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.
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 "Business Combination"). 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.

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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 (ii) 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.
Liquidity and Capital Resources
At June 30, 2021, we had cash of approximately $0.8 million and working capital
of approximately $0.9 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 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 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 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.
Results of Operations
Our entire activity since inception up to June 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 Business Combination.
For the three months ended June 30, 2021, we had net loss of approximately
$309,000, which consisted of approximately $248,000 in general and
administrative expenses, $60,000 in general and administrative expenses -
related party, and approximately $49,000 in franchise tax expense, partially
offset by approximately $42,000 gain in change in fair value of derivative
warrant liabilities and gain on investment held in Trust Account of
approximately $6,000.
For the six months ended June 30, 2021, we had net income of approximately $6.9
million, which consisted of approximately $7.4 million gain in change in fair
value of derivative warrant liabilities and gain on investment held in Trust
Account of approximately $13,000, offset by $379,000 in general and
administrative expenses, $123,000 in general and administrative expenses -
related party, and approximately $98,000 in franchise tax expense.
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 six months ended June 30, 2021, the Company incurred $60,000 and
$120,000 in expenses in connection with such services, respectively.

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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:
Investments Held in the Trust Account
Our portfolio of investments held in the Trust Account is comprised of
investments in money market funds that invest in U.S. government securities. The
estimated fair values of investments held in the Trust Account are determined
using available market information.
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 control and subject to the occurrence of uncertain future events.
Accordingly, at June 30, 2021 and December 31, 2020, 16,034,115 and 15,759,775,
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 Income (Loss) Per Common Share
The Company's condensed statements of operations include a presentation of net
income (loss) per share for Class A common stock subject to possible redemption
in a manner similar to the two-class method of net income (loss) per share. Net
income (loss) per share of common stock, basic and diluted for shares of
redeemable Class A common stock is calculated by dividing the interest income
earned on investments held in the Trust Account, less interest available to be
withdrawn for the payment of taxes, by the weighted average number of redeemable
Class A common stock outstanding for the periods. Net income (loss) per share of
common stock, basic and diluted for shares of non- redeemable Class A, Class B,
and Class F common stock is calculated by dividing the net income (loss),
adjusted for income attributable to redeemable Class A common stock by the
weighted average number of non-redeemable Class A, Class B, and Class F common
stock outstanding for the periods. Non-redeemable Class A common stock includes
shares sold in the Private Placement CAPS
™
, Class B common stock include the Performance Shares, and Class F common stock
include the Founder Shares as these common stocks do not have any redemption
features and do not participate in the income earned on the Trust Account.
The calculation of diluted net income (loss) per common stock does not consider
the effect of the warrants issued in connection with the (i) Initial Public
Offering, (ii) exercise of over-allotment and (iii) Private Placement CAPS
™
since the exercise price of the warrants is in excess of the average common
stock price for the period and therefore the inclusion of such warrants would be
anti-dilutive.
Derivative Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow,
market, or foreign currency risks. The Company evaluates all of its 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.
The Company 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, the Company recognizes the warrant instruments as liabilities at
fair value and adjusts 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 June 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. 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 June 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
Disclosure controls are procedures that are designed with the objective of
ensuring that information required to be disclosed in our reports filed under
the Exchange Act, such as this Report, is recorded, processed, summarized, and
reported within the time period specified in the SEC's rules and forms.
Disclosure controls are also designed with the objective of ensuring that such
information is accumulated and communicated to our management, including the
chief executive officer and chief financial officer, as appropriate to allow
timely decisions regarding required disclosure. As required by
Rules 13a-15
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 June 30, 2021. Based upon their
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that 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 June 30, 2021, due solely to
the material weakness in our internal control over financial reporting with
respect to the classification of the Company's Public Warrants and Private
Warrants as components of equity instead of as derivative liabilities, as
described in our Quarterly Report on Form 10Q for the fiscal quarter ended
March 31, 2021, as filed with the SEC on May 28, 2021. In light of this material
weakness, we performed additional analysis as deemed necessary to ensure that
our financial statements were prepared in accordance with U.S. generally
accepted accounting principles. Accordingly, management believes that the
financial statements included in this Quarterly Report present fairly in all
material respects our financial position, results of operations and cash flows
for the period presented.
We do not expect that our disclosure controls and procedures will prevent all
errors and all instances of fraud. Disclosure controls and procedures, no matter
how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the disclosure controls and procedures are met.
Further, the design of disclosure controls and procedures must reflect the fact
that there are resource constraints, and the benefits must be considered
relative to their costs. Because of the inherent limitations in all disclosure
controls and procedures, no evaluation of disclosure controls and procedures can
provide absolute assurance that we have detected all our control deficiencies
and instances of fraud, if any. The design of disclosure controls and procedures
also is based partly on certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
Other than as described herein, there was no change in our internal control over
financial reporting that occurred during the three and six months ended June 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. To respond to the material weakness
identified, we have devoted, and plan to continue to devote, significant effort
and resources to the remediation and improvement of our internal control over
financial reporting. While we have processes to identify and appropriately apply
applicable accounting requirements, we plan to enhance our system of evaluating
and implementing 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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