References to the "Company," "our," "us" or "we" refer to Executive Network
Partnering Corporation. The following discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the unaudited condensed 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.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form
10-Q
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"). We have
based these forward- looking statements on our current expectations and
projections about future events. These forward-looking statements are subject to
known and unknown risks, uncertainties and assumptions about us that may cause
our actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"should," "could," "would," "expect," "plan," "anticipate," "believe,"
"estimate," "continue," or the negative of such terms or other similar
expressions. Such statements include, but are not limited to, possible
partnering transactions and the financing thereof, and related matters, as well
as all other statements other than statements of historical fact included in
this Form
10-Q.
Factors that might cause or contribute to such a discrepancy include, but are
not limited to, those described in our other Securities and Exchange Commission
("SEC") filings.
Overview
We are a blank check company incorporated in Delaware on June 22, 2020 for the
purpose of identifying a company to partner with in order to effectuate a
merger, share exchange, asset acquisition, share purchase, reorganization or
similar partnering transaction with one or more businesses ("Partnering
Transaction"). We may pursue a Partnering Transaction in any business or
industry but expect to focus on a business where we believe our strong network,
operational background, and aligned economic structure will provide us with a
competitive advantage. Our sponsor is ENPC Holdings, LLC, a Delaware limited
liability company (our "Sponsor").
Our registration statements for our initial public offering (the "Initial Public
Offering") became effective on September 15, 2020. On September 18, 2020, we
consummated the Initial Public Offering of 16,560,000 (41,400,000 after giving
effect to the Stock Split) CAPS
™
(with respect to the Class A common stock included in the CAPS
™
being offered, the "Public Shares"), which included 2,160,000 CAPS
™
(5,400,000 CAPS
™
after giving effect to the Stock Split) issued as a result of the underwriters'
exercise in full of their over-allotment option, at $25.00 per CAPS
™
($10.00 per CAPS
™
after giving effect to the Stock Split), generating gross proceeds of
$414.0 million, and incurring offering costs of approximately $4.8 million.
Concurrently with the closing of the Initial Public Offering, we completed the
private sale of 245,600 (614,000 after giving effect to the Stock Split) private
placement CAPS
™
("Private Placement CAPS
™
"), at a price of $25.00 per Private Placement CAPS
™
($10.00 per Private Placement CAPS
™
after giving effect to the Stock Split) to the Sponsor, generating gross
proceeds to the Company of approximately $6.1 million.
Upon the closing of the Initial Public Offering and the sale of Private
Placement CAPS
™
, $414.0 million ($10.00 per CAPS
™
after giving effect to the Stock Split) of the net proceeds of the sale of the
CAPS
™
in the Initial Public Offering and the Private Placement were placed in a trust
account ("Trust Account") located in the United States with Continental Stock
Transfer & Trust Company acting as trustee, and held as cash or invested only in
U.S. "government securities," within the meaning set forth in Section 2(a)(16)
of the Investment Company Act, with a maturity of 185 days or less, or in money
market funds meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of
Rule
2a-7
under the Investment Company Act, which invest only in direct U.S. government
treasury obligations, as determined by us, until the earlier of: (i) the
completion of a Partnering Transaction and (ii) the distribution of the Trust
Account as described below.

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We have 24 months from the closing of the Initial Public Offering, or
September 18, 2022 (or 27 months, or December 18, 2022, if we have executed a
letter of intent, agreement in principle or definitive agreement for the
Partnering Transaction within 24 months) to complete its initial Partnering
Transaction (the "Partnering Period"). If we do not complete a Partnering
Transaction within this period of time (and stockholders do not approve an
amendment to the certificate of incorporation to extend this date), we will
(i) cease all operations except for the purpose of winding up, as promptly as
reasonably possible but not more than ten business days thereafter, redeem the
Public Shares, at a
per-share
price, payable in cash, of $25.00, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the remaining stockholders
and our board of directors, liquidate and dissolve, subject in the case of
clauses (ii) and (iii), to our obligations under Delaware law to provide for
claims of creditors and in all cases subject to the other requirements of
applicable law.
Results of Operations
Our entire activity since inception through June 30, 2021 related to our
formation, the preparation for the Initial Public Offering, and since the
closing of the Initial Public Offering, the search for a prospective initial
Partnering Transaction. We have neither engaged in any operations nor generated
any revenues to date. We will not generate any operating revenues until after
completion of our initial Partnering Transaction. We will generate
non-operating
income in the form of interest income on investments held in Trust Account. We
expect to 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.
For the three months ended June 30, 2021, we had a net loss of approximately
$1.4 million, which consisted of approximately $264,000 in general and
administrative expenses, $60,000 in related party administrative fee,
approximately $50,000 of franchise tax expense and approximately $1.1 million
loss from change in fair value of warrant liabilities, partially offset by
approximately $10,000 of interest income from investments held in Trust Account.
For the six months ended June 30, 2021, we had net income of approximately
$200,000, which consisted of approximately $939,000 gain from change in fair
value of warrant liabilities and approximately $21,000 interest income from
investments held in Trust Account, partially offset by $541,000 in general and
administrative costs, $120,000 in related party administrative fee and
approximately $99,000 of franchise tax expense.
For the period from June 22, 2020 (inception) through June 30, 2020, we had a
net loss of approximately $12,000, which consisted of approximately $8,000 in
general and administrative expenses and approximately $4,000 of franchise tax
expense.
Liquidity and Capital Resources
As of June 30, 2021, we had approximately $371,000 in our operating bank
account, working capital of approximately $277,000 and investments held in the
Trust Account of approximately $414.0 million. Interest income on the balance in
the Trust Account may be used by us to pay franchise and income tax obligations.
We intend to use substantially all of the funds held in the Trust Account to
complete the initial Partnering Transaction and to pay our expenses relating
thereto. To the extent that our capital stock or debt is used, in whole or in
part, as consideration to complete the initial Partnering Transaction, 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.
Our liquidity needs up to the closing of the Initial Public Offering and the
sale of Private Placement CAPS
™
had been satisfied through a capital contribution of $25,000 from our Sponsor to
purchase Class F and Class B common stock, a loan under our note agreement with
our Sponsor of approximately $171,000 (the "Note") to cover for offering costs
in connection with the Initial Public Offering, and the net proceeds from the
consummation of the Private Placement not held in the Trust Account. We fully
repaid the Note on September 22, 2020. In addition, in order to finance
transaction costs in connection with a Partnering Transaction, our officers,
directors and initial stockholders may, but are not obligated to, provide us
working capital loans. To date, there were no amounts outstanding under any
working capital loans.

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Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity from our Sponsor or an affiliate of our Sponsor,
or our officers and directors to meet our needs through the earlier of the
consummation of a Partnering Transaction or one year from this filing. Over this
time period, we will be using these funds for paying existing accounts payable,
identifying and evaluating prospective initial Partnering Transaction
candidates, performing due diligence on prospective target businesses, paying
for travel expenditures, selecting the target business to merge with or acquire,
and structuring, negotiating and consummating the Partnering Transaction.
We continue to evaluate the impact of the
COVID-19
pandemic and have concluded that the specific impact is not readily determinable
as of the date of the balance sheet. The unaudited condensed financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities,
other than an agreement to pay Administrative Services Agreement fees to our
Sponsor that total $20,000 per month for office space, secretarial and
administrative services provided to members of our management team. The Company
incurred $60,000 and $120,000 in expenses in connection with such services
during the three and six months ended June 30, 2021 as reflected in the
accompanying unaudited condensed statements of operations, respectively.
Critical Accounting Policies
This management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of our financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses and the disclosure of contingent assets and liabilities in
our financial statements. On an ongoing basis, we evaluate our estimates and
judgments, including those related to fair value of financial instruments and
accrued expenses. We base our estimates on historical experience, known trends
and events and various other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. The Company has identified the following as its
critical accounting policies:
Class A Common Stock Subject to Possible Redemption
Class A common stock subject to mandatory redemption (if any) is classified as a
liability instrument and is measured at fair value. Conditionally redeemable
Class A common stock (including Class A 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 the Company's control)
is classified as temporary equity. At all other times, Class A common stock is
classified as stockholders' equity. Our Class A common stock features certain
redemption rights that are considered to be outside of our control and subject
to the occurrence of uncertain future events. Accordingly, at June 30, 2021 and
December 31, 2020, 39,931,898 and 39,911,945 shares of Class A common stock
subject to possible redemption are presented as temporary equity, respectively,
outside of the stockholders' equity section of the Company's unaudited condensed
balance sheets.
Net Income (Loss) per Share of Common Stock
Our unaudited condensed statements of operations include a presentation of
income (loss) per share of Class A common stock subject to redemption in a
manner similar to the
two-class
method of income (loss) per share. Net income per share of redeemable Class A
common stock, basic and diluted, is calculated by dividing the investment income
earned on the Trust Account by the weighted average number of redeemable Class A
common stock outstanding for the periods. Net loss per shares of nonredeemable
Class A, Class B and Class F common stock, basic and diluted, is calculated by
dividing the net income (loss), less income attributable to redeemable Class A
common stock, by the weighted average number of nonredeemable Class A, Class B
and Class F common stock outstanding for the periods.

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The calculation of diluted net income (loss) per share of common stock does not
consider the effect of the warrants issued in connection with the (i) Initial
Public Offering, (ii) exercise of over-allotment and (iii) Private Placement
since the exercise price of the warrants is in excess of the average common
stock price for the period and therefore the inclusion of such warrants would be
anti-dilutive.
Derivative Warrant Liabilities
We do not use derivative instruments to hedge its exposures to cash flow, market
or foreign currency risks. Management evaluates all of our financial
instruments, including issued warrants to purchase its Class A common stock, to
determine if such instruments are derivatives or contain features that qualify
as embedded derivatives, pursuant to ASC 480 and ASC
815-15.
The classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is
re-assessed
at the end of each reporting period.
We issued 10,350,000 warrants to purchase Class A common stock to investors in
our Initial Public Offering, including the over-allotment, and simultaneously
issued 153,500 Private Placement Warrants. All of our outstanding warrants are
recognized as derivative liabilities in accordance with ASC
815-40.
Accordingly, we recognize the warrant instruments as liabilities at fair value
and adjust the instruments to fair value at each reporting period. The
liabilities are 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 fair value of the warrants issued
in connection with the Initial Public Offering was initially measured using a
Monte-Carlo simulation model and subsequently been measured based on the listed
market price of such warrants at each measurement date when separately listed
and traded. The fair value of the warrants issued in connection with the Private
Placement have been estimated using a Black-Scholes Option Pricing model at each
measurement date. The determination of the fair value of the warrant liability
may be subject to change as more current information becomes available and
accordingly the actual results could differ significantly. Derivative warrant
liabilities are classified as
non-current
liabilities as their liquidation is not reasonably expected to require the use
of current assets or require the creation of current liabilities.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No.
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):
Accounting for Convertible Instruments and Contracts in an Entity's Own Equity
("ASU
2020-06"),
which simplifies accounting for convertible instruments by removing major
separation models required under current U.S. GAAP. The ASU also removes certain
settlement conditions that are required for equity-linked contracts to qualify
for the derivative scope exception, and it simplifies the diluted earnings per
share calculation in certain areas. We adopted ASU
2020-06
on January 1, 2021. Adoption of the ASU did not impact our financial position,
results of operations or cash flows.
Our management does not believe that any recently issued, but not yet effective,
accounting standards updates, if currently adopted, would have a material effect
on the accompanying unaudited condensed financial statements.
Off-Balance
Sheet Arrangements
As of June 30, 2021, we did not have any
off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for
non-emerging
growth companies. As a result, the financial statements may not be comparable to
companies that comply with new or revised accounting pronouncements as of public
company effective dates.


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Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of
non-emerging
growth public companies under the Dodd-Frank Wall Street Reform and Consumer
Protection Act, (iii) comply with any requirement that may be adopted by the
PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's
report providing additional information about the audit and the financial
statements (auditor discussion and analysis) and (iv) disclose certain executive
compensation related items such as the correlation between executive
compensation and performance and comparisons of the CEO's compensation to median
employee compensation. These exemptions will apply for a period of five years
following the completion of our Initial Public Offering or until we are no
longer an "emerging growth company," whichever is earlier.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule
12b-2
of the Exchange Act and are not required to provide the information otherwise
required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including
our principal executive officer and principal financial and accounting officer,
we conducted an evaluation of the effectiveness of our disclosure controls and
procedures as of the end of the fiscal quarter ended June 30, 2021, as such term
is defined in Rules
13a-15(e)
and
15d-15(e)
under the Exchange Act. Based upon their evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures (as defined in Rules
13a-15
(e) and
15d-15
(e) under the Exchange Act) were not effective as of June 30, 2021, due solely
to the material weakness in our internal control over financial reporting
described in "Management's Report on Internal Control over Financial Reporting"
included in our Annual Report on Form 10K/A as filed with the SEC on June 1,
2021. In light of this material weakness, we performed additional analysis as
deemed necessary to ensure that our unaudited interim financial statements were
prepared in accordance with U.S. generally accepted accounting principles.
Accordingly, management believes that the financial statements included in this
Quarterly Report on Form 10Q present fairly in all material respects our
financial position, results of operations and cash flows for the period
presented.
Disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in our Exchange Act reports is recorded,
processed, summarized, and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to our management, including our principal executive officer and principal
financial officer or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended June 30, 2021 covered by this Quarterly
Report on Form
10-Q
that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting, as the circumstances that led to the
restatement of our previously filed financial statements described above had not
yet been identified. In light of the restatement of the previously filed
financial statements, we plan to enhance our processes to identify and
appropriately apply applicable accounting requirements to better evaluate and
understand the nuances of the complex accounting standards that apply to our
financial statements. We plan to further improve this process by enhancing
access to accounting literature, research materials and documents and increased
communication among our personnel and third-party professionals with whom we
consult regarding complex accounting applications. The elements of our
remediation plan can only be accomplished over time, and we can offer no
assurance that these initiatives will ultimately have the intended effects.

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