References to the "Company," "our," "us" or "we" refer to Powered Brands. 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 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 (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 Quarterly Report on Form 10-Q. 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.
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.
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.
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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 September 30,
2022, was in preparation for our formation and the Initial Public Offering, and
since the closing of the Initial Public Offering, the search for Business
Combination candidates. We will not be generating any operating revenues until
the closing and completion of our initial Business Combination. We generated
non-operating income in the form of investment income from the investments held
in the Trust Account following the closing of the Initial Public Offering.
For the three months ended September 30, 2022, we had a net income of
approximately $1.3 million, which consisted of income of approximately $291,000
from the changes in the fair value of derivative warrant liabilities and
approximately $1.2 million from the investments held in the Trust Account,
partially offset by approximately $150,000 in general and administrative
expenses and approximately $38,000 in general and administrative expenses -
related party.
For the three months ended September 30, 2021, we had net income of
approximately $4.5 million which consisted of approximately $4.9 million from
changes in the fair value of the derivative warrant liabilities and
approximately $7,000 of income from the investments held in the Trust Account,
partially offset by approximately $260,000 in general and administrative
expenses and approximately $139,000 in general and administrative expenses -
related party.
For the nine months ended September 30, 2022, we had a net income of
approximately $8.5 million, which consisted of income of approximately $7.7
million from the changes in the fair value of derivative warrant liabilities and
approximately $1.6 million from the investments held in the Trust Account,
partially offset by approximately $747,000 in general and administrative
expenses and approximately $114,000 in general and administrative expenses -
related party.
For the nine months ended September 30, 2021, we had net income of approximately
$2.3 million which consisted of approximately $3.6 million from changes in the
fair value of derivative warrant liabilities and approximately $19,000 of income
from the investments held in the Trust Account, partially offset by
approximately $738,000 in general and administrative expenses, approximately
$139,000 in general and administrative expenses - related party and
approximately $480,000 in transaction costs associated with the issuance of
warrants.
Liquidity and Going Concern
As of September 30, 2022, we had approximately $92,000 in our operating bank
account and a working capital deficit of approximately $210,000.
Our liquidity needs to date have been satisfied through a contribution of
$25,000 from Sponsor to cover for certain expenses in exchange for the issuance
of the Founder Shares, a loan of approximately $141,000 from our Sponsor
pursuant to a promissory note ("Note"), and the proceeds from the consummation
of the Private Placement not held in the Trust Account. We repaid the Note in
full on January 19, 2021.
In addition, in order to 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, provide us Working Capital
Loans. On October 15, 2021, we entered into a promissory note with our Sponsor
and may borrow up to $277,649 from our Sponsor for ongoing expenses reasonably
related to our business and the consummation of the Business Combination
("Working Capital Promissory Note"). The full amount of the Working Capital
Promissory Note was drawn on October 15, 2021, and immediately converted into
warrants. As of September 30, 2022 and December 31, 2021, no balance was
outstanding under the Working Capital Loans.
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Our management plans to continue its efforts to complete a Business Combination
within 24 months of the closing of the Initial Public Offering, or January 12,
2023. We believe that the funds currently available to us outside of the Trust
Account will be sufficient to allow us to operate until January 12, 2023;
however, there can be no assurances that this estimate is accurate. We expect we
would incur significant costs in pursuit of an initial Business Combination
which would require additional liquidity.
In connection with our assessment of going concern considerations in accordance
with FASB ASC Topic 205-40, "Presentation of Financial Statements - Going
Concern," our management has determined that the liquidity condition and the
mandatory liquidation date and subsequent dissolution raises substantial doubt
about our ability to continue as a going concern. If we are unable to complete a
business combination by January 12, 2023, then we will cease all operations
except for the purpose of liquidating. No adjustments have been made to the
carrying amounts of assets or liabilities should we be required to liquidate
after January 12, 2023.
Management continues to evaluate the impact of the COVID-19 pandemic on the
industry and has concluded that while it is reasonably possible that the virus
could have a negative effect on our financial position, results of our
operations and/or search for a target company, the specific impact is not
readily determinable as of the date of the unaudited condensed financial
statements. The unaudited condensed financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities.
Administrative Services
On October 15, 2021, we entered into an Administrative Services Agreement with
the Sponsor, pursuant to which the Sponsor will provide certain administrative
services to us, and we will reimburse the Sponsor up to $10,000 a month based on
receipts submitted by the Sponsor to us, and $12,650 per month, in each case
subject to adjustment in accordance with the terms of the agreement. In
addition, we made a one-time payment to Sponsor during the three months ended
September 30, 2021 equal to $125,849. During the three months ended September
30, 2022 and 2021, the Company incurred approximately $38,000 and $139,000,
respectively, under this agreement, included in general and administrative
expenses - related party on the accompanying unaudited condensed statements of
operations. During the nine months ended September 30, 2022 and 2021, the
Company incurred approximately $114,000 and $139,000, respectively, under this
agreement, included in general and administrative expenses - related party on
the accompanying unaudited condensed statements of operations. As of September
30, 2022 and December 31, 2021, there were no amounts outstanding for these
services.
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.
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
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held in the Trust Account solely in the event that we complete a Business
Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses. A summary of our significant accounting policies is
included in Note 2 to our condensed financial statements in Part I, Item 1 of
this Quarterly Report. Certain of our accounting policies are considered
critical, as these policies are the most important to the depiction of our
financial statements and require significant, difficult or complex judgments,
often employing the use of estimates about the effects of matters that are
inherently uncertain. Such policies are summarized in the Management's
Discussion and Analysis of Financial Condition and Results of Operations section
in our 2021 Annual Report on Form 10-K filed with the SEC on March 31, 2022.
There have been no significant changes in the application of our critical
accounting policies during the nine months ended September 30, 2022.
Recent Accounting Pronouncements
See Note 2 to the unaudited condensed financial statements included in Part I,
Item 1 of this Quarterly Report for a discussion of recent accounting
pronouncements.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations
As of September 30, 2022 and December 31, 2021, 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 unaudited condensed 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 Public Company
Accounting Oversight Board 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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