References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to FirstMark Horizon Acquisition Corp. References to our
"management" or our "management team" refer to our officers and directors and
references to the "Sponsor" refer to FirstMark Horizon 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
(the "Financial Statements"). Capitalized terms used but not otherwise defined
herein have the meaning set forth in the Financial Statements. 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 10-K/A for the fiscal year 2020 filed with the U.S. Securities and
Exchange Commission (the "SEC") on May 27, 2021 (the "FY 2020 10-K/A"). 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 incorporated in Delaware on August 13, 2020 for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination with one or more
businesses (the "Business Combination"). Our sponsor is FirstMark Horizon
Sponsor LLC, a Delaware limited liability company (the "Sponsor").
The registration statements for our initial public offering ("Initial Public
Offering") became effective on October 5, 2020. On October 8, 2020, we
consummated the Initial Public Offering of 41,400,000 units (the "Units" and,
with respect to the Class A common stock included in the Units being offered,
the "Public Shares"), including 5,400,000 Units to cover over-allotments (the
"Over-Allotment Units"), at $10.00 per Unit, generating gross proceeds of $414.0
million, and incurring offering costs of approximately $23.3 million, inclusive
of approximately $14.5 million in deferred underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 6,853,333 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants")
at a price of $1.50 per Private Placement Warrant to our Sponsor, generating
proceeds of approximately $10.3 million.
Upon the closing of the Initial Public Offering and the Private Placement,
$414.0 million ($10.00 per Unit) of the net proceeds of the Initial Public
Offering and certain of the proceeds of the Private Placement was held in a
trust account ("Trust Account") located in the United States with Continental
Stock Transfer & Trust Company acting as trustee, and invested only in U.S.
"government securities," within the meaning of Section 2(a)(16) of the
Investment Company Act, having a maturity of 185 days or less or in money market
funds meeting certain conditions under Rule 2a-7 promulgated under the
Investment Company Act, which invest only in direct U.S. government treasury
obligations, as determined by the Company, until the earlier of: (i) the
completion of a Business Combination and (ii) the distribution of the Trust
Account as described below.
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If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or October 8, 2022, (the "Combination
Period") and our stockholders have not amended the Amended and Restated
Certificate of Incorporation to extend such Combination Period, we will (1)
cease all operations except for the purpose of winding up; (2) as promptly as
reasonably possible but not more than 10 business days thereafter, redeem the
Public Shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the Trust Account, including interest (less up to
$100,000 of interest to pay dissolution expenses and which interest shall be net
of taxes payable), divided by the number of then issued and outstanding Public
Shares, which redemption will completely extinguish Public Stockholders' rights
as stockholders (including the right to receive further liquidating
distributions, if any); and (3) 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 each case to our
obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law.
Liquidity and Capital Resources
As of March 31, 2021, we had approximately $1.1 million in our operating bank
account, approximately $12,000 of interest income available in the Trust Account
to pay the Company's franchise and income tax obligations and working capital of
approximately $0.6 million. Further, we have incurred and expect to continue to
incur significant costs in pursuit of its acquisition plans.
Our liquidity needs to date have been satisfied through the $25,000 capital
contribution to purchase founder shares by our Sponsor, the loan proceeds under
a promissory note of $167,000 from our Sponsor to cover the Company's 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. The
balance of the promissory note was fully repaid on October 8, 2020. In addition,
in order to finance transaction costs in connection with a Business Combination,
our Sponsor or an affiliate of our Sponsor, or certain of our officers and
directors may, but are not obligated to, provide us Working Capital Loans. As of
March 31, 2021 and December 31, 2020, there were no amounts outstanding under
any Working Capital Loans.
Based on the foregoing, we have determined that the working capital deficit
raises substantial doubt about our ability to continue as a going concern until
the earlier of the consummation of a Business Combination or the date we are
required to liquidate. The unaudited condensed financial statements do not
include any adjustment that might be necessary if we are unable to continue as a
going concern. Over this time period, we will be using these funds for paying
existing accounts payable, identifying and evaluating prospective initial
Business Combination 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
Business Combination.
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 financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Results of Operations
Our entire activity since inception through March 31, 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
Business Combination. 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 Business Combination. We will generate non-operating
income in the form of interest income and dividends 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 March 31, 2021, we had net income of approximately
$18.7 million, which consisted of a non-operating gain resulting from the change
in fair value of derivative warrant liabilities of approximately $19.4 million
and interest and dividends on investments held in the Trust Account of
approximately $6,000, partially offset by approximately $691,000 of operating
expenses. Total operating expenses for the three months ended March 31, 2021were
comprised of approximately $642,000 of general and administrative costs,
including $30,000 of administrative services expenses to related parties, and
approximately $49,000 of franchise tax expense.
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Related Party Transactions
Founder Shares
On August 18, 2020, our Sponsor purchased 8,625,000 shares of the Company's
Class B common stock, par value $0.0001 per share, (the "Founder Shares") for an
aggregate price of $25,000. The Company transferred an aggregate of 120,000
Founder Shares to certain members of our management team. On October 5, 2020,
the Company effected a 1:1.2 stock split of its Class B common stock, resulting
in our Sponsor holding an aggregate of 10,230,000 Founder Shares and there being
an aggregate of 10,350,000 Founder Shares outstanding. All shares and associated
amounts have been retroactively restated to reflect the stock split. Our Sponsor
agreed to forfeit up to 1,350,000 Founder Shares to the extent that the
over-allotment option is not exercised in full by the underwriters, so that the
Founder Shares would represent 20.0% of the Company's issued and outstanding
shares after the Initial Public Offering. The underwriter exercised its
over-allotment option in full on October 6, 2020; thus, the 1,350,000 Founder
Shares were no longer subject to forfeiture.
The initial stockholders agreed, subject to limited exceptions, not to transfer,
assign or sell any of the Founder Shares until the earlier to occur of: (A) one
year after the completion of the initial Business Combination; and (B)
subsequent to the initial Business Combination (x) if the last reported sale
price of Class A common stock equals or exceeds $12.00 per share (as adjusted
for stock splits, stock dividends, reorganizations, recapitalizations and the
like) for any 20 trading days within any 30-trading day period commencing at
least 150 days after the initial Business Combination or (y) the date on which
we complete a liquidation, merger, stock exchange, reorganization or other
similar transaction that results in all of the Public Stockholders having the
right to exchange their shares of Class A common stock for cash, securities or
other property. Any permitted transferees will be subject to the same
restrictions and other agreements of the initial stockholders with respect to
any Founder Shares.
Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, we consummated
the Private Placement of 6,853,333 Private Placement Warrants, at a price of
$1.50 per Private Placement Warrant to the Sponsor, generating proceeds of
approximately $10.3 million.
Each Private Placement Warrant is exercisable for one whole share of Class A
common stock at a price of $11.50 per share. A portion of the proceeds from the
sale of the Private Placement Warrants to the Sponsor were added to the net
proceeds from the Initial Public Offering held in the Trust Account. If the
Company does not complete a Business Combination within the Combination Period,
the Private Placement Warrants will expire worthless. The Private Placement
Warrants will be non-redeemable (except as described below in Note 6 under
"Warrants - Redemption of warrants when the price per share of Class A common
stock equals or exceeds $10.00") so long as they are held by the initial
purchasers or their permitted transferees.
The purchasers of the Private Placement Warrants agreed, subject to limited
exceptions, not to transfer, assign or sell any of their Private Placement
Warrants (except to permitted transferees) until 30 days after the completion of
the initial Business Combination.
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Related Party Loans
On August 18, 2020, our Sponsor agreed to loan us an aggregate of up to $300,000
to cover expenses related to the Initial Public Offering pursuant to a
promissory note (the "Note"). This loan was non-interest bearing and payable
upon the completion of the Initial Public Offering. The Company fully borrowed
$167,000 under the Note. We repaid the Note in full on October 8, 2020.
In addition, in order to finance transaction costs in connection with a Business
Combination, our Sponsor or an affiliate of our Sponsor, or certain of our
officers and directors may, but are not obligated to, loan us funds as may be
required ("Working Capital Loans"). If we complete a Business Combination, we
will repay the Working Capital Loans out of the proceeds of the Trust Account
released to the Company. Otherwise, the Working Capital Loans would be repaid
only out of funds held outside the Trust Account. In the event that a Business
Combination does not close, we may use a portion of proceeds held outside the
Trust Account to repay the Working Capital Loans but no proceeds held in the
Trust Account would be used to repay the Working Capital Loans. The Working
Capital Loans would either be repaid upon consummation of a Business Combination
or, at the lender's discretion, up to $1.5 million of such Working Capital Loans
may be convertible into warrants of the post Business Combination entity at a
price of $1.50 per warrant. The warrants would be identical to the Private
Placement Warrants. Except for the foregoing, the terms of such Working Capital
Loans, if any, have not been determined and no written agreements exist with
respect to such loans. To date, we have no borrowings under the Working Capital
Loans.
Administrative Services Agreement
We entered into an agreement that provides that, commencing on October 6, 2020,
through the earlier of consummation of the initial Business Combination and the
Company's liquidation, we will pay an affiliate of the Sponsor a total of
$10,000 per month for office space, administrative and support services.
Our Sponsor, officers and directors, or any of their respective affiliates, will
be reimbursed for any out-of-pocket expenses incurred in connection with
activities on the Company's behalf such as identifying potential target
businesses and performing due diligence on suitable Business Combinations. Our
audit committee will review on a quarterly basis all payments that were made by
us to our Sponsor, directors, officers or the Company's or any of their
affiliates.
Contractual Obligations
Registration Rights
The initial stockholders and holders of the Private Placement Warrants are
entitled to registration rights pursuant to a registration rights agreement. The
initial stockholders and holders of the Private Placement Warrants will be
entitled to make up to three demands, excluding short form registration demands,
that we register such securities for sale under the Securities Act. In addition,
these holders will have "piggy-back" registration rights to include their
securities in other registration statements filed by us. We will bear the
expenses incurred in connection with the filing of any such registration
statements.
Underwriting Agreement
The underwriter was entitled to an underwriting discount of $0.20 per share, or
approximately $8.28 million in the aggregate, paid upon the closing of the
Initial Public Offering. In addition, $0.35 per share, or approximately $14.5
million in the aggregate will be payable to the underwriter for deferred
underwriting commissions. The deferred fee will become payable to the
underwriter from the amounts held in the Trust Account solely in the event that
we complete a Business Combination, subject to the terms of the underwriting
agreement.
Critical Accounting Policies and Estimates
Derivative Warrant liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to Financial
Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC")
Topic 480 "Distinguishing Liabilities from Equity" ("ASC 480") and ASC 815,
"Derivatives and Hedging" ("ASC 815"). 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.
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The 13,800,000 issued in connection with the Initial Public Offering (the
"Public Warrants") and the 6,853,333 Private Placement Warrants are recognized
as derivative liabilities in accordance with ASC 815. 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 the Company's statement of operations. The initial
and subsequent fair value of the Private Warrants and the initial fair value of
the Public Warrants issued in connection with the private placement and initial
public offering, respectively, have been measured using a binomial lattice model
in an option pricing framework. The fair value of the Public Warrants has
subsequently been determined using listed prices in an active market for such
warrants.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in ASC 480. Shares of Class A common stock subject
to mandatory redemption (if any) are classified as liability instruments and are
measured at fair value. Shares of conditionally redeemable Class A common stock
(including Class A common stock that feature 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) are classified as
temporary equity. At all other times, shares of Class A common stock are
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, as of March 31, 2021
and December 31, 2020, a total of 36,311,195 and 34,438,230 shares of Class A
common stock subject to possible redemption, respectively, are presented as
temporary equity, outside of the stockholders' equity section of our balance
sheet.
Net Income Per Share of Common Stock
We apply the two-class method in calculating earnings per share. Net income per
share is computed by dividing net loss by the weighted-average number of shares
of common stock outstanding during the period. An aggregate of 36,311,195 shares
of common stock subject to possible redemption at March 31, 2021 has been
excluded from the calculation of basic income per share of common stock, since
such shares, if redeemed, only participate in their pro rata share of the trust
earnings. We have not considered the effect of the warrants sold in the Initial
Public Offering (including the consummation of the Over-allotment) and Private
Placement to purchase an aggregate of 20,653,333 shares of the Company's common
stock in the calculation of diluted loss per share, since the exercise of the
warrants are contingent upon the occurrence of future events. As a result,
dilutive net loss per common share is the same as basic net loss per common
share for the periods presented.
Recent Adopted Accounting Standards
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, which simplifies accounting for
convertible instruments by removing major separation models required under
current GAAP. The ASU also removes certain settlement conditions that are
required for equity-linked contracts to qualify for the derivative scope
exception and it also simplifies the diluted earnings per share calculation in
certain areas. We early adopted the ASU on January 1, 2021. Adoption of the ASU
did not impact our financial position, results of operations or cash flows.
Recent Issued Accounting Standards
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 financial statement.
Off-Balance Sheet Arrangements
As of March 31, 2021, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
Inflation
We do not believe that inflation had a material impact on our business, revenues
or operating results during the period presented.
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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 Public Company
Accounting Oversight Board 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.
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