The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our unaudited financial
statements and the notes related thereto which are included in "Item 1.
Financial Statements" of this Quarterly Report on Form 10Q.
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this
Quarterly Report on Form 10Q including, without limitation, statements under
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. When used in this Quarterly Report on Form 10Q,
words such as "anticipate," "believe," "estimate," "expect," "intend" and
similar expressions, as they relate to us or the Company's management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of management, as well as assumptions made by, and information currently
available to, the Company's management. Actual results could differ materially
from those contemplated by the forward-looking statements as a result of certain
factors detailed in our filings with the SEC. All subsequent written or oral
forward-looking statements attributable to us or persons acting on the Company's
behalf are qualified in their entirety by this paragraph.
Overview
We are a blank check company incorporated on September 14, 2020 as a Delaware
corporation and formed for the purpose of effecting a Business Combination with
one or more target businesses. We completed our Public Offering on March 1,
2021.
We presently have no revenue, have had losses since inception from incurring
formation costs and have had no operations other than the active solicitation of
a target business with which to complete a business combination.
Recent Developments
Proposed Business Combination
On December 13, 2021, Gores Holdings VIII, Inc. entered into an Agreement and
Plan of Merger (the "Merger Agreement"), by and among the Company, Frontier
Merger Sub, Inc. ("First Merger Sub"), Frontier Merger Sub II, LLC ("Second
Merger Sub"), and Footprint International Holdco, Inc. ("Footprint"), which
provides for, among other things: (a) the merger of First Merger Sub with and
into Footprint, with Footprint continuing as the surviving corporation (the
"First Merger"); and (b) immediately following the First Merger and as part of
the same overall transaction as the First Merger, the merger of Footprint with
and into Second Merger Sub, with Second Merger Sub continuing as the surviving
entity (the "Second Merger" and, together with the First Merger, the "Mergers").
The transactions set forth in the Merger Agreement, including the Mergers, will
constitute a "Business Combination" as contemplated by the Company's Amended and
Restated Certificate of Incorporation.
The Merger Agreement and the transactions contemplated thereby were unanimously
approved by the Board of Directors of the Company and the Board of Directors of
Footprint (the "Footprint Board") on December 13, 2021.
The Merger Agreement
Merger Consideration
Pursuant to the terms of the Merger Agreement, at the effective time of the
First Merger, (a) each share of (i) Footprint's common stock, par value
$0.000001 per share ("Footprint Common Stock"), including shares of Footprint
Common Stock issuable pursuant to the exercise of warrants to purchase Footprint
Common Stock ("Footprint Warrants"), will be converted into the right to receive
a number of newly-issued shares of the Company's Class A Common Stock, par value
$0.0001 per share ("Company Class A Stock"), equal to the Per Share Company
Common Stock Consideration (as defined in the Merger Agreement), (ii)
Footprint's Class A preferred stock, par value $0.001 per share ("Footprint
Class A Preferred Stock"), will be converted into the right to receive a number
of newly-issued shares of Company Class A Stock equal to the Per Share Company
Class A
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Preferred Stock Consideration (as defined in the Merger Agreement), (iii)
Footprint's Class B preferred stock, par value $0.001 per share ("Footprint
Class B Preferred Stock"), will be converted into the right to receive a number
of newly-issued shares of Company Class A Stock equal to the Per Share Company
Class B Preferred Stock Consideration (as defined in the Merger Agreement), and
(iv) Footprint's Class C preferred stock, par value $0.001 per share ("Footprint
Class C Preferred Stock"), will be converted into the right to receive a number
of newly-issued shares of Company Class A Stock equal to the Per Share Company
Class C Preferred Stock Consideration (as defined in the Merger Agreement) and
(b) each of the promissory notes outstanding that entitle the holder thereof to
convert outstanding amounts into shares of capital stock of Footprint
("Footprint Convertible Promissory Notes") will be converted into the right to
receive a number of newly-issued shares of Company Class A Stock set forth on
the Company Closing Certificate (as defined in the Merger Agreement). Pursuant
to the terms of the Merger Agreement, the Company is required to use reasonable
best efforts to cause the shares of Company Class A Common Stock to be issued in
connection with the transactions contemplated by the Merger Agreement to be
listed on the Nasdaq Capital Market (the "NASDAQ") at the closing of the
Proposed Business Combination.
Pursuant to the Merger Agreement, the aggregate merger consideration payable at
the closing of the Proposed Business Combination to all of the stockholders,
holders of stock options of Footprint, holders of Footprint Warrants and holders
of Footprint Convertible Promissory Notes will be an aggregate of 161,776,650
shares of Company Class A Stock (deemed to have a value of $10.00 per share).
In addition to the consideration to be paid at the closing of the Proposed
Business Combination, certain stockholders and holders of stock options of
Footprint will be entitled to receive, pursuant to the Merger Agreement or the
Parent Performance Plan (as defined in the Merger Agreement), additional shares
of Company Class A Stock or performance-based restricted stock units from the
Company, as applicable, subject to the terms provided in the Merger Agreement or
the Parent Performance Plan.
Treatment of Footprint's Stock Options
Pursuant to the Merger Agreement, at the closing of the Proposed Business
Combination, each of Footprint's stock options, to the extent then outstanding
and unexercised, will automatically be converted into an option to acquire a
certain number of shares of Company Class A Stock and at an adjusted exercise
price per share as determined pursuant to the terms of the Merger Agreement.
Each such converted option will be subject to the same terms and conditions as
were applicable to the corresponding Footprint stock option as of immediately
prior to the closing of the Proposed Business Combination.
Representations, Warranties and Covenants
The parties to the Merger Agreement have made representations, warranties and
covenants that are customary for transactions of this nature. The
representations and warranties of the respective parties to the Merger Agreement
will not survive the closing of the Proposed Business Combination.
Covenants
The Merger Agreement includes customary covenants of the parties with respect to
operation of their respective businesses prior to consummation of the Proposed
Business Combination and efforts to satisfy conditions to consummation of the
Proposed Business Combination. The Merger Agreement also contains additional
covenants of the parties, including, among others, (a) covenants providing for
the Company and Footprint to use their reasonable best efforts to obtain all
necessary regulatory approvals and (b) covenants providing for the Company and
Footprint to cooperate in the preparation of the Registration Statement and
Proxy Statement (as each such term is defined in the Merger Agreement) required
to be filed in connection with the Proposed Business Combination. The covenants
of the parties to the Merger Agreement will not survive the closing of the
Proposed Business Combination, except for those covenants that by their terms
expressly apply in whole or in part after the closing of the Proposed Business
Combination.
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Conditions to Consummation of the Proposed Business Combination
The consummation of the Proposed Business Combination is conditioned upon, among
other things, (a) the expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (b) the
absence of any governmental order, statute, rule or regulation enjoining or
prohibiting the consummation of the Proposed Business Combination, (c) the
Company having at least $5,000,001 of net tangible assets (as determined in
accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) remaining after the completion of the contemplated
redemption offer in relation to Company Class A Stock in accordance with the
terms of the Merger Agreement, (d) receipt of the required Company stockholder
approval, (e) the adoption of the Merger Agreement and the approval of the
transactions contemplated by the Merger Agreement by holders of a majority of
the voting power of the outstanding shares of Footprint Common Stock (the
"Footprint Stockholder Approval"), (f) the effectiveness of the Registration
Statement under the Securities Act, (g) the receipt of the approval for listing
by NASDAQ of the Company Class A Stock to be issued in connection with the
closing of the Proposed Business Combination, subject only to (i) the
requirement to have a sufficient number of round lot holders and (ii) official
notice of listing, and (h) the Closing Parent Cash (as defined in the Merger
Agreement) being equal to or exceeding $550,000,000.
Following approval of the Merger Agreement and the transactions contemplated
thereby by the Footprint Board, and receipt of the recommendation of the
Footprint Board to adopt the Merger Agreement and approve the transactions
contemplated thereby, Footprint stockholders holding a sufficient amount of
Footprint Common Stock delivered a written consent adopting the Merger Agreement
and approving the transactions contemplated by the Merger Agreement, and no
further approval of Footprint's stockholders is required with respect to the
consummation of the transactions contemplated by the Merger Agreement.
Termination
The Merger Agreement may be terminated at any time prior to the consummation of
the Mergers (whether before or after the required Company stockholder vote and
Footprint Stockholder Approval has been obtained) by mutual written consent of
the Company and Footprint and in certain other circumstances, including if the
Proposed Business Combination has not been consummated by July 13, 2022 (the
"Outside Date") and the delay in closing prior to such date is not due to the
breach of the Merger Agreement by the party seeking to terminate.
The foregoing description of the Merger Agreement and the transactions
contemplated thereby, including the Mergers, does not purport to be complete and
is qualified in its entirety by the terms and conditions of the Merger
Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated
herein by reference. The Merger Agreement contains representations, warranties
and covenants that the respective parties made to each other as of the date of
such agreement or other specific dates. The assertions embodied in those
representations, warranties and covenants were made for purposes of the contract
among the respective parties to the Merger Agreement and are subject to
important qualifications and limitations agreed to by the contracting parties in
connection with negotiating the Merger Agreement. The Merger Agreement has been
attached to provide investors with information regarding its terms. It is not
intended to provide any other factual information about the Company or any other
party to the Merger Agreement. In particular, the representations, warranties,
covenants and agreements contained in the Merger Agreement, which were made only
for purposes of the Merger Agreement and as of specific dates, were solely for
the benefit of the respective parties to the Merger Agreement, may be subject to
limitations agreed upon by the contracting parties (including being qualified by
confidential disclosures made for the purposes of allocating contractual risk
between the respective parties to the Merger Agreement instead of establishing
these matters as facts) and may be subject to standards of materiality
applicable to the contracting parties that differ from those applicable to the
Company's investors and security holders. Company investors and security holders
are not third-party beneficiaries under the Merger Agreement and should not rely
on the representations, warranties or covenants of any party to the Merger
Agreement. Moreover, information concerning the subject matter of the
representations and warranties may change after the date of the Merger
Agreement, which subsequent information may or may not be fully reflected in the
Company's public disclosures.
Amendment to Merger Agreement
On May 20, 2022, the parties to the Merger Agreement entered into Amendment No.
1 to the Merger Agreement ("Amendment No. 1"). Amendment No. 1 amends the Merger
Agreement to, among other things: (a)
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account for the termination of the KSP Subscription Agreement (as defined below)
by revising the aggregate number of shares of Class A common stock, par value
$0.0001 per share, of the Company (the "Class A Stock") contemplated by the PIPE
Investment from 31,055,000 shares to 28,555,000 shares; (b) account for the May
Footprint Class C Financing (as defined below) by increasing the amount under
clause "(d)" of the definition of "Closing Parent Cash" from to $150,000,000 to
$175,000,000; (c) account for the amendment of the Waiver and Share Surrender
Agreement (as defined below); and (d) make certain other administrative changes.
PIPE Subscription Agreements; Termination of KSP Subscription Agreement; May
Footprint Class C Financing
On December 13, 2021, the Company entered into subscription agreements (each, a
"Subscription Agreement" and collectively, the "Subscription Agreements") with
certain investors, including certain individuals (each, an "Individual Investor
Subscription Agreement"), institutional investors (each, an "Institutional
Investor Subscription Agreement"), KSP Footprint Investments, LLC (the "Koch
Preference Subscriber") and Gores Sponsor VIII LLC (the "Sponsor Subscription
Agreement," and, together with the Individual Investor Subscription Agreement,
the Institutional Investor Subscription Agreement, and the Koch Preference
Subscriber, the "PIPE Subscription Agreements"), pursuant to which the investors
have agreed to purchase an aggregate of 31,055,000 shares of Company Class A
Stock in a private placement for $10.00 per share (the "PIPE Investment").
As part of the PIPE Investment, the Koch Preference Subscriber agreed to
purchase 2,500,000 shares of Class A Stock, at a price per share of $10.00 for
an aggregate purchase price of $25,000,000 (the "KSP Subscription Agreement").
On May 20, 2022, Footprint issued and sold 1,000 shares of Footprint's Class C
Non-Participating Preferred Stock, par value $0.001 per share, at a purchase
price of $25,000 per share, for a total purchase price of $25,000,000 (the "May
Footprint Class C Financing") to the Koch Preference Subscriber. In connection
with the May Footprint Class C Financing, the parties terminated the KSP
Subscription Agreement (the "Termination Agreement"). As a result, the aggregate
number of shares to be purchased in the PIPE Investment will be 28,555,000
shares of Class A Stock at $10.00 per share for an aggregate purchase price
equal to $285,550,000.
Each Subscription Agreement will terminate with no further force and effect upon
the earliest to occur of: (a) such date and time as the Merger Agreement is
terminated in accordance with its terms; (b) upon the mutual written agreement
of the parties to such Subscription Agreement; (c) if any of the conditions to
closing set forth in such Subscription Agreement are not satisfied or waived on
or prior to the closing and, as a result thereof, the transactions contemplated
by such Subscription Agreement are not consummated at the closing; and (d) 30
days after the Outside Date, if the closing of the Proposed Business Combination
shall not have occurred by such date other than as a result of a breach of the
investor's obligations under the Subscription Agreement. As of the date hereof,
the shares of Company Class A Stock to be issued pursuant to the Subscription
Agreements have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"). The Company will, within 30 days after the closing, file
with the Securities and Exchange Commission ("SEC") a registration statement
(the "Post-Closing Registration Statement") registering the resale of such
shares of Class A Common Stock and will use its commercially reasonable efforts
to have such Post-Closing Registration Statement declared effective as soon as
practicable after the filing thereof.
The Sponsor Subscription Agreement is substantially similar to the Individual
Investor Subscription Agreements, except that the Sponsor has the right to
assign its commitment to purchase the Company Class A Stock under the Sponsor
Subscription Agreement in advance of the closing of the Proposed Business
Combination. The Institutional Investor Subscription Agreement is substantially
similar to the Individual Investor Subscription Agreement.
Amendment to the Waiver and Share Surrender Agreement
On December 13, 2021, the Company entered a Waiver and Share Surrender Agreement
(the "Waiver Agreement") with the Sponsor and each holder (including the
Sponsor) (each, a "Class F Holder," and, collectively, the "Class F Holders") of
the Company's Class F Common Stock, par value $0.0001 per share ("Class F Common
Stock"), pursuant to which (a) the Class F Holders have agreed to waive certain
of the anti-dilution rights in respect of their Class F Common Stock and (b) the
Sponsor has agreed to irrevocably surrender 1,501,650 shares of Class F Common
Stock, in each case, in connection with, and subject to, the closing of the
Proposed Business Combination.
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On May 20, 2022, the parties to the Waiver and Share Surrender Agreement entered
into Amendment No. 1 to the Waiver and Share Surrender Agreement (the "Waiver
and Share Surrender Agreement Amendment"), pursuant to which the Sponsor has
agreed to irrevocably surrender a total of 1,751,925 shares of Class F Stock, in
connection with, and subject to, the closing of the Business Combination.
Results of Operations
For the six months ended June 30, 2022 and 2021, we had net income/(loss) of
$8,618,033 and ($358,926) of which $11,064,332 and $1,892,583 is a non-cash gain
related to the change in fair value of the warrant liability, respectively. Our
business activities during the quarter mainly consisted of identifying and
evaluating prospective acquisition candidates for a Business Combination. We
believe that we have sufficient funds available to complete our efforts to
effect a Business Combination with an operating business by March 1, 2023.
However, if our estimates 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 Business Combination.
As indicated in the accompanying unaudited financial statements, at June 30,
2022, we had $96,916 in cash and deferred offering costs of $12,075,000.
Further, we expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete our Business
Combination will be successful.
Liquidity and Capital Resources
On January 11, 2021, the Sponsor purchased 8,625,000 Founder Shares for $25,000,
or approximately $0.003 per share. On February 23, 2021, the Sponsor transferred
25,000 Founder Shares to each of the Company's three independent director
nominees at their original purchase price.
On March 1, 2021, we consummated our Public Offering of 34,500,000 Units at a
price of $10.00 per Unit, including 4,500,000 Units as a result of the
underwriter's full exercise of its over-allotment option, generating gross
proceeds of $345,000,000. On the IPO Closing Date, we completed the private sale
of an aggregate of 2,966,666 Private Placement Warrants, each exercisable to
purchase one share of Common Stock at $11.50 per share, to our Sponsor, at a
price of $3.00 per Private Placement Warrant, generating gross proceeds, before
expenses, of $8,900,000. After deducting the underwriting discounts and
commissions (excluding the Deferred Discount, which amount will be payable upon
consummation of the Business Combination, if consummated), the total net
proceeds from our Public Offering and the sale of the Private Placement Warrants
were $347,000,000, of which $345,000,000 (or $10.00 per share sold in the Public
Offering) was placed in the Trust Account. The amount of proceeds not deposited
in the Trust Account was $2,000,000 at the closing of our Public Offering.
Interest earned on the funds held in the Trust Account may be released to us to
fund our Regulatory Withdrawals, subject to an annual limit of $900,000, for a
maximum of 24 months and/or additional amounts necessary to pay our franchise
and income taxes.
Prior to the completion of the Public Offering, the Sponsor loaned the Company
an aggregate of $300,000 by the issuance of an unsecured promissory note (the
"Note") issued by the Company in favor of the Sponsor to cover organization
expenses and expenses related to the Public Offering. The Note was non-interest
bearing and payable on the earlier of January 31, 2022 or the completion of the
Public Offering. The Note was repaid upon completion of the Public Offering.
On March 19, 2021, the Sponsor made available to the Company a loan of up to
$4,000,000 pursuant to a promissory note issued by the Company to the Sponsor.
The proceeds from the note will be used for ongoing operational expenses and
certain other expenses in connection with the Business Combination. The note is
unsecured, non-interest bearing and matures on the earlier of: (i) February 11,
2023 or (ii) the date on which the Company consummates the Business Combination.
As of June 30, 2022, the amount advanced by Sponsor to the Company was
$1,950,000.
As of June 30, 2022 and December 31, 2021, we had cash held outside of the Trust
Account of approximately $96,916 and $317,220, respectively, which is available
to fund our working capital requirements. Additionally, interest earned on the
funds held in the Trust Account may be released to us to fund our Regulatory
Withdrawals, for a maximum of 24 months and/or additional amounts necessary to
pay our franchise and income taxes.
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At June 30, 2022 and December 31, 2021, the Company had current liabilities of
$10,651,597 and $19,501,774 and a working capital deficit of ($9,911,346) and
($18,094,276), respectively, the balances of which are primarily related to
warrants we have recorded as liabilities as described in Notes 2 and 3. Other
amounts are related to accrued expenses owed to professionals, consultants,
advisors and others who are working on seeking a Business Combination as
described in Note 1. Such work is continuing after June 30, 2022, and amounts
are continuing to accrue. Additionally, the warrant liability will not impact
the Company's liquidity until a Business Combination has been consummated, as
they do not require cash settlement until such event has occurred.
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We intend to use substantially all of the funds held in the Trust Account,
including interest (which interest shall be net of Regulatory Withdrawals and
taxes payable) to consummate our Business Combination. Moreover, we may need to
obtain additional financing either to complete a Business Combination or because
we become obligated to redeem a significant number of shares of our Class A
Common Stock upon completion of a Business Combination. Subject to compliance
with applicable securities laws, we would only complete such financing
simultaneously with the completion of our Business Combination. If we are unable
to complete our 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 Business Combination, if cash on hand is
insufficient, we may need to obtain additional financing in order to meet our
obligations. To the extent that our capital stock or debt is used, in whole or
in part, as consideration to consummate our Business Combination, the remaining
proceeds held in our Trust Account, if any, will be used as working capital to
finance the operations of the target business or businesses, make other
acquisitions and pursue our growth strategy. Following the closing of a Business
Combination, we do not expect there to be remaining proceeds in our Trust
Account.
As of June 30, 2022 and December 31, 2021, we did not have any long-term debt
obligations, capital lease obligations, operating lease obligations, purchase
obligations or long-term liabilities. In connection with the Public Offering, we
entered into an administrative services agreement to pay monthly recurring
expenses of $20,000 to The Gores Group for office space, utilities and
secretarial support. The administrative services agreement terminates upon the
earlier of the completion of a Business Combination or the liquidation of the
Company.
The underwriter is entitled to underwriting discounts and commissions of 5.5%,
of which 2.0% ($6,900,000) was paid at the closing of the Public Offering, and
3.5% ($12,075,000) was deferred. The Deferred Discount will become payable to
the underwriter from the amounts held in the Trust Account solely in the event
that the Company completes a Business Combination, subject to the terms of the
underwriting agreement. The underwriter is not entitled to any interest accrued
on the Deferred Discount.
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