References to the "Company," "BowX Acquisition Corp.," "BowX," "our," "us" or
"we" refer to BowX Acquisition Corp. 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 consolidated 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 U.S. Securities
and Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated as a Delaware corporation on May 19,
2020. 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 not
limited to a particular industry or sector for purposes of consummating a
Business Combination. We are an emerging growth company and, as such, we are
subject to all of the risks associated with emerging growth companies.
Our sponsor is BowX Sponsor, LLC, a Delaware limited liability company of which
Vivek Ranadivé, the Company's Chairman and
Co-Chief
Executive Officer, and Murray Rode, our
Co-Chief
Executive Officer and Chief Financial Officer, are the managing members (the
"Sponsor"). The registration statement for the initial public offering (the
"Initial Public Offering") was declared effective on August 4, 2020. On
August 7, 2020, we consummated our Initial Public Offering of 42,000,000 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 $420.0 million, and incurring offering costs of approximately
$23.7 million, inclusive of $14.7 million in deferred underwriting commissions.
On August 10, 2020, the underwriter exercised the over-allotment option to
purchase an additional of 6,300,000 Units at the Initial Public Offering price
at $10.00 per Unit and we consummated the sale of such Units on August 13, 2020,
generating additional gross proceeds of $63.0 million, and incurring additional
offering costs of approximately $3.5 million, inclusive of approximately
$2.2 million in deferred underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 6,933,333 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants")
at a price of $1.50 per Private Placement Warrant in a private placement to
certain of the initial stockholders and certain funds and accounts managed by
subsidiaries of BlackRock, Inc (the "Private Placement Warrants Purchasers"),
generating gross proceeds of $10.4 million, and incurring offering costs of
approximately $8,000. In connection with the consummation of the sale of
additional Units pursuant to the underwriter's over-allotment option on
August 13, 2020, we sold an additional 840,000 Private Placement Warrants to the
Private Placement Warrants Purchasers, generating additional gross proceeds of
approximately $1.3 million.
Upon the closing of the Initial Public Offering and the Private
Placement(including the exercise of the over-allotment) $483.0 million ($10.00
per Unit) of the net proceeds of the sale of the Units in the Initial Public
Offering and 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 held as cash or invested only in 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 in money market funds
meeting certain conditions under the Investment Company Act, which invest only
in direct U.S. government treasury obligations, as determined by us, until the
earlier of: (i) the completion of a Business Combination and (ii) the
distribution of the Trust Account as described below.
We only have 24 months from the closing of the Initial Public Offering, or
August 7, 2022, to complete our initial Business Combination (the "Combination
Period"). If we do not complete a Business Combination within this period of
time (and stockholders do not approve an amendment to the amended and restated
certificate of incorporation to extend this date), 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

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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 taxes (less 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 liquidating
distributions, if any); and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the remaining stockholders and our
board of directors, dissolve and liquidate, subject in the case of clauses
(ii) and (iii) to our obligations under Delaware law to provide for claims of
creditors and the requirements of other applicable law. Our Sponsor and the
other holders of the Founder Shares (as defined below), excluding funds and
accounts managed by subsidiaries of BlackRock, Inc (the "initial stockholders"),
have entered into agreements with us, pursuant to which they have waived their
rights to participate in any redemption with respect to their Founder Shares in
the event we do not complete a Business Combination within the required time
period; provided, however, if the initial stockholders or any of our officers,
directors or affiliates acquire Public Shares in or after the Initial Public
Offering, they will be entitled to a pro rata share of the Trust Account upon
our redemption or liquidation in the event we do not complete a Business
Combination within the required time period. In the event of such distribution,
it is possible that the per share value in the Trust Account will be less than
the Initial Public Offering price per Unit in the Initial Public Offering.
Proposed Business Combination
On March 25, 2021, we, BowX Merger Subsidiary Corp., a Delaware corporation
("Merger Sub") and a direct, wholly owned subsidiary of the Company, and WeWork
Inc., a Delaware corporation ("WeWork"), entered into an Agreement and Plan of
Merger (the "Merger Agreement"), pursuant to which, among other transactions, on
the terms and conditions set forth therein, Merger Sub is to merge with and into
WeWork (the "First Merger"), with WeWork surviving the First Merger as a wholly
owned subsidiary of us (WeWork, in its capacity as the surviving corporation of
the First Merger, is sometimes referred to as the "Surviving Corporation"); and
as promptly as practicable and as part of the same overall transaction as the
First Merger, such Surviving Corporation will be merged with and into BowX
Merger Subsidiary II, LLC, a Delaware limited liability company ("Merger Sub
II") and a direct wholly owned subsidiary of us (the "Second Merger" and,
together with the First Merger, the "Mergers" and, collectively with the other
transactions described in the Merger Agreement, the "Business Combination"),
with Merger Sub II being the surviving entity of the Second Merger (Merger Sub
II, in its capacity as the surviving entity of the Second Merger, is sometimes
referred to herein as the "Surviving Entity"). In connection with the Closing
(as defined herein), BowX intends to change its name to WeWork Inc. (such
post-Closing entity, "New WeWork").
As a result of and upon the Closing, among other things, all outstanding shares
of WeWork capital stock of the First Merger (other than shares of WeWork Class C
common stock, treasury shares, the dissenting shares and shares of WeWork
capital stock reserved in respect of WeWork awards) will be cancelled in
exchange for the right to receive an aggregate of 655,300,000 shares of New
WeWork Class A common stock (at a deemed value of $10.00 per share) representing
a
pre-transaction
equity value of WeWork of approximately $7.9 billion (the "Aggregate Merger
Consideration"). An additional 80,000,000 shares of New WeWork Class A common
stock will be purchased (at a price of $10.00 per share) at the Closing by
certain third-party investors (collectively, the "PIPE Investors"), for a total
aggregate purchase price of $800,000,000 (the "PIPE Investment"). The proceeds
of the PIPE Investment, together with the amounts remaining in our trust
account.
Refer to the preliminary proxy statement/consent solicitation
statement/prospectus, included in the Registration Statements on Form
S-4
and
S-4/A
filed with the SEC on May 14, 2021, June 29, 2021 and July 21, 2021, for
additional information.
Liquidity and Capital Resources
As of June 30, 2021, we had approximately $506,000 in cash and working capital
deficit of approximately $2.9 million.
Through June 30, 2021 our liquidity needs were satisfied through a payment of
$25,000 from the Company's Chairman and
Co-Chief
Executive Officer to cover for certain offering costs in exchange for the
issuance of the Founder Shares, and the loan under the Note of approximately
$150,000 to us to cover for offering costs in connection with the Initial Public
Offering. Subsequent to the consummation of the Initial Public Offering on
August 7, 2020, the liquidity needs have been satisfied through the net proceeds
from the consummation of the Private Placement not held in the Trust Account. We
fully repaid the Note on August 7, 2020. In addition, in order to finance
transaction costs in connection with a Business Combination, our officers,
directors and initial stockholders may, but are not obligated to, provide us
Working Capital Loans. To date, there were no amounts outstanding under any
Working Capital Loans.
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 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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Management continues to evaluate the impact of the
COVID-19
pandemic and has concluded that the specific impact is not readily determinable
as of the date of the unaudited condensed consolidated financial statements. The
unaudited condensed consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Results of Operations
Our entire activity since inception through June 30, 2021 was in preparation for
our formation, the Initial Public Offering, and, since the closing of our
Initial Public Offering, a search for business combination candidates. We will
not be generating any operating revenues until the closing and completion of our
initial Business Combination.
For the three months ended June 30, 2021, we had net loss of approximately
$11.2 million, which consisted of approximately $1.8 million in general and
administrative expenses, approximately $9.4 million in change in fair value of
warrant liabilities and approximately $50,000 in franchise tax expense,
partially offset by approximately $12,000 of interest income from investments
held in Trust Account.
For the six months ended June 30, 2021, we had net loss of approximately
$16.8 million, which consisted of approximately $4.1 million in general and
administrative expenses, approximately $12.7 million in change in fair value of
warrant liabilities and approximately $99,000 in franchise tax expense,
partially offset by approximately $59,000 of interest income from investments
held in Trust Account.
For the period from May 19, 2020 (inception) through June 30, 2020, we had a net
loss of approximately $23,000, which consisted of $401 in general and
administrative expenses and approximately $23,000 of franchise tax expense.
Related Party Transactions
Founder Shares
On May 26, 2020, we issued 10,062,500 shares of Class B common stock to our
Company's Chairman and
Co-Chief
Executive Officer in exchange for a payment of $25,000 for offering costs made
by our Sponsor on behalf of our company (the "Founder Shares"). In July 2020,
the Chairman and
Co-Chief
Executive Officer transferred certain Founder Shares to our directors and
officers as well as to certain third parties. On August 4, 2020, we effected a
stock dividend of 0.2 shares of Class B common stock for each share of Class B
common stock outstanding, resulting in an aggregate of 12,075,000 Founder Shares
outstanding. All shares and associated amounts have been retroactively restated
to reflect the share dividend. On August 13, 2020, the underwriters exercised
their 15% over-allotment option in full; thus, the Founder Shares were no longer
subject to forfeiture.
The initial stockholders have 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 and
(B) subsequent to the initial Business Combination, (x) if the last reported
sale price of the 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 we complete a liquidation, merger, capital stock
exchange, reorganization or other similar transaction that results in all of our
stockholders having the right to exchange their shares of common stock for cash,
securities or other property.
Related Party Loans
On May 26, 2020, our Chairman and
Co-Chief
Executive Officer agreed to loan us up to an aggregate of $150,000 pursuant to
an unsecured promissory note (the "Note") to cover expenses related to the
Initial Public Offering. This loan was payable without interest upon the
completion of the Initial Public Offering. We borrowed up to the full amount of
the Note and received additional advances of approximately $45,000 advancement
of funds from such officer, for a total outstanding loan of approximately
$195,000. We fully repaid the Note and the advances to such officer on August 7,
2020.
In order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial Business Combination, the initial
stockholders, officers and directors and their affiliates may, but are not
obligated to, loan us funds as may be required (the "Working Capital Loans"). 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 at the
option of the lender. Such warrants would be identical to the Private Placement
Warrants. Except for the foregoing, the terms of such loans, if any, have not
been determined and no written agreements exist with respect to such loans to
date. To date, we did not have any borrowings under the Working Capital Loans.

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Contractual Obligations
Registration Rights
The initial stockholders and holders of the Private Placement Warrants are
entitled to registration rights pursuant to a registration rights agreement. The
initial stockholders and holders of the Private Placement Warrants will be
entitled to make up to three demands, excluding short form registration demands,
that we register such securities for sale under the Securities Act. In addition,
these holders will have "piggy-back" registration rights to include their
securities in other registration statements filed by us. We will bear the
expenses incurred in connection with the filing of any such registration
statements.
Underwriting Agreement
We granted the underwriter a
45-day
option to purchase up to 6,300,000 additional Units to cover any
over-allotments, at the Initial Public Offering price less the underwriting
discounts and commissions. On August 10, 2020, the underwriter fully exercised
the over-allotment option.
The underwriter was entitled to an underwriting discount of $0.20 per unit, or
$8.4 million in the aggregate, paid upon the closing of the Initial Public
Offering. In addition, $0.35 per unit, or $14.7 million in the aggregate will be
payable to the underwriter for deferred underwriting commissions. 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.
In connection with the consummation of the sale of Units pursuant to the
over-allotment option on August 13, 2020, the underwriter received an aggregate
of $1.26 million in underwriting fees and additional deferred underwriting
commissions of approximately $2.2 million.
Critical Accounting Policies
Investments Held in the Trust Account
Our portfolio of investments held in the Trust Account is comprised 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 and generally have
a readily determinable fair value, or a combination thereof. When the
investments held in the Trust Account are comprised of U.S. government
securities, the investments are classified as trading securities. When the
investments held in the Trust Account are comprised of money market funds, the
investments are recognized at fair value. Trading securities and investments in
money market funds are presented on the balance sheets at fair value at the end
of each reporting period. Gains and losses resulting from the change in fair
value of these securities are included in net gain from investments held in
Trust Account in the accompanying unaudited condensed consolidated statements of
operations. The estimated fair values of investments held in the Trust Account
are determined using available market information.
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." Shares of Class A common stock subject to mandatory redemption (if any)
are classified as liability instruments and are measured at fair value. Shares
of conditionally redeemable Class A common stock (including 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) are classified as temporary equity. At all other times,
shares of Class A common stock are 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, at June 30, 2021 and December 31, 2020, 43,231,098 and
44,911,184 shares of Class A common stock subject to possible redemption are
presented as temporary equity, outside of the stockholders' equity section of
the accompanying unaudited condensed consolidated balance sheet.
Net Income (Loss) per Share of Common Stock
Our unaudited condensed consolidated statements of operations include a
presentation of income (loss) per share of Class A common stock subject to
redemption in a manner similar to the
two-class
method of income (loss) per share. Net income per share of Class A common stock,
basic and diluted, is calculated by dividing the investment income earned on the
Trust Account, net of applicable franchise taxes, by the weighted average number
of Class A common stock outstanding for the periods. Net loss per shares of
Class B common stock, basic and diluted, is calculated by dividing the net loss,
less income attributable to Class A common stock, by the weighted average number
of Class B common stock outstanding for the periods.

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The calculation of diluted net income (loss) per share of common stock does not
consider the effect of the warrants issued in connection with the Initial Public
Offering and Private Placement since their inclusion would be anti-dilutive.
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of its financial instruments, including
issued shares purchase warrants, to determine if such instruments are
derivatives or contain features that qualify as embedded derivatives, pursuant
to ASC Topic 815, "Derivatives and Hedging" ("ASC 815"). 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 account for the warrants issued in connection with the Private Placement as
derivative warrant liabilities in accordance with ASC 815. Accordingly, we
recognize the warrant instruments as liabilities at fair value and adjusts the
instruments to fair value at each reporting period. The liabilities are subject
to
re-measurement
at each balance sheet date until exercised, and any change in fair value is
recognized in the statements of operations. The fair value of warrants issued by
us in connection with the Private Placement has been estimated using Public
Warrant trading prices at each measurement date. 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.
Recent Accounting Pronouncements
Our management does not believe there are any recently issued, but not yet
effective, accounting pronouncements, if currently adopted, that would have a
material effect on our 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 unaudited condensed 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.


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