The following discussion should be read in conjunction with the Company's
condensed financial statements and the related notes included elsewhere in this
Quarterly Report on Form 10-Q (the "Form 10-Q"), as well as Management's
Discussion and Analysis of Financial Condition and Results of Operations
("MD&A") included in the Company's Annual Report on Form 10-K for the period
from December 10, 2020 (inception) through December 31, 2020 (the "Form 10-K").
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 Form 10-Q includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of 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 Form 10-Q
including 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 final prospectus for its Initial Public Offering filed with the SEC on
February 11, 2021. 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 as a Cayman Islands exempted company
for the purpose of effecting a merger, share exchange, asset acquisition, share
purchase, reorganization or similar business combination with one or more
businesses. Lazard Ltd, an affiliate of our Sponsor, intends to use resources
across its international financial advisory and asset management businesses to
source and evaluate attractive, high growth private companies. Although we are
not limited to a particular industry or geographic region in our identification
and acquisition of a target company, we believe the growth-oriented subsectors
of the healthcare, technology, energy transition, financial and consumer sectors
present particularly attractive investment opportunities.
At June 30, 2021, we had cash of $227,578 and cash held in a Trust Account of
$575,011,856, current liabilities of $1,472,568, deferred underwriting
commission payable of $20,125,000 and warrants for the purchase of Class A
ordinary shares of $23,395,000. Further, we expect to continue to incur
significant costs in the pursuit of our acquisition plans. We cannot assure you
that our plans to complete an initial Business Combination will be successful.
Results of Operations
For the three months ended June 30, 2021, we had a net loss of $3,478,129, which
consisted of a change in the fair value of warrants exercisable for Class A
ordinary shares of $2,895,000, general and administrative fees of $594,014 and
expensed offering costs of $971 related to the closing of our Initial Public
Offering. These expenses were partially offset by interest income earned on
funds held in the Trust Account. Interest earned on the Trust Account is
restricted to the redemption or liquidation of Class A ordinary shares and
cannot be used for the Company's business activities. Our business activities
for the three months ended June 30, 2021 primarily related to identifying and
evaluating prospective acquisition targets for an initial Business Combination.
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For the six months ended June 30, 2021, we had a net loss $2,374,697, which
consisted of a change in the fair value of warrants exercisable for Class A
ordinary shares of $845,000, general and administrative fees of $827,059 and
offering costs that were expensed of $714,494 related to the closing of our
Initial Public Offering. These expenses were partially offset by interest income
earned on funds held in the Trust Account. Interest earned on the Trust Account
is restricted to the redemption or liquidation of Class A ordinary shares and
cannot be used for the Company's business activities. Our business activities
for the six months ended June 30, 2021 primarily related to completing our
Initial Public Offering, and since the offering, our activity has been limited
to identifying and evaluating prospective acquisition targets for an initial
Business Combination.
We do not expect to generate any operating revenues until after the completion
of our initial Business Combination. We expect to continue to generate
non-operating income in the form of interest income on cash held in the 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.
Liquidity and Capital Resources
On February 12, 2021, we consummated our Initial Public Offering of 57,500,000
of our Units, including 7,500,000 Units sold upon exercise in full of the
underwriter's over-allotment option. Each Unit consists of one Class A ordinary
share of the Company, $0.0001 par value per share, and one-fifth of one Public
Warrant, with each whole Public Warrant entitling the holder thereof to purchase
one Class A ordinary share at an exercise price of $11.50 per share, subject to
adjustment. The Units were sold at an offering price of $10.00 per Unit,
generating gross proceeds of $575,000,000. Goldman Sachs & Co. LLC acted as
Book-Running Manager. The securities sold in the Initial Public Offering were
registered under the Securities Act on a registration statement on Form S-1 (No.
333-252408), which was declared effective by the SEC on February 9, 2021.
Simultaneously with the consummation of the Initial Public Offering and the
issuance and sale of the Units, the Company consummated the sale to the Sponsor
of 9,000,000 Private Placement Warrants, with each Private Placement Warrant
exercisable to purchase one Class A ordinary share at $11.50 per share subject
to adjustment, at a price of $1.50 per Private Placement Warrant, generating
total proceeds of $13,500,000. The Private Placement Warrants are identical to
the Public Warrants, except that, so long as they are held by the Sponsor or its
permitted transferees, (i) they will not be redeemable by us, (ii) they
(including the Class A ordinary shares issuable upon exercise of these Private
Placement Warrants) may not, subject to certain limited exceptions, be
transferred, assigned or sold by our Sponsor until 30 days after the completion
of our initial Business Combination, (iii) they may be exercised by the holders
on a cashless basis and (iv) they will be entitled to registration rights.
A total of $575,000,000, comprised of $563,500,000 of the proceeds from the
Initial Public Offering and $11,500,000 of the proceeds from the sale of the
Private Placement Warrants, was placed in the Trust Account. Transaction costs
amounted to $32,476,988, consisting of $11,500,000 of underwriting fees (a net
underwriting fee of $8,500,000 after giving effect to the underwriter's
reimbursement of the Company for $3,000,000 of financial advisory fees payable
by the Company to Lazard Frères & Co. LLC), $20,125,000 of deferred
underwriting fees (as may be reduced as a result of the underwriter's
reimbursement to the Company for certain financial advisory fees payable by the
Company to Lazard Frères & Co. LLC) and $851,988 of other offering costs.
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
taxes payable and deferred underwriting commissions), to complete our initial
Business Combination. We may withdraw interest income (if any) to pay taxes, if
any. Any 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
In order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial Business Combination, the Sponsor has, as of
August 5, 2021, committed $2,000,000 to be provided to us to fund our expenses
relating to investigating and selecting a target business and other working
capital requirements prior to our initial Business Combination. In addition, the
Sponsor or an affiliate of the Sponsor may, but is not obligated to, loan us
additional funds as may be required. If we complete our initial Business
Combination, we may repay such loaned amounts out of the proceeds of the Trust
Account released to us. In the event that our initial Business Combination does
not close, we may use a portion of the working capital held outside the Trust
Account to repay
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such loaned amounts but no proceeds from our Trust Account would be used for
such repayment. Up to $2,000,000 of such loans may be convertible into warrants
of the post-Business Combination entity at a price of $1.50 per warrant at the
option of the lender. The warrants would be identical to the Private Placement
Warrants. Except for the foregoing, the terms of such additional loans have not
been determined and no written agreements exist with respect to such loans.
Prior to the completion of our initial Business Combination, we do not expect to
seek loans from parties other than our Sponsor or its affiliates as we do not
believe third parties will be willing to loan such funds and provide a waiver
against any and all rights to seek access to funds in our Trust Account.
We may need to obtain additional financing to complete our initial Business
Combination, either because the transaction requires more cash than is available
from the proceeds held in the Trust Account, or because we become obligated to
redeem a significant number of our public shares upon completion of the Business
Combination, in which case we may issue additional securities or incur debt in
connection with such Business Combination. If we have not consummated our
initial Business Combination within the required time period because we do not
have sufficient funds available to us, we would be forced to cease operations
and liquidate the Trust Account.
Off-balance Sheet Financing Arrangements
We have no obligations, assets or liabilities which would be
considered off-balance sheet arrangements. 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 entered into any non-financial agreements involving assets.
Contractual Obligations
At June 30, 2021, we did not have any long-term debt, capital lease obligations,
operating lease obligations or long-term liabilities. On February 10, 2021, we
entered into an administrative support agreement pursuant to which we have
agreed to pay an affiliate of the Sponsor a total of $20,000 per month for
office space, administrative and support services. Upon the earlier of the
completion of the Initial Business Combination and the Company's liquidation, we
will cease paying these monthly fees.
The underwriter of the Initial Public Offering received a cash underwriting
discount of $0.20 per Unit, or $11,500,000 in the aggregate, upon the closing of
the Initial Public Offering. In addition, the underwriter will be entitled to
deferred commissions of $0.35 per Unit, or $20,125,000 in the aggregate. The
deferred underwriting discount will be paid to the underwriter solely in the
event that the Company completes a Business Combination within the time
required, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States 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 condensed financial statements, and expenses during the periods
reported. Actual results could materially differ from those estimates. We have
identified the following as our critical accounting policies:
Net Income Per Ordinary Share
We comply with accounting and disclosure requirements of ASC Topic 260, Earnings
Per Share. Net income per share of ordinary shares is computed by dividing net
income by the weighted average number of common shares outstanding during the
period. We apply the two-class method in calculating earnings per share.
Adjustments associated with the redeemable shares of Class A ordinary shares
under ASC Topic 480-S993 are excluded from earnings per share as the redemption
value approximates fair value and we elect to reflect changes in redemption
value immediately as they occur through Additional-Paid-In-Capital.
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As of June 30, 2021, we had outstanding warrants to purchase of up to 20,500,000
shares of Class A ordinary shares. The weighted average of these shares was
excluded from the calculation of diluted net income per share of ordinary shares
since the exercise of the warrants is contingent upon the occurrence of future
events. As of June 30, 2021, we did not have any dilutive securities or other
contracts that could, potentially, be exercised or converted into shares of
ordinary shares and then share in our earnings. As a result, diluted income per
common share is the same as basic income per common share for the period.
Deferred Offering Costs
We comply with the requirements of the ASC Topic 340-10-S99-1 and SEC Staff
Accounting Bulletin Topic 5A -"Expenses of Offering." We incurred offering costs
in connection with our Initial Public Offering of $851,988. These costs,
together with the upfront underwriter discount and deferred discount of
$31,625,000, were charged to the shares of our Class A ordinary shares and
warrants upon the closing of our Public Offering.
Warrants
Under ASC Topic 815, we have classified issued warrants as liabilities
remeasured at fair value, with changes in fair value each period reported to
earnings.
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LAZARD GROWTH ACQUISITION CORP. I 
