"). This Presentation is preliminary in nature and solely for information and discussion purposes and
must not be relied upon for any other purpose.
For the purpose of this notice, "Presentation" shall mean and include the slides that follow, the oral presentation of
the slides by members of SPAC or the Company or any person on their behalf, the question
-
and
-
answer session
that follows that oral presentation, copies of this document and any materials distributed at, or in connection with,
that presentation. By accepting this Presentation, participating in the meeting, or by reading the Presentation slides,
you will be deemed to have (
i
) acknowledged and agreed to the following conditions, limitations and notifications
and made the following undertakings, and (ii) acknowledged that you understand the legal and regulatory sanctions
attached to the misuse, disclosure or improper circulation of this Presentation.
This Presentation does not constitute (
i
) an offer or invitation for the sale or purchase of the securities, assets or
business described herein or a commitment of the Company or SPAC with respect to any of the foregoing, or (ii) a
solicitation of proxy, consent or authorization with respect to any securities or in respect of the Transaction, and this
Presentation shall not form the basis of any contract, commitment or investment decision and does not constitute
either advice or recommendation regarding any securities. The Company and SPAC expressly reserve the right, at
any time and in any respect, to amend or terminate this process, to terminate discussions with any or all potential
investors, to accept or reject any proposals and to negotiate with, or cease negotiations with, any party regarding a
transaction involving the Company and SPAC. Any offer to sell securities will be made only pursuant to a definitive
subscription agreement and will be made in reliance on an exemption from registration under the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder (collectively, the "Securities Act"), for
offers and sales of securities that do not involve a public offering.
Except where otherwise indicated, this Presentation speaks as of the date hereof. The information contained in this
Presentation replaces and supersedes, in its entirety, information of all prior versions of similar presentations. This
Presentation does not purport to contain all information that may be required for or relevant to an evaluation of the
Transaction. Further, this Presentation should not be construed as legal, tax, investment or other advice, and
should not be relied upon to form the basis of, or be relied on in connection with, any contract or commitment or
investment decision whatsoever. You will be responsible for conducting any investigations and analysis that is
deemed appropriate and should consult your own legal, regulatory, tax, business, financial and accounting advisors
to the extent you deem
necessary, and
must make your own investment decision and perform your own
independent investigation and analysis with respect to the Transaction or any of an investment in SPAC and the
transactions contemplated in this Presentation.
SPAC and the Company reserve the right to amend or replace this Presentation at any time but none of SPAC and
the Company, their respective subsidiaries, affiliates, legal advisors, financial advisors or agents shall have any
obligation to update or supplement any content set forth in this Presentation or otherwise provide any additional
information to you in connection with the Transaction should circumstances, management's estimates or opinions
change or any information provided in this Presentation become inaccurate.
Confidential Information
The information contained in this Presentation is confidential and being provided to you solely for the purpose of
assisting you in familiarizing yourself with SPAC and the Company in connection with the Transaction. This
Presentation shall remain the property of the Company and the Company reserves the right to require the return of
this Presentation (together with any copies or extracts thereof) at any time. Neither this Presentation nor any of its
contents may be disclosed or used for any purposes other than information and discussion purposes without the
prior written consent of SPAC and the Company. You agree that you will not copy, reproduce or distribute this
Presentation, in whole or in part, to other persons or entities at any time without the prior written consent of SPAC
and the Company. Any unauthorized distribution or reproduction of any part of this Presentation may result in a
violation of the Securities Act.
2
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e r
ight to take legal action against such violations.
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Disclaimer
Forward
-
Looking Statements
This Presentation contains certain forward
-
looking statements within the meaning of Section 27A of the Securities
Act, and Section 21E of the Securities Exchange Act of 1934, as amended,
and also
contains certain financial
forecasts and projections. All statements other than statements of historical fact contained in this Presentation,
including statements as to future results of operations and financial position, planned products and services,
business strategy and plans, objectives of management for future operations of the Company, market size and
growth opportunities, competitive position and technological and market trends, are forward
-
looking statements.
Some of these forward
-
looking statements can be identified
by the use of
forward
-
looking words, including
"anticipate," "expect," "suggests," "plan," "believe," "intend," "estimates," "targets," "projects," "should," "could,"
"would," "may," "will," "forecast" or other similar expressions. All forward
-
looking statements are based upon
current estimates and forecasts and reflect the views, assumptions, expectations, and opinions of SPAC and the
Company as of the date of this Presentation, and are therefore subject to
a number of
factors, risks and
uncertainties, some of which are not currently known to us. Some of these factors include, but are not limited to:
the success of new product or service offerings of the Company and its subsidiaries (collectively the "Group"), the
Group's ability to attract new and retain existing customers, competitive pressures in the industry in which the
Group operates, the Group's ability to achieve profitability despite a history of losses, the Group's ability to
implement its growth strategies and manage its growth, the Group's ability to meet consumer expectations, the
Group's ability to produce accurate forecasts of its operating and financial results, the Group's internal This
Precontrols
, fluctuations in foreign currency exchange rates, the Group's ability to raise additional capital, media
coverage of the Group, changes in the regulatory environments of the countries in which the Group operates or to
which the Group is subject, general economic conditions in the countries in which the Group operates, the Group's
ability to attract and retain senior management and skilled employees, the success of the Group's strategic
alliances and acquisitions, changes in the Group's relationship with its current customers, suppliers and service
providers, disruptions to information technology systems and networks, the Group's ability to protect its brand and
the Group's reputation, the Group's ability to protect its intellectual property, potential and future litigation that the
Group may be involved in, taxes or other liabilities that may be incurred or required subsequent to, or in connection
with, the consummation of the Transaction. The foregoing list of factors is not exhaustive. We undertake no
obligation to publicly update or review any forward
-
looking statement, whether as a result of new information,
future developments or otherwise, except as required by law.
In light of
these factors, risks and uncertainties, the forward
-
looking events and circumstances discussed in this
Presentation may not occur, and any estimates, assumptions, expectations, forecasts, views or opinions set forth
in this Presentation should be regarded as preliminary and for illustrative purposes only and should not be relied
upon as being necessarily indicative of future results. You should carefully consider the risks and uncertainties
described in the "Risk Factors" section of this Presentation and the "Risk Factors" section of the proxy
statement/prospectus on Form F
-
4 relating to the Transaction filed with the U.S. Securities and Exchange
Commission ("SEC"), and other documents filed from time to time with the SEC. These filings identify and address
other important risks and uncertainties that could cause actual events and results to differ materially from those
contained in the forward
-
looking statements. SPAC and the Company assume no obligation and do not intend to
update or revise these forward
-
looking statements, whether as a result of new information, future events, or
otherwise.
Moreover, the Company operates in a very competitive and rapidly changing environment, and new risks may
emerge from time to time. It is not possible to predict all risks, nor assess the impact of all factors on the
Company's business or the extent to which any factor, or combination of factors, may cause the Company's actual
results, performance or financial condition to be materially different from the expected future results, performance
of financial condition. In addition, the analyses of SPAC and the Company contained herein are not, and do not
purport to be, appraisals of the securities, assets or business of the Company, SPAC or any other entity. There
may be additional risks that neither SPAC nor the Company presently knows or that SPAC and the Company
currently believe are immaterial that could also cause actual results to differ from those contained in the forward
-
looking statements. These forward
-
looking statements should not be relied upon as representing the Company's or
SPAC's assessment as of any date
subsequent to
the date of this Presentation. More generally, we caution you
against relying on these forward
-
looking statements, and we qualify
all of
our forward
-
looking statements by these
cautionary statements.
Industry and Market Data
This Presentation also contains information, estimates and other statistical data derived from third party sources
(including Frost & Sullivan). Such information involves
a number of
assumptions and limitations, and due to the
nature of the techniques and methodologies used in market research, Frost & Sullivan cannot guarantee the
accuracy of such information. You are cautioned not to give undue weight to such estimates. Neither SPAC nor the
Company has independently verified such
third party
information, and makes no representation, express or
implied, as to the accuracy, completeness, timeliness, reliability or availability of, such
third party
information.
SPAC and the Company may have supplemented such information where necessary,
taking into account
publicly
available information about other industry participants.
Use of Projections and Historical Financial Information
The 2021 historical financial data included in this Presentation has been derived from the Company's 2021
financial statements prepared in accordance with United States generally accepted accounting principles ("GAAP")
and are subject to updates based on an ongoing external audit in accordance with the Public Company Accounting
Oversight Board ("PCAOB") standards. In addition, the Company's financial data for the six months ended June
30,
2022
included in this Presentation is based on financial data derived from the Company's management
accounts that have not been reviewed or audited and are subject to further review and updates.
3
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e r
ight to take legal action against such violations.
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Disclaimer
This Presentation contains financial forecasts for the Company with respect to certain of its financial results for the
fiscal years 202
2
through 2024 for illustrative purposes. Neither SPAC's nor the Company's independent auditors
have audited, studied, reviewed, compiled or performed any procedures with respect to the projections for the
purpose of their inclusion in this Presentation, and accordingly, they did not express any opinion or provide any
other form of assurance with respect thereto for the purpose of this Presentation. These projections are forward
-
looking statements and should not be relied upon as being necessarily indicative of future results. In this
Presentation, certain of the above
-
mentioned projected information has been provided for purposes of providing
comparisons with historical data. The assumptions and estimates underlying the prospective financial information
are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks
and uncertainties that could cause actual results to differ materially from those contained in the prospective
financial information. While such information and projections are necessarily speculative, SPAC and the Company
believe that the preparation of prospective financial information involves increasingly higher levels of uncertainty
the further out the projection extends from the date of preparation. Accordingly, there can be no assurance that the
prospective results are indicative of the future performance of the Company or that actual results will not differ
materially from those presented in the prospective financial information. The inclusion of prospective financial
information in this Presentation should not be regarded as a representation by any person that the results
contained in the prospective financial information will be achieved. All subsequent written and oral forward
-
looking
statements concerning the Company or SPAC, the Transaction or other matters and attributable to the Company
or SPAC or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements
above.
Non
-
GAAP Financial Measures
This Presentation also includes references to non
-
GAAP financial measures such as
adjusted
EBITDA. Such non
-
GAAP measures should be considered only as supplemental to, and not as superior to, financial measures
prepared in accordance with GAAP. SPAC and the Company believe these non
-
GAAP measures of financial
results provide useful information to management and investors regarding certain financial and business trends
relating to the Company's financial condition and results of operations. SPAC and the Company believe that the
use of these non
-
GAAP financial measures provides an additional tool for investors to use in evaluating ongoing
operating results and trends in and in comparing the Company's financial measures with other similar companies,
many of which present similar non
-
GAAP financial measures to investors. Management does not consider these
non
-
GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP.
These non
-
GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments
by management about which expense and income are excluded or included in determining these non
-
GAAP
financial measures.
Additionally, to the extent that forward
-
looking non
-
GAAP financial measures are provided, they are presented on
a non
-
GAAP basis without reconciliations of such forward
-
looking non
-
GAAP measures due to the inherent
difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation.
Additional Information
In connection with the Transaction, the Company has filed a proxy statement/prospectus on Form F
-
4. You are
urged to read the proxy statement/prospectus and any other relevant documents filed with the SEC when they
become available because, among other things, they will contain updates to the financial, industry and other
information herein as well as important information about SPAC, the Company and the Transaction. Shareholders
of SPAC will be able to obtain a free copy of the proxy statement (when filed), as well as other filings containing
information about SPAC, the Company and the Transaction, without charge, at the SEC's website located at
www.sec.gov.
Participants in the Solicitation
SPAC and the Company, and their respective directors and executive officers may be deemed to be participants in
the solicitation of proxies from SPAC's shareholders in connection with the Transaction. A list of the names of such
directors and executive officers and information regarding their interests in the Transaction is contained in the
proxy statement. You may obtain free copies of these documents as described in the preceding paragraph. The
definitive proxy statement will be mailed to shareholders of SPAC as of a record date to be established for voting
on the Transaction when it becomes available.
Trademarks
This Presentation may contain trademarks, service marks, trade names and copyrights of third parties, which are
the property of their respective owners. Solely for convenience, some of the trademarks, service marks, trade
names and copyrights referred to in this Presentation may be listed without the TM, SM © or ® symbols, but such
references are not intended to indicate, in any way, that SPAC, the Company or the third
-
parties will not assert, to
the fullest extent under applicable law, their rights or the right of the applicable owners or licensors to these
trademarks, service marks, trade names and copyrights.
Neither SPAC, the Company, nor any of their respective directors, officers, employees, affiliates, advisors,
representatives or agents, makes any representation or warranty of any kind, express or implied, as to the value
that may be realized in connection with the Transaction, the legal, regulatory, tax, financial, accounting or other
effects of the Transaction or the accuracy or completeness of the information contained in this Presentation, and
none of them shall have any liability based on or arising from, in whole or in part, any information contained in, or
omitted from, this Presentation or for any other written or oral communication transmitted to any person or entity in
the course of its evaluation of the Transaction, and they expressly disclaim any responsibility or liability for direct,
indirect, incidental, exemplary, compensatory, punitive, special, or consequential damages, costs, expenses, legal
fees, or losses (including lost income or profits and opportunity costs) in connection with the use of the information
herein.
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e r
ight to take legal action against such violations.
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TECHNOLOGY
02
STRATEGY
03
01
COMPANY
TRANSACTION
04
05
FINANCIALS
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e r
ight to take legal action against such violations.
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e r
ight to take legal action against such violations.
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Transaction Overview
•
Pro
Forma
Equity Value of $3.8bn
2
•
Pre
-
Money Enterprise Value of $3.4bn
and
Equity
Value
of
$3.4bn
1
•
Implied EV multiple of 4.3x 2023E Revenue and 2.6x 2024E Revenue
1
•
$368mm raised goes to balance sheet after expenses, including $300mm from COVA cash
-
in
-
trust
2
and $110mm in additional capital committed through strategic investments and other financings
3
•
Existing ECARX shareholders will retain 89% of pro forma equity in the combined company
3
FX rate (USD/RMB) = 6.
6981
as of June 30, 2022
1.
For pre
-
money
valuation, Enterprise Value is calculated
based
on
Equity Value of $3.4bn, total debt of $139mm and existing cash balance of $135mm (as of December 31, 2021)
2.
Assumes no redemptions by COVA shareholders and excludes (
i
) the impact of any equity awards issued at or after the closing of the transaction, (ii) the dilutive impact of 15.0mm publi
c w
arrants and 8.9mm sponsor warrants with a strike price of $11.50 per share, (iii) the impact of shares with super
-
voting rights,
and (iv) shares underlying the $65mm convertible notes which are convertible into shares of ECARX upon election of the holder
of
such notes
3.
As of November 14, 2022, the Company has received a committed amount of $35mm in the form of strategic investments, the proce
eds
of which are dependent upon the closing of the proposed business combination. The Company has also received $75mm financing i
n
the form of convertible notes which consist
of (
i
) $10mm convertible notes that are automatically convertible into shares of ECARX upon consummation of the proposed business
com
bination and (ii) $65mm convertible notes that are convertible into shares of ECARX upon election of the holder of the notes,
th
e proceeds of which have been received by the
Company
Transaction
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e r
ight to take legal action against such violations.
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COVA
Acquisition
Corp
.
Jun Hong Heng
Chairman, CEO
K.V. Dhillon
President, Secretary and Director
Alvin
Widarta
Sariaatmadja
Director
Austin Russell
Senior Advisor
Jack Smith
Director
Pandu
Sjahrir
Director
Transaction
8
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e r
ight to take legal action against such violations.
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e r
ight to take legal action against such violations.
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Co
-
founded in 201
7
by renowned Chinese entrepreneurs Mr. Eric Li (Li
Shufu
) and Mr.
Ziyu
Shen
to develop the full
-
stack automotive computing platform
c.70%
of the team are
R&D personnel
5 years since founding
c.2,000
FTEs
2
$415mm 2021 revenue
1
3.7
mm+
vehicles equipped
with ECARX technologies
3
serving
12
brands
in
Asia Pacific and Europe
3
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all
reserve the right to take legal action against such violations.
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1.
FX rate (USD/RMB) = 6.6981 as of June 30, 2022
2.
Full
-
time employees
3.
Operational data as of
June 30, 2022
Company
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e r
ight to take legal action against such violations.
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Peter
Rogbrant
Common OS
Brook
Zhang
Head of China
Product
Development
President
of China
Kelvin
Du
Richard
Sun
AI and Core
Computing
Platform
COO
P
eter
Cirino
Chairman
and CEO
Ziyu
Shen
CFO
Ramesh
Narasimhan
General Counsel
Andrew
Winterton
ECARX is led by a highly experienced international team
Senior Management
Core
Technical Leadership
Company
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e r
ight to take legal action against such violations.
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ECARX provides a unique investment opportunity
1.
Operational data as of June
30
,
2022
2.
FX rate (USD/RMB) =
6.6981
as of June
30
,
2022
3.7
mm vehicles equipped with ECARX technologies
1
since
2017
Revenue of $
415
mm in
2021
2
Competing in a growing market with a TAM of $400bn+
Vehicle "DNA" to transform more in the next decade than in the past century
Vertically integrated full
-
stack technology solution
Vision to transform vehicles into seamlessly integrated information,
communications, and transportation devices
Integrated approach allows efficient product roadmap development
Deep experience with
Geely
ecosystem
Established business with
seasoned management team
Large and growing market
Differentiated technology
and product vision
Well positioned
with unique go
-
to
-
market
strategy
Company
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e r
ight to take legal action against such violations.
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The shift
towards
next
-
gen
vehicle
technologies
creates a large
and growing
market
opportunity
Tailwinds
•
Shift towards fully electric
vehicle
platforms, more
connected cars and
automated driving
technologies
•
Transformative demand in
electronic components
means they will take greater
portion of product value as
software enables onboard
experiences
•
ECARX is positioned to
partner with and/or supply
OEMs and Tier 1 suppliers
with key platform technology
•
Expect "all
-
new" platforms to
serve as the foundation for
future product development
over the next 10+ years
Company
Source: Frost & Sullivan
2020
–
2030
Global TAM Opportunity
4.6X
Autonomous
driving solutions
market
~$
400
B
Automotive
software market
~$105 B
4.7X
Automotive
SoC market
~$177 B
12.0X
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all
reserve the right to take legal action against such violations.
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e r
ight to take legal action against such violations.
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e r
ight to take legal action against such violations.
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Technology
ECARX is developing a vertically
-
integrated, full
-
stack automotive
technology platform
Clear
platform
roadmap consisting of one SoC family and versatile OS
Digital Cockpit
Initial SOP:
2021
Infotainment
S
o
C:
E01
(2018)
, E02
(2020)
Customized
Android
Infotainment Oriented
Initial SOP:
201
7
Next Generation
Products
Seamlessly integrated
information, communications,
and transportation devices
Automotive Central
Computing Platform
Initial SOP: 2024
1
SoC
: Snapdragon8155 (2021);
SE1000 (2022)
1
Customized Android
Linux
and
RTOS
Cluster
+
Infotainment + ADAS
SoC Family (Multiple)
One OS
Platform
Cockpit + Body + ADAS
+ Unsupervised highway driving
1.
Estimated
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e r
ight to take legal action against such violations.
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ECARX combines SoC and OS technology with a unique software stack
Operating System
Software Stack
Powerful SoC targeting
automotive applications
Operating system and tool
chain intended to maximize the
power of ECARX SoC
Software to address
major domains of
automotive applications
Technology
Vertically integrated technology platform simplifies and speeds up product development
System
-
on
-
a
-
Chip
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e r
ight to take legal action against such violations.
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System on a Chip ("SoC")
ECARX is implementing a fast and robust SoC technology development roadmap
2018
2020
2021
2022
2023
2024
2025
CPU: 14k DMIPS
GPU: 22 GFLOPS
Coc
kp
it
i
n
CHN
28nm
E01
CPU: 60k DMIPS
GPU: 100 GFLOPS
Coc
kp
it
i
n
CHN
12nm
E
02
E
01
and E
02
Infotainment
SoC Core Modules
1
E03: Digital
In
-
Car Host
SoC Core Module
1
CPU: 30k
-
45 DMIPS
GPU: 100~200 GFLOPS
Coc
kp
it
i
n
CHN
14nm
E03
SE
1000
: Digital Cockpit SoC
2
✓
High performance, low
power consumption
✓
High security
✓
High AI capability
✓
Customer sample ready
AD
1000
Vehicle Computing SoC
2
Coc
kp
it
i
n
ASIL
-
D
AD1000
IP Core
SE2000
2
Coc
kp
it
i
n
ASIL
-
B
SE
2000
JV between ECARX and ARM China established in 2018.
ECARX is collaborating with
SiEngine
to define the feature
set for the next generation automotive
SoC.
1.
ECARX repackaged from commercial chipset to automotive grade and integrated with key IC (integrated circuit) peripheral into
E01
/E02/E03 SoC Core Modules
2.
Estimated timeline for SE1000,
SE2000
,
AD1000
and
ECARX
IP
Core
Infotainment
Digital Cockpit
Automotive Central Computing Platform
Technology
Coc
kp
it
i
n
7
nm
ASIL
-
B
SE1000
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e r
ight to take legal action against such violations.
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Operating System
Technology
ECARX
Hypervisor
•
Integrate
heterogeneous
processing units’
(CPU/GPU/NPU/
etc
)
resources with best
utilization for various
vehicle domains
•
Simplified peripheral
integration and easy
development
Core OS Platforms
for Main Vehicle
Application Domains
•
HaleyTek
OS for
Infotainment
•
ECARX Drive OS for
Cluster + AD
•
Safety OS for functional
safety
ECARX Automotive
Service Core
•
Abstraction of vehicle
features and
communication flow across
systems and domains
Tools and
Services
•
Runtime, SDK, Toolchains,
IDE, Emulator, EVB
hardware and relevant
source code to developers
ECARX is building a
versatile one OS platform to maximize SoC benefits and enable
broad applications
Joint venture between ECARX and Volvo Cars established in 2021
to develop the OS to empower Android based infotainment system
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e r
ight to take legal action against such violations.
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Software Stack
Technology
Digital Cockpit
3.7mm+ customers are already
experiencing ECARX's world class
cockpit software
ADAS & Unsupervised Driving
Developing & partnering to offer driver
assistance technologies to enable the
future of mobility
Functional Safety
Control over key vehicle systems to
enable functionality, ensure
information
security,
and improve performance
ECARX software integrates intelligent, connected technology to enhance rider experience
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e r
ight to take legal action against such violations.
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04
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e r
ight to take legal action against such violations.
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Geely
Auto
7
Brands
+ Ecosystem
8
Brands
ECARX's unique go
-
to
-
market strategy creates
multiple development
and commercialization
opportunities, starting with scale and "day one"
involvement
•
Millions of customers in China are already enjoying
ECARX experiences across
Geely
Auto
•
Geely's
diverse international OEM ecosystem helps
to expand
ECARX's geographic reach and creates
meaningful scale
•
Deliver
unique "day one" involvement and early
technology deployment, accelerating and informing
our future product pipeline
•
Capital efficient technology partnerships including
strategic international co
-
development
These strategic relationships are creating robust pathways to third party
OEMs and international growth
Partnerships
& Collaborations
System on a Chip
Operating system
Driver assist / unsupervised highway
4
2
5
JICA
Intelligent
3
1.
SoC Core
M
odule refers to complete computing board
which efficiently integrates SoC together with core ICs (integrated circuit) and peripheral
2.
Zenseact
was founded by Volvo Cars. ECARX held 13.5%
equity interest
in
Zenseact
as of June 30, 2022
3.
JICA Intelligent was co
-
founded by ECARX and a subsidiary of
Geely
Holding in April 2021. ECARX held 50%
equity
interest in JICA Intelligent as of June 30,
2022
4.
Haleytek
was co
-
founded by ECARX and Volvo Cars in September 2021. ECARX held 40%
equity
interest in
Haleytek
as of June 30, 2022
5.
SiEngine
was co
-
founded by ECARX and ARM China in September 2018. ECARX held 30.97%
equity
interest in
SiEngine
as of June 30, 2022
6.
AMD and ECARX entered into a strategic collaboration agreement in August 2022
7.
Geely
Auto refers to
Geely
Automobile Holdings Limited, which manages brands including
Geely
,
Lynk
& Co, Geometry,
Zeekr
and
other brands
8.
Geely
Ecosystem refers to
Geely
Auto, Volvo Cars,
s
mart, Lotus, Proton, LEVC and other OEMs that are affiliated with or are investee
companies of Zhejiang
Geely
Holding Group Co., Ltd ("
Geely
Holding")
Strategy
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e r
ight to take legal action against such violations.
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Significant global momentum with ECARX technologies embedded in
next generation vehicles
•
Key strategic
partner to various
Geely
ecosystem brands including
Lotus,
Smart, Volvo with respect to their automotive products and services
•
Pathway in place to secure international orders from OEMs worldwide
“
Luminar, the Florida
-
based lidar company that went public via SPAC in
2020
, has formed a close alliance with
an auto behemoth in China. It
’
s making a strategic investment
…
in
ECARX
, an auto tech startup co
-
founded by
Eric Li, founder of China
’
s largest private automaker Geely,
ECARX said
on Thursday.
”
“
Volvo Cars to launch joint venture with ECARX to develop smart car software systems
”
ECARX has operations in China and Europe and is focused on technology used in smart vehicles, high
-
definition
maps and car chips. The company was founded in 2017 by Ziyu Shen, its chief executive officer, and Li
Shufu
,
chairman of Geely.
“We are getting
bigger
and we want to be an international company,”
Ziyu
Shen, ECARX’s chairman, said in an
interview. “We want to have a very strong international expansion in the next five years.”
Strategy
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e r
ight to take legal action against such violations.
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e r
ight to take legal action against such violations.
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Revenue Growth and Diversification
74
%
57%
44%
7%
18%
30%
19%
25
%
26
%
$415mm
$539mm
$797mm
$1,317mm
2021A
2022E
2023E
2024E
Geely Auto Brands
Other Geely Ecosystem Brands
Third Party
Key
Highlights
•
Over 50% CAGR in
revenues over the next
several years
•
Contribution from third
-
party OEMs to increase
significantly to 26% in
2024
•
Continue to heavily
invest to drive growth,
with over 70% of
opex
allocated to R&D
= YoY Growth
+
65.2
%
+47.9%
+29.9%
FX rate (USD/RMB) = 6.
6981
as of J
une
30, 2022
1.
The financial forecast assumes additional financing of $300mm in 2022 from the proceeds of the SPAC trust and from the strate
gic
investments and other financings. If the Company is unable to raise $300mm from the proposed business combination transaction
i
n conjunction with the
strategic investments and other financings, the Company intends to seek alternative financing following the closing of the bu
sin
ess combination. If such amounts are not available to the Company on acceptable terms, such amounts may not be
raised
and the financial forecast set forth herein
would be inaccurate
Financials
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e r
ight to take legal action against such violations.
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Adjusted EBITDA
FYE December ($mm)
2021A
2022E
2023E
2024E
Gross Profit
122
167
266
456
Gross Profit Margin (%)
29.4%
31.0%
33.3%
34.6%
Adjusted EBITDA
2
(122)
(162)
(122)
31
Adjusted EBITDA Margin (%)
(29.4%)
(30.0%)
(15.4%)
2.3%
Break
-
even by the end of 2024, with gross margin growth through new product margin
and
customer diversity
Key
Highlights
•
Enhanced gross
margins with an
increase of over
500
basis points by the
end of
2024
•
Clear pathway to
achieve adjusted
EBITDA profitability
by the end of
2024
FX rate (USD/RMB) =
6.
6981
as of J
une
30
,
2022
1.
The financial forecast assumes additional financing of $
300
mm in
2022
from the proceeds of the SPAC trust and from the strategic investments and other financings. If the Company is unable to rais
e $
300
mm from the proposed business combination transaction in conjunction with the
strategic investments and other financings, the Company intends to seek alternative financing following the closing of the bu
sin
ess combination. If such amounts are not available to the Company on acceptable terms, such amounts may not be
raised
and the financial forecast set forth herein
would be inaccurate
2.
Adjusted EBITDA is a non
-
GAAP financial metric defined by the Company as net loss or gain before income tax expenses, net intere
st expenses, depreciation and amortization and share
-
based compensation
Financials
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e r
ight to take legal action against such violations.
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ECARX provides a unique investment opportunity
3.7mm vehicles equipped with ECARX technologies
1
since 2017
Revenue of $415mm in 2021
2
Competing in a growing market with a TAM of $400bn+
Vehicle "DNA" to transform more in the next decade than in the past century
Vertically integrated full
-
stack technology solution
Vision to transform vehicles into seamlessly integrated information,
communications, and transportation devices
Integrated approach allows efficient product roadmap development
Deep experience with
Geely
ecosystem
Established business with
seasoned management team
Large and growing market
Differentiated technology
and product vision
Well positioned
with unique go
-
to
-
market
strategy
1.
Operational data as of June 30, 2022
2.
FX rate (USD/RMB) = 6.6981 as of June 30, 2022
Financials
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e r
ight to take legal action against such violations.
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Selected Public References
Enterprise
Value
EV/Revenue
2023E
1,2
EV/Revenue
2024E
1,2
Revenue CAGR
2022E
-
2024E
1
Semiconductor
& Software Full
Stack Solution
-
9.2x
8.3x
4.9%
Automotive
Technology
-
15.3x
6.4
x
121
.
4
%
ECARX
$3.4BN
3
4.3x
2.6x
56.3%
Source: FactSet as of N
ovember
16, 2022
1.
EV / Revenue multiples and 2022
-
2024E revenue CAGRs refer to arithmetic averages
2.
Aurora excluded from the calculation as multiple exceeds 40x
3.
Pre
-
money
valuation
based
on
Equity Value of $3.4bn, total debt of $139mm and existing cash balance of $135mm (as of December 31, 2021)
4.
FX rate (USD/RMB) = 6.6981 as of June 30, 2022
Financials
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e r
ight to take legal action against such violations.
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7.9%
2.0%
1.2%
89.0%
Public Shareholders
COVA Sponsor
Strategic and Other
Financings Investors
Existing ECARX
Shareholders
Transaction Overview
1,2
Illustrative Pro Forma Ownership
1,2,3
Transaction
S
ummary
Estimated Sources And Uses
1
(assuming no redemptions by COVA shareholders)
Pro Forma Valuation
1,2
•
Pro forma equity value of $3.8bn
2
•
Pre
-
money enterprise value of $3.4bn
2
and
equity
value
of
$3.4bn
2
-
An implied EV multiple of 4.3x 2023E
Revenue and 2.6x 2024E Revenue
2
•
Assumes $300mm cash in trust from COVA
3
and $110mm in additional capital committed through strategic
investments and other financings
4
•
Previously agreed financing satisfies the $100mm minimum cash condition for the business combination
•
All existing ECARX shareholders will retain their shareholding. No existing shareholders exit
•
Proceeds to be used for strategic acquisitions or investments, R&D, product roll
-
out, geographic expansion
and general corporate purposes
Sources
($mm)
Existing ECARX Shareholder Equity
3,400
COVA Trust
3
300
Common Equity Strategic
Investments
4
35
Convertible Notes
4
75
Total Sources
$3,810
($mm, except for per share data)
PF Shares Outstanding
382
Share Price
$
10.00
Pro Forma Equity
$3,820
Plus: Debt
139
Less: Existing Cash Balance
(135)
Less: Net Transaction Proceeds to Balance Sheet
(368)
Pro Forma Enterprise Value
$3,457
Uses
($mm)
Existing ECARX Shareholder Equity
3,400
Net Cash to Balance Sheet at
Closing
368
Estimated Fees & Expenses
5
42
Total Uses
$3,810
FX rate (USD/RMB) = 6.
6981
as of J
une
30, 2022
1.
Excludes (
i
) the impact of any equity awards issued at or after the closing of the transaction, (ii) the dilutive impact of 15.0mm publi
c w
arrants and 8.9mm sponsor warrants with a strike price of $11.50 per share, and (iii) the impact of shares with super
-
voting rig
hts
2.
Pro forma valuation assumes no redemptions by COVA shareholders and excludes the shares underlying the $65mm convertible note
s w
hich are convertible into shares of ECARX upon election of the holder of such notes. For pre
-
money
valuation, Enterprise Value is calculated
based
on
Equity Value of $3.4bn,
total debt of $139mm and existing cash balance of $135mm (as of December 31, 2021)
3.
Assumes no redemptions by COVA shareholders
4.
As of November 14, 2022, the Company has received a committed amount of $35mm in the form of strategic investments, the proce
eds
of which are dependent upon the closing of the proposed business combination. The Company has also received $75mm financing i
n
the form of convertible notes which consist of
(
i
) $10mm convertible notes that are automatically convertible into shares of ECARX upon consummation of the proposed business
com
bination and (ii) $65mm convertible notes that are convertible into shares of ECARX upon election of the holder of the notes,
th
e proceeds of which have been received by the
Company
5.
Estimated transaction fees & expenses of c.$42 million, exact number to be finalized
Financials
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e r
ight to take legal action against such violations.
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Risk Factors
Risks Relating to ECARX's Business and Industry
1.
ECARX has a limited operating history in a new market and faces significant challenges in the fast
-
developing
industry.
2.
If
ECARX
's solutions do not appropriately address the evolution of the automotive industry or automotive
intelligence technologies, its business could be adversely affected.
3.
Changes in automobile sales and market demand can adversely affect the business of ECARX.
4.
Disruptions in the supply of components or the underlying raw materials used in ECARX's products may
materially and adversely affect its business and profitability.
5.
A reduction in the market share and changes in product mix offered by ECARX's customers could materially
and adversely affect ECARX's business, financial condition, and results of operations.
6.
The automotive intelligence industry is highly competitive, and ECARX may not be successful in competing in
this industry.
7.
ECARX had negative net cash flows from operations in the past and has not been profitable, which may
continue in the future.
8.
ECARX currently has a concentrated customer base with a limited number of key customers, particularly
Geely
Holding and its related parties. The loss of one or more of its key customers, or a failure to renew any
agreement with one or more of its key customers, could adversely affect its results of operations and ability to
market its products and services.
9.
ECARX is subject to risks and uncertainties associated with international operations, which may harm its
business.
10.
ECARX's automotive intelligence technologies and related hardware and software could have defects, errors,
or bugs, undetected or otherwise, which could create safety issues, reduce market adoption, damage its
reputation with current or prospective customers, or expose it to product liability and other claims that could
materially and adversely affect its business, financial condition, and results of operations.
11.
ECARX relies on its business partners and other industry participants. Business collaboration with partners is
subject to risks, and these relationships may not lead to significant revenue. Any adverse change in
ECARX
's
cooperation with its business partners could harm its business.
12.
ECARX's business plans require a significant amount of capital. In addition, ECARX's future capital needs may
require it to sell additional equity or debt securities that may dilute its shareholders or introduce covenants that
may restrict its operations or its ability to pay dividends.
13.
The COVID
-
19 pandemic continues to impact ECARX's business and could materially and adversely affect its
financial condition and results of operations.
14.
ECARX is subject to risks relating to its restructuring.
15.
ECARX may not be able to realize the potential financial or strategic benefits of business ventures,
acquisitions or strategic investments or successfully integrate acquisition targets, which could harm its ability to
grow its business, develop new products or sell its existing products.
16.
ECARX may incur material losses and costs as a result of warranty claims, product recalls, and product liability
that may be brought against it.
17.
ECARX has limited insurance coverage, which could expose it to significant costs and business disruption.
18.
ECARX's business depends substantially on the continued efforts of its executive officers, key employees and
qualified personnel, and its operations may be severely disrupted if ECARX loses their services.
19.
ECARX's management team has limited experience managing a public company.
20.
ECARX may not succeed in continuing to establish, maintain, or strengthen its brand, and the brand and
reputation of ECARX could be harmed by negative publicity with respect to itself, its directors, officers,
employees, shareholders, peers, business partners, or the industry in general.
21.
ECARX's revenues and financial results may be adversely affected by any economic slowdown in China as
well as globally.
22.
Heightened tensions in international relations, particularly between the United States and China, may
adversely impact ECARX's business, financial condition, and results of operations
23.
Natural disasters, terrorist activities, political unrest, the ongoing conflict between Russia and Ukraine, rising
inflation, and other global pandemic outbreaks could disrupt ECARX's production, delivery, and operations,
which could materially and adversely affect its business, financial condition, and results of operations.
24.
If ECARX fails to implement and maintain an effective system of internal controls, it may be unable to
accurately report its results of operations, meet its reporting obligations or prevent fraud, which may have
material and adverse effect to investor confidence and the market price of its shares.
25.
ECARX depends on information technology to conduct its business. Any significant disruptions to its
information technology systems or facilities, or to those of third parties with which it does business, such as
disruptions caused by cyber
-
attacks, could adversely impact ECARX's business.
26.
Unexpected termination of leases, failure to renew the lease of ECARX's existing premises or to renew such
leases at acceptable terms could materially and adversely affect its business.
Select Risk Factors
30
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e r
ight to take legal action against such violations.
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Risk Factors
Risks Relating to Intellectual Property
1.
ECARX may need to defend itself against intellectual property right infringement claims, which may be time
-
consuming and would cause ECARX to incur substantial costs.
2.
ECARX may not be able to prevent others from unauthorized use of its intellectual property, which could harm
its business and competitive position.
3.
As ECARX's patents may expire and may not be extended, ECARX's patent applications may not be granted,
and ECARX's patent rights may be contested, circumvented, invalidated, or limited in scope, ECARX may not
be effectively protected by its patent rights.
In particular, ECARX
may not be able to prevent others from
developing or exploiting competing technologies, which could materially and adversely affect its business,
financial condition, and results of operations.
4.
In addition to patented technologies, ECARX relies on its unpatented proprietary technologies, trade secrets,
processes, and know
-
how.
Risks Relating to Regulation and Doing Business in China
1.
The PRC government has significant oversight and discretion over ECARX's business operations, and it may
influence or intervene in ECARX's operations as part of its efforts to enforce PRC law, which could result in a
material adverse change in ECARX's operations and the value of ECARX's securities.
2.
Uncertainties in the PRC legal system and the interpretation and enforcement of PRC laws and regulations
could limit the legal protections available to you and to ECARX, hinder ECARX's ability and the ability of any
holder of its securities to offer or continue to offer such securities, result in a material adverse change to
ECARX's business operations, and damage ECARX's reputation, which would materially and adversely affect
ECARX's financial condition and results of operations and cause ECARX's securities to significantly decline in
value or become worthless.
3.
The approval of and filing with the CSRC or other PRC government authorities may be required in connection
with this offering under PRC law, and, if so required, ECARX cannot predict whether or when it will be able to
obtain such approval or complete such filing, and even if it obtains such approval, it could be rescinded. Any
failure to or delay in obtaining such approval or complying with such filing requirements in relation to this
offering, or a rescission of such approval, could subject ECARX to sanctions imposed by the CSRC or other
PRC government authorities.
4.
The PCAOB is currently unable to inspect ECARX's auditor in relation to their audit work performed for
ECARX's financial statements and the inability of the PCAOB to conduct inspections over ECARX's auditor
deprives ECARX's investors with the benefits of such inspections.
5.
Assuming the business combination is consummated in 2022, ECARX's securities may be prohibited from
trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, in 2025 if
the PCAOB is unable to inspect or fully investigate auditors located in China, or as early as 2024 if proposed
changes to the law are enacted. The delisting of ECARX's securities, or the threat of their being delisted, may
materially and adversely affect the value of your investment.
6.
ECARX's business is subject to complex and evolving laws and regulations regarding cybersecurity, privacy,
data protection and information security in China and elsewhere. Any privacy or data security breach or any
failure to comply with these laws and regulations could damage its reputation and brand, result in negative
publicity, legal proceedings, increased cost of operations, warnings, fines, service or business suspension, or
otherwise harm its business and results of operations.
7.
ECARX may be subject to anti
-
corruption, anti
-
bribery, anti
-
money laundering, financial and economic
sanctions, and similar laws, and noncompliance with such laws can subject ECARX to administrative, civil, and
criminal penalties, collateral consequences, remedial measures, and legal expenses, all of which could
adversely affect its business, results of operations, financial condition, and reputation.
8.
It may be difficult for overseas regulators to conduct investigations or collect evidence within China.
9.
Fluctuations in exchange rates could have a material and adverse effect on ECARX's results of operations.
10.
Governmental control of currency conversion may limit ECARX's ability to utilize its revenues effectively.
11.
Discontinuation of any of the preferential tax treatments and government subsidies or imposition of any
additional taxes and surcharges could adversely affect ECARX's financial condition and results of operations.
Select Risk Factors
31
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e r
ight to take legal action against such violations.
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|
About
ECARX
ECARX is transforming
vehicles into seamlessly integrated information, communications, and transportation devices. It is shaping the interaction between people
and cars by rapidly advancing the technology at the heart of smart mobility. ECARX's current core products include infotainment head
units (IHU), digital cockpits, vehicle chip-set solutions, a core operating system and integrated software stack. Beyond this, ECARX
is developing a full-stack automotive computing platform.
Over the last
three years, ECARX's technology has been integrated into more than 3.7 million cars worldwide. ECARX was founded in 2017 and has since
grown to close to 2,000 team members. The co-founders are two automotive entrepreneurs, Chairman and CEO Ziyu Shen and Eric
Li (Li Shufu), who is also the founder and chairman of Zhejiang Geely Holding Group (Geely), one of the largest automotive groups
in the world that holds ownership interest and investment in international brands such as Lotus, Lynk & Co, Polestar, smart
and Volvo Cars.
About COVA
COVA Acquisition
Corp. is a special purpose acquisition company whose business purpose is to effect a merger, amalgamation, share exchange, asset acquisition,
share purchase, reorganization or similar business combination with one or more businesses or entities.
Forward-Looking
Statements
This communication
contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities
Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on beliefs and assumptions and on
information currently available to COVA and ECARX.
All statements
other than statements of historical fact contained in this communication are forward-looking statements. In some cases, you can identify
forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,”
“expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,”
“predict,” “project,” “potential,” “continue,” “ongoing,” “target,”
“seek” or the negative or plural of these words, or other similar expressions that are predictions or indicate future events
or prospects, although not all forward-looking statements contain these words. These statements are based upon estimates and forecasts
and reflect the views, assumptions, expectations, and opinions of COVA and ECARX, which involve risks, uncertainties and other factors
that may cause actual results, levels of activity, performance or achievements to be materially different from those expressed or implied
by these forward-looking statements. Any such estimates, assumptions, expectations, forecasts, views or opinions, whether or not identified
in this communication, should be regarded as preliminary and for illustrative purposes only and should not be relied upon as being necessarily
indicative of future results. Although each of COVA and ECARX believes that it has a reasonable basis for each forward-looking statement
contained in this communication, each of COVA and ECARX caution you that these statements are based on a combination of facts and factors
currently known and projections of the future, which are inherently uncertain. In addition, there are risks and uncertainties described
in the definitive proxy statement/prospectus on Form F-4 relating to the proposed transaction filed by ECARX with the SEC and other
documents filed by COVA or ECARX from time to time with the SEC. These filings may identify and address other important risks and uncertainties
that could cause actual events and results to differ materially from those expressed or implied in the forward-looking statements. Neither
COVA nor ECARX can assure you that the forward-looking statements in this communication will prove to be accurate. These forward-looking
statements are subject to a number of risks and uncertainties, including the ability to complete the business combination due to the
failure to obtain approval from COVA shareholders or satisfy other closing conditions in the merger agreement, the occurrence of any
event that could give rise to the termination of the merger agreement, the ability to recognize the anticipated benefits of the business
combination, the amount of redemption requests made by COVA public shareholders, costs related to the transaction, the impact of the
global COVID-19 pandemic, the risk that the transaction disrupts current plans and operations as a result of the announcement and consummation
of the transaction, the outcome of any potential litigation, government or regulatory proceedings and other risks and uncertainties,
including those included under the heading “Risk Factors” in the registration statement on Form F-4 filed by ECARX with
the SEC and those included under the heading “Risk Factors” in the final prospectus of COVA dated February 4, 2021 and
in its subsequent filings with the SEC. In light of the significant uncertainties in these forward-looking statements, you should not
regard these statements as a representation or warranty by COVA or ECARX, their respective directors, officers or employees or any other
person that COVA or ECARX will achieve their objectives and plans in any specified time frame, or at all. The forward-looking statements
in this communication represent the views of COVA and ECARX as of the date of this communication. Subsequent events and developments
may cause those views to change. However, while COVA and ECARX may update these forward-looking statements in the future, COVA and ECARX
specifically disclaim any obligation to do so, except to the extent required by applicable law. You should, therefore, not rely on these
forward-looking statements as representing the views of COVA and ECARX as of any date subsequent to the date of this communication. Accordingly,
undue reliance should not be placed upon the forward-looking statements.
Important
Additional Information Regarding the Transaction
In connection
with the proposed transaction, ECARX has filed a registration statement on Form F-4 with the SEC that includes a prospectus with
respect to ECARX’s securities to be issued in connection with the proposed transaction and a proxy statement with respect to the
shareholder meeting of COVA to vote on the proposed transaction, which was declared effective on November 18, 2022. Shareholders
of COVA and other interested persons are encouraged to read the definitive proxy statement/prospectus as well as other documents to be
filed with the SEC because these documents contain important information about COVA and ECARX and the proposed transaction. The definitive
proxy statement/prospectus included in the registration statement will be mailed to shareholders of COVA as of November 8, 2022.
Shareholders of COVA are also able to obtain a copy of the F-4, including the definitive proxy statement/prospectus, and other documents
filed with the SEC without charge, by directing a request to: COVA Acquisition Corp., 1700 Montgomery Street, Suite 240, San Francisco,
CA 94111 or, without charge, at the SEC’s website (www.sec.gov).
Participants
in the Solicitation
COVA and
ECARX and their respective directors and executive officers may be considered participants in the solicitation of proxies with
respect to the potential transaction described in this communication under the rules of the SEC. Information about the
directors and executive officers of COVA and their ownership is set forth in COVA’s filings with the SEC. Additional
information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of
COVA’s shareholders in connection with the potential transaction is set forth in the registration statement containing the
definitive proxy statement/prospectus filed with the SEC. These documents are available free of charge at the SEC’s website at www.sec.gov
or by directing a request to COVA Acquisition Corp., 1700 Montgomery Street, Suite 240, San Francisco, CA 94111.
No Offer
or Solicitation
This communication
is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the potential
transaction and does not constitute an offer to sell or a solicitation of an offer to buy any securities of COVA or ECARX, nor shall
there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of such state or jurisdiction. No offer of securities shall be made except
by means of a prospectus meeting the requirements of the Securities Act.
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