References in this Quarterly Report on Form 10-Q (this "Quarterly Report") to
the "Company," "our," "us" or "we" refer to Starboard Value Acquisition 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
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 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. 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 Delaware on November 14, 2019 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") that we have not yet identified. Our
sponsor is SVAC Sponsor LLC, a Delaware limited liability company (our
"Sponsor").
Our registration statements for our initial public offering (the "Initial Public
Offering") became effective on September 9, 2020. On September 14, 2020, we
consummated the Initial Public Offering of 36,000,000 units (the "Units" and,
with respect to the Class A common stock included in the Units offered, the
"Public Shares") at $10.00 per Unit, generating gross proceeds
of $360.0 million, and incurring offering costs of approximately $23.0 million,
inclusive of $16.2 million in deferred underwriting commissions. The
underwriters were granted a 45-day option from the date of the final prospectus
relating to the Initial Public Offering to purchase up to 5,400,000 additional
Units to cover over-allotments, if any, at $10.00 per Unit, less underwriting
discounts and commissions. On September 18, 2020, the underwriters partially
exercised the over-allotment option and on September 23, 2020, purchased an
additional 4,423,453 Units (the "Over-Allotment Units"), generating gross
proceeds of approximately $44.2 million, and incurred additional offering costs
of approximately $2.7 million (net of approximately $221,000 in reimbursement
for certain expenses from the underwriters), including approximately $2.0
million in deferred underwriting fees. Commencing on November 2, 2020, holders
of the Units may elect to separately trade the Public Shares and the Detachable
Redeemable Warrants (as defined below) included in the Units.
Simultaneously with the closing of the Initial Public Offering, we completed the
private sale (the "Private Placement") of an aggregate of 6,133,333 warrants
(the "Private Placement Warrants") to our Sponsor at a purchase price of $1.50
per Private Placement Warrant, generating gross proceeds of $9.2 million. In
connection with the underwriters' partial exercise of their over-allotment
option, our Sponsor purchased an additional 589,794 Private Placement Warrants,
generating gross proceeds of approximately $0.9 million.
Upon the closing of the Initial Public Offering, the Private Placement, the sale
of the Over-Allotment Units and the sale of 589,794 additional Private Placement
Warrants, $404.2 million ($10.00 per Unit) of the net proceeds of the sale of
the Units in the Initial Public Offering, the Private Placement, the
Over-Allotment Units and the additional Private Placement Warrants were
placed in a trust account ("Trust Account") located in the United States with
Continental Stock Transfer & Trust Company acting as trustee, and invested only
in U.S. "government securities," within the meaning set forth in
Section 2(a)(16) of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), with a maturity of 185 days or less, or 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 Business Combination and (ii) the distribution of the
Trust Account as described below.
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If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or September 14, 2022 (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 earned on the funds held in the Trust Account and not previously
released to us to pay our franchise and income taxes (less up to $100,000 of
interest to pay dissolution expenses), divided by the number of then-outstanding
Public Shares, which redemption will completely extinguish the Public
Stockholders' rights as stockholders (including the right to receive further
liquidating distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably possible following such redemption, subject to the
approval of our remaining stockholders and our board of directors, dissolve and
liquidate, subject in each case to our obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law.
Results of Operations
Our entire activity since inception through September 30, 2020 related to our
formation, the preparation for the Initial Public Offering, and since the
closing of the Initial Public Offering, the search for a prospective initial
Business Combination. We have neither engaged in any operations nor generated
any revenues to date. We will not generate any operating revenues until after
completion of our initial Business Combination. We will generate non-operating
income in the form of interest income on cash and cash equivalents. 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 three months ended September 30, 2020, we had a net loss of
approximately $174,000, which consisted of approximately $27,000 of net gain on
investments held in Trust Account, offset by approximately $53,000 in general
and administrative expenses and approximately $148,000 in franchise tax expense.
For the nine months ended September 30, 2020, we had a net loss of approximately
$176,000, which consisted of approximately $27,000 of net gain on investments
held in Trust Account, offset by approximately $53,000 in general and
administrative expenses and approximately $150,000 in franchise tax expense.
Liquidity and Capital Resources
As of September 30, 2020, we had $2.7 million in its operating bank account, and
working capital of approximately $2.7 million.
Our liquidity needs to date have been satisfied through the payment of $25,000
from our Sponsor to purchase the Founder Shares (as defined below), the loan of
approximately $141,000 under a promissory note from our Sponsor (the "Note"),
and the net proceeds from the consummation of the Private Placement not held in
the Trust Account. We fully repaid the Note on September 14, 2020. In addition,
in order to finance transaction costs in connection with a Business Combination,
our Sponsor or an affiliate of our Sponsor, or our officers and directors may,
but are not obligated to, provide us working capital loans. As of September 30,
2020, there were no working capital loans outstanding.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity from our Sponsor or an affiliate of our Sponsor,
or our officers and directors 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.
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We continue to evaluate the impact of the COVID-19 pandemic and have concluded
that the specific impact is not readily determinable as of the date of the
balance sheet. The 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,
other than an agreement with our Sponsor to pay our Sponsor a total of $10,000
per month for office space, and administrative and support services.
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 accounting principles generally accepted in the United States of
America. The preparation of our 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. The Company has identified the following as its
critical accounting policies:
Class A Common Stock Subject to Possible Redemption
Class A common stock subject to mandatory redemption (if any) is classified as
liability instruments and measured at fair value. Conditionally redeemable
Class A common stock (including Class A common stock that features 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)
is classified as temporary equity. At all other times, Class A common stock is
classified as stockholders' equity. Our Class A common stock features certain
redemption rights that are considered to be outside of our control and subject
to the occurrence of uncertain future events.
Net Income (Loss) Per Common Share
Net loss per share is computed by dividing net loss by the weighted-average
number of common stock outstanding during the periods. We have not considered
the effect of the warrants sold in the Initial Public Offering and the Private
Placement to purchase the Company's Class A common stock in the calculation of
diluted income per share, since their inclusion would be anti-dilutive under the
treasury stock method.
Our unaudited condensed statements of operations include a presentation of net
income (loss) per share for common stock subject to redemption in a manner
similar to the two-class method of income per share. Net income per common
share, basic and diluted for Class A common stock is calculated by dividing the
net gain on investment securities held in the Trust Account, net of applicable
taxes available to be withdrawn from the Trust Account by the weighted average
number of Class A common stock outstanding for each period. Net loss per common
share, basic and diluted for Class B common stock is calculated by dividing the
net loss, less income attributable to Class A common shares by the weighted
average number of Class B common shares outstanding for the period.
Recent Accounting Pronouncements
Our management does not believe that any recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.
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Off-Balance Sheet Arrangements
As of September 30, 2020, 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 have elected 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 of the
Sarbanes-Oxley Act of 2002, (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
(United States) 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 chief executive officer'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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