The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including those set forth under "Special Note Regarding Forward-Looking
Statements," "Item 1A. Risk Factors" and elsewhere in this Annual Report on Form
10-K.
Overview
We are a blank check company formed under the laws of the State of Delaware on
August 27, 2020 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or other similar Business
Combination with one or more businesses. We intend to effectuate our Business
Combination using cash from the proceeds of the Initial Public Offering and the
sale of the Private Placement Shares, our capital stock, debt or a combination
of cash, stock 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 revenues to date.
Our only activities from August 27, 2020 (inception) through December 31, 2020
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and the search for a target company for a
Business Combination. We do not expect to generate any operating revenues until
after the completion of our 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 incur expenses as a result of being a
public company (for legal, financial reporting, accounting and auditing
compliance), as well as for due diligence expenses.
For the period from August 27, 2020 (inception) through December 31, 2020, we
had a net loss of $264,719, which consists of operating costs of $244,346, stock
compensation expense of $22,500, and an unrealized loss on marketable securities
held in our Trust Account of $981, offset by interest income on marketable
securities held in the Trust Account of $3,108.
Liquidity and Capital Resources
On November 23, 2020, we consummated the Initial Public Offering of 10,000,000
Public Shares at a price of $10.00 per Public Share, generating gross proceeds
of $100,000,000. Simultaneously with the closing of the Initial Public Offering,
we consummated the sale of 500,000 Private Placement Shares at a price of $10.00
per Private Placement Share in a private placement to our Sponsor, generating
gross proceeds of $5,000,000.
On December 10, 2020, in connection with the underwriters' election to partially
exercise of their over-allotment option, we consummated the sale of an
additional 352,040 Shares and the sale of an additional 7,041 Private Placement
Shares, generating total gross proceeds of $3,590,810.
Following the Initial Public Offering, the full exercise of the over-allotment
option by the underwriters' and the sale of the Private Placement Shares, a
total of $103,520,402 was placed in the Trust Account and we had $3,045,949 of
cash held outside of the Trust Account, after payment of costs related to the
Initial Public Offering, and available for working capital purposes. We incurred
$6,168,021 in transaction costs, including $2,070,408 of underwriting fees,
$3,623,214 of deferred underwriting fees and $474,399 of other offering costs.
For the period from August 27, 2020 (inception) through December 31, 2020, cash
used in operating activities was $714,521. Net loss of $264,719 was affected by
stock compensation expense of $22,500, interest earned on marketable securities
held in the Trust Account of $3,108, an unrealized loss on marketable securities
held in our Trust Account $981 and changes in operating assets and liabilities,
which used $470,175 of cash from operating activities.
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As of December 31, 2020, we had cash and marketable securities held in the Trust
Account of $103,522,529. We intend to use substantially all of the funds held in
the Trust Account, including any amounts representing interest earned on the
Trust Account to complete our Business Combination. We may withdraw interest to
pay franchise and income taxes. During the period ended December 31, 2020, we
did not withdraw any interest earned on the Trust Account. To the extent that
our capital stock or debt is used, in whole or in part, as consideration to
complete our 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 December 31, 2020, we had cash of $1,889,565 outside of the Trust Account.
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,
and structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor, an affiliate of the
Sponsor, or our officers and directors may, but are not obligated to, loan us
funds as may be required. If we complete a Business Combination, we would repay
such loaned amounts. 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 shares,
at a price of $10.00 per share at the option of the lender. The terms of such
loans by our officers and directors, if any, have not been determined and no
written agreements exist with respect to such loans. The loans would be repaid
upon consummation of a Business Combination, without interest.
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 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 consummation
of our Business Combination, in which case we may issue additional securities or
incur debt in connection with such 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.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2020. 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.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay an
affiliate of the Sponsor a monthly fee of $10,000 for office space and
administrative support to the Company. We began incurring these fees on November
18, 2020 and will continue to incur these fees monthly until the earlier of the
completion of the Business Combination and the Company's liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Share, or
$3,623,214 in the aggregate. The deferred fee will become payable to the
underwriters 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.
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Critical Accounting Policies
The preparation of 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 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:
Class A Common Stock Subject to Possible Redemption
We account for our shares of Class A common stock subject to possible redemption
in accordance with the guidance in Accounting Standards Codification ("ASC")
Topic 480 "Distinguishing Liabilities from Equity." Shares of Class A common
stock subject to mandatory redemption is classified as a liability instrument
and is measured at fair value. Conditionally redeemable common stock (including
common stock that features redemption rights that are 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, common stock is classified as stockholders' equity. Our common stock
features certain redemption rights that are considered to be outside of our
control and subject to occurrence of uncertain future events. Accordingly, the
Class A common stock subject to possible redemption is presented as temporary
equity, outside of the stockholders' equity section of our balance sheet.
Net Loss per Common Share
Net income (loss) per share is computed by dividing net income by the
weighted-average number of shares of common stock outstanding during the period.
The Company's statement of operations includes a presentation of income (loss)
per share for common shares subject to possible redemption in a manner similar
to the two-class method of income (loss) per share. Net income (loss) per common
share, basic and diluted, for Common stock subject to possible redemption is
calculated by dividing the proportionate share of income or loss on marketable
securities held by the Trust Account, net of applicable franchise and income
taxes, by the weighted average number of Common stock subject to possible
redemption outstanding since original issuance.
Net loss per share, basic and diluted, for non-redeemable common stock is
calculated by dividing the net income (loss), adjusted for income or loss on
marketable securities attributable to Class A common stock subject to possible
redemption, by the weighted average number of non-redeemable common stock
outstanding for the period.
Non-redeemable common stock includes Founder Shares and non-redeemable Class A
shares as these shares do not have any redemption features. Non-redeemable
common stock participates in the income or loss on marketable securities based
on Class A non-redeemable share's proportionate interest.
Recent Accounting Standards
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 financial statements.
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