The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our 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/A. 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 "Special Note Regarding
Forward-Looking Statements," "Item 1A. Risk Factors" and elsewhere in this
Annual Report on Form 10-K/A.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations has been amended and restated to give effect to the restatement and
revision of our financial statements as of December 31, 2020 and for the period
from February 14, 2020 (inception) through December 31, 2020. We are restating
our historical financial results for such period to reclassify our Warrants as
derivative liabilities pursuant to ASC 815-40 rather than as a component of
equity as we had previously treated the Warrants. The impact of the restatement
is reflected in the Management's Discussion and Analysis of Financial Condition
and Results of Operations below. Other than as disclosed in the Explanatory Note
and with respect to the impact of the Restatement, no other information in this
Item 7 has been amended and this Item 7 does not reflect any events occurring
after the Original Filing. The impact of the restatement is more fully described
in Note 2 to our financial statements included in Item 15 of Part IV of this
Amendment and Item 9A: Controls and Procedures, both contained herein.
Overview
We are a blank check company formed under the laws of the State of Delaware on
February 14, 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.
Results of Operations
We have neither engaged in any operations (other than searching for a Business
Combination after our Initial Public Offering) nor generated any revenues to
date. Our only activities from February 14, 2020 (inception) through
December 31, 2020 were organizational activities, those necessary to prepare for
the Initial Public Offering, described below, and finding a target company for a
Business Combination. We do not expect to generate any operating revenues until
after the completion of our Business Combination. We generate non-operating
income in the form of interest income on marketable securities held after the
Initial Public Offering. We incur expenses as a result of being a public company
(for legal, financial reporting, accounting and auditing compliance), as well as
for due diligence expenses.
As a result of the restatement described in Note 2 of the notes to the financial
statements included herein, we classify the Warrants issued in connection with
our Initial Public Offering as liabilities at their fair value and adjust the
warrant instrument to fair value at each reporting period. This liability is
subject to re-measurement at each balance sheet date until exercised, and any
change in fair value is recognized in our statement of operations.
For the period from February 14, 2020 (inception) through December 31, 2020, we
had a net loss of $15,294,860, which consists of operating costs of $2,426,204,
changes in fair value of warrant liability of $12,406,208 and transaction costs
associated with our Initial Public Offering of $671,901, offset by interest
income on marketable securities held in the Trust Account of $201,441 and an
unrealized gain on marketable securities held in our Trust Account of $8,012.
Liquidity and Capital Resources
On July 7, 2020, we consummated the Initial Public Offering of 27,600,000 Units
at a price of $10.00 per Unit, which includes the full exercise by the
underwriters of the over-allotment option to purchase an additional 3,600,000,
generating gross proceeds of $276,000,000. Simultaneously with the closing of
the Initial Public Offering, we consummated the sale of 7,520,000 Private
Placement Warrants at a price of $1.00 per Private Placement Warrant in a
private placement to our stockholders, generating gross proceeds of $7,520,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option by the underwriters' and the sale of the Private Placement Warrants, a
total of $276,000,000 was placed in the Trust Account and we had $1,389,212 of
cash held outside of the Trust Account, after payment of costs related to the
Initial Public Offering, and available for working capital purposes. We incurred
$15,851,828 in transaction costs, including $5,520,000 of underwriting fees,
$9,660,000 of deferred underwriting fees and $671,828 of other offering costs.
For the period from February 14, 2020 (inception) through December 31, 2020,
cash used in operating activities was $861,345. Net loss of $15,294,860 was
affected by changes in fair value of warrant liability of $12,406,208,
transaction costs associated with our Initial Public Offering of $671,901,
interest earned on marketable securities held in the Trust Account of $201,441,
an unrealized gain on marketable securities of $8,012 and changes in operating
assets and liabilities, which provided $1,564,859 of cash from operating
activities.
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As of December 31, 2020, we had cash and marketable securities held in the Trust
Account of $276,209,453. We intend to use substantially all of the funds held in
the Trust Account, including any amounts representing interest earned on the
Trust Account to complete our Business Combination. We may withdraw interest to
pay franchise and income taxes. During the period ended December 31, 2020, we
did not withdraw any interest earned on the Trust Account. 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, 2020, we had cash of $491,827 outside of the Trust Account.
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, the Sponsor, an affiliate of the
Sponsor, or our officers and directors may, but are not obligated to, loan us
funds as may be required. If we complete a Business Combination, we would repay
such loaned amounts. 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, including as to exercise price,
exercisability and exercise period. The terms of such loans by our officers and
directors, if any, have not been determined and no written agreements exist with
respect to such loans. The loans would be repaid upon consummation of a Business
Combination, without interest.
On March 3, 2021, the Sponsor committed to provide us an aggregate of $1,500,000
in loans for working capital purpose.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2020. 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.
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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 an
affiliate of the Sponsor a monthly fee of $10,000 for office space, utilities
and secretarial and administrative support to the Company. We began incurring
these fees on July 1, 2020 and will continue to incur these fees monthly until
the earlier of the completion of the Business Combination and the Company's
liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $9,660,000
in the aggregate. The deferred fee will be waived by the underwriters in the
event that the Company does not complete a Business Combination, subject to the
terms of the underwriting agreement.
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 identified the following critical accounting policies:
Warrant Liability (restated, see Note 2)
We account for the Warrants in accordance with the guidance contained in ASC
815-40-15-7D and 7F under which the Warrants do not meet the criteria for equity
treatment and must be recorded as liabilities. Accordingly, we classify the
Warrants as liabilities at their fair value and adjust the Warrants to fair
value at each reporting period. This liability is subject to re-measurement at
each balance sheet date until exercised, and any change in fair value is
recognized in our statement of operations. The private placement warrants and
the public warrants for periods where no observable traded price was available
are valued using a Monte Carlo simulation. For periods subsequent to the
detachment of the public warrants from the units, the public warrant quoted
market price was used as the fair value as of each relevant date.
Class A Common Stock Subject to Possible Redemption
We account for our shares of Class A common stock subject to possible redemption
in accordance with the guidance in Accounting Standards Codification ("ASC")
Topic 480 "Distinguishing Liabilities from Equity." Shares of Class A common
stock subject to mandatory redemption is classified as a liability instrument
and is 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, the
Class A common stock subject to possible redemption is presented as temporary
equity, outside of the stockholders' equity section of our balance sheet.
Net Loss per Common Share
We apply the two-class method in calculating earnings per share. Net income
(loss) per common share, basic and diluted for Class A common stock subject to
possible redemption is calculated by dividing the interest income earned on the
Trust Account, net of applicable taxes, if any, by the weighted average number
of shares of Class A common stock subject to possible redemption outstanding for
the period. Net income (loss) per common share, basic and diluted for and
non-redeemable common stock is calculated by dividing net loss less income
attributable to Class A common stock subject to possible redemption, by the
weighted average number of shares of non-redeemable common stock outstanding for
the period presented.
Recent Accounting Standards
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.
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