References in this Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2022 (this "Report") to "we," "us" or the "Company" refer to
Bridgetown Holdings Limited. References to our "management" or our "management
team" refer to our officers and directors, and references to the "Sponsor" refer
to Bridgetown LLC. The following discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the financial statements and the notes thereto contained elsewhere in this
Report. Certain information contained in the discussion and analysis set forth
below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This 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 final prospectus for
its Initial Public Offering and Annual Report on Form 10-K, as filed with the
SEC on March 28, 2022. 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 in the Cayman Islands on May 27, 2020
formed for the purpose of effecting a Business Combination with one or more
businesses. While we may pursue a Business Combination target in any business or
industry, we are focusing our search on a target with operations or prospective
operations in the technology, financial services, or media sectors in Southeast
Asia. We intend to effectuate our Business Combination using cash derived from
the proceeds of the Initial Public Offering and the sale of the Private
Placement Warrants, our shares, debt or a combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities from inception through March 31, 2022 were
organizational activities and those necessary to prepare for the Initial Public
Offering, described below. We do not expect to generate any operating revenues
until after the completion of our initial Business Combination. We expect to
generate non-operating income in the form of interest income on marketable
securities held after the Initial Public Offering. We expect that we will 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 in connection with searching for, and completing, a Business
Combination.
For the three months ended March 31, 2022, we had a net income of $8,780,301,
which consisted of change in fair value of warrant liability of $9,065,237 and
interest earned on marketable securities held in the Trust Account of $66,267,
offset by the formation and operating cost of $351,203.
For the three months ended March 31, 2021, we had a net income of $41,950,401,
which consisted of change in fair value of warrant liability of $42,301,216 and
interest earned on marketable securities held in the Trust Account of $161,690,
offset by the formation and operating cost of $512,505.
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Liquidity and Going Concern Consideration
On October 20, 2020, we consummated the Initial Public Offering of 55,000,000
Units at a price of $10.00 per Unit, generating gross proceeds of $550,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 6,000,000 Private Placement Warrants to the Sponsor at a price of
$1.50 per Private Placement Warrant generating gross proceeds of $9,000,000.
On October 29, 2020, the Company issued an additional 4,499,351 Units issued for
total gross proceeds of $44,993,510 in connection with the underwriters' partial
exercise of their over-allotment option. Simultaneously with the partial closing
of the over-allotment option, we also consummated the sale of an additional
449,936 Private Placement Warrants at $1.50 per Private Placement Warrant,
generating total proceeds of $674,902.
Following the Initial Public Offering, the partial exercise of their
over-allotment option and the sale of the Private Placement Warrants, a total of
$594,993,510 was placed in the Trust Account. We incurred $26,628,771 in
transaction costs, including $8,174,902 of underwriting fees net of $2,724,968
reimbursed from the underwriters, $17,849,805 of deferred underwriting fees and
$604,064 of other offering costs.
For the three months ended March 31, 2022, cash used in operating activities was
$204,575. Net income of $8,780,301 was affected by change in fair value of
warrant liability of $9,065,237, and interest earned on marketable securities
held in the Trust Account of $66,267. Changes in operating assets and
liabilities provided $146,628 of cash from operating activities.
For the three months ended March 31, 2021, cash used in operating activities was
$131,530. Net income of $41,950,401 was affected by change in fair value of
warrant liability of $42,301,216, and interest earned on marketable securities
held in the Trust Account of $161,690. Changes in operating assets and
liabilities provided $380,975 of cash from operating activities.
As of March 31, 2022, we had cash and marketable securities held in the Trust
Account of $595,516,789. We intend to use substantially all of the funds held in
the Trust Account, including any amounts representing interest earned on the
Trust Account, which interest shall be net of taxes payable and excluding
deferred underwriting commissions, to complete our Business Combination. We may
withdraw interest from the Trust Account to pay taxes, if any. To the extent
that our share capital or debt is used, in whole or in part, as consideration to
complete a Business Combination, the remaining proceeds held in the Trust
Account will be used as working capital to finance the operations of the target
business or businesses, make other acquisitions and pursue our growth
strategies.
As of March 31, 2022, we had cash of $451,552. We intend to use the funds held
outside the Trust Account primarily to identify and evaluate target businesses,
perform business due diligence on prospective target businesses, travel to and
from the offices, plants or similar locations of prospective target businesses
or their representatives or owners, review corporate documents and material
agreements of prospective target businesses, structure, negotiate and complete a
Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our Sponsor or an affiliate of our
Sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required. If we complete a Business Combination, we may
repay such loaned amounts out of the proceeds of the Trust Account released to
us. In the event that a Business Combination does not close, we may use a
portion of the working capital held outside the Trust Account to repay such
loaned amounts, but no proceeds from our Trust Account would be used for such
repayment. Up to $1,500,000 of such loans may be convertible into warrants, at a
price of $1.50 per warrant, at the option of the lender. The warrants would be
identical to the Private Placement Warrants.
On July 9, 2020, the Company issued the Promissory Note, an unsecured promissory
note to the Sponsor, pursuant to which the Company could borrow up to an
aggregate principal amount of $300,000. The Promissory Note was non-interest
bearing and payable on the earlier of (i) December 31, 2020 or (ii) the
completion of the Initial Public Offering. As of March 31, 2022 and December 31,
2021, there was $300,000 outstanding, which is currently due on demand.
On December 15, 2021, the Second Promissory Note, an additional unsecured
promissory note of $500,000 was signed. The Second Promissory Note is due on the
earlier of (i) the date on which the Company consummates an initial business
combination or (ii) the date that the winding up of the Company is effective. On
February 8, 2022, the Company signed the Third Promissory Note, an unsecured
promissory note to the Sponsor of $500,000. The Third Promissory Note carries no
interest and is due on the earlier of (i) the date on which the Company
consummates an initial business combination or (ii) the date that the winding up
of the Company is effective. The Sponsor has waived rights to the Trust Account
under all notes. As of March 31, 2022 and December 31, 2021, there was
$1,000,000 and $500,000, respectively, outstanding under the Second and Third
Promissory Notes, respectively.
Going Concern
The Company intends to complete a Business Combination by October 20, 2022.
However, in the absence of a completed Business Combination, the Company may
require additional capital. If the Company is unable to raise additional
capital, it may be required to take additional measures to conserve liquidity.
The Company cannot provide any assurance that new financing will be available to
it on commercially acceptable terms, if at all.
In connection with the Company's assessment of going concern considerations in
accordance with ASU 2014-15, the Company has until October 20, 2022, to
consummate a Business Combination. It is uncertain that the Company will be able
to consummate a Business Combination by this time. If a Business Combination is
not consummated by this date, there will be a mandatory liquidation and
subsequent dissolution of the Company. Management has determined that the
liquidity condition and mandatory liquidation, should a Business Combination not
occur, and potential subsequent dissolution raises substantial doubt about the
Company's ability to continue as a going concern. No adjustments have been made
to the carrying amounts of assets or liabilities should the Company be required
to liquidate after October 20, 2022.
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Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of March 31, 2022. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than described below.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or
$17,849,805. A portion of such amount, not to exceed 25% of the total amount of
the deferred underwriting commissions held in the Trust Account, may be
re-allocated or paid to affiliated or unaffiliated third parties that assist in
consummating a Business Combination. The election to re-allocate or make any
such payments to affiliated or unaffiliated third parties will be solely at the
discretion of our management team, and such unaffiliated third parties will be
selected by the management team in their sole and absolute discretion. 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. We may, in its sole
discretion, pay up to an additional 1.25% in the aggregate of deferred
underwriting commissions to one or more of the underwriters based on the
underwriters' performance during the Business Combination process.
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in
conformity with GAAP 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 critical
accounting policies:
Warrant Liability
The Company accounts for warrants as either equity-classified or
liability-classified instruments based on an assessment of the warrant's
specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The
assessment considers whether the warrants are freestanding financial instruments
pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and
whether the warrants meet all of the requirements for equity classification
under ASC 815, including whether the warrants are indexed to the Company's own
ordinary shares and whether the warrant holders could potentially require "net
cash settlement" in a circumstance outside of the Company's control, among other
conditions for equity classification. This assessment, which requires the use of
professional judgment, is conducted at the time of warrant issuance and as of
each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of
additional paid-in capital at the time of issuance. For issued or modified
warrants that do not meet all the criteria for equity classification, the
warrants are required to be recorded as a liability at their initial fair value
on the date of issuance, and each balance sheet date thereafter. Changes in the
estimated fair value of the warrants are recognized as a non-cash gain or loss
on the consolidated statements of operations. The public warrants for periods
where no observable traded price was available are valued using a Monte Carlo
Simulation. The Private Placement Warrants are valued using a Modified Black
Scholes Model.
Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible redemption in accordance
with the guidance in ASC 480. Class A Ordinary shares subject to mandatory
redemption is classified as a liability instrument and is measured at fair
value. Conditionally redeemable ordinary shares (including ordinary shares that
features redemption rights that is either within the control of the holder or
subject to redemption upon the occurrence of uncertain events not solely within
our control) is classified as temporary equity. At all other times, ordinary
shares are classified as shareholders' equity. Our Class A ordinary shares
feature certain redemption rights that are considered to be outside of our
control and subject to occurrence of uncertain future events. Accordingly, Class
A ordinary shares subject to possible redemption is presented as temporary
equity, outside of the shareholders' deficit section of our balance sheets.
Net Income per Ordinary Share
Net income per ordinary share is computed by dividing net income by the weighted
average number of ordinary share outstanding for the period. The Company applies
the two-class method in calculating earnings per share. Accretion associated
with the redeemable Class A ordinary shares are excluded from earnings per share
as the redemption value approximates fair value.
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Recent Accounting Standards
In August 2020, the FASB issued ASU 2020-06 to simplify accounting for certain
financial instruments. ASU 2020-06 eliminates the current models that require
separation of beneficial conversion and cash conversion features from
convertible instruments and simplifies the derivative scope exception guidance
pertaining to equity classification of contracts in an entity's own equity. The
new standard also introduces additional disclosures for convertible debt and
freestanding instruments that are indexed to and settled in an entity's own
equity. ASU 2020-06 amends the diluted earnings per share guidance, including
the requirement to use the if-converted method for all convertible instruments.
ASU 2020-06 is effective January 1, 2022 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on January
1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06
would have on its financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our condensed financial statements.
Factors That May Adversely Affect Our Results of Operations
Our results of operations and our ability to complete an initial Business
Combination may be adversely affected by various factors that could cause
economic uncertainty and volatility in the financial markets, many of which are
beyond our control. Our business could be impacted by, among other things,
downturns in the financial markets or in economic conditions, increases in oil
prices, inflation, increases in interest rates, supply chain disruptions,
declines in consumer confidence and spending, the ongoing effects of the
COVID-19 pandemic, including resurgences and the emergence of new variants, and
geopolitical instability, such as the military conflict in the Ukraine. We
cannot at this time fully predict the likelihood of one or more of the above
events, their duration or magnitude or the extent to which they may negatively
impact our business and our ability to complete an initial business combination.
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