References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Bridgetown Holdings Limited. References to our "management"
or our "management team" refer to our officers and directors, and references to
the "Sponsor" refer to Bridgetown 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.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act 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
"anticipate," "believe," "continue," "could," "estimate," "expect," "intends,"
"may," "might," "plan," "possible," "potential," "predict," "project," "should,"
"would" and variations thereof 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 and Annual Report on Form 10-KA filed with the SEC
on May 25, 2021. 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 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 September 30, 2021 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.
For the three months ended September 30, 2021, we had a net income of
$20,335,001, which consisted of change in fair value of warrant liability of
$21,329,607 and an interest income on marketable securities held in the Trust
Account of $47,941, offset by the formation and operating cost of $1,042,547.
For the nine months ended September 30, 2021, we had a net income of
$79,888,342, which consisted of change in fair value of warrant liability of
$83,243,113 and an interest income on marketable securities held in the Trust
Account of $261,978, offset by the formation and operating cost of $3,616,749.
For the three months ended September 30, 2020, we had a net loss of $742, which
consisted of formation and operational costs.
For the period from May 27, 2020 (inception) through September 30, 2020, we had
a net loss $5,742, which consisted of formation and operating costs.
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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.
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 nine months ended September 30, 2021, cash used in operating activities
was $834,144. Net income of $79,888,342 was affected by change in fair value of
warrant liability of $83,243,113, and interest earned on marketable securities
held in the Trust Account of $261,978. Changes in operating assets and
liabilities provided $2,782,605 of cash from operating activities.
For the period from May 27, 2020 (inception) through September 30, 2020, cash
used in operating activities was $742. Net loss of $5,742 was affected by
payment of formation costs through advances from related party of $5,000.
As of September 30, 2021, we had cash and marketable securities held in the
Trust Account of $595,382,051. 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 September 30, 2021, we had cash of $1,080,954. 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 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.
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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 $0.35 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.
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 condensed 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
The Company accounts for warrants as either equity-classified or
liability-classified instruments based on an assessment of the warrant's
specific terms and applicable authoritative guidance in Financial Accounting
Standards Board ("FASB") Accounting Standards Codification ("ASC") 480,
Distinguishing Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and
Hedging ("ASC 815"). The assessment considers whether the warrants are
freestanding financial instruments pursuant to ASC 480, meet the definition of a
liability pursuant to ASC 480, and whether the warrants meet all of the
requirements for equity classification under ASC 815, including whether the
warrants are indexed to the Company's own ordinary shares and whether the
warrant holders could potentially require "net cash settlement" in a
circumstance outside of the Company's control, among other conditions for equity
classification. This assessment, which requires the use of professional
judgment, is conducted at the time of warrant issuance and as of each subsequent
quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of
additional paid-in capital at the time of issuance. For issued or modified
warrants that do not meet all the criteria for equity classification, the
warrants are required to be recorded as a liability at their initial fair value
on the date of issuance, and each balance sheet date thereafter. Changes in the
estimated fair value of the warrants are recognized as a non-cash gain or loss
on the consolidated statements 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 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 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 share outstanding for the period. The
Company applies the two-class method in calculating earnings per share.
Accretion associated with the redeemable Class A ordinary shares are excluded
from earnings per 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. 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.
Management does not believe that any other 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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