References to the "Company," "Periphas Capital Partnering Corporation,"
"Periphas," "our," "us" or "we" refer to Periphas Capital Partnering
Corporation. The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with the
unaudited interim condensed 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.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form
10-Q
includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have
based these forward-looking statements on our current expectations and
projections about future events. These forward-looking statements are subject to
known and unknown risks, uncertainties and assumptions about us that may cause
our actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"should," "could," "would," "expect," "plan," "anticipate," "believe,"
"estimate," "continue," or the negative of such terms or other similar
expressions. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described in our other SEC filings. 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 Amendment No. 2 to the Company's
Annual Report on Form
10-K/A
filed with the SEC on December 29, 2021.
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 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 classified 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 $25.00 per Class A ordinary share 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.
In connection with the change in presentation for the Class A common stock
subject to possible redemption, the Company restated its earnings per share
calculation to allocate income and losses shared pro rata between all classes of
shares. This presentation differs from the previously presented method of
earnings per share, which was similar to the two-class method.
Overview
We are a blank check company incorporated in Delaware on September 11, 2020. We
were formed 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 "Partnering Transaction"). We are an emerging growth
company and, as such, the Company is subject to all of the risks associated with
emerging growth companies.
Our sponsor is PCPC Holdings, LLC, a Delaware limited liability company (the
"Sponsor"). The registration statement for our Initial Public Offering was
declared effective on December 9, 2020. On December 14, 2020, we consummated our
Initial Public Offering of 14,400,000 CAPS
™
at $25.00 per CAPS
™
, generating gross proceeds of $360.0 million, and incurring offering costs of
approximately $4.0 million (net of reimbursement of offering costs of
approximately $350,000 from the underwriter). On December 14, 2020, the
underwriter exercised the over-allotment option in full, and on December 16,
2020, purchased 2,160,000 additional CAPS
™
(the "Over-Allotment CAPS
™
"), generating additional gross proceeds of $54.0 million, and incurred
additional offering costs of approximately $540,000 in underwriting fees (the
"Over-Allotment").
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 224,000 private placement CAPS
™
(the "Private Placement CAPS
™
") at a price of $25.00 per CAPS
™
to the Sponsor, generating proceeds of $5.6 million (Note 4). Simultaneously
with the closing of the Over-Allotment on December 16, 2020, we consummated the
second closing of the Private Placement, resulting in the purchase of an
aggregate of an additional 21,600 Private Placement CAPS
™
at a price of $25.00 per CAPS
™
by the Sponsor, generating gross proceeds to the Company of $540,000.
Upon the closing of the Initial Public Offering and the Private Placement on
December 14, 2020, $360.0 million ($25.00 per CAPS
™
) of the net proceeds of the sale of the CAPS
™
in the Initial Public Offering and of the Private Placement CAPS
™
in the Private Placement were placed in a trust account ("Trust Account")
located in the United States with Continental Stock Transfer & Trust Company
acting as trustee, and were invested in money market funds meeting the
conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule
2a-7
under the Investment Company Act, which invest only in direct U.S. government
treasury obligations, as determined by us, until the earlier of: (i) the
completion of a Partnering Transaction and (ii) the distribution of the Trust
Account as described below. Upon the closing of the Over-Allotment on
December 16, 2020, additional net proceeds from the consummation of the
Over-Allotment of $54.0 million were placed in the Trust Account, for a total of
$414.0 million held in Trust Account.
Our management has broad discretion with respect to the specific application of
the net proceeds of its initial public offering (the "Initial Public Offering")
of its securities called CAPS
™
("CAPS
™
"), although substantially all of the net proceeds of the Initial Public
Offering are intended to be generally applied toward completing a Partnering
Transaction. Furthermore, there is no assurance that we will be able to
successfully complete a Partnering Transaction.
We will have until December 14, 2022, (or March 14, 2023, if we have executed a
letter of intent, agreement in principle or definitive agreement for the
Partnering Transaction by December 14, 2022) to complete our initial Partnering
Transaction (the "Partnering Period"). If we do not complete a Partnering
Transaction within this period of time (and stockholders do not approve an
amendment to the certificate of incorporation to extend this date), it 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 Public Shares, at a
per-share
price, payable in cash, of $25.00, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the remaining shareholders
and the board of directors, liquidate and dissolve, subject in the case of
clauses (i) and (iii), to our obligations under Delaware law to provide for
claims of creditors and in all cases subject to the other requirements of
applicable law.

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Liquidity and Capital Resources
At September 30, 2021, we had cash of approximately $0.6 million and working
capital of approximately $0.6 million.
Our liquidity needs through the Initial Public Offering had been satisfied
through a payment of $25,000 from the Sponsor to cover certain offering costs on
our behalf in exchange for the issuance of the Founder Shares and the
Performance Shares (as defined in Note 4), the loan under the Note from the
Sponsor of approximately $148,000 (as defined in Note 4) to us, and the net
proceeds from the consummation of the Private Placement not held in the Trust
Account. We fully repaid the Note on December 15, 2020 and borrowing is no
longer available. In addition, in order to finance transaction costs in
connection with a Partnering Transaction, the Sponsor or an affiliate of the
Sponsor, or certain of our officers and directors may, but are not obligated to,
provide us Working Capital Loans (see Note 4). As of September 30, 2021 and
December 31, 2020, there were no amounts outstanding under any Working Capital
Loans.
Based on the foregoing, our management believes that we will have sufficient
working capital and borrowing capacity to meet our needs through the earlier of
the consummation of a Partnering Transaction 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 Partnering Transaction
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 Partnering Transaction.
Management continues to evaluate the impact of the
COVID-19
pandemic and has concluded that while it is reasonably possible that the virus
could have a negative effect on our financial position, results of its
operations and search for a partner candidate company, the specific impact is
not readily determinable as of the date of these financial statements. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
In connection with our assessment of going concern considerations in accordance
with Financial Accounting Standard Board's Accounting Standards Update ("ASU")
2014-15,
"Disclosures of Uncertainties about an Entity's Ability to Continue as a Going
Concern," we have until December 14, 2022 (or March 14, 2023, if we execute a
letter of intent, agreement in principle or definitive agreement for the
Partnering Transaction by December 14, 2022) to consummate a Partnering
Transaction. It is uncertain that we will be able to consummate a Partnering
Transaction by this time. If a Partnering Transaction is not consummated by this
date, there will be a mandatory liquidation and subsequent dissolution of the
Company. Management has determined that the liquidity condition and mandatory
liquidation, should a Partnering Transaction not occur, and potential subsequent
dissolution raises 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 14,
2022.
Results of Operations
Our entire activity since inception up to September 30, 2021 was in preparation
for our Initial Public Offering, and since our Initial Public Offering, our
activity has been limited to the search for a prospective Partnering
Transaction. We will not be generating any operating revenues until the closing
and completion of our initial Partnering Transaction.
For the three months ended September 30, 2021, we had net income of
approximately $2.4 million, which consisted of approximately $2.7 million gain
in change in fair value of derivative warrant liabilities and gain on investment
held in Trust Account of approximately $16,000, partially offset by
approximately $140,000 in general and administrative expenses, $60,000 in
general and administrative expenses - related party, and approximately $50,000
in franchise tax expense.
For the nine months ended September 30, 2021, we had net income of approximately
$9.3 million, which consisted of approximately $10.1 million gain in change in
fair value of derivative warrant liabilities and gain on investment held in
Trust Account of approximately $29,000, partially offset by approximately
$519,000 in general and administrative expenses, $183,000 in general and
administrative expenses - related party, and approximately $148,000 in franchise
tax expense.
For the period from September 11, 2020 (inception) through September 30, 2020,
we had a net loss of $5,000 which consisted of general and administrative
expenses. General and administrative expenses were comprised of professional
fees.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities,
other than an agreement to pay Administrative Services Agreement fees to our
Sponsor that total $20,000 per month for office space, secretarial and
administrative services provided to members of our management team. During the
three and nine months ended September 30, 2021, the Company incurred $60,000 and
$180,000 in expenses in connection with such services, respectively.
Critical Accounting Policies
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 U.S. 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:

                                       21
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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. Class A common stock subject to
mandatory redemption (if any) are classified as liability instruments and are
measured at fair value. 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) is classified as temporary equity. At all
other times, shares of Class A common stock are classified as stockholders'
equity. Our shares of Class A common stock feature certain redemption rights
that are considered to be outside of our control and subject to the occurrence
of uncertain future events. Accordingly, 16,560,000 shares of Class A common
stock subject to possible redemption are presented as temporary equity, outside
of the stockholders' equity section of our condensed balance sheet. We recognize
changes in redemption value immediately as they occur and adjust the carrying
value of the Class A common stock subject to possible redemption to equal the
redemption value at the end of each reporting period. This method would view the
end of the reporting period as if it were also the redemption date for the
security.
Effective with the closing of the Initial Public Offering and the over-allotment
option, we recognized the accretion from initial book value to redemption
amount, which resulted in charges against additional
paid-in
capital (to the extent available) and accumulated deficit.
Net Income (Loss) Per Common Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share." We have three classes of shares, which are referred to as
Class A common stock, Class B common stock, and Class F common stock. Income and
losses are shared pro rata between the three classes of shares. Net income
(loss) per common stock is calculated by dividing the net income (loss) by the
weighted average shares of common stock outstanding for the respective period.
The calculation of diluted net income (loss) per common share does not consider
the effect of the warrants issued in connection with the Initial Public Offering
(including exercise of the over-allotment option) and the Private Placement to
purchase an aggregate of 4,201,400 Class A common stock in the calculation of
diluted income (loss) per common share, because their exercise is contingent
upon future events and their inclusion would be anti-dilutive under the treasury
stock method. As a result, diluted net income (loss) per common share is the
same as basic net income (loss) per share for the three and nine months ended
September 30, 2021. Accretion associated with the redeemable Class A common
stock is excluded from earnings per share as the redemption value approximates
fair value.
We have considered the effect of Class F common stock that were excluded from
weighted average number as they were contingent on the exercise of
over-allotment option by the underwriters. Since the contingency was satisfied,
we included these shares in the weighted average number as of the beginning of
the interim period to determine the dilutive impact of these shares.
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 ASC 480
and 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.
We issued 4,140,000 warrants to purchase Class A common stock to investors in
our Initial Public Offering and Over-Allotment (the "Public Warrants") and
issued 61,400 Private Placement Warrants (the "Private Warrants"). All of its
outstanding warrants are recognized as derivative liabilities in accordance with
ASC
815-40.
Accordingly, we recognize the warrant instruments as liabilities at fair value
and adjust the carrying value of the instruments to fair value at each reporting
period until they are exercised. The initial fair value of the Public Warrants
was calculated using an option pricing method and the fair value of the Private
Warrants was calculated using the Black-Scholes Option Pricing Model as of
December 31, 2020.
Subsequently, as of September 30, 2021, the fair value of the Private Warrants
was calculated using the Black-Scholes Option Pricing Model, and the fair value
of the Public Warrants has been measured based on the listed market price of
such warrants. The determination of the fair value of the warrant liability may
be subject to change as more current information becomes available and
accordingly the actual results could differ significantly. Derivative warrant
liabilities are classified as noncurrent liabilities as their liquidation is not
reasonably expected to require the use of current assets or require the creation
of current liabilities.
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 using the modified retrospective method for transition. Adoption of the ASU
did not impact our financial position, results of operations or cash flows.

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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 September 30, 2021, we did not have any
off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K.
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
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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule
12b-2
of the Exchange Act and are not required to provide the information otherwise
required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, we conducted an
evaluation of the effectiveness of our disclosure controls and procedures as of
the fiscal quarter ended September 30, 2021, as such term is defined in Rules
13a-15(e)
and
15d-15(e)
under the Exchange Act. Based on this evaluation, our Chief Executive Officer
and Chief Financial Officer, concluded that during the period covered by this
report, our disclosure controls and procedures were not effective as of
September 30, 2021, because of a material weakness in our internal control over
financial reporting relating to the accounting for complex financial
instruments. A material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the Company's annual or
interim financial statements will not be prevented or detected on a timely
basis. Specifically, the Company's management has concluded that our internal
control around the interpretation and accounting for certain complex equity and
equity-linked instruments issued by the Company and the presentation of earnings
per share was not effectively designed or maintained. This material weakness
resulted in the restatement of the Company's balance sheet as of December 14,
2020, its annual financial statements for the period ended December 31, 2020 in
the Company's Form 10-K/A Amendment No. 2 for the year ended December 31, 2020
as filed with the SEC on December 29, 2021, and its interim financial statements
for the quarters ended March 31, 2021, June 30, 2021, and September 30, 2021.
Additionally, this material weakness could result in a misstatement of the
carrying value of equity, equity-linked instruments and related accounts and
disclosures, and presentation of earnings per share that would result in a
material misstatement of the financial statements that would not be prevented or
detected on a timely basis. As a result, our management performed additional
analysis as deemed necessary to ensure that our financial statements were
prepared in accordance with generally accepted accounting principles in the
United States of America. Accordingly, management believes that the financial
statements included in this Form
10-Q
present fairly, in all material respects, our financial position, result of
operations and cash flows of the periods presented. Management understands that
the accounting standards applicable to our financial statements are complex and
has since the inception of the Company benefited from the support of experienced
third-party professionals with whom management has regularly consulted with
respect to accounting issues. Management intends to continue to further consult
with such professionals in connection with accounting matters.
Disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in our Exchange Act reports is recorded,
processed, summarized, and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to our management, including our Chief Executive Officer and Chief Financial
Officer or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.

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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 on Form
10-Q
that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting except for the below :
Our Chief Executive Officer and Chief Financial Officer performed additional
accounting and financial analyses and other post-closing procedures including
consulting with subject matter experts related to the accounting for certain
complex equity and equity-linked instruments issued by the Company and the
presentation of earnings per share. The Company's management has expended, and
will continue to expend, a substantial amount of effort and resources for the
remediation and improvement of our internal control over financial reporting.
While we have processes to properly identify and evaluate the appropriate
accounting technical pronouncements and other literature for all significant or
unusual transactions, we have expanded and will continue to improve these
processes to ensure that the nuances of such transactions are effectively
evaluated in the context of the increasingly complex accounting standards.

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