References to the "Company," "our," "us" or "we" refer toExecutive 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 otherSecurities and Exchange Commission ("SEC") filings. Overview We are a blank check company incorporated inDelaware onJune 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 isENPC Holdings, LLC , aDelaware limited liability company (our "Sponsor"). Our registration statements for our initial public offering (the "Initial Public Offering") became effective onSeptember 15, 2020 . OnSeptember 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 inthe United States withContinental Stock Transfer & Trust Company acting as trustee, and held as cash or invested only inU.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 directU.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. 20 -------------------------------------------------------------------------------- Table of Contents We have 24 months from the closing of the Initial Public Offering, orSeptember 18, 2022 (or 27 months, orDecember 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 underDelaware 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 throughSeptember 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 endedSeptember 30, 2021 , we had net income of approximately$1.1 million , which consisted of approximately$1.5 million gain from change in fair value of warrant liabilities and approximately$10,000 interest income from investments held in Trust Account, partially offset by$308,000 in general and administrative costs,$180,000 in related party administrative fee and approximately$50,000 of franchise tax expense. For the three months endedSeptember 30, 2020 , we had net income of approximately$1.2 million , which consisted of approximately$1.5 million gain from change in fair value of warrant liabilities and approximately$1,000 interest income from investments held in Trust Account, partially offset by$45,000 in general and administrative costs and approximately$50,000 of franchise tax expense. For the nine months endedSeptember 30, 2021 , we had net income of approximately$1.3 million , which consisted of approximately$2.4 million gain from change in fair value of warrant liabilities and approximately$31,000 interest income from investments held in Trust Account, partially offset by$849,000 in general and administrative costs,$180,000 in related party administrative fee and approximately$150,000 of franchise tax expense. For the period fromJune 22, 2020 (inception) throughJune 30, 2020 , we had net income of approximately$1.2 million , which consisted of approximately$1.5 million gain from change in fair value of warrant liabilities and approximately$1,000 interest income from investments held in Trust Account, partially offset by$52,000 in general and administrative costs and approximately$54,000 of franchise tax expense. Liquidity and Capital Resources As ofSeptember 30, 2021 , we had approximately$189,000 in our operating bank account, working capital deficit of approximately$39,000 . 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 onSeptember 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. As ofSeptember 30, 2021 andDecember 31, 2020 , we had$180,000 and$0 note outstanding under the Working Capital Loans, respectively. 21 -------------------------------------------------------------------------------- Table of Contents In connection with our assessment of going concern considerations in accordance with FASB 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 mandatory liquidation and subsequent dissolution raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate afterSeptember 18, 2022 . The financial statements do not include any adjustment that might be necessary if we are unable to continue as a going concern. 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$180,000 in expenses in connection with such services during the three and nine months endedSeptember 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 inthe 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. As part of the Private Placement CAPS ™ , we issued 614,000 shares of Class A common stock to the Sponsor ("Private Placement Shares"). These Private Placement Shares will not be transferable, assignable or salable until 30 days after the completion of our initial Partnering Transaction, as such are considered non-redeemable and presented as permanent equity in our condensed balance sheet. 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, atSeptember 30, 2021 andDecember 31, 2020 , 41,400,000 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. 22 -------------------------------------------------------------------------------- Table of Contents Net Income per Share of Common Stock We comply with accounting and disclosure requirements of FASB ASC Topic 260, "Earnings Per Share." We have three classes of shares, which are referred to as Class A common stock, Class B common stock and Class F common stock. Income and losses are shared pro rata between the three classes of shares. Net income (loss) per share of common stock is calculated by dividing the net income (loss) by the weighted average number of common stock outstanding for the respective period. The calculation of diluted net income per share of common stock does not consider the effect of the warrants underlying the Units sold in the Initial Public Offering and the Private Placement Warrants to purchase 10,503,500 shares of Class A common stock in the calculation of diluted income per share, because their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income per share of common stock is the same as basic net income per share of common stock for the three and nine months endedSeptember 30, 2021 , and for the three months endedSeptember 30, 2020 and the period fromJune 22, 2020 (inception) throughSeptember 30, 2020 . Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value. 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 InAugust 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 currentU.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 onJanuary 1, 2021 using the modified retrospective method for transition. 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 ofSeptember 30, 2021 , we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K. 23 -------------------------------------------------------------------------------- Table of Contents 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. 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 Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our "Certifying Officers"), the effectiveness of our disclosure controls and procedures as ofSeptember 30, 2021 , pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that our disclosure controls and procedures were effective as ofSeptember 30, 2021 . Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in theSEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our chief executive officer and chief financial officer, 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 endedSeptember 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. The material weakness discussed below was remediated during the quarter endedSeptember 30, 2021 . 24
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Remediation of a Material Weakness in Internal Control over Financial Reporting
We recognize the importance of the control environment as it sets the overall
tone for the Company and is the foundation for all other components of internal
control. Consequently, we designed and implemented remediation measures to
address the material weakness previously identified in the second quarter of
2021 and enhanced our internal control over financial reporting. In light of the
material weakness, we enhanced 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 condensed financial
statements, including providing enhanced 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 foregoing actions, which we believe remediated the material
weakness in internal control over financial reporting, were completed as of the
date of
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