Unless the context otherwise requires, all references in this section to the
"Company," "our," "us," "we," or "Aspirational" refer to Aspirational Consumer
Lifestyle Corp. The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with the
audited financial statements and the notes related thereto which are included in
"Item 8. Financial Statements and Supplementary Data" of this Annual Report.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including those that will be set forth in our preliminary
prospectus/proxy statement to be included in a Registration Statement on Form
S-4 that we will file with the SEC relating to our proposed business combination
with Wheels Up Partners Holdings LLC (the "Wheels Up Business Combination"), and
those set forth under "Cautionary Note Regarding Forward-Looking Statements and
Risk Factor Summary," "Item 1A. Risk Factors" and elsewhere in this Annual
Report.
Overview
We are a blank check company incorporated in the Cayman Islands on July 7, 2020
formed for the purpose of effecting a merger, amalgamation, share exchange,
asset acquisition, share purchase, reorganization or other similar Business
Combination with one or more businesses. We intend to effectuate our Business
Combination using cash derived from the proceeds of the Initial Public Offering
and the sale of the Private Placement Warrants, our shares, debt or a
combination of cash, shares and debt.
The issuance of additional shares in a business combination:
· may significantly dilute the equity interest of investors, which dilution would
increase if the anti-dilution provisions in the Aspirational Class B ordinary
shares resulted in the issuance of Aspirational Class A ordinary shares on a
greater than one-to-one basis upon conversion of the Aspirational Class B
ordinary shares;
· may subordinate the rights of holders of ordinary shares if preferred shares
are issued with rights senior to those afforded our ordinary shares;
· could cause a change of control if a substantial number of our ordinary shares
is issued, which may affect, among other things, our ability to use our net
operating loss carry forwards, if any, and could result in the resignation or
removal of our present directors and officers;
· may have the effect of delaying or preventing a change of control of us by
diluting the share ownership or voting rights of a person seeking to obtain
control of us;
· may adversely affect prevailing market prices for our units, ordinary shares
and/or warrants; and
· may not result in adjustment to the exercise price of our warrants.
Similarly, if we issue debt securities or otherwise incur significant
indebtedness, it could result in:
· default and foreclosure on our assets if our operating revenues after an
initial business combination are insufficient to repay our debt obligations;
· acceleration of our obligations to repay the indebtedness even if we make all
principal and interest payments when due if we breach certain covenants that
require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
· our immediate payment of all principal and accrued interest, if any, if the
debt is payable on demand;
· our inability to obtain necessary additional financing if the debt contains
covenants restricting our ability to obtain such financing while the debt is
outstanding;
· our inability to pay dividends on our ordinary shares;
· using a substantial portion of our cash flow to pay principal and interest on
our debt, which will reduce the funds available for dividends on our ordinary
shares if declared, expenses, capital expenditures, acquisitions and other
general corporate purposes;
· limitations on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate;
· increased vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation;
· limitations on our ability to borrow additional amounts for expenses, capital
expenditures, acquisitions, debt service requirements, execution of our
strategy and other purposes; and
· other disadvantages compared to our competitors who have less debt.
Recent Developments
On February 1, 2021, we announced that we entered into an Agreement and Plan of
Merger (the "Merger Agreement"), with Wheels Up Partners Holdings LLC, a
Delaware limited liability company ("Wheels Up"), KittyHawk Merger Sub LLC, a
Delaware limited liability corporation and our direct wholly owned subsidiary
("Merger Sub"), Wheels Up Blocker Sub LLC, a Delaware limited liability company
and our direct wholly owned subsidiary ("Blocker Sub"), the Blocker Merger Subs
(as defined in the Merger Agreement) and the Blockers (as defined in the Merger
Agreement).
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The Merger Agreement provides that, among other things and upon the terms and
subject to the conditions thereof, the following transactions will occur
(together with the other agreements and transactions contemplated by the Merger
Agreement, the "Wheels Up Business Combination"): The Merger Agreement provides
that, among other things and upon the terms and subject to the conditions
thereof, the following transactions will occur (together with the other
agreements and transactions contemplated by the Merger Agreement, the "Business
Combination"): (i) at the closing of the transactions contemplated by the Merger
Agreement (the "Closing"), upon the terms and subject to the conditions of the
Merger Agreement and in accordance with the General Corporation Law of the State
of Delaware, as amended ("DGCL"), and the Limited Liability Company Act of the
State of Delaware, as amended, as applicable, (x) each of the Blocker Merger
Subs will simultaneously merge with and into the respective Blockers, the
separate corporate existence of each Blocker Merger Sub will cease and each
Blocker will survive as our wholly owned subsidiary (the "First Step Blocker
Mergers"), (y) the surviving Blocker entities will thereafter simultaneously
merge with and into Blocker Sub, the separate corporate existence of each
Blocker will cease and Blocker Sub will be the surviving entity (the "Second
Step Blocker Mergers," and together with the First Step Blocker Mergers, the
"Blocker Mergers") and (z) Merger Sub will thereafter merge with and into Wheels
Up (the "Company Merger"), the separate corporate existence of Merger Sub will
cease and Wheels Up will be the surviving entity (the "Surviving Company"), with
us as its managing member (together with the Blocker Mergers, the "Mergers");
(ii) as a result of the Mergers, among other things, (x) the Blocker Equity
Interests (as defined in the Merger Agreement) of each Blocker that are issued
and outstanding immediately prior to the effective time of the First Step
Blocker Mergers (the "First Step Blocker Effective Time") (other than any
Cancelled Blocker Interests (as defined in the Merger Agreement)) will be
cancelled and converted into the right to receive in the aggregate (A) a number
of shares of our Class A common stock (after our Domestication (as defined
below)), par value $0.0001 per share (the "ASPL Class A Common Stock"), that is
equal to the Exchange Ratio (as defined in the Merger Agreement) multiplied by
the aggregate number of Wheels Up preferred interests held by such Blocker as of
immediately prior to the First Step Blocker Effective Time and (B) any Earnout
Shares (as defined below) that may be due and issuable pursuant to the Merger
Agreement, and (y) each outstanding Wheels Up common interest and preferred
interest (other than any Wheels Up common interests subject to the Wheels Up
awards discussed below and the Wheels Up preferred interests held by Blocker
Sub) immediately prior to the effective time of the Company Merger (the
"Effective Time") will be cancelled in exchange for the right to receive (A) a
number of shares of ASPL Class A Common Stock that is equal to the Exchange
Ratio and (B) any Earnout Shares that may be due and issuable pursuant to the
Merger Agreement, which will, in the case of all shares described in clauses (x)
and (y), together with the shares of ASPL Class A Common Stock reserved in
respect of the awards described immediately below, in the aggregate equal an
aggregate merger consideration of $1,885,000,000, in addition to a number of
shares of ASPL Class A Common Stock that may be issued post-Closing if any
Wheels Up Options (as defined below) were to be cash exercised and due to the
conversion of any Wheels Up Profits Interests (as defined below) for shares of
ASPL Class A Common Stock at a level above the intrinsic value of such profits
interests immediately after Closing, plus any Earnout Shares; (iii) as a result
of the Mergers, among other things, (x) each option to purchase Wheels Up common
interests (the "Wheels Up Options") that is outstanding immediately prior to the
Effective Time will be converted into the right to receive (as adjusted,
including with respect to the applicable exercise price, based on the Exchange
Ratio) an option related to the shares of ASPL Class A Common Stock, (y) each
award of Wheels Up profits interests (the "Wheels Up Profit Interests"),
including those granted under any Wheels Up incentive plan in Wheels Up that is
outstanding immediately prior to the Effective Time, will be converted into the
right to receive (as adjusted based on the Exchange Ratio and to maintain the
intrinsic value of such award) an award of profits interests of the Surviving
Company with substantially the same terms and conditions as were applicable to
such award as of immediately prior to the Effective Time, which, upon vesting
and subject to the expiration of the Lock-Up Period (as defined below), if
applicable to the particular holder thereof, will be exchangeable for shares of
ASPL Class A Common Stock, and (z) each award of Wheels Up restricted interests
(the "Wheels Up Restricted Interests") granted under any Wheels Up incentive
plan will be converted into the right to receive (as adjusted based on the
Exchange Ratio) an award of restricted interests of the Surviving Company with
substantially the same terms and conditions as were applicable to such award as
of immediately prior to the Effective Time, which, upon vesting and subject to
the expiration of the Lock-Up Period, will be exchangeable for shares of ASPL
Class A Common Stock; (iv) as a result of the Mergers, existing Wheels Up
equityholders will have the right to receive, including profits interests
holders and restricted interest holders through the issuance of Wheels Up EO
Units (as defined in the Merger Agreement) that upon vesting may become
exchangeable for, up to an aggregate of 9,000,000 additional shares of ASPL
Class A Common Stock in three equal tranches which are issuable upon the
achievement of share price thresholds for ASPL Class A Common Stock of $12.50,
$15.00 and $17.50, respectively (such shares, the "Earnout Shares"); and (v)
upon the effective time of the Domestication, we will immediately be renamed
"Wheels Up Experience Inc."
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Prior to the Closing, subject to the approval of our shareholders, and in
accordance with the DGCL, Cayman Islands Companies Act (2021 Revision) (the
"CICA") and our Amended and Restated Memorandum and Articles of Association (as
may be amended from time to time, the "Cayman Constitutional Documents"), ASPL
will effect a deregistration under the CICA and a domestication under Section
388 of the DGCL (by means of filing a certificate of domestication with the
Secretary of State of Delaware), pursuant to which our jurisdiction of
incorporation will be changed from the Cayman Islands to the State of Delaware
(the "Domestication").
In connection with the Domestication, (i) each of our then issued and
outstanding Class A ordinary shares will convert automatically, on a one-for-one
basis, into a share of ASPL Class A Common Stock, which are entitled to one vote
per share, (ii) each of our then issued and outstanding Class B ordinary shares
will convert automatically, on a one-for-one basis, into a share of ASPL Class A
Common Stock, (iii) each of our then issued and outstanding warrants will
convert automatically into a warrant to acquire one share of ASPL Class A Common
Stock ("Domesticated ASPL Warrant") and (iv) each of our then issued and
outstanding unit will convert automatically into a share of ASPL Class A Common
Stock, on a one-for-one basis, and one-third of one Domesticated ASPL Warrant.
In addition, on February 1, 2021, we announced that, concurrently with the
execution of the Merger Agreement, we entered into subscription agreements (the
"Subscription Agreements") with certain investors (collectively, the "PIPE
Investors") pursuant to which, on the terms and subject to the conditions
therein, the PIPE Investors have collectively subscribed for 55,000,000 shares
of our Class A Common Stock for an aggregate purchase price equal to
$550,000,000 (the "PIPE Investment"). The PIPE Investment will be consummated
substantially concurrently with the Closing, subject to the terms and conditions
contemplated by the Subscription Agreements.
On February 1, 2021, we also entered into a Sponsor Support Agreement (the
"Sponsor Support Agreement"), by and among us, our Sponsor, Wheels Up and the
other parties thereto, pursuant to which our Sponsor and each of our directors
agreed to, among other things, vote in favor of the Merger Agreement and the
transactions contemplated thereby and not to redeem their shares in us in
connection therewith, in each case, subject to the terms and conditions
contemplated by the Sponsor Support Agreement. In addition, we have entered into
a Equityholder Support Agreement (the "Equityholder Support Agreement") by and
among us, Wheels Up and certain equityholders of Wheels Up (the "Key Company
Equityholders"), pursuant to which the Key Company Equityholders have agreed to,
among other things, vote in favor of the Merger Agreement and the transactions
contemplated thereby, in each case, subject to the terms and conditions
contemplated by the Equityholder Support Agreement.
The consummation of the proposed Wheels Up Business Combination is subject to
certain conditions as further described in the Merger Agreement.
For more information about the Merger Agreement and the proposed Wheels Up
Business Combination, see our Current Report on Form 8-K filed with the SEC on
February 1, 2021, and the Wheels Up Disclosure Statement that we will file with
the SEC. Unless specifically stated, this Annual Report does not give effect to
the proposed Wheels Up Business Combination and does not contain the risks
associated with the proposed Wheels Up Business Combination. Such risks and
effects relating to the proposed Wheels Business Combination will be included in
the Wheels Up Disclosure Statement.
On March 8, 2021, we issued a promissory note (the "Promissory Note') to the
Sponsor, pursuant to which we borrowed an aggregate principal amount of
$100,000.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities from July 7, 2020 (inception) through December 31,
2020 were organizational activities, those necessary to prepare for our Initial
Public Offering, as described below, and the search for a target company for a
Business Combination, including the proposed Wheels Up Business Combination. We
do not expect to generate any operating revenues until after the completion of
our initial Business Combination. We have generated and except to generate
non-operating income in the form of interest income on marketable securities
held in the Trust Account. We have incurred and expect to incur expenses as a
result of being a public company (for legal, financial reporting, accounting and
auditing compliance), as well as for due diligence expenses in connection with
searching for, and completing, a Business Combination.
For the period from July 7, 2020 (inception) through December 31, 2020, we had a
net loss of $1,554,342, which consisted of formation and operating costs of
$1,603,147 and an unrealized loss on marketable securities held in our Trust
Account of $785, offset by interest income on marketable securities held in the
Trust Account of $49,590.
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Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, our only source of
liquidity was an initial purchase of ordinary shares by the Sponsor and loans
from our Sponsor.
On September 25, 2020, we consummated the Initial Public Offering of 22,500,000
Units at a price of $10.00 per Unit, generating gross proceeds of $225,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 4,333,333 Private Placement Warrants to the Sponsor at a price of
$1.50 per Private Placement Warrant generating gross proceeds of $6,500,000.
On October 2, 2020, in connection with the underwriter's election to partially
exercise of its over-allotment option, we consummated the sale of an additional
1,474,632 Units and the sale of an additional 196,617 Private Placement
Warrants, generating total gross proceeds of $15,041,246.
Following the Initial Public Offering, the partial exercise of the
over-allotment option by the underwriter and the sale of the Private Placement
Warrants, a total of $239.7 million was placed in the Trust Account, and we had
$1,861,552 of cash held outside of the Trust Account, after payment of costs
related to the Initial Public Offering, available for working capital purposes.
We incurred $12,952,619 in transaction costs, including $4.5 million of
underwriting fees, paid to Credit Suisse (of which 10% was reimbursed to cover
the financial advisory fee paid to Connaught), $8.391 million of deferred
underwriting fees payable to Credit Suisse (of which 10% will be reimbursed to
cover the deferred financial advisory fee payable to Connaught) and $577,619 of
other costs. Credit Suisse, Connaught and their respective affiliates have
engaged in, or may in the future engage in, as applicable, investment banking
and other commercial dealings in the ordinary course of business with us, our
affiliates or Wheels Up. They have received, or may in the future receive, as
applicable, customary fees and commissions for these transactions.
For the period from July 7, 2020 (inception) through December 31, 2020, net cash
used in operating activities was $1,084,845. Net loss of $1,554,342 was impacted
by interest earned on marketable securities of $49,590, unrealized loss on
marketable securities held in our Trust Account of $785 and formation costs paid
by Sponsor in exchange for issuance of Class B Aspirational ordinary shares of
$15,092. Changes in operating assets and liabilities provided $503,210 of cash
from operating activities.
At December 31, 2020, we had marketable securities held in the Trust Account of
$239,795,125. We intend to use substantially all of the funds held in the Trust
Account, including any amounts representing interest earned on the Trust
Account, to complete the Business Combination, including to pay deferred
underwriting commission. We may withdraw interest from the Trust Account to pay
our taxes, if any. To the extent that our share capital or debt is used, in
whole or in part, as consideration to complete a Business Combination, the
remaining proceeds held in the Trust Account will be used as working capital to
finance the operations of the target business or businesses, make other
acquisitions and pursue our growth strategies.
At December 31, 2020, we had cash of $719,926 held outside of the Trust Account.
The primary uses of the funds held outside the Trust Account were to identify
and evaluate target businesses, perform business due diligence on prospective
target businesses, travel to and from the offices, plants or similar locations
of prospective target businesses or their representatives or owners, review
corporate documents and material agreements of prospective target businesses,
structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor or an affiliate of the
Sponsor or certain of our officers and directors may, but are not obligated to
(other than pursuant to the Promissory Note), loan us additional funds as may be
required. If we complete a Business Combination, we may repay such loaned
amounts out of the proceeds of the Trust Account released to us. In the event
that a Business Combination does not close, we may use a portion of the working
capital held outside the Trust Account to repay such loaned amounts, but no
proceeds from the Trust Account would be used for such repayment.
On March 8, 2021, Aspirational issued the Promissory Note to the Sponsor,
pursuant to which Aspirational borrowed an aggregate principal amount of
$100,000. We may need to raise additional capital through loans or additional
investments from the Sponsor, shareholders, officers, directors, or third
parties. Our officers, directors and the Sponsor may, but are not obligated to,
loan us funds, from time to time or at any time, in whatever amount they deem
reasonable to meet our working capital needs. Accordingly, we may not be able to
obtain additional financing. If we are unable to raise additional capital, we
may be required to take additional measures to conserve liquidity, which could
include, but not necessarily be limited to, curtailing operations, suspending
the pursuit of a potential transaction, and reducing overhead expenses. We
cannot provide any assurance that new financing will be available to us on
commercially acceptable terms, if at all. These conditions raise substantial
doubt about our ability to continue as a going concern for a reasonable period
of time, which is considered to be one year from the issuance date of the
financial statements. The financial statements do not include any adjustments
relating to the recovery of the recorded assets or the classification of the
liabilities that might be necessary should we be unable to continue as a going
concern.
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Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2020. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay the Sponsor
a monthly fee of $10,000 for office space, administrative and support services,
provided to Aspirational. Such agreement was assigned from the Sponsor to
Turmeric Capital Singapore Pte Ltd ("Turmeric Capital"), an affiliate of our
Chief Executive Officer, on December 31, 2020. We began incurring these fees on
September 23, 2020 and will continue to incur these fees monthly until the
earlier of the completion of the Business Combination and our liquidation.
We have agreed, commencing on September 23, 2020, to pay Turmeric Capital
$10,000 per month for support services, including accounting, book and record
keeping and cash management services. Upon completion of the Business
Combination or our liquidation, we will cease paying these monthly fees.
The underwriter is entitled to a deferred fee of $0.35 per Unit, or $8,391,121
in the aggregate. The deferred fee will become payable to the underwriter from
the amounts held in the Trust Account solely in the event that we complete a
Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480, Distinguishing Liabilities from Equity. Class A ordinary shares subject to
mandatory redemption are classified as a liability instrument and are measured
at fair value. Conditionally redeemable ordinary shares (including ordinary
shares that feature redemption rights that are either within the control of the
holder or subject to redemption upon the occurrence of uncertain events not
solely within our control) are classified as temporary equity. At all other
times, ordinary shares are classified as shareholders' equity. The Class A
ordinary shares feature certain redemption rights that are considered to be
outside of our control and subject to occurrence of uncertain future events.
Accordingly, Class A ordinary shares subject to possible redemption are
presented at redemption value as temporary equity, outside of the shareholders'
equity section of the balance sheet.
Net Loss per Ordinary Share
Net income (loss) per share is computed by dividing net income by the
weighted-average number of ordinary shares outstanding during the period. We
have not considered the effect of the public warrants and the Private Placement
Warrants to purchase an aggregate of 12,521,494 shares in the calculation of
diluted loss per share, since the exercise of the warrants are contingent upon
the occurrence of future events and the inclusion of such warrants would be
anti-dilutive.
Our statement of operations includes a presentation of income (loss) per share
for our redeemable Class A ordinary shares in a manner similar to the two-class
method of income (loss) per share. Net income per common share, basic and
diluted, for our redeemable Class A ordinary shares is calculated by dividing
the proportionate share of income or loss on marketable securities held by the
Trust Account, net of applicable franchise and income taxes, by the weighted
average number of ordinary shares subject to possible redemption outstanding
since original issuance.
Net loss per share, basic and diluted, for our non-redeemable Class A and Class
B ordinary shares is calculated by dividing the net loss, adjusted for income or
loss on marketable securities attributable to our redeemable Class A prdinary
shares, by the weighted average number of non-redeemable ordinary shares
outstanding for the period.
Our non-redeemable Class A and Class B ordinary shares include our Founder
Shares and non-redeemable ordinary shares as these shares do not have any
redemption features. Our non-redeemable Class A and Class B ordinary shares
participate in the income or loss on marketable securities based on such
non-redeemable ordinary shares' proportionate interest.
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Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
financial statements.
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