References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to TZP Strategies Acquisition Corp. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to TZPS SPAC Holdings LLC. The following
discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with the 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.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations has been amended and restated to give effect to the restatement of
our financial statements for the periods ending March 31, 2021 and June 30,
2021. Management identified errors made in its historical financial statements
where, at the closing of our Initial Public Offering, we improperly valued our
Class A ordinary shares subject to possible redemption. We previously determined
the Class A ordinary shares subject to possible redemption to be equal to the
redemption value of $10.00 per share of Class A ordinary shares while also
taking into consideration a redemption cannot result in net tangible assets
being less than $5,000,001. Management determined that the Class A ordinary
shares issued during the Initial Public Offering can be redeemed or become
redeemable subject to the occurrence of future events considered outside of the
Company's control. Therefore, management concluded that the redemption value
should include all Class A ordinary shares subject to possible redemption,
resulting in the Class A ordinary shares subject to possible redemption being
equal to their redemption value. As a result, management has noted a
reclassification error related to temporary equity and permanent equity. This
resulted in a restatement to the initial carrying value of the Class A ordinary
shares subject to possible redemption with the offset recorded to additional
paid-in capital (to the extent available), accumulated deficit and Class A
ordinary shares.
Special 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") that are not historical facts and involve risks and
uncertainties that could cause actual results to differ materially from those
expected and projected. All statements, other than statements of historical fact
included in this Quarterly Report including, without limitation, statements in
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the Company's financial position, business strategy and
the plans and objectives of management for future operations, are
forward-looking statements. Words such as "expect," "believe," "anticipate,"
"intend," "estimate," "seek" and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect
management's current beliefs, based on information currently available. 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 (defined below) filed
with the U.S. Securities and Exchange Commission (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 in the Cayman Islands on August 31,
2020 formed for the purpose of effecting a merger, amalgamation, share exchange,
asset acquisition, share purchase, reorganization or other similar Business
Combination with one or more businesses. We intend to effectuate our Business
Combination using cash derived from the proceeds of the Initial Public Offering
and the sale of the Private Placement Warrants, our shares, debt or a
combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from August 31, 2020 (inception) through September 30, 2021
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and identifying a target company for a
Business Combination. We do not expect to generate any operating revenues until
after the completion of our Business Combination. We generate
non-operating
income in the form of interest income on marketable securities held in the Trust
Account. We incur 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, 2021, we had net income of
approximately $2.2 million, which consisted of income of approximately
$2.7 million derived from the changes in fair value of the warrant liabilities
and interest earned on investment held in Trust Account of $3,700, offset by
general and administrative expenses of approximately $0.4 million and interest
expense of approximately $4,000.
For the nine months ended September 30, 2021, we had net income of approximately
$8.7 million, which consisted of income of approximately $11.7 million derived
from the changes in fair value of the warrant liabilities and interest earned on
investment held in Trust Account of approximately $46,000, offset by general and
administrative expenses costs of approximately $3.0 million and interest expense
of approximately $14,000.
For the period from August 31, 2020 (inception) through September 30, 2020, we
had a net loss of $5,000, which consists of formation costs.
Liquidity and Capital Resources
On January 22, 2021, we consummated the Initial Public Offering of 28,750,000
Units which includes the full exercise by the underwriter of its over-allotment
option in the amount of 3,750,000 Units, at $10.00 per Unit, generating gross
proceeds of $287,500,000. Simultaneously with the closing of the Initial Public
Offering, we consummated the sale of 5,166,667 Private Placement Warrants at a
price of $1.50 per warrant in a private placement to the Sponsor, generating
gross proceeds of $7,750,000.
For the nine months ended September 30, 2021, cash used in operating activities
was approximately $1.1 million. Net income of approximately $8.7 million was
affected by
non-cash
charges (income) related to the change in fair value of the warrant liabilities
of approximately $11.7 million, interest earned on investment held in Trust
Account of approximately $46,000 and transaction costs associated with the
warrant liabilities of approximately $0.8 million. Changes in operating assets
and liabilities provided approximately $1.1 million of cash for operating
activities.
As of September 30, 2021, we had investments held in the Trust Account of
$287,546,397 (including approximately $46,000 of interest income) consisting of
a mutual fund with a maturity of 185 days or less. We may withdraw interest from
the Trust Account to pay taxes, if any. We intend to use substantially all of
the funds held in the Trust Account, including any amounts representing interest
earned on the Trust Account (less income taxes payable), to complete our
Business Combination. To the extent that our share capital 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.

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As of September 30, 2021, we had cash of $314,746. We intend to use the funds
held outside the Trust Account primarily to identify and evaluate target
businesses, perform business due diligence on prospective target businesses,
travel to and from the offices, plants or similar locations of prospective
target businesses or their representatives or owners, review corporate documents
and material agreements of prospective target businesses, and structure,
negotiate and complete a Business Combination.
On August 10, 2021, we issued an unsecured promissory note (the "Note") in the
principal amount of $1,000,000 to the Sponsor. The Note does not bear interest
and is repayable in full upon consummation of a Business Combination. If we do
not complete a Business Combination, the Note shall not be repaid and all
amounts owed under it will be forgiven. Upon the consummation of a Business
Combination, the Sponsor shall have the option, but not the obligation, to
convert the principal balance of the Note, in whole or in part, into private
placement warrants, at a price of $1.50 per private placement warrant. The Note
is subject to customary events of default, the occurrence of which automatically
trigger the unpaid principal balance of the Note and all other sums payable with
regard to the Note becoming immediately due and payable. As of September 30,
2021, there were no amounts outstanding under the Note.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor, or certain of our officers
and directors or their affiliates may, but are not obligated to, loan us funds
as may be required. If we complete a Business Combination, we would repay such
loaned amounts. In the event that a 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 our Trust Account would be used for
such repayment. 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.
Off-Balance
Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance
sheet arrangements as of September 30, 2021. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating
off-balance
sheet arrangements. We have not entered into any
off-balance
sheet financing arrangements, established any special purpose entities,
guaranteed any debt or commitments of other entities, or purchased any
non-financial
assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities,
The underwriters are entitled to a deferred fee of $0.35 per Unit, or
$10,062,500 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
the Company completes a Business Combination, subject to the terms of the
underwriting agreement.
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America 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 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:
Warrant Liabilities
We account for the Warrants in accordance with the guidance contained in ASC 815
under which the Warrants do not meet the criteria for equity treatment and must
be recorded as liabilities. Accordingly, we classify the Warrants as liabilities
at their fair value and adjust the Warrants to fair value at each reporting
period. This liability is subject to
re-measurement
at each balance sheet date until exercised, and any change in fair value is
recognized in our statements of operations. The Private Placement Warrants and
Public Warrants for periods where no observable traded price was available were
valued using a binomial lattice simulation model. For periods subsequent to the
detachment of the Public Warrants from the Units, the Public Warrant quoted
market price was used as the fair value for the Warrants as of each relevant
date.
Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Ordinary shares subject to mandatory
redemption are classified as a liability instrument and measured at fair value.
Conditionally redeemable ordinary shares (including 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, ordinary shares
are classified as shareholders' equity. Our ordinary shares feature certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, ordinary shares subject
to possible redemption are presented at redemption value as temporary equity,
outside of the shareholders' (deficit) equity section of our condensed balance
sheets.
Net Income (Loss) Per Ordinary Share
Net income (loss) per ordinary share is computed by dividing net income (loss)
by the weighted average number of ordinary shares outstanding during the period.
We apply the
two-class
method in calculating income (loss) per ordinary share. Accretion associated
with the redeemable shares of Class A ordinary shares is excluded from income
(loss) per ordinary share as the redemption value approximates fair value.

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Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU")
2020-06,
Debt - Debt with Conversion and Other Options (Subtopic
470-20)
and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic
815-40)
("ASU 2020-06")
to simplify accounting for certain financial instruments. ASU
2020-06
eliminates the current models that require separation of beneficial conversion
and cash conversion features from convertible instruments and simplifies the
derivative scope exception guidance pertaining to equity classification of
contracts in an entity's own equity. The new standard also introduces additional
disclosures for convertible debt and freestanding instruments that are indexed
to and settled in an entity's own equity. ASU
2020-06
amends the diluted earnings per share guidance, including the requirement to use
the
if-converted
method for all convertible instruments. ASU
2020-06
is effective January 1, 2022 and should be applied on a full or modified
retrospective basis, with early adoption permitted beginning on January 1, 2021.
We are currently assessing the impact, if any, that
ASU 2020-06
would have on our financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on the Company's unaudited condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in our Exchange Act reports (as defined under
Section 13 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), is recorded, processed, summarized, and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to our management, including our principal executive officers
and principal financial officer or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief
Executive Officers and Chief Financial Officer carried out an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures as of September 30, 2021. Based upon their evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act) were not effective, due to the material weakness in our internal
control over financial reporting related to the Company's accounting for complex
financial instruments. As a result, we performed additional analysis as deemed
necessary to ensure that our financial statements were prepared in accordance
with U.S. generally accepted accounting principles. Accordingly, management
believes that the financial statements included in this
Form 10-Q/A
present fairly in all material respects our financial position, results of
operations and cash flows for the period presented.
Changes in Internal Control over Financial Reporting
During the fiscal quarter ended September 30, 2021, there has been no change in
our internal control over financial reporting that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting. Management has identified a material weakness in internal controls
related to the accounting for complex financial instruments. While we have
processes to identify and appropriately apply applicable accounting
requirements, we plan to continue to enhance our system of evaluating and
implementing the accounting standards that apply to our financial statements,
including through enhanced analyses by our personnel and third-party
professionals with whom we consult regarding complex accounting applications.
The elements of our remediation plan can only be accomplished over time, and we
can offer no assurance that these initiatives will ultimately have the intended
effects.

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