References to the "Company," "our," "us" or "we" refer to TWC Tech Holdings II
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
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 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 Delaware on July 20, 2020 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. 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 TWC Tech Holdings II,
LLC, a Delaware limited liability company and an affiliate of certain of our
officers and directors (our "Sponsor").
Our registration statement for our initial public offering (the "Initial Public
Offering") was declared effective on September 10, 2020. On September 15, 2020,
we consummated the Initial Public Offering of 60,000,000 units (the "Units" and,
with respect to the Class A common stock included in the Units being offered,
the "Public Shares"), which included 7,500,000 Units issued pursuant to the
partial exercise by the underwriters of their over-allotment option, at $10.00
per Unit, generating gross proceeds of $600.0 million, and incurring offering
costs of approximately $33.6 million, inclusive of $21.0 million in deferred
underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 9,666,667 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants")
to our Sponsor, each exercisable to purchase one share of Class A common stock
at $11.50 per share, at a price of $1.50 per Private Placement Warrant,
generating gross proceeds to us of $14.5 million.
Upon the closing of the Initial Public Offering and the Private Placement,
$600.0 million of the net proceeds of the sale of the Units in the Initial
Public Offering and the sale of Private Placement Warrants in the Private
Placement were placed in a trust account ("Trust Account") located in the United
States with American Stock Transfer & Trust Company acting as trustee, and
invested only in U.S. "government securities" within the meaning of Section
2(a)(16) of the Investment Company Act of 1940, as amended (the "Investment
Company Act") having a maturity of 185 days or less or in money market funds
meeting certain conditions under Rule 2a-7 promulgated under the Investment
Company Act which invest only in direct U.S. government treasury obligations, as
determined by the Company. Except with respect to interest earned on the funds
held in the Trust Account that may be released to the Company for amounts
withdrawn to fund the Company's working capital requirements, subject to an
annual limit of $500,000, and/or to pay taxes, the funds held in the Trust
Account will not be released until the earliest of: (1) the completion of the
initial Business Combination; (2) the redemption of any Public Shares properly
submitted in connection with a stockholder vote to amend the Company's amended
and restated certificate of incorporation (the "Certificate of Incorporation")
(i) to modify the substance or timing of the Company's obligation to provide for
the redemption of its Public Shares in connection with an initial Business
Combination or to redeem 100% of its Public Shares if the Company does not
complete its initial Business Combination within the completion window or (ii)
with respect to any other material provisions relating to the rights of holders
of the Class A common stock prior to the initial Business Combination or
pre-initial Business Combination business activity; and (3) the redemption of
all of the Public Shares if the Company is unable to complete its initial
Business Combination within the completion window, subject to applicable law.
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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 15, 2022, (or 27 months
from the closing of the Initial Public Offering if the Company has executed a
letter of intent, agreement in principle or definitive agreement for an initial
Business Combination within 24 months from the closing of the Initial Public
Offering, or December 15, 2022) (the "Combination Period"), we will (i) cease
all operations except for the purpose of winding up; (2) 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 calculated as of two business days
prior to the consummation of the initial Business Combination, including
interest (net of amounts withdrawn to fund our working capital requirements,
subject to an annual limit of $500,000, and/or to pay for the Company's taxes
and up to $100,000 of interest to pay dissolution expenses), divided by the
number of then outstanding Public Shares, which redemption will completely
extinguish rights of holders of the Public Shares (the "Public Stockholders") as
stockholders (including the right to receive further liquidating distributions,
if any), subject to applicable law; and (3) as promptly as reasonably possible
following such redemption, subject to the approval of the remaining stockholders
and the 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 target for its 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 period from July 20, 2020 (inception) through September 30, 2020, we had
a net loss of $77,563, which consisted of approximately $38,000 in general and
administrative costs and approximately $40,000 in franchise tax expense.
Liquidity and Capital Resources
As of September 30, 2020, we had approximately $2.0 million in our operating
bank account, working capital of approximately $1.8 million, and no interest
income available in the Trust Account to pay for our tax obligations, if any.
Our liquidity needs have been satisfied prior to the completion of the Initial
Public Offering through receipt of a $25,000 capital contribution from our
Sponsor in exchange for the issuance of shares of the Company's Class B common
stock, par value $0.0001 per share (the "Founder Shares"), to our Sponsor
and the advancement of funds by our Sponsor to cover our expenses in connection
with the Initial Public Offering. In addition, our Sponsor advanced
approximately $264,000 to us under a promissory note (the "Note"). The Company
repaid the Note in full as of September 21, 2020. Subsequent to the consummation
of the Initial Public Offering and Private Placement, our liquidity needs have
been satisfied from the proceeds from the consummation of the Private Placement
not held in the Trust Account. 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 ("Working Capital Loans"). As of September 30, 2020,
there were no amounts outstanding under the Working Capital Loan.
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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.
We continue 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 financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Related Party Transactions
Founder Shares
On July 20, 2020, our Sponsor subscribed to purchase 15,093,750 Founder Shares
for an aggregate price of $25,000, and subsequently paid for the subscription on
July 24, 2020. Our Sponsor agreed to forfeit up to 1,968,750 Founder Shares to
the extent that the over-allotment option was not exercised in full by the
underwriters. Subsequently, our Sponsor transferred 25,000 Founder Shares to
each of the four independent director nominees, at the original per share
purchase price. The aggregate 100,000 Founder Shares held by the independent
director nominees were not subject to forfeiture in the event the underwriters'
over-allotment option was not exercised. The forfeiture would be adjusted to the
extent that the over-allotment option was not exercised in full by the
underwriters so that the Founder Shares would represent 20% of our issued and
outstanding shares after the Initial Public Offering (assuming the Initial
Stockholders do not purchase any Units in the Initial Public Offering). The
underwriters partially exercised their over-allotment option on September 15,
2020 and 93,750 Founder Shares were forfeited by our Sponsor accordingly.
The Sponsor and any other holders of the Founder Shares immediately prior to the
Initial Public Offering (the "Initial Stockholders") agreed, subject to limited
exceptions, not to transfer, assign or sell any of the Founder Shares until
(i) with respect to 50% of the Founder Shares, the earlier to occur of: (A) 180
days after completion of our initial Business Combination; or (B) if the closing
price of the common stock equals or exceeds $12.00 per share (as adjusted for
stock splits, stock dividends, reorganizations, recapitalizations and the like)
for any 20 trading days within any 30-trading day period commencing any time 90
days after completion of the initial Business Combination and (ii) with respect
to the remaining 50% of the Founder Shares, only if the closing price of the
common stock equals or exceeds $12.00 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like) for any 20
trading days within any 30-trading day period commencing any time 90 days after
completion of the initial Business Combination. Any permitted transferees would
be subject to the same restrictions (the "lock-up") and other agreements of the
Sponsor with respect to any Founder Shares. Notwithstanding the foregoing, if we
complete a liquidation, merger, stock exchange, reorganization or other similar
transaction after the initial Business Combination that results in all of the
Public Stockholders having the right to exchange their Public Shares for cash,
securities or other property, the Founder Shares will be released from the
lock-up.
Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, we consummated
the Private Placement of 9,666,667 Private Placement Warrants to the Sponsor at
a price of $1.50 per Private Placement Warrant, generating gross proceeds to us
of $14.5 million.
Each Private Placement Warrant is exercisable for one whole share of Class A
common stock at a price of $11.50 per share. A portion of the proceeds from the
sale of the Private Placement Warrants to the Sponsor was added to the proceeds
from the Initial Public Offering held in the Trust Account. If we do not
complete a Business Combination within the Combination Period, the Private
Placement Warrants will expire worthless. Except as set forth below, the Private
Placement Warrants will be non-redeemable for cash and exercisable on a cashless
basis so long as they are held by the Sponsor or their permitted transferees.
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The Sponsor agreed, subject to limited exceptions, not to transfer, assign or
sell any of its Private Placement Warrants until 30 days after the completion of
the initial Business Combination.
Related Party Loans
On July 20, 2020, our Sponsor agreed to loan us an aggregate of up to $350,000
to cover expenses related to the Initial Public Offering pursuant to the "Note.
This loan was non-interest bearing and payable upon the completion of the
Initial Public Offering. We borrowed approximately $264,000 under the Note and
repaid this Note in full as of September 15, 2020.
In addition, in order to finance transaction costs in connection with a Business
Combination, our Sponsor or an affiliate of the Sponsor, or certain of our
officers and directors may, but are not obligated to, provide us with 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. The Working Capital Loans would either
be repaid upon consummation of a Business Combination or, at the lender's
discretion, up to $1.5 million 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.
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.
To date, the Company had no borrowings under the Working Capital Loans.
Commitments and Contingencies
Forward Purchase Agreements
In connection with the consummation of the Initial Public Offering, we entered
into forward purchase agreements with certain institutional accredited investors
("Forward Purchasers") that will provide for the aggregate purchase of at least
$100,000,000 of Class A common stock at $10.00 per share, in a private placement
that will close concurrently with the closing of the Business Combination. The
Forward Purchasers' commitments under the forward purchase agreements are
subject to certain conditions described in the prospectus for the Initial Public
Offering. The obligations under the forward purchase agreements will not depend
on whether any shares of Class A common stock are redeemed by our Public
Stockholders. The Forward Purchasers will not receive any Founder Shares or
warrants as part of the forward purchase agreements. The forward purchase shares
will be identical to the shares of Class A common stock included in the Units
being sold in the Initial Public Offering, except that the forward purchase
shares will be subject to certain transfer restrictions and have certain
registration rights.
Registration Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may
be issued upon conversion of Working Capital Loans (and any shares of common
stock issuable upon the exercise of the Private Placement Warrants or warrants
issued upon conversion of the Working Capital Loans and upon conversion of the
Founder Shares), as well as the Forward Purchasers and their permitted
transferees, are entitled to registration rights pursuant to a registration
rights agreement. These holders will be entitled to certain demand and
"piggyback" registration rights. We will bear the expenses incurred in
connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters were entitled to an underwriting discount of $0.20 per unit, or
$12.0 million in the aggregate, paid upon the closing of the Initial Public
Offering. An additional fee of $0.35 per unit, or $21.0 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.
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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:
Investments Held in the Trust Account
Our portfolio of investments held in the Trust Account is comprised of 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 investments in
money market funds that invest in U.S. government securities, or a combination
thereof. The investments held in the Trust Account are classified as trading
securities. Trading securities are presented on the balance sheets at fair value
at the end of each reporting period. Gains and losses resulting from the change
in fair value of these securities is included in gain on marketable securities,
dividends and interest held in Trust Account in the accompanying unaudited
condensed statement of operations. The estimated fair values of investments held
in the Trust Account are determined using available market information.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in Accounting Standards Codification Topic 480
"Distinguishing Liabilities from Equity." Shares of Class A common stock subject
to mandatory redemption (if any) are classified as liability instruments and are
measured at fair value. Conditionally redeemable shares of Class A common stock
(including shares of 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, shares of Class A common stock are
classified as stockholders' equity. Our shares of 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, as of
September 30, 2020, 57,580,959 shares of Class A common stock subject to
possible redemption were presented as temporary equity, outside of the
stockholders' equity section of the Company's balance sheet.
Net Income Per Share of Common Stock
Net income per share is computed by dividing net income by the weighted-average
number of shares 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 an aggregate of 29,666,667 shares of 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 statement of operations includes a presentation of
income per share for common stock subject to redemption in a manner similar to
the two-class method of income per share. Net income per share of common stock,
basic and diluted for shares of Class A common stock are calculated by dividing
the income (loss) earned on investments held in the Trust Account, net of
applicable taxes and working capital amounts available to be withdrawn from the
Trust Account, which was $0 for the period from July 20, 2020 (inception)
through September 30, 2020, by the weighted average number of Class A common
stock outstanding for the period. Net loss per share of common stock, basic and
diluted for shares of Class B common stock is calculated by dividing the net
loss of approximately $78,000, less income attributable to Class A common stock
by the weighted average number of Class B common stock outstanding for the
period.
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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.
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 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 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 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 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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