The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the condensed financial statements
and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q
(this "Quarterly Report"). References in this Quarterly Report to "we," "us,"
"the Company" or "our Company" are to
Information Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements contained in this Quarterly Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Forward-looking statements in this Quarterly Report may include, for example, statements about:
? our being a company with no operating history and no operating revenues;
? our ability to select an appropriate target business or businesses;
? our ability to complete our initial Business Combination;
? our expectations around the performance of the prospective target business;
? our success in retaining or recruiting, or changes required in, our officers,
key employees or directors following our initial Business Combination;
our officers and directors allocating their time to other businesses and
? potentially having conflicts of interest with our business or in approving our
initial Business Combination;
? our potential ability to obtain additional financing to complete our initial
Business Combination;
? our pool of prospective target businesses;
our ability to consummate an initial Business Combination due to the
? uncertainty resulting from the COVID-19 pandemic and other events (such as
terrorist attacks, natural disasters or a significant outbreak of other
infectious diseases);
? the ability of our officers and directors to generate a number of potential
Business Combination opportunities;
? our public securities' potential liquidity and trading;
? the lack of a market for our securities;
? the use of proceeds not held in the Trust Account or available to us from
interest income on the Trust Account balance;
? the Trust Account not being subject to claims of third parties;
19 Table of Contents
? our financial performance;
? our ability to complete a merger with
business of
the other risks and uncertainties discussed under the heading "Risk Factors" in
? this Quarterly Report, in our Annual Report on Form 10-K for the year ended
No. 333-260852) filed in connection with our initial public offering.
The foregoing risks and uncertainties may not be exhaustive. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Overview
We are a newly organized, blank check company incorporated as a
Our registration statement for our IPO was declared effective on
Simultaneously with the closing of the IPO on
Upon the closing of the IPO and the Private Placement, a total of
On
We intend to effectuate our initial Business Combination using cash from the proceeds of our IPO and the Private Placement of the Private Placement Warrants, the proceeds of the sale of our securities in connection with our initial Business Combination
20 Table of Contents
(pursuant any forward purchase agreements or backstop agreements we may enter into), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing or other sources.
The issuance of additional shares or equity-linked securities in connection with our initial Business Combination to the owners of the target or other investors:
may significantly dilute the equity interest of investors, which dilution would
? increase if the anti-dilution provisions in the Class B ordinary shares
resulted in the issuance of Class A ordinary shares on a greater than
one-to-one basis upon conversion of the Class B ordinary shares;
may subordinate the rights of holders of Class A ordinary shares if preference
? shares are issued with rights senior to those afforded our Class A ordinary
shares;
could cause a change in control if a substantial number of Class A ordinary
? shares are issued, which may affect, among other things, our ability to use our
net operating loss carry forwards, if any, and could result in the resignation
or removal of our present officers and directors;
may have the effect of delaying or preventing a change of control of us by
? diluting the share ownership or voting rights of a person seeking to obtain
control of us;
? may adversely affect prevailing market prices for our Units, Class A ordinary
shares and/or warrants; and
? may not result in adjustment to the exercise price of our warrants.
Similarly, if we issue debt securities or otherwise incur significant debt, it could result in:
? default and foreclosure on our assets if our operating revenues after an
initial Business Combination are insufficient to repay our debt obligations;
acceleration of our obligations to repay the indebtedness even if we make all
? principal and interest payments when due if we breach certain covenants that
require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
? our immediate payment of all principal and accrued interest, if any, if the
debt is payable on demand;
our inability to obtain necessary additional financing if the debt contains
? covenants restricting our ability to obtain such financing while the debt is
outstanding;
? our inability to pay dividends on our Class A ordinary shares;
using a substantial portion of our cash flow to pay principal and interest on
? our debt, which will reduce the funds available for dividends on our Class A
ordinary shares if declared, expenses, capital expenditures, acquisitions and
other general corporate purposes;
? limitations on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate;
increased vulnerability to adverse changes in general economic, industry and
? competitive conditions and adverse changes in government regulation or
prevailing interest rates; and
limitations on our ability to borrow additional amounts for expenses, capital
? expenditures, acquisitions, debt service requirements, execution of our
strategy and other purposes and other disadvantages compared to our competitors
who have less debt. 21 Table of Contents Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities since inception have been organizational activities and
those necessary to prepare for the IPO and, subsequent to the completion of our
IPO on
For the three months ended
For the six months ended
Liquidity and Capital Resources
Our initial liquidity needs were satisfied prior to the completion of the IPO
through amounts advanced from our Sponsor, which included a
On
A total of
During the six months ended
As of
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 taxes payable and deferred underwriting commissions) to complete our initial Business Combination. We may withdraw interest to pay our taxes, if any. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the Trust Account. We expect the interest income earned on the amount in the Trust Account (if any) will be sufficient to pay our taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial 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
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
22
Table of Contents
or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete our initial Business Combination, and to pay taxes to the extent the interest earned on the Trust Account is not sufficient to pay our taxes.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business prior to our initial Business
Combination, other than funds available from loans from our Sponsor. However, if
our estimates of the costs of identifying a target business, undertaking
in-depth due diligence and negotiating an initial 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. In
order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial 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 our initial
Business Combination, we may repay such loaned amounts out of the proceeds held
in the Trust Account released to us. In the event that our initial 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
Prior to the completion of our initial Business Combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.
We expect our primary liquidity requirements during that period to include legal, accounting, due diligence, travel, consulting and other expenses in connection with a search for and consummation of any Business Combination as well as legal and accounting fees related to regulatory reporting obligations. In addition, general working capital will be used for miscellaneous expenses and reserves. In the future, we, upon consultation with the compensation committee of our board of directors, may decide to compensate our executive officers and other employees.
These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not held in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a "no-shop" provision (a provision designed to keep target businesses from "shopping" around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed Business Combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a "no-shop" provision would be determined based on the terms of the specific Business Combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
Moreover, we may need to obtain additional financing to complete our initial Business Combination, either because the transaction requires more cash than is available from the proceeds held in our Trust Account or because we become obligated to redeem a significant number of our public shares upon completion of the Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. If we do not complete our initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
As a result of the above, in connection with the Company's assessment of going concern considerations in accordance with Financial Accounting Standard Board's Accounting Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern," management has determined that the liquidity condition and date for mandatory liquidation and dissolution raise substantial doubt about the Company's ability to continue as a going concern through approximately one year from the date the financial statements were issued. The financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
23 Table of Contents Registration Rights
The holders of founder shares, Private Placement Warrants, and securities that
may be issued upon conversion of working capital loans, if any, are entitled to
registration rights pursuant to a registration rights agreement dated as of
Underwriting Agreement
The underwriters were paid a cash underwriting discount of
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible
redemption in accordance with the guidance in ASC 480. Shares of 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 the Company's control) is classified as
temporary equity. At all other times, ordinary shares are classified as
stockholders' equity. The Company's Class A ordinary shares features certain
redemption rights that are considered to be outside of the Company's control and
subject to occurrence of uncertain future events. Accordingly, on
Warrant Liabilities
We account for the warrants issued in connection with our IPO in accordance with Accounting Standards Codification ("ASC") 815-40, "Derivatives and Hedging-Contracts in Entity's Own Equity" ("ASC 815"), under which the warrants do not meet the criteria for equity classification and must be recorded as liabilities. As the warrants meet the definition of a derivative as contemplated in ASC 815, the warrants are measured at fair value at issuance and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the Statements of Operations in the period of change. In accordance with ASC 825-10 "Financial Instruments", the Company has concluded that a portion of the transaction costs which directly related to the IPO and the sale of the Private Placement Warrants should be allocated to the warrants based on their relative fair value against total proceeds, and recognized as transaction costs in the Statements of Operations.
Net Loss per Ordinary Share
The Company complies with accounting and disclosure requirements of ASC Topic 260, "Earnings Per Share". The Statements of Operations includes a presentation of income (loss) per Class A redeemable ordinary shares and loss per non-redeemable ordinary shares following the two-class method of income per ordinary shares. In order to determine the net income (loss) attributable to both the Class A redeemable ordinary shares and non-redeemable ordinary shares, the Company first considered the total income (loss) allocable to both sets of stock. This is calculated using the total net income (loss) less any dividends paid. For purposes of calculating net income (loss) per share, any remeasurement of the Class A ordinary shares subject to possible redemption was treated as dividends paid to the public stockholders. Subsequent to calculating the total income (loss) allocable to both sets of stock, the Company split the amount to
24
Table of Contents
be allocated using a ratio of 80% for the Class A redeemable ordinary shares and
20% for the non-redeemable ordinary shares for the period three months ended
Recent Accounting Pronouncements
In
Our management does not believe that there are any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, that would have a material effect on our financial statements.
© Edgar Online, source