References to the "Company," "our," "us" or "we" refer to Bright Lights
Acquisition Corp. The following discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the audited financial statements and the notes related thereto which are
included in "Item 8. Financial Statements and Supplementary Data" of this Annual
Report on Form 10-K. Certain information contained in the discussion and
analysis set forth below includes forward-looking statements. Our actual results
may differ materially from those anticipated in these forward-looking statements
as a result of many factors. Certain information contained in the discussion and
analysis set forth below includes forward-looking statements. Our actual results
may differ materially from those anticipated in these forward-looking statements
as a result of many factors, including those set forth under "Cautionary Note
Regarding Forward-Looking Statements and Risk Factor Summary," "Item 1A. Risk
Factors" and elsewhere in this Annual Report on Form 10-K.
Overview
We are a blank check company formed under the laws of the State of Delaware on
September 15, 2020, for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or other similar
business combination with one or more businesses. We intend to effectuate our
Business Combination using cash from the proceeds of the Initial Public Offering
and the sale of the Private Placement Warrants, our capital stock, debt or a
combination of cash, stock 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.
Recent Developments
First Amendment to Business Combination Agreement
On January 10, 2022, the parties to the Business Combination Agreement (the
"BCA"), dated as of November 22, 2021, by and among the Company, Bright Lights
Parent Corp., a Delaware corporation and a direct wholly owned subsidiary of the
Company ("ParentCo"), Mower Intermediate Holdings, Inc., a Delaware corporation
and a direct wholly owned subsidiary of the Company ("Intermediate Holdco"),
Mower Merger Sub Corp., a Delaware corporation and a direct wholly owned
subsidiary of ParentCo ("Merger Sub Corp"), Mower Merger Sub 2, LLC, a Delaware
limited liability company and a direct wholly owned subsidiary of Intermediate
Holdco ("Merger Sub LLC"), and Manscaped, LLC, a Delaware limited liability
company ("Manscaped") entered into the First Amendment to Business Combination
Agreement (the "BCA Amendment"). The BCA Amendment provides that each of the
outstanding Company LLC Units (as defined in the BCA) and the shares issuable
pursuant to the applicable earnout milestone will be treated as converted to
ParentCo Class A common stock, as applicable, issued and to be taken into
account in calculating the per share price for purposes of determining whether
any earnout milestone has been achieved in connection with certain transactions
where all or substantially all the holders of outstanding shares of ParentCo
Class A common stock have such shares converted, exchanged or otherwise replaced
with the right to receive cash, securities or other property. Additionally,
pursuant to the BCA Amendment, the definition of "Earnout Consideration" is
amended with respect to each holder of ParentCo Class A common stock and each
holder of restricted stock units of ParentCo to equal a portion of the available
earnout shares or the available earnout restricted stock units, respectively, as
determined by the Board of Managers of Manscaped. The BCA Amendment also removes
the definition of "Earnout Pro Rata Portion". The BCA Amendment also revises the
figure in Section 2.4(a) of the BCA to read "22,244,958 Company LLC Units" and
amends Section 6.3(a) of the BCA such that, if the registration statement filed
in connection with the parties' business combination is not effective by
February 15, 2022, Manscaped shall act in good faith to deliver to the Company
its audited financial statements as of and for the years ended December 31,
2021, as soon as reasonably practicable following such date. The BCA Amendment
is filed as Exhibit 2.1 to our Current Report on Form 8-K as filed with the SEC
on January 10, 2022, and the foregoing description thereof is qualified in its
entirety by reference to the full text of the BCA Amendment.
First Amendment to Sponsor Support Agreement
On January 10, 2022, the parties to the Sponsor Support Agreement entered into
the First Amendment to Sponsor Support Agreement (the "SSA Amendment"). Pursuant
to the SSA Amendment, the definition of "Earnout Strategic Transaction Price,"
which is the price used to determine whether the shares owned by the Sponsor
that, as part of the transactions contemplated by the BCA, as amended, are to be
subjected to potential forfeiture to ParentCo for no consideration until the
occurrence of certain earnout vesting conditions (such shares, the "Sponsor
Earnout Shares"), will vest in connection with certain transactions, was amended
such that the Sponsor Earnout Shares to be issued are to be taken into account
when determining the Earnout Strategic Transaction Price. The SSA Amendment is
filed as Exhibit 10.1 to our Current Report on Form 8-K as filed with SEC on
January 10, 2022, and the foregoing description thereof is qualified in its
entirety by reference to the full text of the SSA Amendment.
42
Working Capital Loan
On January 18, 2022, the Company entered into a Convertible Promissory Note (the
"Working Capital Loan") with the Sponsor. Pursuant to the Working Capital Loan,
the Sponsor agreed to loan to the Company up to $1.5 million to be used for
working capital purposes. In December 2021, the Sponsor advanced $200,000 to the
Company for incurred expenses, which advance is deemed to have been a drawdown
under the Working Capital Loan. Up to $1.5 million of the loans may be settled
in whole warrants to purchase Class A common stock of the Company at a
conversion price equal to $1.00 per warrant. The warrants are identical to the
Private Placement Warrants. The loans do not bear any interest, and will be
repayable by the Company to the Sponsor upon the earlier of the date by which
the Company must complete a Business Combination pursuant to its amended and
restated certificate of incorporation (as amended from time to time) and the
consummation of the Business Combination between the Company, the Company's
subsidiaries and Manscaped. If the Company completes a Business Combination, the
Company would repay the Working Capital Loans out of the proceeds of the Trust
Account released to the Company. 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, the Company may use a portion of 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 Loan is filed as Exhibit 10.1 to our Current Report
on Form 8-K as filed with the SEC on January 18, 2022, and the foregoing
description thereof is qualified in its entirety by reference to the full text
of the Working Capital Loan.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities from inception through December 31, 2021 were
organizational activities and those necessary to prepare for the Initial Public
Offering, described below, and identifying a target company for a Business
Combination. 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 year ended December 31, 2021, we had a net loss of $1,341,378, which
consists of operational and due diligence costs of $7,177,176, a loss on the
initial issuance of the Private Placement Warrants of $1,716,000 and transaction
costs associated with the Initial Public Offering of $788,627, offset by
interest earned on marketable securities held in the Trust Account of $14,425
and changes in the fair value of warrant liabilities of $8,326,000.
For the period from September 15, 2020 (inception) through December 31, 2020, we
had net loss of $4,251, which consisted of formation costs.
Liquidity and Capital Resources
On January 11, 2021, we consummated the Initial Public Offering of 23,000,000
Units at $10.00 per Unit, generating gross proceeds of $230,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 6,600,000 Private Placement Warrants at a price of $1.00 per Private
Placement Warrant in a private placement to the Sponsor generating gross
proceeds of $6,600,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Units, a total of $230,000,000 was placed in
the Trust Account. We incurred $12,301,684 in Initial Public Offering related
costs, including $4,325,000 of underwriting fees, $7,568,750 of deferred
underwriting fees and $407,934 of other costs.
For the year ended December 31, 2021, cash used in operating activities was
$2,004,860. Net loss of $1,341,378 was affected by the change in fair value of
warrant liabilities of $8,326,000, transaction costs associated with Initial
Public Offering of $788,627, a loss on the initial issuance of the Private
Placement Warrants of $1,716,000 and interest earned on marketable securities
held in the Trust Account of $14,425. Changes in operating assets and
liabilities provided $5,172,316 of cash for operating activities.
For the period from September 15, 2020 (inception) through December 31, 2020,
cash used in operating activities was $132. Net loss of $4,251 was affected by
the change in operating assets and liabilities which provided $4,119 of cash for
operating activities.
43
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account (less
deferred underwriting commissions and income taxes payable), to complete our
Business Combination. To the extent that our capital stock 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 target business or businesses, make other
acquisitions and pursue our growth strategies.
As of December 31, 2021, we had cash of $87,074. 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, and 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 $1.00 per warrant, at the option of the lender. The warrants would be
identical to the Private Placement Warrants.
Going Concern
In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standard Board's Accounting Standards
Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability
to Continue as a Going Concern," we have determined that the liquidity condition
raises substantial doubt about the Company's ability to continue as a going
concern through at least one year from issuance date of these financial
statements. These financial statements do not include any adjustments relating
to the recovery of the recorded assets or the classification of the liabilities
that might be necessary should the Company be unable to continue as a going
concern.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2021. 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, an agreement to pay the
Sponsor a monthly fee of $10,000 for office space, secretarial, and
administrative support services. We began incurring these fees on January 7,
2021 and will continue to incur these fees monthly until the earlier of the
completion of the Business Combination and our liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Unit, up to
$7,568,750 in the aggregate. 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. Certain investors identified by our Sponsor may purchase units in
this offering at the initial public offering price. The underwriters did not
receive any underwriting discounts or commissions on units sold in this offering
that were purchased by certain investors identified by the Sponsor.
44
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
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 financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have not identified any critical accounting policies.
Warrant Liabilities
The Company accounts for the Public Warrants and Private Placement Warrants
(together, the "Warrants") in accordance with the guidance contained in ASC
815-40. The Warrants are not considered indexed to the Company's own common
stock, and as such, the Warrants do not meet the criteria for equity treatment
and must be recorded as liabilities. The Private Placement Warrants and the
Public Warrants for periods where no observable traded price was available were
valued using the Modified Monte Carlo Simulation and Modified Black Scholes
option pricing models.
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Common stock subject to mandatory
redemption is classified as a liability instrument and measured at fair value.
Conditionally redeemable common stock (including 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) is classified as temporary equity. At all other times, common stock is
classified as stockholders' equity. Our common stock features certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, common stock subject to
possible redemption is presented at redemption value as temporary equity,
outside of the stockholders' equity section of our balance sheets.
Net Loss Per Common Share
Net loss per common share is computed by dividing net loss by the weighted
average number of common stock outstanding during the period. We apply the
two-class method in calculating net loss per common share. Accretion associated
with the redeemable shares of Class A common stock is excluded from net loss per
common share as the redemption value approximates fair value.
45
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU
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)
("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.
We adopted ASU 2020-06 and the adoption did not have an impact on our 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 financial statements.
© Edgar Online, source Glimpses
BRIGHT LIGHTS ACQUISITION CORP. 
