References to "we", "us", "our" or the "Company" are to Blue Whale Acquisition
Corp I, except where the context requires otherwise. The following discussion
should be read in conjunction with our condensed financial statements and
related notes thereto included elsewhere in this report.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act 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
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. Words such as
"anticipate," "believe," "continue," "could," "estimate," "expect," "intends,"
"may," "might," "plan," "possible," "potential," "predict," "project," "should,"
"would" and variations thereof and similar words and expressions are intended to
identify such forward-looking statements. 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. 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 prospectus filed with
the SEC on August 4, 2021. 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 incorporated as a Cayman Islands exempted company
on March 10, 2021 for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with
one or more businesses (the "Business Combination"). While we may pursue an
initial Business Combination target in any industry or geographic location, we
intend to focus our search for a target business operating in the media,
entertainment and technology industries. Our sponsor is Blue Whale Sponsor I LLC
(the "Sponsor"), a Cayman Islands limited liability company.
Our registration statement for our initial public offering (the "Initial Public
Offering") was declared effective on August 3, 2021. On August 6, 2021, we
consummated our Initial Public Offering of 20,000,000 units (the "Units" and,
with respect to the Class A ordinary shares included in the Units offered, the
"Public Shares") at $10.00 per Unit, generating gross proceeds of $200 million
and incurring offering costs of approximately $12,164,514, consisting of
$4,000,000 of underwriting commission, $7,000,000 of deferred underwriting
commission, and $1,164,514 of other offering costs. The Company also granted the
underwriters in the IPO a
45-day
option to purchase up to an additional 3,000,000 Units to cover over-allotments,
if any.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement (the "Private Placement") of 3,000,000 Warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants"),
at a price of $2.00 per Private Placement Warrant to our Sponsor, generating
gross proceeds of $6 million.
Upon the closing of the Initial Public Offering and the Private Placement, an
aggregate of $200 million ($10.00 per Unit) of the net proceeds of the Initial
Public Offering and certain of the proceeds of the Private Placement was placed
in a trust account ("Trust Account") with Continental Stock Transfer & Trust
Company acting as trustee and invested in United States government treasury
bills with a maturity of 185 days or less or in money market funds investing
solely in U.S. Treasuries and meeting certain conditions under Rule
2a-7
under the Investment Company Act, as determined by the Company, until the
earlier of: (i) the completion of a Business Combination and (ii) the
distribution of funds in the Trust Account to the Company's shareholders, as
described below. Except with respect to interest earned on the funds held in the
trust account that may be released to us to pay franchise and income tax
obligations (less up to $100,000 of interest to pay dissolution expenses), the
proceeds from the Initial Public

                                       16

--------------------------------------------------------------------------------


Offering and the sale of the Private Placement Warrants 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 shareholder vote to amend the Company's Amended
and Restated Memorandum and Articles of Association (a) to modify the substance
or timing of its obligation to allow redemption in connection with the Company's
initial business combination or to redeem 100% of its public shares if the
Company does not complete its initial business combination within 24 months from
the closing of the Initial Public Offering or (b) with respect to any other
provisions relating to shareholders' rights or
pre-initial
business combination activity; and (iii) the redemption of the public shares if
the Company has not completed an initial business combination within 24 months
from the closing of the Initial Public Offering, subject to applicable law (the
"Combination Period"). The proceeds deposited in the trust account could become
subject to the claims of our creditors, if any, which could have priority over
the claims of our public stockholders.
If we are unable to complete a Business Combination within the Combination
Period, as such period may be extended, we will (i) cease all operations except
for the purpose of winding up; (ii) as promptly as reasonably possible but not
more than 10 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, divided by the number of then issued and outstanding public
shares, which redemption will completely extinguish public shareholders' rights
as shareholders (including the right to receive further liquidating
distributions, if any); and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining shareholders and our
board of directors, liquidate and dissolve, subject in each case to our
obligations under Cayman Islands law to provide for claims of creditors and the
requirements of other applicable law.
Results of Operations
Our only activities from inception through September 30, 2021 were those related
to our formation, the preparation for our Initial Public Offering and, since the
closing of the Initial Public Offering, the search for a prospective initial
Business Combination. We have neither engaged in any operations nor generated
any operating revenues to date. We will not generate any operating revenues
until after completion of our initial Business Combination, at the earliest. We
incurred expenses as a result of being a public company (including for legal,
financial reporting, accounting and auditing compliance), as well as for
expenses in connection with searching for a prospective initial Business
Combination.
For the three months ended September 30, 2021, we had a net income of
approximately $817,594, which consists of changes in the derivative warrant
liabilities of approximately $1,492,935, financing costs for our warrant
liabilities of approximately $342,640 and unrealized gain on investments held in
the Trust Account of approximately $5,000, partially offset by approximately
$337,701 in general and administrative costs.
Liquidity and Capital Resources
As of September 30, 2021, we had approximately $229,413,110 cash held in the
Trust Account. We intend to use substantially all of the funds held the Trust
Account, including any amounts, representing interest earned on the Trust
Account (less taxes payable (if applicable) and deferred underwriting
commissions) and the proceeds from the sale of the forward purchase shares to
complete our Business Combination. To the extend that our shares or debt is
used, in whole or in part, as consideration to complete our Business
Combination, the remaining proceeds held in the Trust Account will be used as
working capital to finance the operations of the post-Business Combination
entity, make other acquisitions and pursue our growth strategies.
As of September 30, 2021, we had cash of $372,788 held outside of the Trust
Account. We intend to use the funds held outside of the Trust Account primarily
to identify and evaluate target businesses, perform business due diligence on
prospective target businesses, travel to and from the offices, properties, or
similar locations of prospective target businesses or their representative or
owners, review corporate documents and material agreements of prospective target
businesses, and structure, negotiate and complete a Business Combination.
Prior to the completion of the Initial Public Offering, our liquidity needs were
satisfied through a payment from the Sponsor of $25,000 (see Note 6) for the
Founder Shares and borrowings under the Promissory Note of $300,000 (see Note
6). Subsequent to the consummation of the Initial Public Offering and Private
Placement, our liquidity needs have been satisfied from the proceeds from the
Initial Public Offering and Private Placement not held in the Trust Account.
During the interim period ended September 30, 2021, the Company has sustained
negative cash flows from operations and expects to continue to incur negative
cash flows from operations for at least the next twelve months from the filing
of this report. Consequently, substantial doubt about the Company's ability to
continue as a going concern existed as of September 30, 2021. In addition, in
order to finance transaction costs in connection with a Business Combination,
our Sponsor or an affiliate of our Sponsor, or our officers and directors may
provide us working capital loans ("Working Capital Loans"). On November 22, 2021
the Sponsor confirmed to the Company that it will provide any such Working
Capital Loans for at least the next twelve months. As of September 30, 2021,
there were no amounts outstanding under any Working Capital Loan.

                                       17

--------------------------------------------------------------------------------


Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity to meet its 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 the funds held outside of the Trust Account for
paying existing accounts payable, identifying and evaluating prospective
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.
Off-Balance
Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results
As of September 30, 2021, we did not have any
off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K
and did not have any commitments or contractual obligations other than
obligations disclosed herein.
Contractual Obligations
Administrative Services Agreement
Commencing on the date that our securities were first listed on Nasdaq through
the earlier of consummation of the initial Business Combination and the
liquidation, we agreed to pay our Sponsor $10,000 per month for office space,
secretarial and administrative services provided to us by an affiliate of our
Sponsor. There was no balance due to related party at September 30, 2021.
In addition, our Sponsor, officers and directors, or our respective affiliates
will be reimbursed for any
out-of-pocket
expenses incurred in connection with activities on our behalf such as
identifying potential target businesses and performing due diligence on suitable
Business Combinations. Our audit committee will review on a quarterly basis all
payments that were made by us to our Sponsor, executive officers or directors,
or our affiliates. Any such payments prior to an initial Business Combination
will be made using funds held outside the Trust Account. There was no balance
due to related party at September 30, 2021.
Registration Rights Agreement
The holders of the Founder Shares, Private Placement Shares, and any shares that
may be issued upon conversion of Working Capital Loans (and any Class A ordinary
shares issuable upon conversion of the Founder Shares) were entitled to
registration rights pursuant to a registration and shareholder rights agreement
signed upon the effective date of the Initial Public Offering. The holders of
these securities were entitled to make up to three demands, excluding short form
demands, that we register such securities. In addition, the holders had certain
"piggy-back" registration rights with respect to registration statements filed
subsequent to the completion of the initial Business Combination. We will bear
the expenses incurred in connection with the filing of any such registration
statements.
Underwriting Agreement
The Company granted the underwriters a
45-day
option to purchase up to 3,000,000 additional Units to cover over-allotments at
the Initial Public Offering price, less the underwriting discounts and
commissions.
The underwriters were paid a cash underwriting discount of 2.00% of the gross
proceeds of the Initial Public Offering, or $4,000,000. In addition, the
underwriters will be entitled to a deferred fee of three and half percent
(3.50%) of the gross proceeds of the Initial Public Offering, or $7,000,000. On
August 16, 2021, the underwriters partially exercised the over-allotment option
and purchased an additional 2,940,811 Over-Allotment Units, generating an
aggregate of gross proceeds of $29,480,110, incurred $588,162 in cash
underwriting fees and $1,029,284 in deferred underwriters' fees, and forfeited
the remainder of the option, which over-allotment closed on August 18, 2021. The
deferred fee was placed in the Trust Account and will be paid in cash upon the
closing of a Business Combination, subject to the terms of the underwriting
agreement.

                                       18

--------------------------------------------------------------------------------


Forward Purchase Agreement
The Company entered into a forward purchase agreement with MIC Capital Partners
(Public) Parallel Cayman, LP, an affiliate of the Sponsor, providing for the
purchase, in its sole discretion, an aggregate of up to 5,000,000 Units for an
aggregate purchase price of up to $50,000,000, or $10.00 per Unit, in a private
placement to close substantially concurrently with the closing of our initial
Business Combination. The forward purchase investor will determine in its sole
discretion the specific number of forward purchase Units it will purchase, if
any, pursuant to the forward purchase agreement. Each forward purchase Unit will
consist of one Class A ordinary share and
one-fourth
of one redeemable Warrant. The terms of the forward purchase Units will
generally be identical to the terms of the units being issued in the Initial
Public Offering, except that the securities underlying the forward purchase
Units will be subject to certain registration rights.
Critical Accounting Policies and Estimates
This management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with GAAP. The preparation of our 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 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. The company has identified
the following as its critical accounting policies:
Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to ASC 480
and 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.
We issued an aggregate of 5,000,000 ordinary shares warrants associated with
Units issued to investors in our Initial Public Offering and we issued 3,294,081
Private Placement Warrants. All of our outstanding warrants are recognized as
derivative liabilities in accordance with ASC
815-40.
Accordingly, we recognize the warrant instruments as liabilities at fair value
and adjust the instruments to fair value at each reporting period. The
liabilities are subject to remeasurement at each balance sheet date until
exercised, and any change in fair value is recognized in the Company's statement
of operations. The fair value of warrants issued in connection with the Initial
Public Offering and Private Placement were initially measured at fair value
using a binomial lattice model. The fair value of Warrants issued in connection
with our Initial Public Offering have subsequently been measured based on the
listed market price of such warrants, and the fair value of the Private
Placement Warrants have been estimated using a binomial lattice model each
measurement date.

                                       19

--------------------------------------------------------------------------------


Investments Held in Trust Account
The Company's portfolio of investments is comprised solely of U.S. government
securities, within the meaning set forth in Section 2(a)(16) of the Investment
Company Act, with a maturity of 185 days or less, or investments in money market
funds that invest in U.S. government securities, or a combination thereof. The
Company's investments held in the Trust Account are classified as trading
securities. Trading securities are presented on the balance sheet at fair value
at the end of each reporting period. Gains and losses resulting from the change
in fair value of these securities is included in net gain on investments held in
Trust Account in the accompanying statement of operations. The estimated fair
values of investments held in the Trust Account are determined using available
market information, other than for investments in open-ended money market funds
with published daily net asset values ("NAV"), in which case the Company uses
NAV as a practical expedient to fair value. The NAV on these investments is
typically held constant at $1.00 per unit.
Fair Value of Financial Instruments
Fair value measurements are based on the premise that fair value is an exit
price representing the amount that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants. As
such, fair value is a market-based measurement that should be determined based
on assumptions that market participants would use in pricing an asset or
liability. As a basis for considering such assumptions, the following three-tier
fair value hierarchy has been used in determining the inputs used in measuring
fair value:


Level 1   -   Quoted prices in active markets for identical assets or liabilities on
              the reporting date.

Level 2   -   Pricing inputs are based on quoted prices for similar instruments in
              active markets, quoted prices for identical or similar instruments in
              markets that are not active and model-based valuation techniques for
              which all significant assumptions are observable in the market or can be
              corroborated by observable market data for substantially the full term
              of the assets or liabilities.

Level 3   -   Pricing inputs are generally unobservable and include situations where
              there is little, if any, market activity for the investment. The inputs
              into the determination of fair value require management's judgment or
              estimation of assumptions that market participants would use in pricing
              the assets or liabilities. The fair values are therefore determined
              using factors that involve considerable judgment and interpretations,
              including, but not limited to, private and public comparables,
              third-party appraisals, discounted cash flow models, and fund manager
              estimates.

As of September 30, 2021, the recorded values of cash and cash held in the Trust Account, prepaid expenses, accounts payable, accrued expenses and accrued expenses - related party approximate the fair values due to the short-term nature of the instruments. Class A Ordinary shares Subject to Possible Redemption Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A 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 the Company's control) are classified as temporary equity. At all other times, Class A ordinary shares is classified as shareholders' equity. Our Class A ordinary shares features certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, at September 30, 2021, 22,940,811 shares of Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders' equity section of the Company's balance sheet.



                                       20

--------------------------------------------------------------------------------


Net Earnings (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 warrants sold in the Public Offering and
Private Placement to purchase an aggregate of 8,000,000 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 earnings (loss) per share
for Class A ordinary shares subject to redemption in a manner similar to the
two-class
method of earnings (loss) per share. Net income per common share, basic and
diluted, for Class A ordinary shares subject to redemption is calculated by
dividing the proportionate share of earnings 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 income or loss per share, basic and diluted, for
non-redeemable
ordinary shares is calculated by dividing the net income or loss, adjusted for
income or loss on marketable securities attributable to ordinary shares subject
to redemption, by the weighted average number of
non-redeemable
ordinary shares outstanding for the period.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. Section 102(b)(1) of the JOBS Act exempts emerging
growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a
Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the
new or revised financial accounting standards. The JOBS Act provides that a
company can elect to opt out of the extended transition period and comply with
the requirements that apply to
non-emerging
growth companies but any such an election to opt out is irrevocable. We have
elected to irrevocably opt out of such extended transition period, which means
that when a standard is issued or revised and it has different application dates
for public or private companies, we will adopt the new or revised standard at
the time public companies adopt the new or revised standard. This may make
comparison of our financial statements with another emerging growth company that
has not opted out of using the extended transition period difficult or
impossible because of the potential differences in accountant standards used.
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.

                                       21

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses