References to the "Company," "Powered Brands," "our," "us" or "we" refer to
Powered Brands. The following discussion and analysis of our financial condition
and results of operations should be read in conjunction with the financial
statements and the notes thereto contained elsewhere in this Annual Report on
Form 10-K. 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 Annual Report on Form 10-K includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (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. Such statements include, but are not limited
to, possible business combinations and the financing thereof, and related
matters, as well as all other statements other than statements of historical
fact included in this Annual Report on Form 10-K. Factors that might cause or
contribute to such a discrepancy include, but are not limited to, those
described in our other Securities and Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated in the Cayman Islands on September 18,
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 have not
selected any specific business combination target and we have not, nor has
anyone on our behalf, engaged in any substantive discussions directly or
indirectly, with any business combination target with respect to an initial
business combination with us.
Our Sponsor is PB Management, a Cayman Islands exempted company. We are an
emerging growth company and, as such, we are subject to all of the risks
associated with emerging growth companies.
The registration statement for our Initial Public Offering was declared
effective on January 7, 2021. On January 12, 2021, we consummated our Initial
Public Offering of 27,600,000 units (the "Units" and, with respect to the
Class A ordinary shares included in the Units being offered, the "Public
Shares"), including 3,600,000 additional Units to cover over-allotments (the
"Over-Allotment Units"), at $10.00 per Unit, generating gross proceeds of
$276.0 million, and incurring offering costs of approximately $15.8 million, of
which approximately $9.7 million was for deferred underwriting commissions (Note
6).
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Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 5,180,000 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants"),
at a price of $1.50 per Private Placement Warrant with our Sponsor, generating
gross proceeds of approximately $7.8 million (Note 4).
Upon the closing of the Initial Public Offering and the Private Placement,
$276.0 million ($10.00 per Unit) of the net proceeds of the Initial Public
Offering and certain of the proceeds of the Private Placement were placed in a
trust account ("Trust Account") with Continental Stock Transfer & Trust Company
acting as trustee, and were invested by the trustee only 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 of the Investment Company Act, until
the earlier of: (i) the completion of a Business Combination and (ii) the
distribution of the Trust Account as described below.
Our management has broad discretion with respect to the specific application of
the net proceeds of the Initial Public Offering and the sale of Private
Placement Warrants, although substantially all of the net proceeds are intended
to be applied generally toward consummating a Business Combination.
If we are unable to complete a Business Combination by January 12, 2023, 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 Public Shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the Trust Account, including interest (which interest
shall be net of taxes payable and up to $100,000 of interest to pay dissolution
expenses), divided by the number of then issued and outstanding Public Shares,
which redemption will completely extinguish public shareholders' rights as
shareholders (including the right to receive further liquidation distributions,
if any) 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 each case to our obligations under
Cayman Islands law to provide for claims of creditors and in all cases subject
to the other requirements of applicable law.
Results of Operations
Our entire activity from September 18, 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 at the earliest.
We generate non-operating income in the form of interest income from the
proceeds of the Initial Public Offering. We expect to incur increased expenses
as a result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well as for due diligence expenses.
For the period from September 18, 2020 (inception) through December 31, 2020, we
had a net loss of approximately $28,000, which consisted solely of general and
administrative expenses.
Liquidity and Capital Resources
As of December 31, 2020, we had no cash and a working capital deficit of
approximately $0.4 million.
Our liquidity needs prior to the consummation of the Initial Public Offering 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, and a loan of approximately $141,000 pursuant to the Note issued to our
Sponsor. Subsequent to the closing of the Initial Public Offering, the proceeds
from the consummation of the Private Placement not held in the Trust Account
will be used to satisfy our liquidity. We fully repaid the Note to our Sponsor
on January 19, 2021. 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. As of
December 31, 2020, there were no amounts outstanding under any Working Capital
Loan.
Based on the foregoing, management believes that it 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.
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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.
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 United States generally accepted accounting principles. 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. Critical accounting policies are identified below.
Upon the closing of the Initial Public Offering and the Private Placement, the
net proceeds of the Initial Public Offering and certain of the proceeds of the
Private Placement were placed in a trust account ("Trust Account") with
Continental Stock Transfer & Trust Company acting as trustee and will be
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 of 1940, as amended, or 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.
The Company accounts for its Class A ordinary shares subject to possible
redemption in accordance with the guidance in ASC Topic 480 "Distinguishing
Liabilities from Equity." Class A ordinary shares subject to mandatory
redemption (if any) are classified as liability instruments and are measured at
fair value. Conditionally redeemable Class A ordinary shares (including Class A
ordinary shares 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 the Company's control) are classified as temporary
equity. At all other times, Class A ordinary shares are classified as
shareholders' equity. The Company's Class A ordinary shares feature certain
redemption rights that are considered to be outside of the Company's control and
subject to the occurrence of uncertain future events.
Related Party Transactions
Founder Shares
On October 16, 2020, our sponsor paid $25,000 to cover certain expenses on our
behalf in exchange for issuance of 5,750,000 Class B ordinary shares (the
"Founder Shares"). By December 4, 2020, our Sponsor transferred an aggregate of
140,000 Founder Shares to certain of the board members, board nominees, officers
and consultants. On January 7, 2021, we effected a share sub-division, resulting
in an aggregate of 6,900,000 Founder Shares outstanding. All shares and
associated amounts had been retroactively restated to reflect the share
sub-division. Our Sponsor agreed to forfeit up to an aggregate of 900,000
Founder Shares to the extent that the option to purchase additional units was
not exercised in full by the underwriters, so that the Founder Shares would
represent 20% of our issued and outstanding shares after the Initial Public
Offering. On January 12, 2021, the underwriter fully exercised its
over-allotment option; thus, these 900,000 Founder Shares were no longer subject
to forfeiture.
The Initial Shareholders agreed not to transfer, assign or sell any of their
Founder Shares until the earlier to occur of: (A) one year after the completion
of the initial Business Combination and (B) subsequent to the initial Business
Combination, (x) if the closing price of Class A ordinary shares equals or
exceeds $12.00 per share (as adjusted for share sub-divisions, share
capitalizations, reorganizations, recapitalizations and the like) for any 20
trading days within any 30-trading day period commencing at least 150 days after
the initial Business Combination, or (y) the date on which we complete a
liquidation, merger, share exchange, reorganization or other similar transaction
that results in all of the public shareholders having the right to exchange
their ordinary shares for cash, securities or other property.
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Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, we consummated
the Private Placement of 5,180,000 Private Placement Warrants at a price of
$1.50 per Private Placement Warrant with our Sponsor, generating gross proceeds
of approximately $7.8 million.
Each whole Private Placement Warrant is exercisable for one whole share of
Class A ordinary shares at a price of $11.50 per share. A portion of the
proceeds from the sale of the Private Placement Warrants to our Sponsor was
added to the proceeds from the Initial Public Offering held in the Trust
Account. If we do not complete a Business Combination within the Combination
Period, the Private Placement Warrants will expire worthless. The Private
Placement Warrants will be non-redeemable except as described below in Note 7
and exercisable on a cashless basis so long as they are held by our Sponsor or
its permitted transferees.
Our Sponsor and our officers and directors agreed, subject to limited
exceptions, not to transfer, assign or sell any of their Private Placement
Warrants until 30 days after the completion of the initial Business Combination.
Related Party Loans
On October 16, 2020, our Sponsor agreed to loan us up to $300,000 to be used for
the payment of costs related to the Initial Public Offering pursuant to a
promissory note (the "Note"). The Note was non-interest bearing, unsecured and
due upon closing of the Initial Public Offering. We borrowed approximately
$141,000 under the Note, and then fully repaid the Note on January 19, 2021.
In addition, in order to fund working capital deficiencies or finance
transaction costs in connection with a Business Combination, our Sponsor or an
affiliate of our Sponsor, or certain of our officers and directors may, but are
not obligated to, loan us funds as may be required ("Working Capital Loans"). If
we complete a Business Combination, we may repay the Working Capital Loans out
of the proceeds of the Trust Account released to us. Otherwise, the Working
Capital Loans would be repaid only out of funds held outside the Trust Account.
In the event that a Business Combination does not close, we may use a portion of
proceeds held outside the Trust Account to repay the Working Capital Loans but
no proceeds held in the Trust Account would be used to repay the Working Capital
Loans. The Working Capital Loans would either be repaid upon consummation of a
Business Combination, without interest, or, at the lender's discretion, up to
$1.5 million of such Working Capital Loans may be convertible into warrants of
the post Business Combination entity at a price of $1.50 per warrant. The
warrants would be identical to the Private Placement Warrants. Except for the
foregoing, the terms of such Working Capital Loans, if any, have not been
determined and no written agreements exist with respect to such loans. As of
December 31, 2020 we had no borrowings under the Working Capital Loans.
Other Contractual Obligations
Registration and Shareholder Rights
The holders of the Founder Shares, Private Placement Warrants, Class A ordinary
shares underlying the Private Placement Warrants and warrants that may be issued
upon conversion of Working Capital Loans (and any Class A ordinary shares
issuable upon the exercise of the Private Placement Warrants and warrants that
may be issued upon conversion of Working Capital Loans) were entitled to
registration rights pursuant to a registration and shareholder rights agreement
signed upon the effective date of the Initial Public Offering. The holders of
these securities were 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.
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Underwriting Agreement
We granted the underwriters a 45-day option from the date of the final
prospectus to purchase up to 3,600,000 additional Units at the Initial Public
Offering price less the underwriting discounts and commissions. On January 12,
2021, the underwriters fully exercised the over-allotment option.
The underwriters were entitled to an underwriting discount of $0.20 per Unit, or
approximately $5.5 million in the aggregate, paid upon the closing of the
Initial Public Offering. In addition, $0.35 per unit, or approximately
$9.7 million in the aggregate is 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.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations
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.
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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