References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Longevity Acquisition Corporation. References to our
"management" or our "management team" refer to our officers and directors,
references to the "sponsor" refer to Whale Management Corporation. 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.
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 and Section 21E of 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 Form 10-Q
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 Annual Report on Form 10-K 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 on March 9, 2018 in the British Virgin
Islands with limited liability formed for the purpose of acquiring, engaging in
a share exchange, share reconstruction and amalgamation with, purchasing all or
substantially all of the assets of, or engaging in any other similar business
combination with one or more businesses or entities. We currently has until May
29, 2021 to consummate a business combination.
On October 21, 2020, we entered into the Merger Agreement with 4D Pharma and
Merger Sub. Pursuant to the Merger Agreement, among other things, we will merge
with and into Merger Sub, with Merger Sub continuing as the surviving entity and
a wholly-owned subsidiary of 4D Pharma. The Merger will become effective at such
time on the closing date as the Articles of Merger and the resolution amending
Merger Sub's memorandum or articles of association and their amendment are
registered by the registrar of corporate affairs of the British Virgin Islands
or at such other time subsequent thereto, but not exceeding 30 days from such
registration, as mutually agreed between 4D Pharma and Longevity and specified
in the Articles of Merger.
On August 28, 2020, we received the Notice from the Listing Qualifications
Department of Nasdaq indicating that we were not in compliance with the Minimum
Public Holders Rule, which requires us to have at least 300 public holders for
continued listing on The Nasdaq Capital Market.
On December 10, 2020, we received a letter from the Listing Qualifications
Department of Nasdaq, confirming that we had regained compliance with the
Minimum Public Holders Rule based on its submissions to Nasdaq dated October 12,
October 28, and November 30 showing that we had more than 300 public holders and
closing the matter.
On October 26, 2020, we filed a definitive proxy statement for a special meeting
of shareholders for the November 2020 Extension to be held on November 20, 2020,
at which its shareholders shall vote on the amendment to our Charter, extending
the date by which we must consummate its initial business combination from
November 30, 2020 to May 29, 2021 or such earlier date as determined by our
board. Our Shareholders approved the November 2020 Extension at the special
meeting.
On December 18, 2020, we held the Longevity 2020 annual meeting and our
shareholders approved the longevity director election proposal and the longevity
auditor ratification proposal.
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception through November 30, 2020 were organizational
activities, those necessary to prepare for the Initial Public Offering,
described below, and identifying a target business 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 after the Initial Public Offering.
We are incurring expenses as a result of being a public company (for legal,
financial reporting, accounting and auditing compliance), as well as for due
diligence expenses in connection with completing a Business Combination.
For the three months ended November 30, 2020, we had a net loss of $196,283,
which consists of operating costs of $196,646, offset by interest income on
marketable securities held in the Trust Account of $363.
For the nine months ended November 30, 2020, we had a net loss of $520,260,
which consists of operating costs of $566,963, offset by interest income on
marketable securities held in the Trust Account of $46,703.
For the three months ended November 30, 2019, we had a net loss of $116,123,
which consists of operating costs of $289,884 and an unrealized loss on
marketable securities held in our Trust Account of $6,374, offset by interest
income on marketable securities held in the Trust Account of $180,135.
For the nine months ended November 30, 2019, we had a net loss of $225,309,
which consists of operating costs of $860,442, offset by interest income on
marketable securities held in the Trust Account of $635,133.
Liquidity and Capital Resources
On August 31, 2018, we consummated the Initial Public Offering of 4,000,000
Units at a price of $10.00 per Unit, generating gross proceeds of $40,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 270,000 Private Units to the sponsor and the underwriter at a price
of $10.00 per unit, generating gross proceeds of $2,700,000.
Following the Initial Public Offering and the sale of the Private Units, a total
of $40,000,000 was placed in the Trust Account and we had $1,061,385 of cash
held outside of the Trust Account, after payment of costs related to the Initial
Public Offering, and available for working capital purposes. We incurred
$2,631,167 in transaction costs, including $1,200,000 of underwriting fees,
$1,000,000 of deferred underwriting fees and $431,167 of offering costs.
For the nine months ended November 30, 2020, cash used in operating activities
was $324,718, consisting primarily of a net loss of $520,260 and interest earned
on marketable securities held in the Trust Account and not available for
operations of $46,703. Changes in our operating assets and liabilities provided
cash of $242,245.
For the nine months ended November 30, 2019, cash used in operating activities
was $847,371, consisting primarily of a net loss of $225,309 and interest earned
on marketable securities held in the Trust Account and not available for
operations of $635,133. Changes in our operating assets and liabilities provided
cash of $13,071.
At November 30, 2020, we had marketable securities held in the Trust Account of
$14,607,845. We intend to use substantially all of the funds held in the Trust
Account (excluding deferred underwriting commissions and interest to pay taxes)
to acquire a target business or businesses and to pay our expenses relating
thereto. To the extent that our capital stock is used in whole or in part as
consideration to effect our Business Combination, the remaining proceeds held in
the Trust Account as well as any other net proceeds not expended will be used as
working capital to finance the operations of the target business or businesses.
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At November 30, 2020, we had cash of $19,330 held outside the Trust Account. We
intend to use the funds held outside the Trust Account primarily to identify and
evaluate prospective acquisition candidates, perform business due diligence on
prospective target businesses, travel to and from the offices, plants or similar
locations of prospective target businesses, review corporate documents and
material agreements of prospective target businesses, select the target business
to acquire and structure, negotiate and consummate a Business Combination.
In connection with the extension of time to consummate a Business Combination to
May 28, 2020, the Sponsor deposited into the Trust Account $400,000 ($0.10 per
Unit) on each of August 20, 2019, November 20, 2019 and February 21, 2020, for a
total amount of $1,200,000.
On May 22, 2020, our shareholders approved an amendment to our Charter to extend
the period of time for which we were required to consummate a Business
Combination from May 28, 2020 to November 30, 2020. In connection with the
approval of the extension on May 22, 2020, shareholders elected to redeem an
aggregate of 2,643,178 ordinary shares, of which we paid cash in the aggregate
amount of $28,055,793, or approximately $10.61 per share, to redeeming
shareholders on June 3, 2020. In connection with the extension, we deposited
into the Trust Account $0.025 for each public share that was not redeemed in
connection with the extension, or an aggregate of approximately $34,000, for
such extension.
On November 20, 2020, our shareholders approved an amendment to our Charter to
extend the period of time for which we were required to consummate a Business
Combination from November 30, 2020 to May 29, 2021. In connection with the
approval of the extension on November 20, 2020, shareholders elected to redeem
an aggregate of 1,200 ordinary shares, of which was paid cash in the aggregate
amount of $12,919, or approximately $10.77 per share on December 1, 2020. In
connection with the extension, we deposited into the Trust Account $0.05 for
each public share that was not redeemed in connection with the extension, or an
aggregate of approximately $68,000, for such extension.
On June 25, 2020, October 7, 2020 and January 1, 2021, the sponsor committed to
provide us loans in the aggregate amount of $630,000 in order to finance
transaction costs in connection with a Business Combination.
As of the date hereof, we have an outstanding balance of working capital loans
provided by the sponsor in the aggregated amount of $500,000 evidenced by a
convertible note dated October 21, 2020 issued to the sponsor. As provided in
the Merger Agreement, the sponsor has agreed to convert such convertible note of
$500,000 into the Company's units immediately prior to the closing of the
Business Combination at a conversion price of $10.00 per unit; and in connection
with such conversion, the sponsor will forfeit 50,000 founder shares.
On December 9, 2020, the Company issued a facility of $300,000 evidenced by a
promissory note to the Sponsor to provide any additional working capital loans
to the Company on an as-needed basis towards the consummation of a Business
Combination. Outstanding working capital loans, if any, under this promissory
note will be paid off by applying the proceeds from the Trust Account after the
redemption upon the closing.
Other than as described above, in order to fund working capital deficiencies or
finance transaction costs in connection with a Business Combination, our sponsor
or an affiliate of our sponsor or certain of our officers and directors 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
loans may be convertible into Private Units, at a price of $10.00 per unit at
the option of the lender.
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We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
undertaking in-depth due diligence and negotiating a Business Combination is
less than the actual amount necessary to do so, we may have insufficient funds
available to operate our business prior to our Business Combination. Moreover,
we may need to obtain additional financing either to consummate our Business
Combination or because we become obligated to redeem a significant number of our
public shares upon consummation of our Business Combination, in which case we
may issue additional securities or incur debt in connection with such Business
Combination. Subject to compliance with applicable securities laws, we would
only consummate such financing simultaneously with the consummation of our
Business Combination. Following our Business Combination, if cash on hand is
insufficient, we may need to obtain additional financing in order to meet our
obligations.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of November 30, 2020. 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 other than an agreement to pay an affiliate
of a member of our sponsor a monthly fee of $10,000 for office space, utilities
and administrative support provided to the Company.
We began incurring these fees on August 28, 2018. Effective May 31, 2020, our
sponsor agreed to stop charging us the monthly administrative fee
In addition, we have an agreement to pay the underwriters a deferred fee of two
and one-half percent (2.5%) of the gross proceeds of the Initial Public
Offering, or $1,000,000. Pursuant to the agreement we have with the underwriter,
we will have the right to pay up to $400,000 of such amount to other advisors
retained by us to assist us in connection with a Business Combination; provided,
however, that we may, in its sole discretion, apply such 1.0% fee to other deal
expenses instead.
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:
Ordinary Shares Subject to 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 are 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' equity section of our condensed balance
sheets.
Net Loss Per Ordinary Share
We apply the two-class method in calculating earnings per share. Ordinary shares
subject to possible redemption which are not currently redeemable and are not
redeemable at fair value, have been excluded from the calculation of basic net
loss per ordinary share since such shares, if redeemed, only participate in
their pro rata share of the Trust Account earnings. Our net loss is adjusted for
the portion of income that is attributable to ordinary shares subject to
redemption, as these shares only participate in the earnings of the Trust
Account and not our income or losses.
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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
condensed financial statements.
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