References in this quarterly report on
Form10-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 condensed 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 our
Annual Report on Form
10-K
for the fiscal year ended December 31, 2021 (the "Form
10-K")
filed with the U.S. Securities and Exchange Commission (the "SEC") on March 31,
2022, as well as Item 1A, Part II of this Quarterly Report. 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 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. We intend to effectuate our business
combination using cash from the proceeds of the initial public offering and the
sale of the private placement warrants, our capital stock, debt or a combination
of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to 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 June 30, 2022 were organizational activities, those
necessary to prepare for the Initial Public Offering, described 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. We generate
non-operating
income in the form of interest income on marketable securities held in the trust
account, along with
non-operating
income or expense related to the change in fair value of the warrant liabilities
and the Convertible Note. 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 June 30, 2022, we had a net income of $4,559,558,
which consists of interest earned on marketable securities held in the trust
account of $579,347 and change in fair value of warrant liabilities of
$4,707,000, partially offset by formation and operational costs of $494,140,
unrealized loss on marketable securities held in the trust account of $215,929,
change in fair value of convertible promissory note - related party of $14,400,
and provision for income taxes of $31,121.
For the six months ended June 30, 2022, we had a net income of $13,942,789,
which consists of interest earned on marketable securities held in the trust
account of $754,108, change in fair value of convertible promissory note -
related party of $146,522 and change in fair value of warrant liabilities of
$14,105,310, partially offset by formation and operational costs of $881,748,
unrealized loss on marketable securities held in the trust account of $150,283,
and provision for income taxes of $31,121.
For the three months ended June 30, 2021, we had a net loss of $6,000,287, which
consists of formation and operational costs of $260,702, unrealized loss on
marketable securities held in the trust account of $1,243 and change in fair
value of warrant liabilities of $5,753,000, partially offset by interest earned
on marketable securities held in the trust account of $14,658.
For the six months ended June 30, 2021, we had a net income of $11,929,157,
which consists of interest earned on marketable securities held in the trust
account of $77,770 and change in fair value of warrant liabilities of
$13,075,000, partially offset by formation and operational costs of $1,220,648
and unrealized loss on marketable securities held in the trust account of
$2,965.
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. 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.
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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, net of reimbursement, $12,075,000 of
deferred underwriting fees and $631,206 of other offering costs.
For the six months ended June 30, 2022, net cash used in operating activities
was $226,740. Net income of $13,942,789 was affected by the change in fair value
of warrant liabilities of $14,105,310, change in fair value of convertible
promissory note - related party of $146,522, interest earned on marketable
securities held in trust account of $754,108 and an unrealized gain on
marketable securities held in trust account of $150,282. Changes in operating
assets and liabilities provided $686,128 of cash from operating activities
primarily due to a decrease in prepaid expenses and an increase in accounts
payable and accrued expenses.
For the six months ended June 30, 2021, net cash used in operating activities
was $292,616. Net income of $11,929,157 was affected by the change in fair value
of warrant liabilities of $13,075,000, interest earned on marketable securities
held in trust account of $77,770 and an unrealized loss on marketable securities
held in trust account of $2,965. Changes in operating assets and liabilities
provided $928,032 of cash from operating activities primarily due to an increase
in prepaid expenses and an decrease in accounts payable and accrued expenses.
For the six months ended June 30, 2022, net cash provided by financing
activities was $300,000 as a result of the drawdowns on the Convertible Note.
At June 30, 2022 we had cash and marketable securities held in the trust account
of $345,774,665 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 date of this filing June 30, 2022, 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 June 30, 2022, we had cash of $85,140 outside of the trust account, accounts
payable and accrued expenses of $813,059, and income taxes payable of $31,121.
We intend to use the funds held outside the trust account in addition to the
remaining amount unborrowed on the Convertible Promissory note of $379,889
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,
lend us funds as may be required. If we complete a business combination, we
would repay such lent 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 lent amounts but no proceeds from our trust account would
be used for such repayment. On September 13, 2021, the Sponsor agreed to lend us
an aggregate of up to $1,000,000 pursuant to the Convertible Note (as defined
below) for working capital purposes. At June 30, 2022, there was $620,111 of
cumulative cash advanced under the convertible promissory note. The convertible
promissory note was valued using the fair value method. The advances of $300,000
for the six months ended June 30, 2022 were initially valued at $160,622 whereas
the difference of $139,378 was recorded as a credit to stockholders' deficit.
The change in the fair value of the note recorded in the statements of
operations for the three and six months ended June 30, 2022 were $14,400 and
$146,522, respectively, resulting in a fair value of the convertible note of
$273,700.
Going Concern
As of June 30, 2022, the Company had $85,140 in its operating bank account,
$345,774,665 in marketable securities held in the Trust Account to be used for a
Business Combination, or to repurchase or redeem its stock in connection
therewith and a working capital deficit of $256,240, which excludes the
permitted withdrawal should the Company elect to withdraw from the Trust Account
for franchise taxes payable of $249,219. As of June 30, 2022, $774,665 of the
amount on deposit in the Trust Account represented interest income, $150,282 of
which was recorded as an unrealized loss. Interest income earned on the Trust
Account is available to pay the Company's tax obligations. As of June 30, 2022,
no amounts were withdrawn from the Trust Account to pay the Company's tax
obligations
.
The Company may raise additional capital through loans or additional investments
from the Sponsor or an affiliate of the Sponsor or certain of its directors and
officers. The Sponsor may but is not obligated to (except as described below),
lend the Company funds, from time to time in whatever amounts it deems
reasonable in its sole discretion, to meet the Company's working capital needs.
On September 13, 2021, the Sponsor agreed to lend the Company an aggregate of up
to $1,000,000 for working capital purposes pursuant to a convertible promissory
note. The Company had drawn an aggregate of $620,111 under the convertible
promissory note as of June 30, 2022, which includes drawdowns of $120,000 on
September 13, 2021, $114,311 on October 5, 2021, $70,800 on October 26, 2021,
$15,000 on November 29, 2021, $150,000 on January 31, 2022, and $150,000 on
March 31, 2022. There can be no assurance that the Company will be able to
obtain additional financing prior to completing the Business Combination,
however. Moreover, the Company may need to obtain additional financing either to
complete its Business Combination or because the Company becomes obligated to
redeem a significant number of its public shares upon consummation of its
Business Combination, in which case the Company may issue additional securities
or incur debt in connection with such Business Combination. Subject to
compliance with applicable securities laws, the Company would only complete such
financing simultaneously with the completion of its Business Combination.
If the Company is unable to raise additional capital, it may be required to take
additional measures to conserve liquidity, which could include, but not
necessarily be limited to, curtailing operations, suspending the pursuit of a
potential transaction and reducing overhead expenses. The Company cannot provide
any assurance that new financing will be available to it on commercially
acceptable terms, if at all.
In connection with the Company's assessment of going concern considerations in
accordance with ASC Subtopic
205-40,
Presentation of Financial Statements - Going Concern, pursuant to its Amended
and Restated Certificate of Incorporation, the Company has until December 22,
2022 to consummate a Business Combination. If a Business Combination is not
consummated by this date, or its stockholders have not approved an extension,
there will be a mandatory liquidation and subsequent dissolution of the Company.
Although the Company intends to consummate a Business Combination on or before
December 22, 2022, and may seek an extension, it is uncertain that the Company
will be able to consummate a Business Combination, or obtain an extension, by
this time. This, as well as its liquidity condition, raise substantial doubt
about the Company's ability to continue as a going concern. No adjustments have
been made to the carrying amounts of assets or liabilities should the Company be
required to liquidate after December 22, 2022.
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Off-Balance
Sheet Arrangements
We did not have any
off-balance
sheet arrangements as of June 30, 2022.
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. In
addition for both the three and six months ended June 30, 2022, the Company
reimbursed such affiliate of the Sponsor for certain costs incurred on the
Company's behalf in the amounts of $6,075 which is included in general and
administrative expenses in the accompanying condensed statement of operations.
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
We prepare our financial statements in accordance with accounting principles
generally accepted in the United States of America. The preparation of financial
statements also requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, costs and expenses and related
disclosures. We base our estimates on historical experience and on various other
assumptions that we believe to be reasonable under the circumstances. Actual
results could differ significantly from the estimates made by our management.
There have been no material changes to our critical accounting policies and
estimates from those disclosed in our financial statements and the related notes
and other financial information included in our Form
10-K
for the year ended December 31, 2021, on file with the SEC.
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