References to the "Company," "BowX Acquisition Corp. ," "BowX," "our," "us" or "we" refer toBowX 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 interim condensed consolidated 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, and Section 21E of 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. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our otherU.S. Securities and Exchange Commission ("SEC") filings. Overview We are a blank check company incorporated as aDelaware corporation onMay 19, 2020 . We were formed 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"). We are not limited to a particular industry or sector for purposes of consummating a Business Combination. As ofSeptember 30, 2021 , we were an emerging growth company and, as such, we were subject to all of the risks associated with emerging growth companies. Our sponsor isBowX Sponsor, LLC , aDelaware limited liability company of whichVivek Ranadivé , the Company's Chairman and Co-Chief Executive Officer, andMurray Rode , our Co-Chief Executive Officer and Chief Financial Officer, are the managing members (the "Sponsor"). The registration statement for the initial public offering (the "Initial Public Offering") was declared effective onAugust 4, 2020 . OnAugust 7, 2020 , we consummated our Initial Public Offering of 42,000,000 units (the "Units" and, with respect to the Class A common stock included in the Units being offered, the "Public Shares") at$10.00 per Unit, generating gross proceeds of$420.0 million , and incurring offering costs of approximately$23.7 million , inclusive of$14.7 million in deferred underwriting commissions. OnAugust 10, 2020 , the underwriter exercised the over-allotment option to purchase an additional of 6,300,000 Units at the Initial Public Offering price at$10.00 per Unit and we consummated the sale of such Units onAugust 13, 2020 , generating additional gross proceeds of$63.0 million , and incurring additional offering costs of approximately$3.5 million , inclusive of approximately$2.2 million in deferred underwriting commissions. Simultaneously with the closing of the Initial Public Offering, we consummated the private placement ("Private Placement") of 6,933,333 warrants (each, a "Private Placement Warrant" and collectively, the "Private Placement Warrants") at a price of$1.50 per Private Placement Warrant in a private placement to certain of the initial stockholders and certain funds and accounts managed by subsidiaries of BlackRock, Inc (the "Private Placement Warrants Purchasers"), generating gross proceeds of$10.4 million , and incurring offering costs of approximately$8,000 . In connection with the consummation of the sale of additional Units pursuant to the underwriter's over-allotment option onAugust 13, 2020 , we sold an additional 840,000 Private Placement Warrants to the Private Placement Warrants Purchasers, generating additional gross proceeds of approximately$1.3 million . Upon the closing of the Initial Public Offering and the Private Placement (including the exercise of the over-allotment)$483.0 million ($10.00 per Unit) of the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement were placed in a trust account ("Trust Account") located inthe United States withContinental Stock Transfer & Trust Company acting as trustee, and held as cash or invested only inU.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 the Investment Company Act, which invest only in directU.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. 18 -------------------------------------------------------------------------------- Consummated Business Combination OnOctober 20, 2021 , we,BowX Merger Subsidiary Corp. , a newly formed wholly owned subsidiary of us, andWeWork Inc. , aDelaware corporation ("WeWork"), consummated the previously announced merger pursuant to that certain Agreement and Plan of Merger, datedMarch 25, 2021 . See the Form 8-K, filed with theSEC onOctober 26, 2021 , for additional information. Liquidity and Capital Resources As ofSeptember 30, 2021 , we had approximately$242,000 in cash and working capital deficit of approximately$5.8 million . ThroughSeptember 30, 2021 , our liquidity needs were satisfied through a payment of$25,000 from the Company's Chairman and Co-Chief Executive Officer to cover for certain offering costs in exchange for the issuance of the Founder Shares, and the loan under the Note of approximately$150,000 to us to cover for offering costs in connection with the Initial Public Offering. Subsequent to the consummation of the Initial Public Offering onAugust 7, 2020 , the liquidity needs have been satisfied through the net proceeds from the consummation of the Private Placement not held in the Trust Account. We fully repaid the Note onAugust 7, 2020 . Results of Operations Our entire activity since inception throughSeptember 30, 2021 , was in preparation for our formation, the Initial Public Offering, and, since the closing of our Initial Public Offering, a search for business combination candidates including due diligence on theWeWork transaction. We will not be generating any operating revenues until the closing and completion of our initial Business Combination. For the three months endedSeptember 30, 2021 , we had a net income of approximately$6.9 million , which consisted of approximately$9.8 million in change in fair value of warrant liabilities and approximately$7,000 of interest income from investments held in Trust Account, partially offset by approximately$2.8 million in general and administrative expenses and approximately$50,000 in franchise tax expense. For the nine months endedSeptember 30, 2021 , we had net loss of approximately$9.9 million , which consisted of approximately$6.9 million in general and administrative expenses, approximately$2.9 million in change in fair value of warrant liabilities and approximately$150,000 in franchise tax expense, partially offset by approximately$66,000 of interest income from investments held in Trust Account. For the three months endedSeptember 30, 2020 , we had net loss of approximately$1.3 million , which consisted of approximately$93,000 in general and administrative expenses, approximately$1.2 million in change in fair value of warrant liabilities, approximately$49,000 in franchise tax expense and approximately$10,000 offering costs associated with private placement warrants, partially offset by approximately$84,000 of interest income from investments held in Trust Account. For the period fromMay 19, 2020 (inception) throughSeptember 30, 2020 , we had net loss of approximately$1.3 million , which consisted of approximately$93,000 in general and administrative expenses, approximately$1.2 million in change in fair value of warrant liabilities, approximately$72,000 in franchise tax expense, approximately$2,000 of income tax expense, and approximately$10,000 offering costs associated with private placement warrants, partially offset by approximately$84,000 of interest income from investments held in Trust Account. 19 -------------------------------------------------------------------------------- Related Party Transactions Founder Shares OnMay 26, 2020 , we issued 10,062,500 shares of Class B common stock to our Company's Chairman and Co-Chief Executive Officer in exchange for a payment of$25,000 for offering costs made by our Sponsor on behalf of our company (the "Founder Shares"). InJuly 2020 , the Chairman and Co-Chief Executive Officer transferred certain Founder Shares to our directors and officers as well as to certain third parties. OnAugust 4, 2020 , we effected a stock dividend of 0.2 shares of Class B common stock for each share of Class B common stock outstanding, resulting in an aggregate of 12,075,000 Founder Shares outstanding. All shares and associated amounts have been retroactively restated to reflect the share dividend. OnAugust 13, 2020 , the underwriters exercised their 15% over-allotment option in full; thus, the Founder Shares were no longer subject to forfeiture. The initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination and (B) subsequent to the initial Business Combination, (x) if the last reported sale price of the Class A 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 at least 150 days after the initial Business Combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property. Related Party Loans OnMay 26, 2020 , our Chairman and Co-Chief Executive Officer agreed to loan us up to an aggregate of$150,000 pursuant to an unsecured promissory note (the "Note") to cover expenses related to the Initial Public Offering. This loan was payable without interest upon the completion of the Initial Public Offering. We borrowed up to the full amount of the Note and received additional advances of approximately$45,000 advancement of funds from such officer, for a total outstanding loan of approximately$195,000 . We fully repaid the Note and the advances to such officer onAugust 7, 2020 . In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial Business Combination, the initial stockholders, officers and directors and their affiliates may, but are not obligated to, loan us funds as may be required (the "Working Capital Loans"). 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 at the option of the lender. Such warrants would be identical to the Private Placement Warrants. Except for the foregoing, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans to date. To date, we did not have any borrowings under the Working Capital Loans. Contractual Obligations Registration Rights The initial stockholders and holders of the Private Placement Warrants are entitled to registration rights pursuant to a registration rights agreement. The initial stockholders and holders of the Private Placement Warrants will be entitled to make up to three demands, excluding short form registration demands, that we register such securities for sale under the Securities Act. In addition, these holders will have "piggy-back" registration rights to include their securities in other registration statements filed by us. We will bear the expenses incurred in connection with the filing of any such registration statements. Underwriting Agreement We granted the underwriter a 45-day option to purchase up to 6,300,000 additional Units to cover any over-allotments, at the Initial Public Offering price less the underwriting discounts and commissions. OnAugust 10, 2020 , the underwriter fully exercised the over-allotment option. The underwriter was entitled to an underwriting discount of$0.20 per unit, or$8.4 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition,$0.35 per unit, or$14.7 million in the aggregate was paid to the underwriter for deferred underwriting commissions. The deferred fee was paid to the underwriter from the amounts held in the Trust Account in accordance with the terms of the underwriting agreement. 20
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In connection with the consummation of the sale of Units pursuant to the
over-allotment option on
We entered into certain consulting arrangements for due diligence, a transaction
advisory agreement, and a placement agent arrangement in connection with our
search for a prospective initial Business Combination. A portion of the fees in
connection with the services rendered as of
Critical Accounting Policies Investments Held in the Trust Account Our portfolio of investments held in the Trust Account is comprised ofU.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 inU.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the investments held in the Trust Account are comprised ofU.S. government securities, the investments are classified as trading securities. When the investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds 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 are included in net gain from investments held in Trust Account in the accompanying unaudited condensed consolidated statements 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 ASC 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. Shares of 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, shares of Class A common stock are 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. Accordingly, as ofSeptember 30, 2021 andDecember 31, 2020 , 48,300,000 shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders' equity section of the accompanying condensed consolidated balance sheet. Net Income (Loss) per Share of Common Stock We comply with accounting and disclosure requirements of FASB ASC Topic 260, "Earnings Per Share." We have two classes of shares, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income (loss) per share of common stock is calculated by dividing the net income (loss) by the weighted average number of common stock outstanding for the respective period. The calculation of diluted net income (loss) per share of common stock does not consider the effect of the warrants underlying the Units sold in the Initial Public Offering (including exercise of the over-allotment option) and the Private Placement Warrants to purchase 23,873,333 shares of Class A common stock in the calculation of diluted loss per share, because their exercise is contingent upon future events. As a result, diluted net loss per share of common stock is the same as basic net loss per share of common stock for the three and nine months endedSeptember 30, 2021 , and for the three months endedSeptember 30, 2020 and the period fromMay 19, 2020 (inception) throughSeptember 30, 2020 . Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value. 21 -------------------------------------------------------------------------------- Derivative Warrant Liabilities We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of its financial instruments, including issued shares purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC Topic 815, "Derivatives and Hedging" ("ASC 815"). 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 the warrants issued in connection with the Private Placement as derivative warrant liabilities in accordance with ASC 815. 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 the statements of operations. The fair value of warrants issued by us in connection with the Private Placement has been estimated using Public Warrant trading prices at each measurement date. The determination of the fair value of the warrant liability may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. Recent Accounting Pronouncements Our management does not believe there are any recently issued, but not yet effective, accounting pronouncements, if currently adopted, that would have a material effect on our financial statements. Off-Balance Sheet Arrangements As ofSeptember 30, 2021 , 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. As ofSeptember 30, 2021 , we qualified as an "emerging growth company" and under the JOBS Act were allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We elected to delay the adoption of new or revised accounting standards, and as a result, we may not have complied with new or revised accounting standards on the relevant dates on which adoption of such standards was required for non-emerging growth companies. As a result, the unaudited condensed financial statements may not be comparable to companies that complied with new or revised accounting pronouncements as of public company effective dates. Item 3. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item. 22
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