References in this quarterly report on Form
10-Q
(the "Quarterly Report") to "we," "us" or the "Company" refer to Golden Falcon
Acquisition Corp. References to our "management" or our "management team" refer
to our officers and directors, and references to the "Sponsor" refer to Golden
Falcon Sponsor Group, 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 this
Quarterly Report and the Risk Factors section of the Company's Annual Report on
Form
10-K/A
for the fiscal year ended December 31, 2020 ("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.
Restatement
This Management's Discussion and Analysis of Financial Condition and Results of
Operations has been amended and restated to give effect to the restatement of
our financial statements as of December 31, 2020, March 31, 2021, and June 30,
2021. Management identified errors made in its historical financial statements
where, at the closing of our Initial Public Offering, we improperly valued our
Class A common stock subject to possible redemption. We previously determined
the Class A common stock subject to possible redemption to be equal to the
redemption value of $10.00 per share of Class A common stock while also taking
into consideration a redemption cannot result in net tangible assets being less
than $5,000,001. Management determined that the Class A common stock issued
during the Initial Public Offering can be redeemed or become redeemable subject
to the occurrence of future events considered outside of the Company's control.
Therefore, management concluded that the redemption value should include all
Class A common stock subject to possible redemption, resulting in the Class A
common stock subject to possible redemption being equal to their redemption
value. As a result, management has noted a reclassification error related to
temporary equity and permanent equity. This resulted in a restatement to the
initial carrying value of the Class A common stock subject to possible
redemption with the offset recorded to additional paid-in capital (to the extent
available), accumulated deficit and Class A common stock.
Overview
We are a blank check company formed under the laws of the State of Delaware on
August 24, 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 ("Business Combination"). We intend to
effectuate our Business Combination using cash from the proceeds of the Initial
Public Offering and the sale of the 8,900,000 warrants (each, a "Private
Placement Warrant" and, collectively, 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 raise capital or to
complete our initial Business Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through September 30, 2021, were organizational activities,
those necessary to prepare for the Initial Public Offering (defined below), and,
after our Initial Public Offering, identifying a target company for a Business
Combination. We do not expect to generate any operating revenues until after the
completion of our Business Combination, at the earliest. We generate
non-operating
income in the form of interest income on marketable securities held in a trust
account (the "Trust Account") along with
non-operating
income or expense related to the change in fair value of the warrant
liabilities. 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 September 30, 2021, we had a net income of
$7,806,256, which consists of interest earned on marketable securities held in
the Trust Account of $39,274, unrealized gain on marketable securities held in
our Trust Account of $9,879, change in fair value of convertible promissory note
of $17,900 and change in fair value of warrant liabilities of $8,106,500,
partially offset by general and administrative expenses of $367,297.
For the nine months ended September 30, 2021, we had a net income of
$19,735,413, which consists of interest earned on marketable securities held in
the Trust Account of $117,044, unrealized gain on marketable securities held in
our Trust Account of $6,914, change in fair value of convertible promissory note
of $17,900 and change in fair value of warrant liabilities of $21,181,500,
partially offset by general and administrative expenses of $1,587,945.
For the period from August 24, 2020 (inception) September 30, 2020, we had a net
loss of $422, which consisted of formation and operational costs.
Liquidity and Capital Resources
On December 22, 2020, we consummated the initial public offering of 34,500,000
units, at $10.00 per unit, which included the full exercise by the underwriters
of their over-allotment option in the amount of 4,500,000 units, generating
gross proceeds of $345,000,000 (the "Initial Public Offering"). Simultaneously
with the closing of the Initial Public Offering, we consummated the sale of
8,900,000 private placement warrants to the sponsor at a price of $1.00 per
warrant, generating gross proceeds of $8,900,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Placement Warrants, a total of $345,000,000
was placed in the Trust Account. We incurred $19,606,206 in transaction costs,
including $6,900,000 of underwriting fees, $12,075,000 of deferred underwriting
fees and $631,206 of other costs.


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For the nine months ended September 30, 2021, cash used in operating activities
was $1,078,901. Net income of $19,735,413 was affected by the change in fair
value of warrant liabilities of $21,181,500, change in fair value of convertible
promissory note of $17,900, interest earned on marketable securities held in the
Trust Account of $117,044 and an unrealized gain on marketable securities held
in our Trust Account of $6,914. Changes in operating assets and liabilities
provided $509,044 of cash from operating activities.
At September 30, 2021 we had cash and marketable securities held in the Trust
Account of $345,133,328 consisting of U.S. Treasury Bills with a maturity of 185
days or less. Interest income on the balance in the Trust Account may be used by
us to pay taxes. Through September 30, 2021, we have not withdrawn any interest
earned from the Trust Account.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account (less
deferred underwriting commissions and income taxes payable), to complete our
Business Combination. 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.
At September 30, 2021 we had cash of $31,969. 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 or an affiliate of the
Sponsor or certain of our directors and officers 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 identical to the Private Placement Warrants, at a
price of $1.00 per warrant at the option of the lender.
Based on the foregoing, management believes that the Company will have
sufficient working capital and borrowing capacity from the sponsor or an
affiliate of the Sponsor, or certain of the Company's officers and directors to
meet its needs through the earlier of the consummation of a Business Combination
or one year from this filing. Over this time period, the Company 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. On September 13, 2021, the Sponsor agreed
to loan the Company an aggregate of up to $1,000,000 pursuant to a promissory
note (the "Convertible Note"). The Convertible Note is non-interest bearing and
payable upon consummation of the Company's initial Business Combination. At the
Company's discretion, the Convertible Note may be converted into warrants of the
post-Business Combination entity at a price of $1.00 per warrant. The warrants
would be identical to the Private Placement Warrants. At September 30, 2021,
there was $120,000 of borrowings under the Convertible Note. On September 30,
2021, the Sponsor committed the remainder of the convertible note towards a
Sponsor Commitment letter whereas the Sponsor is obligated to provide funding of
up to $880,000 in working capital loans should the Company need it.
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 September 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
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 the Sponsor a monthly fee of $10,000 for certain administrative,
research, transaction and other support services. We began incurring these fees
on December 22, 2020, and will continue to incur these fees monthly until the
earlier of the completion of the Business Combination and our liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or
$12,075,000 in the aggregate. The deferred fee will become payable to the
underwriters 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
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. Our Critical Accounting Policies are presented below.

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Warrant Liabilities and Convertible Promissory Note
We account 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 ("ASC") 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 our
own Class A common stock, 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. The Company accounts for its convertible
promissory note under ASC 815, Derivatives and Hedging ("ASC 815"). Under
815-15-25, the election can be at the inception of a financial instrument to
account for the instrument under the fair value option under ASC 825. The
Company has made such election for its convertible promissory note. Using fair
value option, the convertible promissory note is required to be recorded at its
initial fair value on the date of issuance, and each balance sheet date
thereafter. Changes in the estimated fair value of the note are recognized as
non-cash change in the fair value of the convertible promissory note in the
condensed statements of operations. The fair value of the option to convert into
private warrants was valued utilizing the closed-form model.
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.
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, all
of the Class A common stock subject to possible redemption is presented as
temporary equity, outside of the stockholders' equity section of our condensed
balance sheet.
Net Income (Loss) per Common Share
Net income (loss) per common share is computed by dividing net income (loss) by
the weighted average number of common shares outstanding for the period. The
Company applies the
two-class
method in calculating income (loss) per common share. Accretion associated with
the redeemable shares of Class A common stock is excluded from earnings per
share as the redemption value approximates fair value.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU")
2020-06
- "Contracts in Entity's Own Equity (Subtopic
815-40)
("ASU
2020-06")",
to simplify accounting for certain financial instruments ASU
2020-06
eliminates the current models that require separation of beneficial conversion
and cash conversion features from convertible instruments and simplifies the
derivative scope exception guidance pertaining to equity classification of
contracts in an entity's own equity. The new standard also introduces additional
disclosures for convertible debt and freestanding instruments that are indexed
to and settled in an entity's own equity. ASU
2020-06
amends the diluted earnings per share guidance, including the requirement to use
the
if-converted
method for all convertible instruments. ASU
2020-06
is effective January 1, 2022, and should be applied on a full or modified
retrospective basis, with early adoption permitted beginning on January 1, 2021.
We are currently assessing the impact, if any, that ASU
2020-06
would have on its financial position, results of operations or cash flows.
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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
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 the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed or submitted under the Exchange Act is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.

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Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15f and 15d-15 under the Exchange Act, our Chief
Executive Officer and Chief Financial Officer carried out an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures as of September 30, 2021. Based upon their evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that, due to the
material weakness related to the error in accounting classification of our
Public Warrants and Private Placement Warrants previously disclosed in our Form
10-K/A and our Quarterly Reports on Form 10-Q for the quarters ended March 31,
2021 and June 30, 2021 (the "Prior Reports"), and to the Company's restatement
of its financial statements to reclassify for complex financial instruments as
described in Note 2 to the accompanying unaudited financial statements, 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 September 30, 2021.
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 September 30, 2021 covered by this
Quarterly Report that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting other than as
described herein. In connection with the preparation of this Quarterly report,
and as a result of recent SEC guidance, management has identified a material
weakness in internal controls related to the accounting for our redeemable
equity instruments, as described in Note 2 to the accompanying unaudited
financial statements. Although we have processes to identify and appropriately
apply applicable accounting requirements, in light of this material weakness,
the material weakness identified in our Prior Reports and the resulting
restatements, 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. Our plans at this time include 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 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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