References in this report to "we," "us" or the "Company" refer to Tishman Speyer
Innovation Corp. II, a Delaware corporation, to our "management" or our
"management team" refer to our officers and directors, and references to the
"Sponsor" refer to Tishman Speyer Innovation Sponsor II, L.L.C., a Delaware
limited liability company. "Tishman Speyer" refers to Tishman Speyer Properties,
L.P., a New York limited partnership, and the parent of our Sponsor. References
to our "initial stockholders" refer to our Sponsor and to our independent
directors, Joshua Kazam, Jennifer Rubio, Ned Segal and Michelangelo Volpi. Refer
to the glossary at the end of this report for additional terms.
Special Note Regarding Forward-Looking Statements
This discussion contains forward-looking statements reflecting our current
expectations, estimates and assumptions concerning events and financial trends
that may affect our future operating results or financial position. Our
forward-looking statements include, but are not limited to, statements regarding
our or our management team's expectations, hopes, beliefs, intentions or
strategies regarding the future. In addition, any statements that refer to
projections, forecasts or other characterizations of future events or
circumstances, including any underlying assumptions, are forward-looking
statements. The words "anticipate," "believe," "continue," "could," "estimate,"
"expect," "intends," "may," "might," "plan," "possible," "potential," "predict,"
"project," "should," "would" and similar expressions may identify
forward-looking statements, but the absence of these words does not mean that a
statement is not forward-looking. The forward-looking statements contained in
this report are based on our current expectations and beliefs concerning future
developments and their potential effects on us. There can be no assurance that
future developments affecting us will be those that we have anticipated. A
number of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the "Risk Factors" section of the
final prospectus for our initial public offering filed with the SEC and in our
Annual Report on Form10-K.Except as expressly required by applicable securities
law, we disclaim any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
Overview
We are a blank check company, originally incorporated in Delaware on
November 12, 2020, and formed for the purpose of effecting a merger, share
exchange, asset acquisition, share purchase, reorganization or similar business
combination.
Following the closing of our initial public offering (the "IPO"), on
February 17, 2021, $300,000,000 ($10.00 per Unit) from the net proceeds of the
sale of the Units in the IPO and the sale of the Private Placement Warrants was
placed in the Trust Account and 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 money market funds meeting certain
conditions under Rule2a-7promulgated under the Investment Company Act which
invest only in direct U.S. government treasury obligations, until the earlier
of: (i) the completion of a Business Combination, (ii) the redemption of any
Public Shares properly submitted in connection with a stockholder vote to amend
our amended and restated certificate of incorporation, and (iii) the redemption
of our Public Shares if the we are unable to complete the initial Business
Combination by February 17, 2023 (with the ability to extend or reduce such
period with stockholder approval, see Note 10 to the unaudited condensed
financial statements), subject to applicable law. The proceeds deposited in the
Trust Account could become subject to the claims of our creditors, if any, which
could have priority over the claims of our public stockholders.
Our management has broad discretion with respect to the specific application of
the net proceeds of the IPO 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.
Results of Operations
As of September 30, 2022, we had not commenced any operations. All activity for
the period from November 12, 2020 (inception) through September 30, 2022,
relates to preparation and consummation of the IPO and our search for a target
to consummate a Business Combination. We will not generate any operating
revenues until after the completion of a Business Combination, at the earliest.
We will generate non-operating income in the form of interest income from the
proceeds derived from the IPO and placed in the Trust Account (defined below).
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For the three months ended September 30, 2022, we had a net income of
$1,183,771, consisting of a change in fair value of warrant liabilities and
working capital loan option of $344,529 and interest income from investments
held in trust of $1,365,330, partially offset by $272,621 in operating costs and
income taxes of $253,467.
For the nine months ended September 30, 2022, we had a net income of $8,778,444,
consisting of a change in fair value of warrant liabilities and working capital
loan option of $8,062,134 and interest income from investments held in trust of
$1,807,469, partially offset by $822,874 in operating costs and income taxes of
$268,285.
For the three months ended September 30, 2021, we had a net income of
$10,104,931, consisting of a change in fair value of warrant liabilities of
$10,527,846 and interest income from investments held in trust of $4,609,
partially offset by $427,524 in operating costs.
For the nine months ended September 30, 2021, we had a net income of $5,422,897,
consisting of a change in fair value of warrant liabilities of $6,882,845 and
interest income from investments held in trust of $11,222, offset by $949,475 in
formation and operating costs and $521,695 in offering expense allocated to
issuance of the warrants.
Liquidity, Capital Resources and Capital Resources
As of September 30, 2022, we had cash outside our trust account of $108,478,
available for working capital needs and a working capital deficiency of
$1,872,741, excluding franchise and income taxes payable. All remaining cash was
held in the trust account and is generally unavailable for our use, prior to an
initial business combination.
In order to finance transaction costs in connection with a Business Combination
or liquidate, the Sponsors or an affiliate of the Sponsors or certain of our
officers and directors may, but are not obligated to, loan our funds as may be
required (the "Working Capital Loans"). If we complete an initial Business
Combination, we would repay such loaned amounts out of the proceeds of the Trust
Account released to the us. Otherwise, such loans would be repaid only out of
funds held outside the Trust Account. 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 the
Trust Account would be used to repay such loaned amounts. Up to $1,500,000 of
such loans may be convertible into warrants, at a price of $1.50 per warrant at
the option of the lender. The warrants would be identical to the Private
Placement Warrants, including as to exercise price, exercisability and exercise
period. As of September 30, 2022 and December 31, 2021, $250,000 and $0 Working
Capital Loans were outstanding.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account
(excluding deferred underwriting commissions) to complete our Business
Combination. We may withdraw interest to pay our taxes. We estimate our annual
franchise tax obligations, based on the number of shares of our common stock
authorized and outstanding after the completion of the IPO, to be $200,000,
which is the maximum amount of annual franchise taxes payable by us as a
Delaware corporation per annum, which we may pay from funds from the IPO held
outside of the Trust Account or from interest earned on the funds held in the
Trust Account and released to us for this purpose. Our annual income tax
obligations will depend on the amount of interest and other income earned on the
amounts held in the Trust Account. We expect the interest earned on the amount
in the Trust Account will be sufficient to pay our income taxes. To the extent
that our equity or debt is used, in whole or in part, as consideration to
complete our 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.
Further, our Sponsor, officers and directors or their respective affiliates may,
but are not obligated to, loan us funds as may be required (the "Working Capital
Loans"). If we complete a Business Combination, we would 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. 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. The Working Capital Loans would
either be repaid upon consummation of a Business Combination or, at the lender's
discretion, up to $1,500,000 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. To
date, we had $250,000 in borrowings under the Working Capital Loans.
We have until February 17, 2023 to consummate a Business Combination (with the
ability to extend or reduce such period with stockholder approval, see Note 10
to the unaudited condensed financial statements). In connection with our
assessment of going concern considerations in accordance with Financial
Accounting Standard Board's Accounting Standards Update ("ASU") 2014-15,
"Disclosures of Uncertainties about an Entity's Ability to Continue as a Going
Concern," we determined that the Company's liquidity, mandatory liquidation and
subsequent dissolution, should we be unable to complete a Business Combination,
raises substantial doubt about our ability to continue as a going concern. It is
uncertain that we will be able to consummate a Business Combination by this
time. If a Business Combination is not consummated by this date, there will be a
mandatory liquidation and subsequent dissolution.
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Off-Balance Sheet Financing Arrangements
We did not have any off-balance sheet arrangement as of September 30, 2022 and
December 31, 2021.
Contractual Obligations
As of September 30, 2022 and December 31, 2021, we did not have any long-term
debt, capital or operating lease obligations.
We entered into an administrative services agreement pursuant to which we will
pay our Sponsor for office space and secretarial and administrative services
provided to members of our management team, in an amount not to exceed $10,000
per month.
Critical Accounting Policies and Estimates
The preparation of unaudited condensed financial statements and related
disclosures in conformity with 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 unaudited
condensed 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:
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to ASC 480
and ASC 815-15. 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.
We account for our 11,333,334 warrants issued in connection with its IPO
(6,000,000) and Private Placement (5,333,334) as derivative warrant liabilities
in accordance with ASC815-40. 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 our
condensed statements of operations.
Class A Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption in accordance
with the guidance in the Financial Accounting Standards Board's Accounting
Standards Codification Topic 480 "Distinguishing Liabilities from Equity."
Common stock subject to mandatory redemption (if any) are classified as
liability instruments and are measured at fair value. Conditionally redeemable
Class A common stock (including Class A common stock 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 common stock is
classified as stockholders' equity. Our Class A common stock feature certain
redemption rights that are considered to be outside of our control and subject
to the occurrence of uncertain future events. Accordingly, at September 30, 2022
and December 31, 2021, 30,000,000 shares of Class A common stock subject to
possible redemption are presented as temporary deficit, outside of the
stockholders' deficit section of our condensed balance sheets.
Net Income per Common Share
We have two classes of stock, which are referred to as Class A common stock and
Class B common stock. Earnings and losses are shared pro rata between the two
classes of stock. Private and public warrants to purchase 11,333,334 Class A
common stock at $11.50 per share were issued on February 17, 2021. No warrants
were exercised during the three and nine months ended September 30, 2022 and
2021. The calculation of diluted income per common stock does not consider the
effect of the warrants issued in connection with the (i) IPO, (ii) exercise of
over-allotment, and (iii) Private Placement since the exercise of the warrants
are contingent upon the occurrence of future events. As a result, diluted net
income per common stock is the same as basic net income per common stock for the
periods presented.
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Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
unaudited condensed financial statements.
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