References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Lead Edge Growth Opportunities, Ltd. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to Lead Edge SPAC Management, LLC. The
following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the financial
statements and the notes thereto contained elsewhere in this Quarterly Report.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") that are not historical
facts and involve risks and uncertainties that could cause actual results to
differ materially from those expected and projected. All statements, other than
statements of historical fact included in this Form 10-Q including, without
limitation, statements in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" regarding the completion of the
proposed Business Combination (as defined below), the Company's financial
position, business strategy and the plans and objectives of management for
future operations, are forward-looking statements. Words such as "expect,"
"believe," "anticipate," "intend," "estimate," "seek" and variations and similar
words and expressions are intended to identify such forward-looking statements.
Such forward-looking statements relate to future events or future performance,
but reflect management's current beliefs, based on information currently
available. A number of factors could cause actual events, performance or results
to differ materially from the events, performance and results discussed in the
forward-looking statements, including that the conditions of the proposed
Business Combination are not satisfied. For information identifying important
factors that could cause actual results to differ materially from those
anticipated in the forward-looking statements, please refer to the Risk Factors
section of the Company's final prospectus for its initial public offering (the
"Initial Public Offering") filed with the U.S. Securities and Exchange
Commission (the "SEC"). The Company's securities filings can be accessed on the
EDGAR section of the SEC's website at www.sec.gov. Except as expressly required
by applicable securities law, the Company disclaims any intention or obligation
to update or revise any forward-looking statements whether as a result of new
information, future events or otherwise.
Overview
We are a blank check company incorporated in the Cayman Islands on December 16,
2020 for the purpose of effecting a merger, share exchange, asset acquisition,
share purchase, reorganization or similar business combination with one or more
businesses or entities (a "Business Combination"). We intend to effectuate our
Business Combination using cash derived from the proceeds of the Initial Public
Offering and the sale of the private placement warrants (the "Private Placement
Warrants"), our shares, debt or a combination of cash, shares 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 December 16, 2020 (inception) through September 30,
2021 were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and identifying 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 generate non-operating
income in the form of interest income on marketable securities held in the trust
account (the "Trust Account"). 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 three months ended September 30, 2021, we had a net income of
$12,220,745, which consists of change in fair value of warrant liability of
$13,700,334 and interest earned on investments held in Trust Account of $26,452,
offset by general and administrative expenses of $257,041 and the change in fair
value of Derivative liability - FPA of $1,249,000.
For the nine months ended September 30, 2021, we had a net income of $8,209,776,
which consists of the initial classification of Derivative liability - FPA of
$286,000, the change in fair value of warrant liability of $9,530,667, and the
interest earned on investments held in Trust Account of $33,134, offset by
general and administrative expenses of $680,379, change in fair value of
Derivative liability - FPA of $371,000, and transaction costs incurred in
connection with warrant liabilities of $588,646.
Liquidity and Capital Resources
On March 25, 2021, we consummated the Initial Public Offering of 30,000,000
units (the "Units"), including 4,500,000 additional Units to cover
over-allotments (the "Over-Allotment Units"), at $10.00 per Unit, generating
gross proceeds of $300,000,000 (see Note 4). Simultaneously with the closing of
the Initial Public Offering, we consummated the sale of 5,666,667 Private
Placement Warrants at a price of $1.50 per Private Placement Warrant in a
private placement to the Sponsor, generating gross proceeds of $8,500,000. On
April 13, 2021, in connection with the underwriters fully exercising the
over-allotment option, an additional 4,500,000 Units were sold at $10.00 per
Unit, generating gross proceeds of $45,000,000.
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For the nine months ended September 30, 2021, cash used in operating activities
was $1,143,742. Net income of $8,209,776 was affected by the change in the fair
value of warrant liability of $9,530,667, interest earned on investments held in
Trust Account of $33,134, change in fair value of derivative liability - FPA of
$371,000, transaction costs incurred in connection with warrant liabilities of
$588,646, and the initial classification of derivative liability - FPA of
$286,000. Changes in operating assets and liabilities used $463,363 of cash for
operating activities.
As of September 30, 2021, the investments held in the Trust Account consisted of
cash of $288 and $345,032,846 in U.S. Treasury Bills with a maturity of 185 days
or less. We may withdraw interest from the Trust Account to pay taxes, if any.
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
income taxes payable), to complete our Business Combination. To the extent that
our share capital 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 September 30, 2021, we had cash of $813,867 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 or certain of our officers
and directors or their affiliates may, but are not obligated to, loan us funds
as may be required (the "Working Capital Loans"). 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 Working
Capital Loans may be convertible into up to an additional 1,000,000 Private
Placement Warrants of the post-Business Combination entity at a price of $1.50
per warrant. The warrants would be identical to the Private Placement Warrants.
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.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 2021. 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.
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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 to pay an
affiliate of the Sponsor a total of up to $10,000 per month for office space,
secretarial and administrative support services. We began incurring these fees
on March 22, 2021 and will continue to incur these fees monthly until the
earlier of the completion of the Business Combination and our liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or
$10,500,000 in the aggregate (or $12,075,000 in the aggregate if the
underwriters' over-allotment option is exercised in full). 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.
In connection with the consummation of the Initial Public Offering, the Company
entered into a forward purchase agreement with Lead Edge Capital V, LP, a
Delaware limited partnership ("LEC V"), which provides for the purchase of up to
$50,000,000 of units, with each unit consisting of one Class A ordinary share
and one-fourth of one warrant to purchase one Class A ordinary share at $11.50
per share, subject to adjustment, for a purchase price of $10.00 per unit, in a
private placement to occur concurrently with the closing of the Business
Combination. The obligations under the forward purchase agreement do not depend
on whether any Class A ordinary shares are redeemed by the public shareholders.
The forward purchase securities will be issued only in connection with the
closing of the Business Combination. The proceeds from the sale of forward
purchase securities may be used as part of the consideration to the sellers in
our initial business combination, expenses in connection with the Business
Combination or for working capital in the post-transaction company.
Critical Accounting Policies
The preparation of condensed 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:
Warrant Liabilities and FPA
We do not use derivative instruments to hedge exposures to cash flow, market or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to ASC 480
and ASC 815. The Company accounts for the warrants and FPA in accordance with
the guidance contained in ASC 815-40, under which the warrants and FPA do not
meet the criteria for equity treatment and must be recorded as liabilities.
Accordingly, the Company classifies the warrants and FPA as liabilities at their
fair value and adjust the warrants and FPA to fair value at each reporting
period. These liabilities are subject to re-measurement at each balance sheet
date until exercised, and any change in fair value is recognized in the
statements of operations. The Private Placement Warrants and the Public Warrants
for periods where no observable traded price was available are valued using a
binomial lattice model and the FPA liability is valued based on the value of the
ordinary shares and warrants as compared to the purchase price adjusted for the
probability of a Business Combination.
Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible conversion in accordance
with the guidance in ASC 480. Ordinary shares subject to mandatory redemption
are classified as a liability instrument and measured at fair value.
Conditionally redeemable ordinary shares (including ordinary shares that feature
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) are classified as temporary equity. At all other times, ordinary shares
are classified as shareholders' equity. Our ordinary shares feature certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, ordinary shares subject
to possible redemption are presented at redemption value as temporary equity,
outside of the shareholders' (deficit) equity section of our condensed balance
sheets.
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Net Income (Loss) Per Ordinary Share
Net income (loss) per ordinary share is computed by dividing net income (loss)
by the weighted average number of ordinary share outstanding for the period. The
Company applies the two-class method in calculating earnings per share.
Accretion associated with the redeemable shares of Class A ordinary shares is
excluded from earnings per share as the redemption value approximates fair
value.
Recent Accounting Standards
In August 2020, FASB issued Accounting Standards Update ("ASU") 2020-06, Debt -
Debt with Conversion and Other Options (Subtopic 470-20 and Derivatives and
Hedging - 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 effective January 1, 2022 and should be
applied on a full or modified retrospective basis, with early adoption permitted
beginning on January 1, 2021. The Company is currently assessing the impact, if
any, that ASU 2020-06 would have on its financial position, results of
operations or cash flows.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, including the standard in the next paragraph,
if currently adopted, would have a material effect on our condensed financial
statements.
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