The following discussion and analysis of our 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. 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," "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
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 our 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.
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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 December 31, 2020 were
organizational activities, those necessary to prepare for our 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 our
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 period from July 7, 2020 (inception) through December 31, 2020, we had a
net loss of $339,804, which consists of operating costs of $457,991 offset by
interest income on marketable securities held in our trust account of $103,994
and an unrealized gain on marketable securities held in our trust account of
$14,193.
Liquidity and Capital Resources
Until the consummation of our initial public offering, our only source of
liquidity was an initial purchase of Class B common stock by our sponsor and
loans from our sponsor.
On September 18, 2020, we consummated our 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 our 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.
Following our 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 $414,000,000 was placed in our trust account and we had $1,107,022 of
cash held outside of our trust account, after payment of costs related to our
initial public offering, and available for working capital purposes. We incurred
$23,411,063 in transaction costs, including $8,280,000 of underwriting fees,
$14,490,000 of deferred underwriting fees and $641,063 of other offering costs.
For the period from July 7, 2020 (inception) through December 31, 2020, cash
used in operating activities was $501,235. Net loss of $339,804 was affected by
interest earned on marketable securities held in our trust account of $103,994,
an unrealized gain on marketable securities held in our trust account $14,193
and changes in operating assets and liabilities, which used $43,244 of cash from
operating activities.
As of December 31, 2020, we had cash and marketable securities held in our trust
account of $414,118,187. We intend to use substantially all of the funds held in
our trust account, including any amounts representing interest earned on our
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 our 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 our 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 $882,702 outside of our trust account.
We intend to use the funds held outside our 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, an affiliate of our
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
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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 our 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 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.
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 our 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 our 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 our initial public offering (but who are
members of the Financial Industry Regulatory Authority) that assist us in
consummating its initial Business Combination.
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:
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
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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 loss per
common share, basic and diluted for Class A redeemable common stock is
calculated by dividing the interest income earned on our trust account, net of
applicable taxes, by the weighted average number of shares of Class A redeemable
common stock outstanding for the periods. Net loss per common share, basic and
diluted for and Class B non-redeemable common stock is calculated by dividing
net loss less income attributable to Class A redeemable common stock, by the
weighted average number of shares of Class B 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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