Certain statements in this Quarterly Report on Form 10-Q constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, including statements regarding completing an
initial business combination, the consequences of not completing an initial
business combination, the release of funds held in the Trust Account (as defined
below), the availability of working capital and borrowing capacity, the use of
funds outside the Trust Account, the payment of deferred underwriting
commissions to the underwriters of our IPO (as defined below), the payment of
fees in connection with our services agreement and facilities sharing agreement
with Liberty Media Corporation ("LMC"), the impact of accounting standards on
our financial statements, fluctuations in interest rates and foreign exchange
rates, the ability to complete the early unwind and liquidation of the company
(if approved at the special meeting of stockholders on November 14, 2022 and our
amended and restated certificate of incorporation (the "certificate of
incorporation") is amended), and our obligations under the forward purchase
agreement we entered into in connection with our IPO. Forward-looking statements
inherently involve many risks and uncertainties that could cause actual results
to differ materially from those projected in these statements. Where, in any
forward-looking statement, we express an expectation or belief as to future
results or events, such expectation or belief is expressed in good faith and
believed to have a reasonable basis, but such statements necessarily involve
risks and uncertainties and there can be no assurance that the expectation or
belief will result or be achieved or accomplished. The following include some
but not all of the factors that could cause actual results or events to differ
materially from those anticipated:
? our being a company with no operating history and no revenue;
? our ability to select an appropriate target business or businesses;
? our ability to complete our initial business combination;
? our expectations around the performance of a prospective target business or
businesses;
? our success in retaining or recruiting, or changes required in, our officers,
key employees or directors following our initial business combination;
our directors and officers allocating their time to other businesses and
? potentially having conflicts of interest with our business or in approving our
initial business combination;
actual and potential conflicts of interest relating to LMC, our Sponsor (as
? defined below) and other entities in which members of our management team are
involved;
? our potential ability to obtain additional financing to complete our initial
business combination including from our Sponsor, LMC or other third parties;
? our pool of prospective target businesses, including the location and industry
of such target businesses;
our ability to consummate an initial business combination due to the
? uncertainty resulting from the COVID-19 pandemic and other events (such as
terrorist attacks, armed conflicts, natural disasters or a significant outbreak
of other infectious diseases);
? the ability of our officers and directors to generate a number of potential
initial business combination opportunities;
the voting structure of our common stock, including any potential adverse
effect on our ability to complete an initial business combination timely or
? cost effectively, and, following our initial business combination, our status
as a controlled company and the ability of our Sponsor and LMC to exercise
control over our policies and operations, each as a result of the high vote
feature of our Series B common stock;
I-16
Table of Contents
? our public securities' potential liquidity and trading;
? the lack of a market for our securities;
? the use of proceeds not held in the Trust Account or available to us from
interest income on the Trust Account balance;
? the Trust Account not being subject to claims of third parties;
? the classification of our warrants as liabilities;
? our financial performance following our IPO; and
our receipt of the requisite stockholder approval at the special meeting of
stockholders and our ability to meet the limitation that we will not redeem
Series A Public Shares or implement the amendment to our certificate of
? incorporation (the "Amendment") to the extent that accepting all properly
submitted redemption requests would cause us to have less than $5,000,001 of
net tangible assets upon approval of the Amendment (such limitation, the
"Redemption Limitation") in order to file the Amendment and commence the early
unwind and liquidation process
For additional risk factors, please see our Annual Report on Form 10-K for the
year ended December 31, 2021 (as filed with the SEC on March 31, 2022) and Part
II Item 1A. of this Quarterly Report. These forward-looking statements and such
risks, uncertainties and other factors speak only as of the date of this
Quarterly Report, and we expressly disclaim any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statement contained
herein, to reflect any change in our expectations with regard thereto, or any
other change in events, conditions or circumstances on which any such statement
is based.
The following discussion and analysis provides information concerning our
results of operations and financial condition. This discussion should be read in
conjunction with our accompanying condensed financial statements and the notes
thereto.
Overview
The accompanying financial statements and the other information herein refer to
Liberty Media Acquisition Corporation as "LMAC," the "Company," "us," "we" and
"our" unless the context otherwise requires. We are a blank check company
incorporated in Delaware on November 6, 2020 for the purpose of effecting a
merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar initial business combination with one or more
businesses. Our sponsor is Liberty Media Acquisition Sponsor, LLC, a Delaware
limited liability company ("Sponsor").
On November 6, 2020, the Sponsor purchased 17,250,000 shares of the Company's
Series F common stock, par value $0.0001 per share (the "Founder Shares"), for
an aggregate price of $25,000. On November 18, 2020, the Sponsor contributed an
aggregate of 2,875,000 Founder Shares to the Company's capital for no
consideration resulting in the Sponsor holding an aggregate of 14,375,000
Founder Shares, including 1,875,000 Founder Shares that were subject to
forfeiture for no consideration to the extent that the underwriters'
over-allotment option was not exercised in full or in part. On January 26, 2021,
the underwriter exercised the full over-allotment option and therefore the
1,875,000 Founder Shares are no longer subject to forfeiture. The fair value of
the Founder Shares at date of our initial public offering ("IPO") was determined
to be approximately $139,000,000 based on the value of the Series A common stock
that was issued on the same day as a proxy for value. The value of these shares
will not ultimately be realized until an initial business combination is
completed.
The registration statement for our IPO became effective on January 21, 2021. On
January 26, 2021, we consummated the IPO of 57,500,000 units (the "Units"),
including 7,500,000 Units sold pursuant to the full exercise of the
underwriters' over-allotment option. Each Unit consists of one share of Series A
common stock of the Company, par value $0.0001 per
I-17
Table of Contents
share ("Series A Common Stock"), and one-fifth of one redeemable warrant of the
Company. Each whole warrant entitles the holder thereof to purchase one share of
Series A Common Stock for $11.50 per share, subject to adjustment, following the
later of 30 days after the consummation of the initial business combination and
12 months from the closing of the IPO. The Units were sold at a price of $10.00
per Unit, generating gross proceeds to the Company of $575,000,000.
Substantially concurrent with the closing of the IPO, the Company completed the
private placement of 10,000,000 warrants (the "Private Placement Warrants") at a
purchase price of $1.50 per Private Placement Warrant, to our Sponsor,
generating gross proceeds to the Company of $15,000,000 (the "Private
Placement"). The Private Placement Warrants are identical to the warrants sold
as part of the Units in the IPO except that, so long as they are held by the
Sponsor or its permitted transferees: (1) they will not be redeemable by the
Company; (2) they (including the Series A Common Stock issuable upon exercise of
these warrants) may not, subject to certain limited exceptions, be transferred,
assigned or sold by the Sponsor until 30 days after the consummation of the
initial business combination; (3) they may be exercised by the holders on a
cashless basis; and (4) they (including the Series A Common Stock issuable upon
exercise of these warrants) are entitled to registration rights.
A total of $575,000,000, comprised of proceeds from the IPO and the issuance of
the Private Placement Warrants was placed in a U.S.-based Trust Account at J.P.
Morgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust
Company, acting as trustee (the "Trust Account"). Except with respect to
interest earned on the funds held in the Trust Account that may be released to
the Company to pay its taxes, if any, the funds held in the Trust Account will
not be released from the Trust Account until the earliest of: (1) the
consummation of the initial business combination; (2) the redemption of any
Series A Common Stock properly submitted in connection with a stockholder vote
to amend the Company's certificate of incorporation (A) to modify the substance
or timing of the Company's obligation to allow redemptions in connection with
the initial business combination or to redeem 100% of its Series A Common Stock
if the Company does not complete its initial business combination within 24
months from the closing of the IPO (or 27 months from the closing of the IPO if
the Company has executed a letter of intent, agreement in principle or
definitive agreement for an initial business combination within 24 months from
the closing of the IPO, which we refer to as an "agreement in principle event")
or (B) with respect to any other provision relating to stockholders' rights or
pre-initial business combination activity; and (3) the redemption of all of the
Series A Common Stock if it is unable to complete its initial business
combination within 24 months from the closing of the IPO (or 27 months if an
agreement in principle event has occurred), subject to applicable law.
Our Sponsor, executive officers and directors have agreed that we only have 24
months from the closing of the IPO to complete an initial business combination
(or 27 months if an agreement in principle event has occurred). If we have not
completed an initial business combination within such 24-month period (or 27
months if an agreement in principle event has occurred) or during any extended
time that we have to consummate an initial business combination beyond 24 months
(or 27 months if an agreement in principle event has occurred) as a result of a
stockholder vote to amend our certificate of incorporation, we will: (1) cease
all operations except for the purposes of winding up; (2) as promptly as
reasonably possible but not more than 10 business days thereafter, redeem the
Series A Common Stock, 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 taxes payable, and less up to $100,000 of interest to
pay dissolution expenses), divided by the number of then issued and outstanding
shares of Series A Common Stock, which redemption will completely extinguish
public stockholders' rights as stockholders (including the right to receive
further liquidating distributions, if any); and (3) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining
stockholders and our board of directors, dissolve and liquidate, subject in each
case to our obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. There will be no redemption rights
or liquidating distributions with respect to our warrants, which will expire
worthless if we fail to complete an initial business combination within such
24-month period (or 27 months if an agreement in principle event has occurred).
On October 11, 2022, the Company filed a definitive proxy statement relating to
a special meeting of stockholders that will be held on November 14, 2022 to
approve an amendment to the Company's certificate of incorporation which would,
if implemented, allow the Company to unwind and redeem all of its outstanding
public shares prior to December 30, 2022, in advance of the contractual
termination date of January 26, 2023. Since its IPO, the Company has employed a
broad set of search criteria for potential target business combinations,
however, management has observed what it believes were high valuations in 2021,
a declining IPO market in 2022, and significant public and private market
volatility, which
I-18
Table of Contents
have prevented the Company from securing an opportunity that it believes will
offer a compelling return on investment for its stockholders. In addition,
recent changes in U.S. tax law could create corporate level tax liabilities in
connection with stockholder redemptions following year end. As a result, the
Company has determined to seek the approval of its stockholders to complete an
early unwind in 2022.
Results of Operations
From November 6, 2020 (inception) until our IPO on January 26, 2021, our entire
activity was in preparation for our IPO, and, following our IPO through
September 30, 2022, our entire activity has been limited to the search for a
prospective initial business combination. The following table is a summary of
our operating results:
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
General, administrative and
formation costs $ (783,023) (611,430) (2,598,681) (2,203,518)
Loss from operations (783,023) (611,430) (2,598,681) (2,203,518)
Other income/(expense)
Interest expense (42,571) (51,853) (272,175) (51,853)
Interest income on marketable
securities held in Trust
Account 2,538,748 14,495 3,320,413 38,916
Realized and unrealized gains
(losses), net 13,428,921 18,575,360 54,370,865 (12,165,753)
Total other income/(expense) 15,925,098 18,538,002 57,419,103 (12,178,690)
Net earnings (loss) $ 15,142,075 17,926,572 54,820,422 (14,382,208)
General, administrative and formation costs increased $171,593 and $395,163
during the three and nine months ended September 30, 2022, respectively, as
compared to the same periods in the prior year. The increase for the three
months ended September 30, 2022, compared to the same period in the prior year,
was primarily due to increased legal fees. The increase for the nine months
ended September 30, 2022, compared to the same period in the prior year, was
primarily due to increased legal fees, the majority of which occurred in the
first quarter of 2022.
Interest expense decreased $9,282 and increased $220,322 during the three and
nine months ended September 30, 2022, respectively, as compared to the same
periods in the prior year. Interest expense is non-cash and is related entirely
to the Working Capital Loan (see note 4 to the accompanying condensed financial
statements).
Interest income on marketable securities held in the Trust Account increased
$2,524,253 and $3,281,497 during the three and nine months ended
September 30, 2022, respectively, as compared to the same periods in the prior
year, primarily due to a higher yield during the second and third quarters of
2022.
Realized and unrealized gains (losses), net decreased $5,146,439 and increased
$66,536,618 during the three and nine months ended September 30, 2022,
respectively, as compared to the same periods in the prior year. Changes in the
fair value of financial instruments recognized in the condensed statements of
operations are primarily due to market factors primarily driven by changes in
the fair value of the underlying shares.
Liquidity and Capital Resources
As of September 30, 2022, we had $288,669 in cash which, along with other
assets, resulted in a working capital deficit of $3,009,568. Excluding the
Sponsor loans (included in current liabilities) the Company has a working
capital surplus of $290,432.
I-19
Table of Contents
Our liquidity needs prior to the consummation of the IPO were satisfied through
the proceeds of $25,000 from the sale of Founder Shares to our Sponsor, and loan
proceeds from our Sponsor of $169,933 under a promissory note we entered into
with our Sponsor (the "Note"). We repaid the Note in full on January 26, 2021.
Subsequent to the consummation of the IPO, our liquidity needs have been
satisfied through the net proceeds held outside of the Trust Account from the
consummation of the IPO and the Private Placement. See "Overview" for additional
information regarding the IPO, Private Placement and Trust Account.
Additionally, on April 15, 2021, the Company entered into a Working Capital Loan
with the Sponsor (see note 4 to the notes to the accompanying condensed
financial statements). During the first quarter of 2022, we amended the Working
Capital Loan to increase the aggregate principal to $4,000,000. As of
September 30, 2022, we had borrowed $3,300,000 on the Working Capital Loan.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity to meet the Company's needs through the earlier
of the consummation of the initial business combination, the mandatory
liquidation date or an early unwind. If the Company's estimated costs are less
than its actual costs, the Company may have insufficient funds available to
operate its business. Moreover, the Company will need to raise additional
capital through loans from its Sponsor and/or third parties. The Sponsor is not
under any obligation to advance funds to, or to invest in, the Company. If the
Company is unable to raise additional capital, it may be required to take
additional measures to conserve liquidity, which could include, but not
necessarily be limited to, curtailing operations, suspending the pursuit of its
business plan, and reducing overhead expenses. The Company cannot provide any
assurance that new financing will be available to it on commercially acceptable
terms, if at all.
We do not have any long-term debt obligations, finance lease obligations,
operating lease obligations, purchase obligations or long-term liabilities.
On January 26, 2021, we entered into a services agreement and facilities sharing
agreement pursuant to which we pay LMC and certain of its subsidiaries a total
of $91,666 per month for office space, administrative and support services.
The underwriters are entitled to underwriting discounts and commissions of 5.5%,
of which 2.0% ($11,500,000) was paid at the closing of the IPO and 3.5%
($20,125,000) was deferred. The deferred underwriting discount will be paid to
the underwriters upon the consummation of the initial business combination
subject to the terms of the underwriting agreement.
Recent Accounting Pronouncements
Our management does not believe that any recently issued, but not yet effective,
accounting standards if currently adopted, would have a material effect on the
accompanying financial statements.
© Edgar Online, source Glimpses