References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Accelerate Acquisition Corp. References to our "management"
or our "management team" refer to our officers and directors, and references to
the "Sponsor" refer to Accelerate Acquisition Sponsor, LLC. The following
discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with the financial statements and the
notes thereto contained elsewhere in this Quarterly Report. Certain information
contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act
that are not historical facts and involve risks and uncertainties that could
cause actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Form 10-Q
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
completion of the Proposed Business Combination (as defined below), the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. Words such as
"expect," "believe," "anticipate," "intend," "estimate," "seek" and variations
and similar words and expressions are intended to identify such forward-looking
statements. Such statements include, but are not limited to, possible business
combinations and the financing thereof, and related matters, as well as other
statements other than statements of historical fact in this Form 10-Q. Such
forward-looking statements relate to future events or future performance, but
reflect management's current beliefs, based on information currently available.
A number of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements, including that the conditions of the Proposed
Business Combination are not satisfied. For information identifying important
factors that could cause actual results to differ materially from those
anticipated in the forward-looking statements, please refer to the Risk Factors
section of the Company's Annual Report on Form 10-K filed with the U.S.
Securities and Exchange Commission (the "SEC"). The Company's securities filings
can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except
as expressly required by applicable securities law, the Company disclaims any
intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on
December 30, 2020, for the purpose of entering into a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses. We intend to effectuate our initial
business combination using cash from the proceeds of the initial public offering
and the sale of the private placement warrants, our capital stock, debt or a
combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from December 30, 2020 (inception) through September 30,
2022, were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and identifying a target company for a
Business Combination. We do not expect to generate any operating revenues until
after the completion of our Business Combination. We generate non-operating
income in the form of interest income on marketable securities held in the Trust
Account. We 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.
For the three months ended September 30, 2022, we had net income of $2,960,737,
which consists of changes in fair value of derivative warrant liabilities of
$1,860,000 and interest earned on investments held in Trust Account of
$1,935,555, offset by operating and formation costs of $438,851 and provision
for income tax of $395,967.
For the nine months ended September 30, 2022, we had net income of $16,746,720,
which consists of changes in fair value of derivative warrant liabilities of
$15,706,666 and interest earned on investments held in Trust Account of
$2,577,429, offset by operating and formation costs of $1,063,047 and provision
for income tax of $474,328.
For the three months ended September 30, 2021, we had net income of $5,867,626,
which consists of interest earned on investments held in Trust Account of
$10,083 and changes in fair value of derivative warrant liabilities of
$6,143,067, offset by the operating and formation costs of $285,524.
For the nine months ended September 30, 2021, we had net income of $653,734,
which consists of interest earned on investments held in Trust Account of
$21,043 and changes in fair value of derivative warrant liabilities of
$2,203,067, offset by the operating and formation costs of $1,570,376.
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Liquidity and Capital Resources
On March 22, 2021, we consummated the initial public offering of 40,000,000
Units at $10.00 per Unit, generating gross proceeds of $400,000,000.
Simultaneously with the closing of the initial public offering, we consummated
the sale of 7,333,333 private placement warrants at a price of $1.50 per private
placement warrant in a private placement to our sponsor, generating gross
proceeds of $11,000,000.
For the nine months ended September 30, 2022, cash used in operating activities
was $848,203. Net income of $16,746,720 was affected by interest earned on
investments held in the Trust Account of $2,577,429 and changes in fair value of
derivative warrant liabilities of $15,706,666. Changes in operating assets and
liabilities provided $689,172 of cash for operating activities.
For the nine months ended September 30, 2021, cash used in operating activities
was $1,263,559. Net income of $653,734 was affected by interest earned on
investments held in the Trust Account of $21,043, changes in fair value of
derivative warrant liabilities of $2,203,067 and transaction costs allocable to
derivative warrant liabilities of $801,198. Changes in operating assets and
liabilities used $494,381 of cash for operating activities.
As of September 30, 2022, we had investments held in the Trust Account of
$402,119,954 (including $2,119,954 of interest) consisting of money market funds
which are invested primarily in U.S. Treasury Securities. Interest income on the
balance in the Trust Account may be used by us to pay taxes. Through September
30, 2022, we have withdrawn $488,750 of interest income from the Trust Account.
We intend to use substantially all of the funds held in the trust account,
including any amounts representing interest earned on the trust account (less
income taxes payable), to complete our initial business combination. To the
extent that our capital stock or debt is used, in whole or in part, as
consideration to complete our initial 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.
As of September 30, 2022, we had cash of $577,701. We intend to use the funds
held outside the Trust Account primarily 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, and structure,
negotiate and complete an initial business combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with initial business combination, our Sponsor, or certain of our
officers and directors or their affiliates may, but are not obligated to, loan
us funds as may be required. If we complete an initial business combination, we
would repay such loaned amounts. In the event that an initial 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 our
trust account would be used for such repayment. Up to $1,500,000 of such working
capital loans may be convertible into warrants of the post business combination
entity at a price of $1.50 per warrant. The warrants would be identical to the
private placement warrants.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence,
and negotiating our initial business combination are less than the actual amount
necessary to do so, we may have insufficient funds available to operate our
business prior to our initial business combination. Moreover, we may need to
obtain additional financing either to complete our initial business combination
or because we become obligated to redeem a significant number of our public
shares upon consummation of our initial business combination, in which case we
may issue additional securities or incur debt in connection with such initial
business combination.
Liquidity and Going Concern
As of September 30, 2022, the Company had $577,701 in its operating bank
accounts, $402,119,954 in securities held in the Trust Account to be used for a
Business Combination or to repurchase or redeem its common stock in connection
therewith and working capital deficit of $540,810 (excluding $335,578 payable
for franchise and income taxes.). If the estimate of the costs of identifying a
target business, undertaking in-depth due diligence, and negotiating a Business
Combination are less than the actual amount necessary to do so, the Company may
have insufficient funds available to operate its business prior to a Business
Combination. Moreover, the Company may need to obtain additional financing or
draw on the Working Capital Loans (as defined below) either to complete a
Business Combination or because it becomes obligated to redeem a significant
number of the Public Shares upon consummation of a Business Combination, in
which case the Company may issue additional securities or incur debt in
connection with such Business Combination. Subject to compliance with applicable
securities laws, the Company would only complete such financing simultaneously
with the completion of our Business Combination. If the Company is unable to
complete the Business Combination because it does not have sufficient funds
available, the Company will be forced to cease operations and liquidate the
Trust Account. In addition, following the Business combination, if cash on hand
is insufficient, the Company may need to obtain additional financing in order to
meet its obligations.
In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standards Board's Accounting Standards
Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability
to Continue as a Going Concern," the Company may not have sufficient funds
available to complete a Business Combination. Management has determined that the
liquidity condition, should a Business Combination not occur, and potential
subsequent dissolution raises substantial doubt about the Company's ability to
continue as a going concern. No adjustments have been made to the carrying
amounts of assets or liabilities should the Company be required to liquidate.
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Off-Balance Sheet Arrangements
We have no obligations, assets, or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 2022. 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, utilities, and secretarial and
administrative support. We began incurring these fees on March 22, 2021 and will
continue to incur these fees monthly until the earlier of the completion of the
initial business combination and our liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or
$14,000,000 in the aggregate. The deferred fee will become payable to the
underwriters from the amounts held in the trust account solely in the event that
the Company completes an initial business combination, subject to the terms of
the underwriting agreement.
Critical Accounting Policies
The preparation of unaudited condensed 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:
Derivative Warrant Liabilities
We account for the warrants in accordance with the guidance contained in ASC
815-40, under which the Warrants do not meet the criteria for equity treatment
and must be recorded as liabilities. Accordingly, we classify the warrants as
liabilities at their fair value and adjust the warrants to fair value in respect
of each reporting period. This liability is subject to re-measurement at each
balance sheet date until the warrants are exercised, and any change in fair
value is recognized in our statements of operations. The private warrants and
the public warrants for periods where no observable traded price was available
were valued using a lattice model, specifically a binomial lattice model
incorporating the Cox-Ross-Rubenstein methodology. For periods subsequent to the
severability of the public warrants from the Units, the public warrant quoted
market price was used as the fair value as of each relevant date. As of
September 30, 2022, the fair value of the private placement warrants was the
equivalent to that of the public warrants as they had substantially the same
terms; however, they are not actively traded, as such are listed as a Level 2
fair value instruments. The change in fair value is recognized in the statements
of operations.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Shares of Class A common stock
subject to mandatory redemption is classified as a liability instrument and is
measured at fair value. Conditionally redeemable common stock (including common
stock that feature redemption rights that is either within the control of the
holder or subject to redemption upon the occurrence of uncertain events not
solely within our control) is classified as temporary equity. At all other
times, common stock is classified as stockholders' (deficit) equity. Our Class A
common stock features certain redemption rights that are considered to be
outside of our control and subject to occurrence of uncertain future events.
Accordingly, shares of Class A common stock subject to possible redemption are
presented as temporary equity, outside of the stockholders' deficit section of
our balance sheets.
Net Income (Loss) Per Common Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share". Net income per common share is computed by dividing net
income by the weighted average number of common shares outstanding for the
period. We have two classes of shares, which are referred to as Class A common
stock and Class B common stock. Income and losses are shared pro rata between
the two classes of stock. Accretion associated with the redeemable shares of
Class A common shares is excluded from earnings per share as the redemption
value approximates fair value.
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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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ACCELERATE ACQUISITION CORP. 
