References to the "Company," "TPB Acquisition Corp I," "our," "us" or "we" refer
to TPB Acquisition Corporation I. The following discussion and analysis of the
Company's financial condition and results of operations should be read in
conjunction with the unaudited condensed interim 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. 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 Company's final prospectus for its
Initial Public Offering filed with the U.S. Securities and Exchange Commission
(the "SEC") and those described in our other filings with the SEC. The Company's
securities filings can be accessed on the EDGAR section of the SEC's website at
www.sec.gov. Except as expressly required by applicable securities law, the
Company disclaims 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 incorporated as a Cayman Islands exempted company
on February 8, 2021. We were formed for the purpose of effecting a merger, share
exchange, asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses or entities (the "Business
Combination").
We are not limited to a particular industry or geographic region for purposes of
consummating a Business Combination. We are in an early stage and emerging
growth company and, as such, we are subject to all of the risks associated with
early stage and emerging growth companies.
All activity through March 31, 2022, relates to our formation and the initial
public offering (the "Initial Public Offering"), which is described below and,
subsequent to the Initial Public Offering, identifying a prospective target for
an initial Business Combination. We will not generate any operating revenues
until after the completion of its initial Business Combination, at the earliest.
We will generate non-operating income in the form of interest income from the
proceeds derived from the Initial Public Offering held in trust.
Our sponsor is TPB Acquisition Sponsor I, LLC (the "Sponsor"). The registration
statement for our Initial Public Offering was declared effective on August 10,
2021. On August 13, 2021, we consummated our Initial Public Offering of
17,500,000 units (the "Units" and, with respect to the Class A ordinary shares
included in the Units being offered, the "Public Shares"), at $10.00 per Unit,
generating gross proceeds of $175.0 million, and incurring offering costs of
approximately $10.5 million, of which approximately $6.1 million and
approximately $489,000 was for deferred underwriting commissions (see Note 6 to
our financial statements) and offering costs allocated to derivate warrant
liabilities, respectively. On August 17, 2021, we consummated a partial exercise
by the underwriters of their over-allotment option for 536,299 additional Units,
generating gross proceeds of approximately $5.4 million (the "Over-Allotment"),
and incurring offering costs of $295,000, of which $188,000 was for deferred
underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 4,000,000 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants"),
at a price of $1.50 per Private Placement Warrant to the Sponsor, generating
proceeds of $6.0 million (see Note 4 to our financial statements). Concurrent
with the consummation of the Over-Allotment on August 17, 2021, the Sponsor
purchased 71,507 additional Private Placement Warrants, generating proceeds of
$107,260 (the "Second Private Placement").
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Upon the closing of the Initial Public Offering, Over-Allotment, Private
Placement and the Second Private Placement, $180.4 million ($10.00 per Unit) of
the net proceeds of the Initial Public Offering and the Private Placement was
placed in a trust account (the "Trust Account"), located in the United States,
and only invested in U.S. government treasury obligations with a maturity of
185 days or less or in money market funds meeting certain conditions under
Rule 2a-7 under the Investment Company Act of 1940, as amended (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 funds held in the Trust Account, as
described below.
Liquidity and Capital Resources
As of March 31, 2022, we had approximately $395,000 in our operating bank
account and working capital of approximately $421,000.
Our liquidity needs prior to the consummation of the Initial Public Offering
were satisfied through the cash contribution of $25,000 from the Sponsor to
purchase 7,187,500 Class B ordinary shares (the "Founder Shares"), and the loan
from the Sponsor of approximately $300,000 under the Note. We repaid the Note in
full on August 16, 2021. Subsequent to the consummation of the Initial Public
Offering, our liquidity has been satisfied through the net proceeds from Private
Placement held outside of the Trust Account. In addition, in order to finance
transaction costs in connection with a Business Combination, the Sponsor or an
affiliate of the Sponsor, or certain of our officers and directors may, but are
not obligated to, provide us Working Capital Loans. As of March 31, 2022, there
were no amounts outstanding under any Working Capital Loan. On April 28, 2022,
we issued an unsecured promissory note (the "2022 Note") in the principal amount
of up to $3,000,000 to our Sponsor, of which $1,000,000 was funded upon
execution of the 2022 Note.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity 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 the funds held outside of the Trust Account 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.
Results of Operations
Our entire activity since inception up to March 31, 2022 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 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
$2.4 million, which consisted of non-operating income of approximately $3.0
million resulting from changes in fair value of derivative warrant liabilities
and approximately $4,000 in income from investments held in the trust account,
partially offset by approximately $501,000 in general and administrative
expenses and $30,000 in general and administrative expenses - related party.
For the three months ended March 31, 2021, we had a net loss of approximately
$52,000, which was entirely comprised of general and administrative expenses.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay the Sponsor
a monthly fee of $10,000 for general and administrative services, including
office space, utilities and administrative support. We began incurring these
fees on August 10, 2021 and will continue to incur these fees monthly until the
earlier of the completion of the Business Combination and our liquidation. For
the three months ended March 31, 2022, we incurred $30,000 of such fees, which
are presented as general and administrative fees - related party in the
accompanying condensed statements of operations. As of March 31, 2022 and
December 31, 2021, approximately $77,000 and $47,000, respectively, is accrued
related to these services and presented in accrued expenses on the accompanying
condensed balance sheets.
The underwriters are entitled to a deferred fee of $0.35 per unit issued in the
Initial Public Offering, or approximately $6.3 million in the aggregate. 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.
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Forward Purchase Agreements
On August 10, 2021, we entered into a forward purchase agreement with the
Sponsor, pursuant to which the Sponsor agreed to purchase up to an aggregate of
2,500,000 Units (the "Forward Purchase Units"), at a price of $10.00 per Unit,
for an aggregate purchase price of up to $25,000,000. The purchase of the
Forward Purchase Units is expected to take place in one or more private
placements, with the full amount to have been purchased no later than
simultaneously with the closing of the Business Combination. The forward
purchase warrants included in the Forward Purchase Units will be exercised on
the same terms as the Public Warrants.
We also entered into additional forward purchase agreements on August 10, 2021,
whereby additional forward purchasers agreed to purchase approximately 8,750,000
Class A ordinary shares (the "Forward Purchase Shares"), at a price of $10.00
per share, for an aggregate purchase price of approximately $87,500,000 in
connection with the closing of the initial Business Combination. The additional
forward purchasers may satisfy their funding commitments with respect to a
number of additional Forward Purchase Shares by (i) committing to purchase some
or all of the additional Forward Purchase Shares allocated to such additional
forward purchaser, (ii) executing a non-redemption agreement with respect to an
equal number of Public Shares held by it (on a share-for-share basis such that
the agreement not to redeem one Public Shares shall be deemed to satisfy a
commitment to purchase one additional Forward Purchase Share), or (iii) a
combination of the foregoing. Any purchases of the additional Forward Purchase
Shares are expected to take place in one or more private placements, but no
later than simultaneously with the closing of the Business Combination. Pursuant
to the additional forward purchase agreements, the Sponsor agreed to transfer up
to 50% (not to exceed 2,187,500 Founder Shares), but not less than 10% (not to
exceed 437,500 Founder Shares), of the Founder Shares outstanding as of the
closing of the Initial Public Offering to fully subscribing additional forward
purchasers. In addition, the Sponsor agreed that the remaining Founder Shares
held by it will be subject to price-based vesting conditions. Such shares will
vest in three equal installments when the price of the Class A ordinary shares
on Nasdaq equals or exceeds $10.00, $12.50 and $15.00 for any 20 trading days
within any 30 trading-day period, commencing on the date of the closing of the
initial Business Combination and ending on the third anniversary thereof. The
Sponsor will forfeit any remaining Founder Shares for no consideration to the
extent the trading price thresholds described above are not met during the
specified period.
The proceeds of any purchases under the forward purchase agreements will not be
deposited in the Trust Account. The Forward Purchase Shares will not have any
redemption rights in connection with the Business Combination or in connection
with certain amendments to out amended and restated memorandum and articles of
association and will not be entitled to liquidating distributions from the Trust
Account if we fail to complete the Business Combination within the Combination
Period. Forward purchase shares will be subject to certain registration rights,
as long as such Forward Purchase Shares are held by the Sponsor, the additional
forward purchasers or the forward transferees. The forward purchase shares, to
the extent issued prior to the record date for a shareholder vote on the
Business Combination or any other matter, will have the right to vote on such
matter with all other outstanding Class A ordinary shares.
Related Party Loan
On April 28, 2022, we issued an unsecured promissory note (the "2022 Note") in
the principal amount of up to $3,000,000 to our Sponsor, of which $1,000,000 was
funded upon execution of the 2022 Note. The 2022 Note does not bear interest, is
not convertible, and may be further drawn down from time to time prior to the
maturity date upon request by the Company, subject to our Sponsor's approval.
The principal balance of the 2022 Note will be payable on the earliest to occur
of (i) the date on which we consummate an initial Business Combination or (ii)
the date that the winding up of the Company is effective. The 2022 Note is
subject to customary events of default, the occurrence of certain of which
automatically triggers the unpaid principal balance of the 2022 Note and all
other sums payable with regard to the 2022 Note becoming immediately due and
payable.
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
condensed 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 30, 2022.
There have been no significant changes in the application of our critical
accounting policies during the three months ended March 31, 2022.
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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.
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, the condensed 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, (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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