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
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1955 (the
"PSLRA"). 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 (as amended on May 20, 2022 ("Amendment No.1") and on September
5, 2022 ("Amendment No.2"), 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
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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 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),
(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
(v) Footprint's Class D preferred stock, par value $0.001 per share ("Footprint
Class D 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 D 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
Business Combination.
Pursuant to the Merger Agreement, the aggregate merger consideration payable at
the closing of the 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 106,757,750
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 Business
Combination, certain stockholders and holders of stock options of Footprint will
be entitled to receive, pursuant to the Merger Agreement and 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
and the Parent Performance Plan.
Treatment of Footprint's Stock Options
Pursuant to the Merger Agreement, at the closing of the 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 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 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 Business
Combination and efforts to satisfy conditions to consummation of the 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 Business Combination. The covenants of the parties
to the Merger Agreement will not survive the closing of the Business
Combination, except for those covenants that by their terms expressly apply in
whole or in part after the closing of the Business Combination.
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Conditions to Consummation of the Business Combination
The consummation of the 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 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
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
Amendment No. 2 further provided for the extension of the Termination Date (as
defined in the Merger Agreement) from July 13, 2022 to November 15, 2022. 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
Business Combination has not been consummated by November 15, 2022 (the
"Termination 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.
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Entry into the Backstop Agreements
On September 5, 2022, in connection with the execution of Amendment No. 2,
Footprint, the Company and 222 Investments, entered into the 222 Backstop
Agreement. Pursuant to the 222 Backstop Agreement and subject to the terms and
conditions contained therein, 222 Investments has committed to purchase from the
Company, upon the election of Footprint and the Company and in connection with
the closing of the Business Combination, between 10,000,000 and 25,000,000
shares of a newly created Class A preferred stock, par value $0.0001 per share
(the "Class A Preferred Stock"), at a price of $10.00 per share (the "222
Preferred Shares").
Additionally, on the same date, the Sponsor provided the Company and Footprint
with a commitment letter to purchase up to 5,460,000 shares of Class A Preferred
Stock, at a price of $10.00 per share (the "Sponsor Preferred Shares" and,
together with the 222 Preferred Shares, the "Backstop Shares") and on the same
terms as those set forth in the 222 Backstop Agreement (the "Sponsor Commitment
Letter" and, together with the 222 Backstop Agreement, the "Backstop
Agreements").
PIPE Subscription Agreements; Termination of KSP Subscription Agreement; May
Footprint Class C Financing; Termination of Sponsor Subscription Agreement;
August Convertible Note Financing; Footprint Class D Financing
In connection with the execution of Amendment No. 2 to the Merger Agreement,
certain Subscribers agreed to amend the terms of the Subscription Agreements
("Subscription Agreement Amendments") to consent to (a) the terms of Amendment
No. 2 to the Merger Agreement and (b) amend the terms of the Subscription
Agreements such that each Subscription Agreement will terminate with no further
force and effect upon the earliest to occur of: (i) such date and time as the
Merger Agreement is terminated in accordance with its terms; (ii) upon the
mutual written agreement of the parties to such Subscription Agreement; (iii) 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 (iv) 30 days after October 31, 2022, if the closing of the
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,
unless further extended by the subscribers to the PIPE Investment
On August 19, 2022, Footprint issued and sold to certain purchasers, including
certain persons affiliated with the Sponsor, $39,500,000 in aggregate principal
amount of unsecured convertible promissory notes (the "Footprint August Note
Financing"). In addition, on September 6, 2022, Footprint agreed to issue and
sell 3,000 shares of Footprint's Class D 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 $75,000,000 (the "Footprint Class D Financing") to KSP
Footprint Investments, LLC.
In connection with the Footprint August Note Financing and the Footprint Class D
Financing, the parties terminated the Sponsor Subscription Agreement (the
"September Termination Agreement"). As a result, the aggregate number of shares
to be purchased in the PIPE Investment will be 9,090,000 shares of Class A Stock
at $10.00 per share for an aggregate purchase price equal to $90,900,000.
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
Business Combination.
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.
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On September 5, 2022, the parties to the Waiver and Share Surrender Agreement
entered into Amendment No. 2 to the Waiver and Share Surrender Agreement (the
"Waiver and Share Surrender Agreement Amendment No. 2"), pursuant to which the
Sponsor has agreed to irrevocably surrender a total of 2,502,750 shares of Class
F Stock, in connection with, and subject to, the closing of the Business
Combination.
Results of Operations
For the nine months ended September 30, 2022 and 2021, we had net income of
$5,450,902 and $358,729 of which $7,934,291 and $3,057,250 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 September
30, 2022, we had $817,967 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.
Going Concern Consideration
If the Company does not complete its Business Combination by March 1, 2023, the
Company will (a) cease all operations except for the purpose of winding up, (b)
as promptly as reasonably possible but not more than ten business days
thereafter, redeem 100% of the common stock sold as part of the units in the
Public Offering, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the Trust Account, including interest (which interest
shall be net of franchise and income taxes payable and less up to $100,000 of
such net interest which may be distributed to the Company to pay dissolution
expenses), divided by the number of then outstanding public shares, which
redemption will completely extinguish public stockholders' rights as
stockholders (including the right to receive further liquidation distributions,
if any), subject to applicable law, and (c) as promptly as reasonably possible
following such redemption, subject to the approval of the Company's remaining
stockholders and the Company's Board of Directors, dissolve and liquidate,
subject in each case to the Company's obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law.
In the event of such distribution, it is possible that the per share value of
the residual assets remaining available for distribution (including Trust
Account assets) will be less than the initial public offering price per unit in
the Public Offering. In addition, if the Company fails to complete its Business
Combination by March 1, 2023, there will be no redemption rights or liquidating
distributions with respect to the warrants, which will expire worthless.
In addition, at September 30, 2022 and December 31, 2021, the Company had
current liabilities of $14,697,115 and $19,501,774, respectively, and a working
capital deficit of ($13,491,927) 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
September 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.
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," the Company has until March 1, 2023 to
consummate a Business Combination. It is uncertain whether the Company will be
able to consummate a Business Combination by this time. If a Business
Combination is not consummated by this date, there will be a mandatory
liquidation and subsequent dissolution of the Company. Management has determined
that the liquidity condition and mandatory liquidation, should a Business
Combination not occur, and potential subsequent dissolution raises substantial
doubt about the Company's ability to continue as a going concern. No adjustments
have been made to the carrying amounts of assets or liabilities should the
Company be required to liquidate after March 1, 2023.
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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: (a) February 11,
2023 or (b) the date on which the Company consummates the Business Combination.
As of September 30, 2022, the amount advanced by Sponsor to the Company was
$1,950,000.
As of September 30, 2022 and December 31, 2021, we had cash held outside of the
Trust Account of approximately $817,967 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.
At September 30, 2022 and December 31, 2021, the Company had current liabilities
of $14,697,115 and $19,501,774 and a working capital deficit of ($13,491,927)
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 September 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.
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
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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 September 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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