References to the "Company," "SCVX Corp." "our," "us" or "we" refer to SCVX
Corp. The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the unaudited
condensed consolidated 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 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. Factors that might cause or contribute to
such a discrepancy include, but are not limited to, those relating to the
proposed Business Combination described below and those described in our other
SEC filings.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company
on November 15, 2019. 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, we are subject to
all of the risks associated with emerging growth companies. Our sponsor is SCVX
USA LLC, a Delaware limited liability company (the "Sponsor").
The registration statement for our initial public offering (the "Initial Public
Offering") was declared effective on January 23, 2020. On January 28, 2020, we
consummated the Initial Public Offering of 23,000,000 units (the "Units" and,
with respect to the Class A ordinary shares included in the Units, the "Public
Shares"), including the issuance of 3,000,000 Units as a result of the
underwriters' exercise of their over-allotment option in full, at $10.00 per
Unit, generating gross proceeds of $230.0 million, and incurring offering costs
of approximately $13.3 million, inclusive of $8.1 million in deferred
underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 6,600,000 warrants (the "Private
Placement Warrants") to our Sponsor at a purchase price of $1.00 per Private
Placement Warrant, generating gross proceeds to us of $6.6 million, and
incurring offering costs of approximately $21,000.
Upon the closing of the Initial Public Offering and the Private Placement,
$230.0 million ($10.00 per Unit) of the net proceeds of the Initial Public
Offering and certain of the proceeds of the Private Placement was placed in a
trust account (the "Trust Account"), located in the United States, with
Continental Stock Transfer & Trust Company acting as trustee, and was invested
only in U.S. government securities, within the meaning set forth in Section
2(a)(16) of the Investment Company Act with a maturity of 185 days or less or in
any open-ended investment company that holds itself out as a money market fund
selected by us meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of
Rule 2a-7 of the Investment Company Act, as determined by us, 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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We have until July 28, 2022 to consummate a Business Combination (the
"Combination Period"). If we are unable to complete a Business Combination
within the Combination Period, 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 (less up to $100,000 of interest to pay dissolution
expenses and which interest shall be net of taxes payable), divided by the
number of then 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 our
remaining shareholders and our board of directors, liquidate and dissolve,
subject in the case of clauses (ii) and (iii) to our obligations under Cayman
Islands law to provide for claims of creditors and the requirements of other
applicable law.
On January 25, 2022, we held an Extraordinary General Meeting (the
"Extraordinary General Meeting"). At the Extraordinary General Meeting, the
shareholders approved to extend the date, from January 28, 2022 to July 28,
2022, by which we much either (a) consummate a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with
one or more businesses or entities or (b) (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 (less up to $100,000 of interest to pay
dissolution expenses and which interest shall be net of taxes payable), divided
by the number of then 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 our remaining shareholders and our board of directors, liquidate and
dissolve, subject in the case of clauses (ii) and (iii) to our obligations under
Cayman Islands law to provide for claims of creditors and the requirements of
other applicable law. In connection with the vote to approve the extension
proposal, the holders of 19,207,987 Class A ordinary shares properly exercised
their right to redeem their shares for cash at a redemption price of
approximately $10.02 per share, for an aggregate redemption amount of
approximately $192.5 million. As such, approximately 84% of the Class A ordinary
shares were redeemed and approximately 16% of the Class A ordinary shares remain
outstanding. After the satisfaction of such redemptions, the balance in our
trust account will be approximately $38.0 million.
Results of Operations
Our entire activity since inception up to March 31, 2022 relates to our
formation, the Initial Public Offering and, since the closing of the Initial
Public Offering, a search for and efforts toward completing an initial Business
Combination. We will not be generating any operating revenues until the closing
and completion of our initial Business Combination, at the earliest.
For the three months ended March 31, 2022, we had net income of approximately
$2.1 million, which consisted of an $2.6 million gain from changes in fair value
of warrant liabilities and approximately $2,000 in interest earned from
investments held in the Trust Account, partially offset by approximately
$478,000 general and administrative expenses and $30,000 of related party
administrative fees.
For the three months ended March 31, 2021, we had net income of approximately
$12.5 million, which consisted of an approximately $13.1 million gain from
changes in fair value of warrant liabilities and approximately $3,000 in
interest earned from investments held in the Trust Account, partially offset by
approximately $589,000 in general and administrative expenses and $20,000 of
related party administrative fees.
Liquidity, Capital Resources and Going Concern
As of March 31, 2022, we had approximately $284,000 in our operating bank
accounts and working capital deficit of approximately $3.3 million.
Prior to the completion of the Initial Public Offering, our liquidity needs were
satisfied through a capital contribution of $25,000 from the Sponsor in exchange
for the issuance of the Founder Shares, and a loan of approximately $139,000
from the Sponsor pursuant to a promissory note originally issued on November 19,
2019 (the "Note"). We fully repaid the Note on January 28, 2020. Subsequent to
the consummation of the Initial Public Offering on January 28, 2020, the
liquidity needs have been satisfied through the net proceeds from the
consummation of the Private Placement not held in the Trust Account. In
addition, our officers, directors and initial shareholders may, but are not
obligated to, provide us loans in order to finance transaction costs in
connection with a Business Combination (the "Working Capital Loans"). As of
March 31, 2022 and December 31, 2021 there were no amounts outstanding under any
Working Capital Loans.
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On February 23, 2022, we issued an unsecured promissory note in the principal
amount of $500,000 to our Sponsor (the "Sponsor Note"). The Sponsor Note bears
interest at a rate of 0.59% per annum and is repayable on the earlier to occur
of (i) the closing of a business combination and (ii) July 28, 2022, which is
the date by which the Company must either consummate a business combination or
cease all operations except for the purpose of winding up.
In connection with our assessment of going concern considerations in accordance
with the Financial Accounting Standards Board's ("FASB") Accounting Standards
Codification ("ASC") Topic 205-40, "Presentation of Financial Statements - Going
Concern," we have determined that the mandatory liquidation and subsequent
dissolution raises substantial doubt about our ability to continue as a going
concern. No adjustments have been made to the carrying amounts of assets or
liabilities should we be required to liquidate after July 28, 2022. The
financial statements do not include any adjustment that might be necessary if we
are unable to continue as a going concern.
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 balance sheet. The unaudited condensed consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
In February 2022, the Russian Federation and Belarus commenced a military action
with the country of Ukraine. As a result of this action, various nations,
including the United States, have instituted economic sanctions against the
Russian Federation and Belarus. The impact of this action and related sanctions
on the world economy are not determinable as of the date of this Report.
Further, the specific impact of this action on our financial condition, results
of operations, and cash flows is also not determinable as of the date of this
Report.
Contractual Obligations
Registration Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may
be issued upon conversion of Working Capital Loans, if any, are entitled to
registration rights pursuant to a registration rights agreement. These holders
will be entitled to certain demand and "piggyback" registration rights. However,
the registration rights agreement provides that we will not permit any
registration statement filed under the Securities Act to become effective until
the termination of the applicable lock-up period for the securities to be
registered. 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 final prospectus relating
to the Initial Public Offering to purchase up to 3,000,000 additional Units to
cover over-allotments at the Initial Public Offering price less the underwriting
discounts and commissions. The underwriters fully exercised their over-allotment
option on January 28, 2020.
The underwriters were entitled to an underwriting discount of $0.20 per unit, or
$4.6 million in the aggregate, which was paid upon the closing of the Initial
Public Offering. In addition, $0.35 per unit, or $8.1 million in the aggregate,
will be 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.
Administrative Support Agreement
Commencing on the date that our securities were first listed on the New York
Stock Exchange, we agreed to pay the Sponsor a total of $10,000 per month for
office space, administrative and support services. Upon completion of the
Initial Business Combination or our liquidation, we will cease paying these
monthly fees. We incurred $30,000 in expenses in connection with such services
during the three months ended March 31, 2022 and 2021, as reflected in the
accompanying unaudited condensed consolidated statements of operations. As of
March 31, 2022 and December 31, 2021, $270,000 and $240,000 in accrued expenses
with related party were outstanding, respectively, as reflected in the
accompanying condensed consolidated balance sheets.
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Critical Accounting Policies and Estimates
The preparation of unaudited condensed consolidated financial statements and
related disclosures in conformity with accounting principles generally accepted
in the United States 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 unaudited condensed consolidated
financial statements, and the reported amounts of income and expenses during the
periods reported. Actual results could materially differ from those estimates.
We have identified the following as our critical accounting policies:
Class A Ordinary Shares Subject to Possible Redemption
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
our control) are classified as temporary equity. At all other times, Class A
ordinary shares are classified as shareholders' equity. Our Class A ordinary
shares feature certain redemption rights that are considered to be outside of
our control and subject to occurrence of uncertain future events. Accordingly,
all of our Class A ordinary shares subject to possible redemption are presented
at redemption value as temporary equity, outside of the shareholders' equity
section of our unaudited condensed consolidated balance sheets.
Under ASC 480, we have elected to recognize changes in the redemption value
immediately as they occur and adjust the carrying value of the security 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. Immediately upon the closing of the Initial Public Offering, we
recognized the accretion from initial book value to redemption amount value. The
change in the carrying value of the redeemable Class A ordinary shares resulted
in charges against additional paid-in capital (to the extent available) and
accumulated deficit.
Net Income per Ordinary Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share." The Company has two classes of shares, which are referred
to as Class A ordinary shares and Class B ordinary shares. Income and losses are
shared pro rata between the two classes of shares. Net income (loss) per
ordinary share is calculated by dividing the net income (loss) by the weighted
average number of ordinary shares outstanding for the respective period.
The calculation of diluted net income per ordinary share does not consider the
effect of the warrants underlying the Units sold in the Initial Public Offering
and the Private Placement Warrants to purchase 18,100,000 Class A ordinary
shares 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 per share is the same as basic net income per share for the
three months ended March 31, 2022 and 2021. Accretion associated with the
redeemable Class A ordinary shares is excluded from earnings per share as the
redemption value approximates fair value.
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of its financial instruments, including
issued shares purchase warrants, to determine if such instruments are
derivatives or contain features that qualify as embedded derivatives, pursuant
to the Financial Accounting Standards Board's ("FASB") Accounting Standards
Codification ("ASC") Topic 480 "Distinguishing Liabilities from Equity" and FASB
ASC Topic 815, "Derivatives and Hedging" ("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.
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We account for its warrants issued in connection with its Initial Public
Offering and Private Placement as derivative warrant liabilities in accordance
with ASC 815. Accordingly, we recognize the warrant instruments as liabilities
at fair value and adjusts the instruments to fair value at each reporting
period. The liabilities are subject to re-measurement at each balance sheet date
until exercised, and any change in fair value is recognized in the unaudited
condensed consolidated statements of operations. The fair value of warrants
issued in connection with the Private Placement has been estimated using
Monte-Carlo simulations at each balance sheet date. The fair value of the
warrants issued in connection with the Initial Public Offering was initially
measured using a Monte-Carlo simulation and subsequently been measured at each
measurement date based on the market price of such warrants when separately
listed and traded.
Recent Accounting Pronouncements
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 unaudited condensed consolidated financial statements.
Off-Balance Sheet Arrangements
As of March 31, 2022, 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, our 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 of the
Sarbanes-Oxley Act, (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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