References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Equity Distribution Acquisition Corp. References to our
"management" or our "management team" refer to our officers and directors.
References to the "Sponsor" refer to Equity Distribution Sponsor, 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 Quarterly 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 Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended (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 Quarterly Report 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 "expect," "believe," "anticipate,"
"intend," "estimate," "seek" and variations 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 Annual report on Form
10-K/A
filed with the U.S. Securities and Exchange Commission (the "SEC"). 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 formed under the laws of the State of Delaware on
July 7, 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 nor generated any revenues to date.
Our only activities from July 7, 2020 (inception) through June 30, 2021 were
organizational activities, those necessary to prepare for the Initial Public
Offering, described below, and the search for 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 expect to 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.
For the three months ended June 30, 2021, we had a net loss of $2,623,966, which
consists of a change in the fair value of warrant liability of $2,065,333,
operating costs of $546,257, which are comprised primarily of legal fees,
consulting fees, printing fees and franchise taxes, as well as an unrealized
loss on marketable securities held in Trust Account of $17,475, partially offset
by interest income on marketable securities held in the Trust Account of $5,099.
For the six months ended June 30, 2021, we had net income of $10,893,757, which
consists of a change in fair value of warrant liability of $12,598,533, and
interest earned on marketable securities held in Trust Account of $70,188,
partially offset by operating costs of $1,756,087, which are comprised primarily
of legal fees, consulting fees, printing fees and franchise taxes, as well as an
unrealized loss on marketable securities held in Trust Account of $17,475 and a
provision for income taxes of $1,402.
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, our only source of
liquidity was an initial purchase of Class B common stock by the Sponsor and
loans from our Sponsor.
On September 18, 2020, we consummated the Initial Public Offering of 41,400,000
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 5,400,000
Units, generating gross proceeds of $414,000,000. Simultaneously with the
closing of the Initial Public Offering, we consummated the sale of 6,853,333
Private Placement Warrants at a price of $1.50 per Private Placement Warrant in
a private placement to our Sponsor, generating gross proceeds of $10,280,000.

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For the six months ended June 30, 2021, cash used in operating activities was
$874,919. Net income of $10,893,757 was affected by the change in fair value of
warrant liability of $12,598,533 and interest earned on marketable securities
held in the Trust Account of $70,188 offset by an unrealized loss on marketable
securities held in Trust Account of $17,475 and changes in operating assets and
liabilities which provided $882,570 in cash from operating activities.
As of June 30, 2021, we had cash and marketable securities held in the Trust
Account of $414,033,273. 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 June 30, 2021, cash
withdrawn from the Trust Account to pay franchise and income taxes totaled
$137,627. 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 June 30, 2021, we had cash of $895,410 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.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking
in-depth
due diligence and negotiating a Business Combination are less than the actual
amount necessary to do so, we may have insufficient funds available to operate
our business prior to our Business Combination. Moreover, we may need to obtain
additional financing either to complete our Business Combination or because we
become obligated to redeem a significant number of our public shares upon
consummation of our Business Combination, in which case we may issue additional
securities or incur debt in connection with such Business Combination. Subject
to compliance with applicable securities laws, we would only complete such
financing simultaneously with the completion of our Business Combination. If we
are unable to complete our Business Combination because we do not have
sufficient funds available to us, we will be forced to cease operations and
liquidate the Trust Account. In addition, following our Business Combination, if
cash on hand is insufficient, we may need to obtain additional financing in
order to meet our obligations.
Off-Balance
Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance
sheet arrangements as of June 30, 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
On June 29, 2021, we issued an unsecured promissory note to our Sponsor (the
"Second Promissory Note"), pursuant to which, we may borrow up to an aggregate
principal amount of $2,500,000. The Second Promissory Note is non-interest
bearing and payable on the earlier of (i) September 18, 2022 or (ii) the
consummation of the Initial Business Combination. As of June 30, 2021, the
outstanding balance under the Second Promissory Note was $750,000 and the
remaining amount available to be drawn was $1,750,000.
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than the Second Promissory Note and
an agreement to pay an affiliate of the Sponsor a monthly fee of $10,000 for
office space and administrative support to the Company. We began incurring these
fees on September 15, 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
$14,490,000 in the aggregate. Subject to the terms of the underwriting
agreement, (i) the deferred fee will be placed in the Trust Account and released
to the underwriters only upon the completion of a Business Combination and
(ii) the deferred fee will be waived by the underwriters in the event that we do
not complete a Business Combination. Up to 50% of the deferred underwriting
commissions may be paid at the sole discretion of its management team to the
underwriters in the allocations determined by its management team and/or to
third parties not participating in the Initial Public Offering (but who are
members of the Financial Industry Regulatory Authority) that assist us in
consummating its initial Business Combination.

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Critical Accounting Policies
The preparation of condensed 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:
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 unaudited condensed
balance sheets.
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 Financial Accounting
Standards Board ("FASB") Accounting Standards Codification 480, Distinguishing
Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and Hedging ("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 common 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 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 statements of operations. The fair value of the warrants was
estimated using the publicly traded price of the Company's warrants.
Net Income (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 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 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 income (loss) less income
attributable to 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 recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
condensed financial statements.

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