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OFFON

BIG SKY GROWTH PARTNERS, INC.

(BSKY)
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BIG SKY GROWTH PARTNERS : Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

08/16/2021 | 04:26pm EDT
References to the "Company," "Big Sky Growth Partners, Inc.," "Big Sky," "our,"
"us" or "we" refer to Big Sky Growth Partners, Inc. The following discussion and
analysis of the Company's financial condition and results of operations should
be read in conjunction with the unaudited interim condensed financial statements
and the notes thereto contained elsewhere in this 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 on Form
10-Q
includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have
based these forward-looking statements on our current expectations and
projections about future events. These 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. 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. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described in our other SEC filings.
Overview
We are a blank check company incorporated in Delaware on February 11, 2021. We
were 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 "Business Combination"). We are an emerging growth
company and, as such, the Company is subject to all of the risks associated with
emerging growth companies.
Our sponsor is Big Sky Growth Partners, LLC, a Delaware limited liability
company (the "Sponsor"). The registration statement for our initial public
offering (the "Initial Public Offering") was declared effective on April 28,
2021. On May 3, 2021, we consummated our Initial Public Offering of 30,000,000
units (the "Units" and, with respect to the Class A common stock included in the
Units being offered, the "Public Shares"), at $10.00 per Unit, generating gross
proceeds of $300.0 million, and incurring offering costs of approximately
$17.3 million, of which $10.5 million was for deferred underwriting commissions.
We granted the underwriters a
45-day
option to purchase up to an additional 4,500,000 Units at the Initial Public
Offering price to cover over-allotments, if any. The option expired unexercised
on June 14, 2021.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement (the "Private Placement") of 5,733,333 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants")
at a price of $1.50 per Private Placement Warrant to the Sponsor, generating
proceeds of $8.6 million.
Upon the closing of the Initial Public Offering and the Private Placement,
$300.0 million ($10.00 per Unit) of the net proceeds of the sale of the Units in
the Initial Public Offering and of the Private Placement Warrants in the Private
Placement were placed in a trust account ("Trust Account") located in the United
States with Continental Stock Transfer & Trust Company acting as trustee, and
invested only in U.S. government treasury obligations with a maturity of 185
days or less or in money market funds meeting certain conditions under Rule
2a-7
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"), which invest only in direct U.S. government treasury obligations, as
determined by the Company, until the earlier of: (i) the completion of a
Business Combination and (ii) the distribution of the Trust Account as described
below.
Our management has broad discretion with respect to the specific application of
the net proceeds of the Initial Public Offering and the sale of Private
Placement Warrants, although substantially all of the net proceeds are intended
to be applied generally toward consummating a Business Combination. There is no
assurance that we will be able to complete a Business Combination successfully.
We must complete one or more initial Business Combinations having an aggregate
fair market value of at least 80% of the value of the funds held in the Trust
Account (excluding the amount of deferred underwriting discounts held in trust
and taxes payable on the interest earned on the Trust Account)

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at the time of the agreement to enter into the initial Business Combination.
However, we only intend to complete a Business Combination if the
post-transaction company owns or acquires 50% or more of the voting securities
of the target or otherwise acquires a controlling interest in the target
sufficient for it not to be required to register as an investment company under
the Investment Company Act.
If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or May 3, 2023 (the "Combination
Period"), and our stockholders have not amended the Certificate of Incorporation
to extend such Combination Period, we will (i) cease all operations except for
the purpose of winding up; (ii) as promptly as reasonably possible, but not more
than ten business days thereafter, redeem the Public Shares, at a
per-share
price, payable in cash, equal to the aggregate amount then on deposit in the
Trust Account, including interest earned on the funds held in the Trust Account
and not previously released to us to pay its income taxes (less taxes payable
and up to $100,000 of interest to pay dissolution expenses), divided by the
number of then outstanding Public Shares, which redemption will completely
extinguish Public Stockholders' rights as stockholders (including the right to
receive further liquidation distributions, if any), subject to applicable law;
and (iii) as promptly as reasonably possible following such redemption, subject
to the approval of ours remaining stockholders and our board of directors,
liquidate and dissolve, subject in each case, to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable
law.
Liquidity and Capital Resources
As of June 30, 2021, we had approximately $1.2 million in our operating bank
account and working capital of approximately $1.6 million (not taking into
account approximately $75,000 in tax obligations that may be paid using
investment income earned in Trust Account).
Our liquidity needs prior to the consummation of the Initial Public Offering
were satisfied through the payment of $25,000 from the Sponsor to cover for
certain offering costs on our behalf in exchange for issuance of Founder Shares
(as defined in Note 4 to the unaudited condensed financial statements), and loan
from the Sponsor of approximately $96,000 under the Note (as defined in Note 4
to the unaudited condensed financial statements). We repaid the Note in full on
May 4, 2021. 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 and the Private Placement held outside of the Trust
Account. In addition, in order to 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, provide us Working
Capital Loans (as defined in Note 4 to the unaudited condensed financial
statements). As of June 30, 2021, there were no amounts outstanding under any
Working Capital Loan.
Based on the foregoing, our management believes that we will have sufficient
working capital and borrowing capacity to meet our needs through the earlier of
the consummation of a Business Combination or one year from this filing. Over
this time period, we will be using these funds for paying existing accounts
payable, identifying and evaluating prospective initial Business Combination
candidates, performing due diligence on prospective target businesses, paying
for travel expenditures, selecting the target business to merge with or acquire,
and structuring, negotiating and consummating the Business Combination.

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Results of Operations
Our entire activity since inception up to June 30, 2021 was in preparation for
our formation and the Initial Public Offering, and, subsequent to the Initial
Public Offering, identifying a target company for a Business Combination. We
will not be generating any operating revenues until the closing and completion
of our initial Business Combination at the earliest.
For the three months ended June 30, 2021, we had net income of approximately
$588,000, which consisted of an approximately $1.3 million gain from the change
in fair value of derivative warrant liabilities and income from investments held
in the Trust Account of approximately $4,000, partially offset by approximately
$155,000 in general and administrative expense, $49,000 of franchise taxes, and
approximately $536,000 of offering costs associated with the issuance of
warrants.
From February 11, 2021 (inception) to ended June 30, 2021, we had net income of
approximately $556,000, which consisted of a $1,323,000 gain in change of fair
value of derivative warrant liabilities, approximately $4,500 gain on
investments held in the Trust Account, which was partially offset by
approximately $536,000 of offering costs associated with the issuance of
warrants, $160,000 of general and administrative expenses and $75,000 of
franchise tax expenses.
Related Party Transactions
Founder Shares
On February 19, 2021, the Sponsor paid $25,000 of our offering costs in exchange
for issuance of 8,625,000 shares of our Class B common stock, par value $0.0001
per share (the "Founder Shares"). The initial stockholders agreed to forfeit up
to 1,125,000 Founder Shares to the extent that the underwriters' option to
purchase additional Units was not exercised in full, so that the Founder Shares
would represent 20.0% of our issued and outstanding shares after the Initial
Public Offering. The over-allotment expired unexercised, thus, the 1,125,000
Founder Shares were forfeited on July 16, 2021.
The initial stockholders agreed, subject to limited exceptions, not to transfer,
assign or sell any of the Founder Shares until the earlier to occur of: (A) one
year after the completion of the initial Business Combination or (B) subsequent
to the initial Business Combination, (x) if the last sale price of Class A
common stock equals or exceeds $12.00 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like) for any 20
trading days within any
30-trading
day period commencing at least 150 days after the initial Business Combination,
or (y) the date on which the Company completes a liquidation, merger, capital
stock exchange, reorganization or other similar transaction that results in all
of the stockholders having the right to exchange their shares of common stock
for cash, securities or other property. Any permitted transferees will be
subject to the same restrictions and other agreements of the initial stockholder
with respect to any Founder Shares.
Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, we consummated
the Private Placement of 5,733,333 Private Placement Warrants at a price of
$1.50 per Private Placement Warrant to the Sponsor, generating proceeds of
$8.6 million.
Each Private Placement Warrant is exercisable for one whole share of Class A
common stock at a price of $11.50 per share. A portion of the proceeds from the
sale of the Private Placement Warrants to the Sponsor was added to the proceeds
from the Initial Public Offering held in the Trust Account. If we do not
complete a Business Combination within the Combination Period, the Private
Placement Warrants will expire worthless. The Private Placement Warrants will be
non-redeemable
for cash and exercisable on a cashless basis so long as they are held by the
initial purchasers or their permitted transferees.
The Sponsor and our officers and directors agreed, subject to limited
exceptions, not to transfer, assign or sell any of their Private Placement
Warrants until 30 days after the completion of the initial Business Combination.

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Related Party Loans
On February 19, 2021, the Sponsor agreed to loan us an aggregate of up to
$300,000 to cover expenses related to the Initial Public Offering pursuant to a
promissory note (the "Note"). This loan was
non-interest
bearing and payable upon the completion of the Initial Public Offering. We
borrowed approximately $96,000 under the Note, and repaid the Note in full on
May 4, 2021.
In addition, in order to 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, loan us funds as may be
required ("Working Capital Loans"). If the Company completes a Business
Combination, we would repay the Working Capital Loans out of the proceeds of the
Trust Account released to us. Otherwise, the Working Capital Loans would be
repaid only out of funds held outside the Trust Account. In the event that a
Business Combination does not close, we may use a portion of the proceeds held
outside the Trust Account to repay the Working Capital Loans but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans. The
Working Capital Loans would either be repaid upon consummation of a Business
Combination or, at the lender's discretion, up to $1.5 million 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. Except for the foregoing, the terms of such Working
Capital Loans, if any, have not been determined and no written agreements exist
with respect to such loans. As of June 30, 2021, we had no borrowings under the
Working Capital Loans.
Contractual Obligations
Registration Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may
be issued upon conversion of Working Capital Loans (and any shares of Class A
common stock issuable upon the exercise of the Private Placement Warrants and
warrants that may be issued upon conversion of Working Capital Loans) were
entitled to registration rights pursuant to a registration and stockholder
rights agreement signed upon the consummation of the Initial Public Offering.
These holders will be entitled to certain demand and "piggy-back" registration
rights. We will bear the expenses incurred in connection with the filing of any
such registration statements.
Underwriting Agreement
The underwriters were entitled to an underwriting discount of $0.20 per Unit, or
$6.0 million in the aggregate, paid upon the closing of the Initial Public
Offering. An additional fee of $0.35 per Unit, or $10.5 million in the aggregate
will be payable to the underwriters for deferred underwriting commissions. The
deferred fee will become payable to the underwriters 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.
Risks and Uncertainties
Management continues to evaluate the impact of the
COVID-19
pandemic on the industry and has concluded that while it is reasonably possible
that the virus could have a negative effect on our financial position, results
of its operations and/or search for a target company, the specific impact is not
readily determinable as of the date of the unaudited condensed financial
statements. The unaudited condensed financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

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Critical Accounting Policies
This management's discussion and analysis of our financial condition and results
of operations is based on our unaudited condensed financial statements, which
have been prepared in accordance with United States generally accepted
accounting principles. The preparation of these unaudited condensed financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses and the disclosure of
contingent assets and liabilities in our unaudited condensed financial
statements. On an ongoing basis, we evaluate our estimates and judgments,
including those related to fair value of financial instruments and accrued
expenses. We base our estimates on historical experience, known trends and
events and various other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.
Derivative warrant liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate our financial instruments, including issued
stock purchase warrants, to determine if such instruments are derivatives or
contain features that qualify as embedded derivatives, pursuant ASC 480 and FASB
ASC Topic 815
, Derivatives and Hedging
("ASC 815")
, paragraph 15 Embedded Derivatives
("ASC
815-15").
The classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is
re-assessed
at the end of each reporting period.
The warrants issued in connection with the Initial Public Offering (the "Public
Warrants") and the Private Placement Warrants are recognized as derivative
liabilities in accordance with ASC 815, paragraph 40,
Contracts in Entity's Own Equity
("ASC
815-40").
Accordingly, we recognize the warrant instruments as liabilities at fair value
and adjusts the instruments to fair value at each reporting period until they
are exercised. The fair value of the Public Warrants issued in connection with
the Public Offering and Private Placement Warrants were initially measured at
fair value utilizing a binomial Monte Carlo simulation model. The fair value of
Public Warrants issued in connection with the Initial Public Offering have
subsequently been measured based on the listed market price of such warrants at
June 30, 2021. Subsequently, the fair value of the Private Placement Warrants
has been estimated utilizing a simulation with assumptions related to expected
stock-price volatility, expected life, risk-free interest rate and dividend
yield. The determination of the fair value of the warrant liability may be
subject to change as more current information becomes available and accordingly
the actual results could differ significantly. Derivative warrant liabilities
are classified as
non-current
liabilities as their liquidation is not reasonably expected to require the use
of current assets or require the creation of current liabilities.
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 ASC Topic 480 "Distinguishing Liabilities from
Equity." Class A common stock subject to mandatory redemption (if any) is
classified as liability instruments and are measured at fair value.
Conditionally redeemable Class A common stock (including Class A common stock
that features 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,
Class A common stock is classified as stockholders' equity. Our Class A common
stock feature certain redemption rights that are considered to be outside of our
control and subject to the occurrence of uncertain future events. Accordingly,
as of June 30, 2021, 27,150,939 shares of Class A common stock subject to
possible redemption is presented at redemption value as temporary equity,
outside of the stockholders' equity section of our condensed balance sheets.
Net Income (Loss) Per Common Share
Our condensed statements of operations include a presentation of net income
(loss) per share for Class A common stock subject to possible redemption in a
manner similar to the
two-class
method of net income (loss) per common stock. Net income (loss) per common
stock, basic and diluted, for Class A common stock is calculated by dividing the
income from investments in the Trust Account, less interest available to be
withdrawn for the payment of taxes, by the weighted average number of Class A
common stock outstanding for the periods. Net income (loss) per common

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stock, basic and diluted, for Class B common stock is calculated by dividing the
net income (loss), adjusted for income attributable to Class A common stock, by
the weighted average number of Class B Common Stock outstanding for the periods.
Class B common stock include the Founder Shares as these shares do not have any
redemption features and do not participate in the income earned on the Trust
Account.
The calculation of diluted net income (loss) per common stock does not consider
the effect of the warrants issued in connection with the Initial Public Offering
and Private Placement since the exercise price of the warrants is in excess of
the average stock price for the period and therefore the inclusion of such
warrants would be anti-dilutive.
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standards Update ("ASU")
No. 2020-06,
Debt-Debt with Conversion and Other Options (Subtopic
470-20)
and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic
815-40):
Accounting for Convertible Instruments and Contracts in an Entity's Own Equity
, which simplifies accounting for convertible instruments by removing major
separation models required under current GAAP. The ASU also removes certain
settlement conditions that are required for equity-linked contracts to qualify
for the derivative scope exception and it also simplifies the diluted earnings
per share calculation in certain areas. We early adopted the ASU on February 11,
2021. Adoption of the ASU did not impact our financial position, results of
operations or cash flows.
Our management does not believe that any other recently issued, but not yet
effective, accounting standards updates, if currently adopted, would have a
material effect on the accompanying unaudited condensed financial statements.
Off-Balance
Sheet Arrangements
As of June 30, 2021, we did not have any
off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for
non-emerging
growth companies. As a result, the financial statements may not be comparable to
companies that comply with new or revised accounting pronouncements as of public
company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of
non-emerging
growth public companies under the Dodd-Frank Wall Street Reform and Consumer
Protection Act, (iii) comply with any requirement that may be adopted by the
PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's
report providing additional information about the audit and the financial
statements (auditor discussion and analysis) and (iv) disclose certain executive
compensation related items such as the correlation between executive
compensation and performance and comparisons of the CEO's compensation to median
employee compensation. These exemptions will apply for a period of five years
following the completion of our Initial Public Offering or until we are no
longer an "emerging growth company," whichever is earlier.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule
12b-2
of the Exchange Act and are not required to provide the information otherwise
required under this item. As of June 30, 2021, we were not subject to any market
or interest rate risk. The net proceeds of the Initial Public Offering,
including amounts in the Trust Account, will be invested in

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U.S. government securities with a maturity of 185 days or less or in money
market funds that meet certain conditions under Rule
2a-7
under the Investment Company Act of 1940, as amended, that invest only in direct
U.S. government treasury obligations. Due to the short-term nature of these
investments, we believe there will be no associated material exposure to
interest rate risk.
We have not engaged in any hedging activities since our inception and we do not
expect to engage in any hedging activities with respect to the market risk to
which we are exposed.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we conducted an
evaluation of the effectiveness of our disclosure controls and procedures as of
the end of the fiscal quarter ended June 30, 2021, as such term is defined in
Rules
13a-15(e)
and
15d-15(e)
under the Exchange Act. Based on this evaluation, our principal executive
officer and principal financial officer has concluded that during the period
covered by this report, our disclosure controls and procedures were effective.
Disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in our Exchange Act reports is recorded,
processed, summarized, and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to our management, including our principal executive officer and principal
financial officer or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended June 30, 2021 covered by this Quarterly
Report on Form
10-Q
that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.

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