The following discussion and analysis of the Company's financial condition and
results of operations of B. Riley Principal 250 Merger Corp. (the "Company")
should be read in conjunction with the financial statements and the notes
thereto contained elsewhere in this report (the "Quarterly Report"). Certain
information contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes forward-looking statements. All statements, other
than statements of historical fact included in this Quarterly Report including,
without limitation, statements in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" regarding the Company's financial
position, business strategy and the plans and objectives of management for
future operations, are forward-looking statements. In some cases, you can
identify forward-looking statements by terminology such as "may," "should,"
"could," "would," "expect," "plan," "anticipate," "believe," "estimate,"
"continue," or the negative of such terms or other similar expressions. We have
based these forward-looking statements on our current expectations and
projections about future events. Forward-looking statements are subject to known
and unknown risks, uncertainties and assumptions about us that may cause our
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. Factors
that might cause or contribute to such a discrepancy include, but are not
limited to, those described in the Risk Factors section of our final prospectus
for our Public Offering (as defined below) and in our other Securities and
Exchange Commission ("SEC") filings. Except as expressly required by applicable
securities law, we disclaim 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 incorporated as a Delaware corporation and formed
for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with
one or more businesses (the "Initial Business Combination").
Our registration statement for our initial public offering (the "Initial Public
Offering") was declared effective on May 7, 2021. On May 11, 2021, we
consummated the Initial Public Offering of 15,000,000 units (the "Units") at
$10.00 per Unit, generating gross proceeds of $150,000,000. Each Unit consists
of one share of Class A common stock (the "Public Shares") of ours, par value
$0.0001, and one-third of one redeemable warrant (the "Public Warrants") of
ours, with each Public Warrant entitling the holder thereof to purchase one
share of Class A common stock for $11.50 per share, subject to adjustment. On
June 14, 2021, the underwriters exercised the over-allotment option in full and
purchased an additional 2,250,000 Units (the "Over-Allotment Units"), generating
additional gross proceeds of $22,500,000 million. We incurred total offering
costs of approximately $4,021,103 consisting of $3,450,000 (2% of gross
proceeds) million in underwriting fees and other offering costs of $571,103.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 555,000 units (each, a "Private
Placement Unit" and collectively, the "Private Placement Units") to our Sponsor,
at a purchase price of $10.00 per Private Placement Unit, generating gross
proceeds to the Company of $5,550,000. Each Private Placement Unit consists of
one share of Class A common stock (the "Private Shares") of ours, par value
$0.0001, and one-third of one redeemable warrant (the "Private Warrants") of
ours, with each Private Warrant entitling the holder thereof to purchase one
share of Class A common stock for $11.50 per share, subject to adjustment. On
June 14, 2021, simultaneously with the sale of the Over-Allotment Units, we
consummated a private sale of an additional 45,000 Private Placement Units (the
"Over-Allotment Private Placement Units") to our Sponsor, generating gross
proceeds of $450,000.
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A total of $172,500,000, comprised of $169,050,000 of the proceeds from the
Initial Public Offering and the sale of the Over-Allotment Units (which amount
includes a $6,037,500 fee payable to B. Riley Securities, Inc. pursuant to the
BCMA upon completion of an Initial Business Combination) and $3,450,000 from the
proceeds of the sale of the Private Placement Units and the Over-Allotment
Private Placement Units, was placed in a U.S.-based trust account at Bank of
America, N.A. maintained by Continental Stock Transfer & Trust Company, acting
as trustee. Except with respect to interest earned on the funds held in the
trust account that may be released to the Company to pay its franchise and
income tax obligations (less up to $100,000 of interest to pay dissolution
expenses), the funds held in the trust account will not be released from the
trust account until the earliest of (i) the completion of the Company's Initial
Business Combination, (ii) the redemption of any Public Shares properly
submitted in connection with a stockholder vote to amend the Company's amended
and restated certificate of incorporation (the "Amended Charter") to modify the
substance or timing of the Company's obligation to redeem 100% of the Company's
Public Shares if the Company does not complete its initial business combination
within 24 months from the closing of the Initial Public Offering or with respect
to any other material provisions relating to stockholders' rights or pre-initial
business combination activity and (iii) the redemption of 100% of the Company's
Public Shares if the Company is unable to complete an Initial Business
Combination within 24 months from the closing of the Initial Public Offering,
subject to applicable law.
We intend to effectuate an Initial Business Combination using cash from the
proceeds of our Initial Public Offering, including the proceeds from the sale of
the Over-Allotment Units, the Private Placement and the proceeds from the sale
of the Over-Allotment Private Placement Units and from additional issuances of,
if any, our capital stock and our debt, or a combination of cash, stock and
debt.
Results of Operations
Our business activities from inception to September 30, 2021 consisted primarily
of our preparation for our Initial Public Offering that was completed on May 11,
2021. Since the offering on May 11, 2021, our business activities have consisted
primarily of identification and evaluation of prospective acquisition targets
for an Initial Business Combination. We have neither engaged in any operations
nor generated any revenues to date. We will not generate any operating revenues
until after completion of our Initial Business Combination. We will generate
non-operating income in the form of net gain from investments held in Trust
Account. We expect to incur increased 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, 2021, we had net income of $2,308,212.
Our net income for the three months ended September 30, 2021, consisted of
interest income earned in the amount of $2,219 on funds held in the Trust
Account and an unrealized gain on change in fair value of warrants in the amount
of $2,521,075. For the three months ended September 30, 2020, we had a net loss
of $472 which is comprised of miscellaneous operating expenses.
For the nine months ended September 30, 2021, we had net income of $908,005. Our
net income for the nine months ended September 30, 2021, consisted of interest
income earned in the amount of $3,890 on funds held in the Trust Account, loss
from operations in the amount of $342,171, warrant issue costs of $124,789, and
unrealized gain on change in fair value of warrants in the amount of $1,371,075.
For the period from June 19, 2020 (Inception) through September 30, 2020, we had
a net loss of $997 which is comprised of miscellaneous expenses related to the
formation of the Company and other miscellaneous operating expenses.
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Liquidity and Capital Resources
Until the closing of the Initial Public Offering, our only source of liquidity
was an initial sale of shares (the "Founder Shares") of Class B common stock,
par value $0.0001 per share, to our Sponsor, and the proceeds of a promissory
note (the "Note") from the Sponsor, in the amount of $300,000. We had an
outstanding balance on the Note of $100,000 at the time of the Initial Public
Offering and the Note was repaid in full on May 17, 2021 with proceeds raised
from the closing of the Initial Public Offering.
Subsequent to the consummation of the Initial Public Offering, our liquidity has
been satisfied through the net proceeds from the consummation of the Initial
Public Offering, the sale of the Over-Allotment Units, the Private Placement and
the sale of the Private Placement Units held outside of the Trust Account. In
addition, in order to finance transaction costs in connection with an Initial
Business Combination, our Sponsor may, but is not obligated to, provide us
Working Capital Loans. As of September 30, 2021, there were no amounts
outstanding under any Working Capital Loan.
As of September 30, 2021, we had cash of $1,140,264 and working capital of
$1,587,911. The working capital of $1,587,911 excludes Delaware franchise taxes
payable of $72,368 (which is included in accounts payable and accrued expenses
as of September 30, 2021) as franchise taxes are paid from the Trust account
from interest income earned.
Income on the funds held in the Trust Account may be released to us to pay our
franchise and income taxes.
We do not believe we will need to raise additional funds other than the funds
raised by the sale of the Units, the Over-Allotment Units, the Private Placement
Units and the Over-Allotment Private Placement Units in order to meet the
expenditures required for operating our business. However, if our estimates of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating an 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 shares of
Class A common stock upon completion of our Initial Business Combination, in
which case we may issue additional securities or incur debt in connection with
such business combination (including from our affiliates or affiliates of our
Sponsor).
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities which would be
considered off-balance sheet arrangements. 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 entered into any non-financial agreements involving assets.
Contractual Obligations
As of September 30, 2021, we did not have any long-term debt, capital lease
obligations, operating lease obligations, long-term liabilities, commitments or
contractual obligations. On May 7, 2021, we entered into an administrative
support agreement pursuant to which we have agreed to pay an affiliate of the
Sponsor a total of $3,750 per month for office space, administrative and support
services. Upon the earlier of the completion of the Initial Business Combination
and the Company's liquidation, we will cease paying these monthly fees.
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On May 7, 2021, we engaged B. Riley Securities, Inc. as advisors in connection
with the Initial Business Combination to assist us in arranging meetings with
stockholders to discuss a potential business combination and the target
business' attributes, introduce us to potential investors that may be interested
in purchasing our securities, assist us in obtaining stockholder approval for
our Initial Business Combination and assist us with the preparation of press
releases and public filings in connection with the Initial Business Combination.
We will pay B. Riley Securities, Inc. for such services upon the consummation of
the Initial Business Combination a cash fee in an amount equal to 3.5% of the
gross proceeds of the Initial Public Offering (exclusive of any applicable
finders' fees which might become payable). Pursuant to the terms of the business
combination marketing agreement, no fee will be due if we do not complete an
Initial Business Combination.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States 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 condensed financial statements, and income and expenses during the
periods reported. Actual results could materially differ from those estimates.
We have identified the following as our critical accounting policies:
Warrant Derivative Liability
In accordance with FASB ASC 815-40, Derivatives and Hedging: Contracts in an
Entities Own Equity, entities must consider whether to classify contracts that
may be settled in its own stock, such as warrants, as equity of the entity or as
an asset or liability. If an event that is not within the entity's control could
require net cash settlement, then the contract should be classified as an asset
or a liability rather than as equity. We have determined because the terms of
Public Warrants include a provision that entitles all warrantholders to cash for
their warrants in the event of a qualifying cash tender offer, while only
certain of the holders of the underlying shares of common stock would be
entitled to cash, our warrants should be classified as derivative liability
measured at fair value, with changes in fair value each period reported in
earnings. Further if our Private Warrants are held by someone other than initial
purchasers of the Private Warrants or their permitted transferees, the Private
Warrants will be redeemable by the Company and exercisable by such holders on
the same basis as the Public Warrants. Because the terms of the Private Warrants
and Public Warrants are so similar, we classified both types of warrants as a
derivative liability measured at fair value. Volatility in our Common Stock and
Public Warrants may result in significant changes in the value of the
derivatives and resulting gains and losses on our statement of operations.
Earnings per Common Share
Basic earnings per common share is computed by dividing net income applicable to
common stockholders by the weighted average number of common shares outstanding
during the period. All shares of Class B common stock are assumed to convert to
shares of Class A common stock on a one-for-one basis. Earnings and losses are
shared pro rata between the two classes of shares. Potential common shares for
outstanding warrants to purchase the Company's stock were excluded from diluted
earnings per share for the three and nine months ended September 30, 2021
because the warrants are contingently exercisable, and the contingencies have
not yet been met. For the three and nine months ending September 30, 2021, we
did not have any dilutive warrants, securities or other contracts that could,
potentially, be exercised or converted into common stock. As a result, diluted
earnings per common share is the same as basic earnings per common share for all
periods presented. For the three and nine months ended September 30, 2021, we
reported earnings per redeemable and non-redeemable common share of $0.10 and
$0.07, respectively.
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Redeemable Shares
All of the 17,250,000 Public Shares sold as part of the Public Offering contain
a redemption feature as described in the final prospectus for our Public
Offering. In accordance with FASB ASC 480, "Distinguishing Liabilities from
Equity", redemption provisions not solely within the control of the Company
require the security to be classified outside of permanent equity. Conditionally
redeemable Class A common stock (including shares of Class A common stock 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) is classified as temporary equity. At all other times, Class A
common stock is classified as stockholders' equity. Our Class A common stock
features certain redemption rights that are considered to be outside of our
control and subject to the occurrence of uncertain future events. Accordingly,
as of September 30, 2021, 17,250,000 shares of Class A common stock subject to
possible redemption at the redemption amount were presented at redemption value
as temporary equity, outside of stockholders' equity on our Condensed Balance
Sheet.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on the
accompanying financial statements.
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B. RILEY PRINCIPAL 250 MERGER CORP. 
