References in this report (the "Quarterly Report") to "we", "us", "our" or the "Company" refer to Pershing Square Tontine Holdings, Ltd., and references to our "management" or our "management team" refer to our officers and directors. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited 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.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other than statements of historical facts, and including but not limited to statements regarding the Company or the Company's management team's expectations, hopes, beliefs, intentions or strategies regarding the future, included in this Quarterly Report that address activities, events or developments that the Company expects or anticipates will or may occur in the future are forward-looking statements. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the Company's control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Information concerning these and other factors can be found in the Company's filings with the SEC, including those set forth in the Risk Factors section of the Company's final prospectus for its initial public offering. Copies are available on the SEC's website, www.sec.gov. In light of the significant uncertainties in forward-looking statements, you should not regard such statements as a representation or warranty that the Company will achieve its objectives and plans in any specified timeframe, or at all, and you should not place undue reliance on any forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements, except as may be required by law.

Overview

We are a blank check company incorporated as a Delaware corporation and 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. We are currently in negotiations with a specific business target and while substantial progress has been made, significant issues remain to be addressed before a transaction can be announced and consummated, if at all. We intend to effectuate our Initial Business Combination using cash from the proceeds of the initial public offering and the private placements of the Sponsor Warrants, Director Warrants and Forward Purchase Units, our capital stock, debt or a combination of cash, stock and debt. Our Initial Business Combination will be a negotiated transaction, not a hostile takeover.

The issuance of additional shares of our stock in a business combination, including the Forward Purchase Securities:





  •   may significantly dilute the equity interest of investors;




     •    may subordinate the rights of holders of our common stock if preferred
          stock is issued with rights senior to those afforded our common stock;




     •    could cause a change in control if a substantial number of shares of our
          common stock is issued, which may affect, among other things, our ability
          to use net operating loss carry forwards, if any, and could result in the
          resignation or removal of our present directors and officers;




     •    may have the effect of delaying or preventing a change of control of us
          by diluting the stock ownership or voting rights of a person seeking to
          obtain control of us; and




     •    may adversely affect prevailing market prices for our Class A Common
          Stock and/or Redeemable Warrants.

Similarly, if we issue debt instruments or otherwise incur significant indebtedness, it could result in:





     •    default and foreclosure on our assets if our operating revenues after our
          Initial Business Combination are insufficient to repay our debt
          obligations;




     •    acceleration of our obligations to repay the indebtedness even if we make
          all principal and interest payments when due if we breach certain
          covenants that require the maintenance of certain financial ratios or
          reserves without a waiver or renegotiation of that covenant;




     •    our immediate payment of all principal and accrued interest, if any, if
          the debt security is payable on demand;




     •    our inability to obtain necessary additional financing if the debt
          security contains covenants restricting our ability to obtain such
          financing while the debt security is outstanding;




  •   our inability to pay dividends on our common stock;




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     •    using a substantial portion of our cash flow to pay principal and
          interest on our debt, which will reduce the funds available for dividends
          on our common stock if declared, our ability to pay expenses, make
          capital expenditures and acquisitions, and fund other general corporate
          purposes;




     •    limitations on our flexibility in planning for and reacting to changes in
          our business and in the industry in which we operate;




     •    increased vulnerability to adverse changes in general economic, industry
          and competitive conditions and adverse changes in government regulation;
          limitations on our ability to borrow additional amounts for expenses,
          capital expenditures, acquisitions, debt service requirements, and
          execution of our strategy; and




     •    other purposes and other disadvantages compared to our competitors who
          have less debt.

We expect to continue to incur costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete our Initial Business Combination will be successful.

Certain Observations

During the first quarter of 2021 through to the date of this Quarterly Report, we continued to work on a potential business combination transaction for which we had initiated discussions and began due diligence in November 2020. While substantial progress has been made, significant issues remain to be addressed before a transaction can be announced and consummated, if at all.

For the three months ended March 31, 2021, we recorded net income of $336,996,381, which was primarily due to a non-cash GAAP gain of $341,613,701 related to the change in accounting for our Public Warrants, Sponsor Warrants, Director Warrants and FPA, each of which was previously accounted for as equity. The change in accounting was initiated following publication of a statement by the Staff of the Securities & Exchange Commission on accounting for SPAC warrants, which impacted nearly all SPACs. As a result of the SEC's public statement, management along with the audit committee reconsidered accounting issues related to these instruments and have restated our financial statements at December 31, 2020 to account for our Public Warrants, Sponsor Warrants, Director Warrants and FPA as liabilities. For the three months ended March 31, 2021, this accounting treatment has required us to record a large non-cash GAAP gain (large non-cash GAAP loss for the period ended December 31, 2020) that does not represent an actual cash gain or loss by the Company, nor do we believe it will have any effect on our ability to consummate an initial business combination on attractive terms.

The revised accounting methodology relates to certain features of the Public Warrants, Sponsor Warrants, Director Warrants and our FPA (the terms of which entitle the Sponsor and directors to receive warrants in addition to common stock) that are designed to protect the holders of warrants by entitling them to be exchanged for cash in certain events. The revised accounting requires that we account for the Public Warrants, Sponsor Warrants, Director Warrants and FPA as liabilities equal to their fair value at the end of each reporting period.

The impact of this accounting treatment is highly volatile as it is driven by changes in our stock price. If our stock price increases over a given measurement period, the fair values of our warrants and FPA will also increase in value and result in a larger liability being recorded on our balance sheet and a larger non-cash GAAP loss recorded in our earnings statement for the period, all other things being equal. Conversely, if our stock price declines over a measurement period, we will record a smaller liability on our balance sheet and report a non-cash GAAP gain in our earnings statement, notwithstanding that our stockholders will be holding shares that have declined in value over the measurement period. Since PSTH is the largest SPAC with the largest Sponsor Committed FPA, and has traded at a significant premium to its cash in trust per share, we expect that our cumulative reported loss through March 31, 2021 related to these liabilities will be larger than those reported by other SPACs.

Non-cash GAAP gains or losses due to changes in the fair value of such instruments have no impact on our business or our cash balances - including the more than $4 billion we hold in a trust account at J.P. Morgan - and the minimum Committed FPA of $1 billion, nor do we expect the change in accounting to have any impact on our ability to consummate a potential initial business combination.

Results of Operations

All activities through March 31, 2021 were related to the Company's organizational activities, preparation for the Company's initial public offering, and subsequently, identifying a target company for a business combination. We will not generate any operating revenues until after completion of our Initial Business Combination. We generate non-operating income in the form of interest and dividends on cash and cash equivalents, and marketable securities held in the trust account. We incur ongoing 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 March 31, 2021, we had net income of $336,996,381, which consisted of a change in the fair value of Forward Purchase Agreement liabilities of $268,621,120, a change in the fair value of Outstanding Warrant liabilities of $72,992,581, unrealized gains on marketable securities held in the trust account of $898,278, and interest and dividends earned on marketable securities held in the operating account of $638, offset by legal, insurance, research, franchise tax and other expenses totaling $5,327,597, and provision for income taxes of $188,639.

Non-GAAPFinancial Measures

As noted above, the Company was 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. As such, we believe the amount of committed capital available for an Initial Business Combination is critical to our success as a blank check company. See Liquidity and Capital Resources below for further information on our unrestricted cash balances and funds held in the trust account as of March 31, 2021. In addition, we report adjusted net loss, which is a non-GAAP financial measure that is not required by, or presented in accordance with, GAAP. Management uses this non-GAAP measure to evaluate results as it reduces the volatility of operations due to the accounting for our warrants and forward purchase agreements, which are more fully described in Note 2 of the Notes to Unaudited Condensed Financial Statements included herein, and which do not have an impact on the funds held in the trust account or committed capital available for an Initial Business Combination. We believe this information is useful to investors for these reasons. This non-GAAP measure should not be considered a substitute for the most directly comparable GAAP measures, which are reconciled below. Further, this measure has limitations as an analytical tool, and when assessing our operating performance, you should not consider this measure in isolation or as a substitute for GAAP measures. We may calculate or present this non-GAAP financial measure differently than other companies who report measures with the same or similar names, and as a result, the non-GAAP measure we report may not be comparable.

Adjusted net loss represents our net income excluding the change in fair value of forward purchase agreement liabilities and the change in fair value of Outstanding Warrant liabilities, which are non-cash items. As of March 31, 2021, our Balance Sheet reflects a liability of $714,984,303 (December 31, 2020: $1,056,598,004) related to liabilities which do not impact the funding available for an Initial Business Combination. As can be observed, the value of the liabilities relating to these instruments under GAAP (and the related income/(loss) that flows through the statement of operations) can swing significantly when in fact no economic changes have occurred.



                   FOR THE THREE MONTHS ENDED MARCH 31, 2021



 Net income                                                       $  336,996,381
 Less:

Change in fair value of Forward Purchase Agreement liabilities 268,621,120


 Change in fair value of Outstanding Warrant liabilities              72,992,581

 Adjusted net loss                                                $   (4,617,320 )




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Liquidity and Capital Resources

Our liquidity needs had been satisfied prior to the consummation of the initial public offering through a capital contribution of $25,000 by our Sponsor in exchange for 100 shares of Class B Common Stock, and interest-bearing loans of $1,121,120 from our Sponsor under an unsecured promissory note covering expenses related to the initial public offering. The loan was repaid in full on July 24, 2020, inclusive of interest.

On July 24, 2020, we consummated the initial public offering of 200,000,000 Units, at $20.00 per unit, generating gross proceeds of $4,000,000,000. Simultaneously with the closing of the initial public offering, we consummated a $67,837,500 sale of Sponsor Warrants and Director Warrants in private placements.

Following the initial public offering and the private placements of Sponsor Warrants and Director Warrants, a total of $4,000,000,000 was placed into the trust account. We incurred $94,623,187 in offering costs, including $35,000,000 of underwriting fees, $56,250,000 of deferred underwriting fees and $3,373,187 of other offering costs. The per share amount to be distributed to Public Stockholders who properly redeem their Public Shares will not be reduced by the deferred underwriting fees (further discussed below).

As of March 31, 2021, we had an unrestricted cash balance of $25,117,342 in the operating account, held outside the trust account to fund our ongoing expenses, as well as cash and marketable securities held in the trust account of $4,002,588,732. Interest and dividend income earned on the balance in the trust account will be used to pay taxes on such income. During the three months ended March 31, 2021, we did not withdraw any interest or dividends earned on the trust account.

We intend to use substantially all of the funds held in the trust account, including any amounts representing interest and dividends earned on the trust account (less taxes payable and deferred underwriting fees), and the proceeds from the sale of the Forward Purchase Units to complete an Initial Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete the Initial 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.

In order to fund working capital deficiencies or finance transaction costs in connection with an Initial Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our directors and officers may, but are not obligated to, loan us funds as may be needed. If we complete the Initial Business Combination, we would repay such loaned amounts. In the event that the Initial Business Combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment.

We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating our Initial Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our business combination. Moreover, we may need to obtain additional financing either to complete our Initial Business Combination or because we become obligated to redeem a significant number of the shares of our Public Shares upon completion of our Initial Business Combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Initial Business Combination. If we are unable to complete our Initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following our Initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations as of March 31, 2021.

The underwriters are entitled to a deferred fee of $0.28 per Unit, or $56,250,000 in the aggregate. The aggregate deferred underwriting fees includes (i) the deferral of any underwriting fees, other than the retail selling concessions, in excess of $30,000,000 (a deferral of $12,500,000), plus (ii) a 2.0% rate applied to the gross offering proceeds, subject to a $56,250,000 cap on the amount of such aggregate deferred underwriting fees. If the amount of proceeds from the trust account paid in connection with the redemption rights of Public Stockholders, together with the amount of any capital raised in private placements in connection with the Initial Business Combination from investors other than Sponsor or its affiliates (the "Net Redemptions"), results in us having less than $2,000,000,000 of cash available upon consummation of the Initial Business Combination, only 25% of the aggregate deferred underwriting fees will be payable. If such amount of cash available is $2,000,000,000 or greater, 50% of the aggregate deferred underwriting fees will be





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payable, and the remaining 50% of the aggregate deferred underwriting fees will be subject to a pro-rata reduction based on the amount of Net Redemptions as a percentage of the total public proceeds of the initial public offering. The deferred underwriting fees will be waived by the underwriters solely in the event that we do not complete a business combination, 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 of America (GAAP) 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 financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following 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." The Company's conditionally redeemable Class A Common Stock features certain redemption rights that are considered to be outside of its control and subject to the occurrence of uncertain future events. Accordingly, at March 31, 2021 and December 31, 2020, 200,000,000 shares of Class A Common Stock subject to possible redemption are presented at redemption value as temporary equity, respectively, outside of the stockholders' equity section of the Company's balance sheet.

Outstanding Warrants and FPA Liabilities

We account for our Outstanding Warrants and FPA in accordance with the guidance contained in ASC 815-40, under which the Outstanding Warrants and FPA do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the Outstanding Warrants and FPA as liabilities with changes in fair value reflected on the Company's statement of operations at each reporting period. The fair value of the Public Warrants was initially measured using a modified Black-Scholes pricing model and subsequently measured at the closing quoted market price. The Private Placement Warrants and FPA are valued using a modified Black-Scholes pricing model. See Note 7 of the Notes to Unaudited Condensed Financial Statements included herein for further information on the significant inputs to the models utilized to determine the fair value of the Outstanding Warrants and FPA liabilities.

Net Income / (Loss) per Common Share

We apply the two-class method of calculating earnings per share. Common stock subject to possible redemption which is not currently redeemable and is not redeemable at fair value, have been excluded from the calculation of basic income / (loss) per common share since such shares, if redeemed, only participate in their pro-rata share of the trust account earnings (net of income taxes). Our net income / (loss) is adjusted for the portion of income that is attributable to common stock subject to possible redemption, as these shares only participate in the earnings of the trust account and not our income or losses.

Off-Balance Sheet Arrangements.

As of March 31, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Recent Accounting Pronouncements.

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material impact on the Company's financial statements.

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