The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including those set forth under "Special Note Regarding Forward-Looking
Statements," "Item 1A. Risk Factors" and elsewhere in this Annual Report on Form
10-K.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations has been amended and restated to give effect to the Restatement. We
are restating our historical financial results to reclassify our Warrants as
derivative liabilities pursuant to ASC 815-40 rather than as a component of
equity as we had previously treated the Warrants. The impact of the restatement
is reflected in the Management's Discussion and Analysis of Financial Condition
and Results of Operations below. Other than as disclosed in the Explanatory Note
and with respect to the impact of the restatement, no other information in this
Item 7 has been amended and this Item 7 does not reflect any events occurring
after the Original Filing. The impact of the restatement is more fully described
in Note 2 to our financial statements included in Item 15 of Part IV of this
Amendment and Item 9A: Controls and Procedures, both contained herein.
Overview
We are a blank check company incorporated in the Cayman Islands on May 27, 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 operating revenues
to date. Our only activities from inception through December 31, 2020 were
organizational activities and those necessary to prepare for the Initial Public
Offering, described below. We do not expect to generate any operating revenues
until after the completion of our initial Business Combination. We expect to
generate non-operating income in the form of interest income on marketable
securities held after the Initial Public Offering. We expect that we will 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 in connection with searching for, and completing, a Business
Combination.
As a result of the restatement described in Note 2 of the notes to the financial
statements included herein, we classify the Warrants issued in connection with
our Initial Public Offering as liabilities at their fair value and adjust the
warrant instrument 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 statement of operations.
For the period from May 27, 2020 (inception) through December 31, 2020, we had a
net loss of $90,424,867, which consisted of formation and operating costs of
$238,199, transaction costs incurred in connection with warrant liabilities of
$826,684 and change in fair value of warrants of $89,486,546, offset by interest
earned on marketable securities held in Trust Account of $126,562.
Liquidity and Capital Resources
On October 20, 2020, we consummated the Initial Public Offering of 55,000,000
Units at a price of $10.00 per Unit, generating gross proceeds of $550,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 6,000,000 Private Placement Warrants to the Sponsor at a price of
$1.50 per Private Placement Warrant generating gross proceeds of $9,000,000.
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On October 29, 2020, the Company issued an additional 4,499,351 Units issued for
total gross proceeds of $44,993,510 in connection with the underwriters' partial
exercise of their over-allotment option. Simultaneously with the partial closing
of the over-allotment option, we also consummated the sale of an additional
449,936 Private Placement Warrants at $1.50 per Private Placement Warrant,
generating total proceeds of $674,902.
Following the Initial Public Offering, the partial exercise of their
over-allotment option and the sale of the Private Placement Warrants, a total of
$594,993,510 was placed in the Trust Account. We incurred $26,628,771 in
transaction costs, including $8,174,902 of underwriting fees net of $2,724,968
reimbursed from the underwriters, $17,849,805 of deferred underwriting fees and
$604,064 of other offering costs.
For the period from May 27, 2020 (inception) through December 31, 2020, cash
used in operating activities was $32,555. Net loss of $90,424,867 was impacted
by formation cost paid through advances from related party of $5,000,
transaction costs incurred in connection with warrant liabilities of $826,684,
change in fair value of warrant liability of $89,486,546, and interest earned on
marketable securities held in the Trust Account of $126,562. Changes in
operating assets and liabilities provided $200,644 of cash from operating
activities.
As of December 31, 2020, we had cash and marketable securities held in the Trust
Account of $595,120,073. We intend to use substantially all of the funds held in
the Trust Account, including any amounts representing interest earned on the
Trust Account, which interest shall be net of taxes payable and excluding
deferred underwriting commissions, to complete our Business Combination. We may
withdraw interest from the Trust Account to pay taxes, if any. To the extent
that our share capital or debt is used, in whole or in part, as consideration to
complete a 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.
As of December 31, 2020, we had cash of $1,500,497. 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, structure, negotiate
and complete a Business Combination.
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 may
repay such loaned amounts out of the proceeds of the Trust Account released to
us. 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 warrants, at a
price of $1.50 per warrant, at the option of the lender. The warrants would be
identical to the Private Placement Warrants.
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
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a Business Combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our initial Business Combination. Moreover, we may need to obtain additional
financing either to complete our Business Combination or because we become
obligated to redeem a significant number of our public shares upon completion of
our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 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 described below.
The underwriters are entitled to a deferred fee of $0.30 per Unit, or
$17,849,805. A portion of such amount, not to exceed 25% of the total amount of
the deferred underwriting commissions held in the Trust Account, may be
re-allocated or paid to affiliated or unaffiliated third parties that assist in
consummating a Business Combination. The election to re-allocate or make any
such payments to affiliated or unaffiliated third parties will be solely at the
discretion of our management team, and such unaffiliated third parties will be
selected by the management team in their sole and absolute discretion. 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. We may, in its sole
discretion, pay up to an additional 1.25% in the aggregate of deferred
underwriting commissions to one or more of the underwriters based on the
underwriters' performance during the Business Combination process.
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Critical Accounting Policies
The preparation of 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 Liability
We account for the Warrants in accordance with the guidance contained in ASC
815-40 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
statement of operations. The Public Warrants for periods where no observable
traded price was available are valued using a Monte Carlo Simulation. The
Private Placement Warrants are also valued using a Modified Black Scholes Model.
Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible redemption in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Class A Ordinary shares subject to
mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable ordinary shares (including ordinary shares
that features redemption rights that is either within the control of the holder
or subject to redemption upon the occurrence of uncertain events not solely
within our control) is classified as temporary equity. At all other times,
ordinary shares are classified as shareholders' equity. Our Class A ordinary
shares feature certain redemption rights that are considered to be outside of
our control and subject to occurrence of uncertain future events. Accordingly,
Class A ordinary shares subject to possible redemption is presented as temporary
equity, outside of the shareholders' equity section of our balance sheet.
Net income (loss) per Ordinary Share
We apply the two-class method in calculating earnings per share. Net income per
ordinary share, basic and diluted for Class A redeemable ordinary shares is
calculated by dividing the interest income earned on the Trust Account by the
weighted average number of Class A redeemable ordinary shares outstanding since
original issuance. Net loss per ordinary share, basic and diluted for Class B
non-redeemable ordinary shares is calculated by dividing the net loss, less
income attributable to Class A redeemable ordinary shares, by the weighted
average number of Class B non-redeemable ordinary shares outstanding for the
periods presented.
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. The Company is currently assessing the impact, if any, that ASU 2020-06
would have on its financial position, results of operations or cash flows.
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