The following discussion and analysis of ENVI's financial condition and results of operations should be read in conjunction with ENVI's audited consolidated financial statements and the notes related thereto, which are presented at the end of this Annual Report beginning on page F-1. This discussion and analysis includes forward-looking statements, and actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under "Cautionary Note Regarding Forward-Looking Statements," "Item 1A. Risk Factors" and elsewhere in this Annual Report.
Overview
ENVI was incorporated onJuly 2, 2020 as a special purpose acquisition company, a type of blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or other similar business combination with one or more target businesses. ENVI was sponsored byCG Investments Inc. VI (the " Sponsor ").
Until the consummation of the Business Combination on
Initial Public Offering and Private Placement
OnJanuary 19, 2021 , ENVI consummated its IPO of 20,700,000 Units, including 2,700,000 Units issued to the underwriters upon full exercise of their over-allotment option. Each Unit consisted of one share of ENVI Class A Common Stock and one-half of one warrant, with each whole warrant entitling the holder thereof to purchase one share of Class A Common Stock for$11.50 per share. The Units were sold at a price of$10.00 per Unit, generating gross proceeds to ENVI of$207.0 million . Simultaneously with the closing of the IPO, ENVI completed the private sale of an aggregate of 2,000,000 Private Placement Warrants toHB Strategies, LLC (" HB Strategies ") at a purchase price of$1.00 per Private Placement Warrant, generating gross proceeds of$2.0 million . At the closing of the IPO, ENVI also issued 600,000 Private Placement Warrants to the Sponsor and 50,000 Private Placement Warrants to each of its three independent directors (together with HB Strategies and the Sponsor, the " Initial Stockholders "). A total of$207.0 million , comprised of$206,750,000 of the proceeds from the IPO and$250,000 of the proceeds of the sale of the Private Placement Warrants, was placed in the trust account maintained byContinental Stock Transfer & Trust Company , acting as trustee.
Business Combination
On
In accordance with the terms and subject to the conditions of the Business
Combination Agreement, at the effective time of the Merger, each outstanding
share of capital stock of GreenLight (other than treasury shares) was exchanged
for shares of New GreenLight Common Stock, and outstanding GreenLight options
and warrants to purchase shares of capital stock of GreenLight (whether vested
or unvested) were converted into comparable options and warrants to purchase
shares of New GreenLight Common Stock, in each case, based on an implied
GreenLight fully diluted equity value of
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In the Business Combination, New GreenLight issued an aggregate of approximately 104.0 million shares of New GreenLight Common Stock, Rollover Options to purchase an aggregate of approximately 18.0 million shares of New GreenLight Common Stock and Assumed Warrants to purchase less than 0.1 million shares of New GreenLight Common Stock.
Consummation of PIPE Financing
In connection with the Business Combination, New GreenLight completed the sale
and issuance of 12,425,000 shares of New GreenLight Common Stock in a private
placement at a purchase price of
Redemption of ENVI Class A Common Stock
Also in connection with the Business Combination, 19,489,626 shares of ENVI
Class A Common Stock were redeemed for an aggregate payment of approximately
Proceeds of the Business Combination and PIPE Financing
New GreenLight's gross proceeds from the Business Combination and the PIPE Financing totaled approximately$136.4 million , which included approximately$12.1 million of funds held in the trust account (after giving effect to redemptions) and approximately$124.3 million of proceeds from the PIPE Financing, inclusive of$35.25 million previously advanced to GreenLight, as described in more detail in " Management's Discussion and Analysis of Financial Condition and Results of Operations of GreenLight " as of and for the years endedDecember 31, 2021 and 2020 (the " GreenLight MD&A "), which is filed as Exhibit 99.2 to New GreenLight's Current Report on Form 8-K filed on the date hereof and is incorporated herein by reference. The gross proceeds do not reflect estimated aggregate transaction expenses and other costs related to the Business Combination, the PIPE Financing and other transactions of approximately$25.0 million .
Warrant Forfeiture
Concurrently with the execution of the Business Combination Agreement, the Initial Stockholders and GreenLight entered into an agreement (the " Sponsor Letter Agreement "), pursuant to which HB Strategies and the Sponsor agreed that, if more than 25% of the shares of ENVI Class A Common Stock were redeemed pursuant to ENVI's Amended and Restated Certificate of Incorporation in effect prior to the Business Combination (the " Existing Charter "), then they would forfeit 25% of the warrants issued to the Initial Stockholders. At the closing of the Business Combination, pursuant to the terms of the Sponsor Letter Agreement, HB Strategies and the Sponsor forfeited an aggregate of 687,500 Private Placement Warrants.
Results of Operations
From its inception until the consummation of the Business Combination, ENVI neither engaged in any operations nor generated any operating revenues. During such period, ENVI's only activities were organizational activities, activities in connection with the IPO and related private placement, identifying a target company for a business combination, and activities in connection with the acquisition of GreenLight. ENVI generated non-operating income in the form of interest income on marketable securities held in the trust account. ENVI incurred expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. 107
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For the year ended
For the period from
Liquidity and Capital Resources; Going Concern
From its inception until the consummation of the Business Combination, ENVI's
principal sources of liquidity consisted of loans from affiliates and the
proceeds of the issuance of the Private Placement Warrants. Although ENVI raised
gross proceeds of
On
As described above under "
- Overview - Initial Public Offering and Private Placement
," on
OnAugust 9, 2021 , HB Strategies loaned ENVI$0.5 million pursuant to an unsecured promissory note. The note was non-interest bearing and was due and payable on the earlier ofJanuary 19, 2022 or the closing of the Business Combination. The proceeds of the loan were used to fund operating expenses. In connection with the consummation of the Business Combination, HB Strategies forgave the full amount of the loan.
Cash Flows from Operating Activities
For the year endedDecember 31, 2021 , cash used in operating activities was$1.8 million . Net loss of$15.1 million included a non-cash loss on initial issuance of Private Placement Warrants of$1.3 million , non-cash charges related to the change in fair value of the warrant liabilities of$0.7 million and transaction costs associated with the warrants of$0.1 million . Net changes in operating assets and liabilities, consisting primarily of an increase in accounts payable and accrued expenses, provided$11.2 million of cash for operating activities. No cash was used in operating activities for the year endedDecember 31, 2020 .
Cash Flows from Investing Activities
For the year ended
Cash Flows from Financing Activities
For the year ended
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repayment of a loan from HB Strategies of
Cash Position
As of
Upon consummation of the Business Combination on
Accounting Predecessor; Known Trends and Uncertainties
As a result of the Business Combination, GreenLight is considered the accounting predecessor of New GreenLight. The audited consolidated financial statements of GreenLight as of and for the years endedDecember 31, 2021 and 2020 (the " GreenLight Financial Statements ") have been filed as Exhibit 99.1 to the Current Report on Form 8-K filed by New GreenLight on the date hereof and are incorporated herein by reference. For filings made after the Closing Date (other than this Annual Report), the consolidated financial statements of GreenLight will be the consolidated financial statements of New GreenLight.
In light of the consummation of the Business Combination, the historical
consolidated financial statements of ENVI ceased to be representative of the
consolidated financial position, results of operations, stockholders' equity and
cash flows of New GreenLight. For information regarding the consolidated
financial position, results of operations, stockholders' equity and cash flows
of New GreenLight as of and for the years ended
Going Concern
As a result of the factors discussed above and in the GreenLight MD&A, including the subsection entitled " -Liquidity and Capital Resources - Funding Future Operations; Going Concern ," in connection with New GreenLight's assessment of going concern considerations in accordance with the Financial Accounting Standard Board's (" FASB ") Accounting Standards Update (" ASU ") 2014-15, " Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern ," New GreenLight management has determined that New GreenLight's liquidity condition raises substantial doubt about its ability to continue as a going concern through one year after the date that ENVI's consolidated financial statements are issued.
Off-Balance
Sheet Financing Arrangements
As ofDecember 31, 2021 , ENVI had no obligations, assets or liabilities that would be considered off-balance sheet financing arrangements. ThroughDecember 31, 2021 , ENVI did not participate in transactions 109 -------------------------------------------------------------------------------- that created relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, for the purpose of facilitating off-balance sheet financing arrangements. ThroughDecember 31, 2021 , ENVI had not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets. Contractual Obligations
As of
Pursuant to the Business Combination Marketing Agreement that ENVI entered into
with Canaccord in connection with its IPO, ENVI engaged Canaccord as advisors in
connection with a business combination to assist ENVI in arranging meetings with
its stockholders to discuss the potential business combination and the target
business's attributes, introduce ENVI to potential investors that may be
interested in purchasing its securities, assist ENVI in obtaining stockholder
approval for the business combination and assist ENVI with the preparation of
its press releases and public filings in connection with the business
combination. Pursuant to the Business Combination Marketing Agreement, ENVI
agreed to pay Canaccord for such services, upon the consummation of a business
combination, a cash fee in an amount equal to 3.76% of the gross proceeds of the
IPO. Pursuant to the terms of the Business Combination Marketing Agreement, no
fee would have been due if ENVI had not completed a business combination. At the
Closing of the Business Combination, the parties agreed to reduce the cash fee
to
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in
Warrant Liabilities
ENVI accounted for the Warrants in accordance with the guidance contained in Accounting Standards Codification (" ASC ") 815-40-15-7D and 7F, under which the Warrants did not meet the criteria for equity treatment and were therefore recorded as liabilities. Accordingly, ENVI classified the Warrants as liabilities at their fair value and must adjust the Warrants to fair value at each subsequent balance sheet date. These liabilities are subject to re-measurement at each balance sheet date until the Warrants are exercised, and any change in fair value will be recognized in ENVI's statements of operations. The Private Placement Warrants, for which no observable trading price was available during the reported periods, were valued using a Modified Black-Scholes Option Pricing Model. The Public Warrants, for periods where no observable trading price was available, were valued using a Monte Carlo simulation. For periods subsequent to the detachment of the Public Warrants from the Units, the Public Warrant quoted market price was used as the fair value as of each relevant date.
ENVI Class A Common Stock Subject to Possible Redemption
ENVI accounted for the ENVI Class A Common Stock subject to possible redemption in accordance with the guidance in ASC Topic 480, " Distinguishing Liabilities from Equity ." Under this guidance, shares of common stock subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are within the control of the holder or that is subject to redemption upon the occurrence of uncertain events not solely within the issuer's control) is classified as temporary equity. At all other times, common stock is classified
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as stockholders' equity. The ENVI Class A Common Stock featured certain redemption rights that were considered to be outside of ENVI's control and subject to the occurrence of uncertain future events. Accordingly, the ENVI Class A Common Stock subject to possible redemption was presented as temporary equity, outside of the stockholders' (deficit) equity section of ENVI's balance sheets. ENVI (and, after the Closing Date, New GreenLight) must recognize changes in redemption value immediately as they occur and adjust the carrying value of the ENVI Class A Common Stock subject to possible redemption at the end of each reporting period to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security.
Net Income (Loss) Per Common Share
At
Recent Accounting Standards
InAugust 2020 , the FASB issued ASU 2020-06, " 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 effectiveJanuary 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning onJanuary 1, 2021 . New GreenLight is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
Management of New GreenLight does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on New GreenLight's consolidated financial statements.
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