References to the "Company," "Montes Archimedes Acquisition Corp.," "our," "us"
or "we" refer to Montes Archimedes Acquisition Corp. 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 report. Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that
involve risks and uncertainties.
Overview
We are a blank check company incorporated in Delaware on July 6, 2020 for the
purpose of effecting a merger, share exchange, asset acquisition, share
purchase, reorganization or similar business combination with one or more
businesses that we have not yet selected ("Business Combination"). We are an
emerging growth company and, as such, we are subject to all of the risks
associated with emerging growth companies.
Our sponsor is Patient Square Capital LLC (the "Sponsor"). The registration
statement for our Initial Public Offering was declared effective on October 6,
2020. On October 9, 2020, we consummated our Initial Public Offering of
40,000,000 units (the "Units") at $10.00 per Unit, generating gross proceeds of
$400.0 million, and incurring offering costs of approximately $22.1 million (net
of reimbursement of offering costs of $520,000 from the underwriters), inclusive
of $14.0 million in deferred underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 10,000,000 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants")
at a price of $1.00 per Private Placement Warrant to the Sponsor, generating
proceeds of $10.0 million (Note 4). The underwriters exercised the
over-allotment option in part and on November 12, 2020 purchased an additional
1,071,823 Units (the "Over-Allotment Units"), generating gross proceeds of
approximately $10.7 million, and incurred additional offering costs of
approximately $576,000 in underwriting fees (net of reimbursement of offering
costs of approximately $14,000 from the underwriters and inclusive of
approximately $0.4 million in deferred underwriting fees) (the
"Over-Allotment"). Simultaneously with the closing of the Over-allotment on
November 12, 2020, we consummated the second closing of the Private Placement,
resulting in the purchase of an aggregate of an additional 214,365 Private
Placement Warrants by our Sponsor, generating gross proceeds to us of
approximately $214,000.
Upon the closing of the Initial Public Offering, the Private Placement and part
of the Over-Allotment option, $410.7 million ($10.00 per Unit) of the net
proceeds of the Initial Public Offering and certain of the proceeds of the
Private Placement was placed in a trust account ("Trust Account") with
Continental Stock Transfer & Trust Company acting as trustee and invested in
United States "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.
If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or October 9, 2022, (as such period may
be extended pursuant to the Certificate of Incorporation, the "Combination
Period"), we will (i) cease all operations except for the purpose of winding up;
(ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the shares of Class A common stock sold in the Initial Public
Offering (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
earned on the funds held in the Trust Account and not previously released to us
to pay its taxes, if any (less up to $100,000 of interest to pay dissolution
expenses), divided by the number of the then outstanding Public Shares, which
redemption will completely extinguish Public Stockholders' rights as
stockholders (including the right to receive further liquidation distributions,
if any), subject to applicable law; and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the remaining stockholders
and the 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.
Results of Operations
Our entire activity from July 6, 2020 (inception) through December 31, 2020, was
in preparation for an Initial Public Offering, and since our Initial Public
Offering, our activity has been limited to the search for a prospective
initial Business Combination. We will not generate any operating revenues until
the closing and completion of our initial Business Combination.
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For the period from July 6, 2020 (inception) through December 31, 2020, we had a
net loss of approximately $386,000, which consisted of approximately $366,000 of
general and administrative expenses, including approximately $28,000 of general
and administrative expenses with related party, franchise tax expense of
approximately $89,000, income tax expense of approximately $17,000 offset by
approximately $85,000 of interest income and unrealized gain on marketable
securities held in the Trust Account.
Liquidity and Capital Resources
As of December 31, 2020, we had approximately $1.7 million in cash and working
capital of approximately $1.5 million (not taking into account approximately
$105,000 of taxes that may be paid using interest income from the Trust
Account).
Our liquidity needs up to December 31, 2020 had been satisfied through the
payment of $25,000 from our Sponsor to cover for certain expenses on behalf of
us in exchange for the issuance of the Founder Shares, a loan of $200,000
pursuant to the Note issued to our Sponsor, and the net proceeds from the
consummation of the Private Placement not held in the Trust Account. We fully
repaid the Note to our Sponsor on October 9, 2020. In addition, in order to fund
working capital deficiencies or finance transaction costs in connection with a
Business Combination, our Sponsor may, but is not obligated to, provide us
Working Capital Loans. To date, there were no amounts outstanding under any
Working Capital Loan.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity to meet its needs through the earlier of the
consummation of a Business Combination or one year from this filing. 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.
Management continues to evaluate the impact of the COVID-19 pandemic and has
concluded that the specific impact is not readily determinable as of the date of
the financial statements. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Contractual Obligations
Registration and Stockholder Rights
The holders of the Founder Shares, Private Placement Warrants and warrants that
may be issued upon conversion of Working Capital Loans (and any Class A common
stock issuable upon the exercise of the Private Placement Warrants and warrants
that may be issued upon conversion of Working Capital Loans) are entitled to
registration rights pursuant to the registration rights agreement. The holders
of these securities are entitled to make up to three demands, excluding short
form demands, that we register such securities. In addition, the holders have
certain "piggy-back" registration rights with respect to registration statements
filed subsequent to the completion of the initial Business Combination. We will
bear the expenses incurred in connection with the filing of any such
registration statements.
Underwriting Agreement
The underwriters were entitled to an underwriting discount of $0.20 per unit, or
$8.0 million in the aggregate, paid upon the closing of the Initial Public
Offering. In addition, $0.35 per unit, or $14.0 million in the aggregate will be
payable to the underwriters for deferred underwriting commissions. 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. The underwriters agreed to make a
payment to us in an amount of 0.13% of the gross proceeds of the Initial Public
Offering, or $520,000, to reimburse certain of offering expenses. We received
such reimbursement on October 27, 2020.
Upon closing of the Over-allotment on November 12, 2020, the underwriters
received approximately $214,000 in fees paid upfront and eligible for an
additional deferred underwriting commissions of approximately $375,000. In
addition, the underwriters agreed to make an additional payment to us in an
amount of 0.13% of the gross proceeds of the Over-allotment, or approximately
$14,000, to reimburse certain of offering expenses. As of December 31, 2020,
approximately $5,000 is included as a receivable for such reimbursements on the
accompanying balance sheet.
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Critical Accounting Policies and Estimates
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 GAAP. The preparation of these 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. We have identified the
following as our critical accounting policies:
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 Topic 480 "Distinguishing Liabilities from
Equity." 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 our 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, at December 31, 2020, 39,285,301 shares of Class A common
stock subject to possible redemption are presented as temporary equity, outside
of the stockholders' equity section of the accompanying balance sheets.
Net Loss Per Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share." Net income (loss) per common share is computed by dividing
net income (loss) by the weighted average number of shares of common stock
outstanding during the period. We have not considered the effect of the warrants
sold in the Initial Public Offering and Private Placement to purchase an
aggregate of 39,285,301 shares of Class A common stock in the calculation of
diluted earnings per share, since the exercise of the warrants are contingent
upon the occurrence of future events and the inclusion of such warrants would be
anti-dilutive.
We apply the two-class method in calculating income (loss) per common share. Net
income (loss) per common share, basic and diluted for Class A common stock
subject to possible redemption is calculated by dividing the proportionate share
of income or loss on marketable securities held by the Trust Account, net of
applicable franchise and income taxes, by the weighted average number of shares
of Class A common stock subject to possible redemption outstanding since
original issuance.
Net income (loss) per common share, basic and diluted for non-redeemable common
stock is calculated by dividing net income (loss) less income attributable to
Class A shares of common stock subject to possible redemption by the weighted
average number of shares of non-redeemable common stock outstanding for the
period presented.
Recent Accounting Pronouncements
Our management does not believe that any recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material impact on
our financial statements.
Off-Balance Sheet Arrangements
As of December 31, 2020, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments
or contractual obligations.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We will qualify as an "emerging growth company" and
under the JOBS Act will be 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 such, our financial statements may not be
comparable to companies that comply with public company effective dates.
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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.
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