References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to VPC Impact Acquisition Holdings. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to VPC Impact Acquisition Holdings Sponsor,
LLC. The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the consolidated
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, as amended (the "Securities Act")
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
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. Words such as
"anticipate," "believe," "continue," "could," "estimate," "expect," "intends,"
"may," "might," "plan," "possible," "potential," "predict," "project," "should,"
"would" and variations thereof 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. 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 Annual Report on Form
10-K/A
filed with the U.S. Securities and Exchange Commission (the "SEC") on May 21,
2021. 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 on July 31, 2020 as a Cayman Islands
exempted company for the purpose of effecting a Business Combination. We intend
to effectuate our initial Business Combination using cash from the proceeds of
our Initial Public Offering and the sale of the private placement warrants, our
shares, debt or a combination of cash, equity 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.

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Recent Developments
Agreement for Business Combination
On January 11, 2021, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement"), with Pylon Merger Company LLC, a Delaware limited
liability company and a direct wholly-owned subsidiary of VIH ("Merger Sub"),
and Bakkt Holdings, LLC, a Delaware limited liability company ("Bakkt"). The
Merger Agreement provides that, among other things and upon the terms and
subject to the conditions thereof, the following transactions will occur
(together with the other agreements and transactions contemplated by the Merger
Agreement, the "Proposed Transaction"):
(i) at the closing of the transactions contemplated by the Merger Agreement (the
"Closing"), in accordance with the Delaware Limited Liability Company Act, as
amended ("DLLCA"), Merger Sub will merge (the "Merger") with and into Bakkt, the
separate corporate existence of Merger Sub will cease and Bakkt will be the
surviving limited liability company, to be renamed Bakkt Opco Holdings, LLC
("Bakkt Opco");
(ii) immediately prior to the closing of the PIPE Investment (as defined below)
and the effective time of the Merger, in connection with the Domestication
described below, VIH will be renamed "Bakkt Holdings, Inc." (referred to
hereinafter as "Bakkt Pubco"); and
(iii) as a result of the Merger, the aggregate consideration to be received in
respect of the Merger by all of the Bakkt interest holders will be an aggregate
of 208,200,000 common units of Bakkt Opco ("Bakkt Opco Units") and 208,200,000
shares of class V common stock of Bakkt PubCo, which will be
non-economic,
voting shares of Bakkt Pubco.
The board of directors of the Company has unanimously (i) approved the Merger
Agreement, the Proposed Transaction and the other transactions contemplated
thereby and (ii) resolved to recommend approval of the Merger Agreement and
related matters by the shareholders of VIH.
Prior to the Closing, subject to the approval of our shareholders, and in
accordance with the DGCL, Cayman Islands Companies Act (as revised) (the "CICA")
and our amended and restated memorandum and articles of association, we will
effect a deregistration under the CICA and a domestication under Section 388 of
the DGCL (by means of filing a certificate of domestication with the Secretary
of State of Delaware), pursuant to which our jurisdiction of incorporation will
be changed from the Cayman Islands to the State of Delaware (the
"Domestication").
Upon the Closing, Bakkt Pubco will be organized in an
"Up-C"
structure in which substantially all of the assets and the business of Bakkt
Pubco will be held by Bakkt Opco and its subsidiaries, and Bakkt Pubco's only
direct assets will consist of Bakkt Opco Units. Assuming no redemptions of
public shares in connection with the Proposed Transaction, upon the Closing
Bakkt Pubco is expected to own approximately 22% of Bakkt Opco Units and will be
the managing member of Bakkt Opco. All remaining Bakkt Opco Units will be owned
by the former equity owners of Bakkt ("Bakkt Equity Holders").
On January 11, 2021, concurrently with the execution of the Merger Agreement, we
entered into subscription agreements with certain investors (collectively, the
"PIPE Investors" which include certain existing equity holders of the Company
and Bakkt), pursuant to, and on the terms and subject to the conditions of
which, the PIPE Investors have collectively subscribed for 32,500,000 Bakkt
Pubco Class A Shares for an aggregate purchase price equal to $325,000,000 (the
"PIPE Investment").
The consummation of the proposed business combination described herein is
subject to certain conditions as further described in the Merger Agreement.
For more information about the Merger Agreement and the proposed business
combination, see our Current Report
on Form 8-K filed
with the SEC on January 11, 2021 (File
No. 001-39544)
and the prospectus included in our Registration Statement on Form
S-4
filed with the SEC on March 31, 2021 (File
No. 333-254935)
(the "Bakkt Disclosure Statement"). Unless specifically stated, this Quarterly
Report does not give effect to the Proposed Transaction and does not contain the
risks associated with the Proposed Transaction. Such risks and effects relating
to the Proposed Transaction will be included in the Bakkt Disclosure Statement.

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Results of Operations
We have neither engaged in any operations (other than searching for a Business
Combination after our Initial Public Offering and entering into the Merger
Agreement described above) nor generated any revenues to date. Our only
activities from inception to June 30, 2021 were organizational activities, those
necessary to prepare for the Initial Public Offering, described below, and,
after the Initial Public Offering, identifying a target company for a Business
Combination and entering into the Merger Agreement. 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 a 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 in connection with completing a Business
Combination.
For the three months ended June 30, 2021, we had a net income of $21,269,658,
which consisted of changes in fair value of warrant liability of $22,449,504 and
interest earned on investments held in the Trust Account of $7,525, offset by
general and administrative cost of $1,187,371.
For the six months ended June 30, 2021, we had a net loss of $12,401,958, which
consisted of changes in fair value of warrant liability of $8,842,864, other
income of $4,476 and interest earned on investments held in the Trust Account of
$17,229, offset by general and administrative cost of $3,580,799.
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, our only source of
liquidity was an initial purchase of ordinary shares by the Sponsor and loans
from our Sponsor.
On September 25, 2020, we consummated the Initial Public Offering of 20,000,000
units (the "Units"), at a price of $10.00 per Unit, generating gross proceeds of
$200,000,000. Simultaneously with the closing of the Initial Public Offering, we
consummated the sale of 6,000,000 warrants (the "Private Placement Warrants") to
the Sponsor at a price of $1.00 per Private Placement Warrant generating gross
proceeds of $6,000,000.
Following the Initial Public Offering and the sale of the Private Placement
Warrants, a total of $200,000,000 was placed in the Trust Account, and we had
$1,205,178 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 $11,906,606 in transaction costs, including $4,147,440 of
underwriting fees, $7,258,021 of deferred underwriting fees and $501,146 of
other offering costs.
On October 1, 2020, in connection with the underwriters' election to partially
exercise of their over-allotment option, we consummated the sale of an
additional 737,202 Units and the sale of an additional 147,440 Private Placement
Warrants, generating total gross proceeds of $7,519,460. A total of $7,372,020
of the net proceeds was deposited into the Trust Account, bringing the aggregate
proceeds held in the Trust Account to $207,372,020.
For the six months ended June 30, 2021, net cash used in operating activities
was $316,507, which consisted of our net loss of $12,401,958 affected by
interest earned on investments of $17,229, changes in fair value of warrant
liability of $8,842,864 and changes in operating assets and liabilities, which
provided $3,259,816 of cash from operating activities.
At June 30, 2021, we had investments held in the Trust Account of $207,393,442.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account, which
interest shall be net of taxes payable and excluding deferred underwriting
commissions, to complete our Business Combination. We may withdraw interest from
the Trust Account to pay taxes, if any. To the extent that our share capital or
debt is used, in whole or in part, as consideration to complete a 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.
At June 30, 2021, we had cash of $861,171 held 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,
structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our Sponsor or an affiliate of our
Sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required. If we complete a Business Combination, we may
repay such loaned amounts out of the proceeds of the Trust Account released to
us. 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 warrants, at a
price of $1.00 per warrant, at the option of the lender. The warrants would be
identical to the Private Placement Warrants.

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If the Business Combination is not consummated, the Company will need to raise
additional capital through loans or additional investments from its Sponsor,
stockholders, officers, directors, or third parties. The Company's officers,
directors and Sponsor may, but are not obligated to, loan the Company funds,
from time to time or at any time, in whatever amount they deem reasonable in
their sole discretion, to meet the Company's working capital needs. Accordingly,
the Company may not be able to obtain additional financing. 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 a potential
transaction, 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. These conditions raise substantial doubt about the Company's
ability to continue as a going concern through one year from the date of these
financial statements if a Business Combination is not consummated. These
financial statements do not include any adjustments relating to the recovery of
the recorded assets or the classification of the liabilities that might be
necessary should the Company be unable to continue as a going concern.
Off-Balance
Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance
sheet arrangements as of June 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.
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 the Sponsor
a monthly fee of $10,000 for office space, utilities, secretarial and
administrative support services, provided to the Company. We began incurring
these fees on September 25, 2020 and will continue to incur these fees monthly
until the earlier of the completion of a Business Combination and the Company's
liquidation.
Underwriting Agreement
The underwriters were paid a cash underwriting discount of $0.20 per Unit, or
$4,147,440 in the aggregate. In addition, $0.35 per Public Share, or
approximately $7,258,021 in the aggregate will be payable to the underwriters
for deferred underwriting commissions. The deferred fee will become payable to
the underwriters from the amounts held in the Trust Account solely in the event
that we complete a Business Combination, subject to the terms of the
underwriting agreement.
Critical Accounting Policies
The preparation of condensed consolidated 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 condensed consolidated
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
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.We account for the warrants issued in connection with our Initial
Public Offering in accordance with the guidance contained in ASC 815 under which
the warrants do not meet the criteria for equity treatment and must be recorded
as liabilities. Accordingly, we classify the warrants as liabilities at their
fair value and adjust the warrants to fair value at each reporting period. This
liability is subject to
re-measurement
at each balance sheet date until exercised, and any change in fair value is
recognized in our statement of operations. The fair value of the warrants was
estimated using a Black-Scholes Option Pricing Model. For periods subsequent to
the detachment of the Public Warrants from the Units, the close price of the
Public Warrant price was used as the fair value of the Public Warrants as of
each relevant date.
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Class A ordinary shares subject to
mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable ordinary shares (including ordinary shares
that features redemption rights that is 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,
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,
Class A ordinary shares subject to possible redemption is presented as temporary
equity, outside of the shareholders' equity section of our condensed balance
sheets.
Net Income (Loss) Per Ordinary Share
We apply the
two-class
method in calculating earnings per share. Net income (loss) per ordinary share,
basic and diluted for Class A redeemable ordinary shares is calculated by
dividing the interest income earned on the Trust Account by the weighted average
number of Class A redeemable ordinary shares outstanding since original
issuance. Net income (loss) per common share, basic and diluted for Class B
non-redeemable
ordinary shares is calculated by dividing the net income (loss), less income
attributable to Class A redeemable ordinary shares, by the weighted average
number of Class B
non-redeemable
ordinary shares outstanding for the periods presented.

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Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
condensed consolidated financial statements.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for
non-emerging
growth companies. As a result, the consolidated financial statements may not be
comparable to companies that comply with new or revised accounting
pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of
non-emerging
growth public companies under the Dodd-Frank Wall Street Reform and Consumer
Protection Act, (iii) comply with any requirement that may be adopted by the
PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's
report providing additional information about the audit and the consolidated
financial statements (auditor discussion and analysis) and (iv) disclose certain
executive compensation related items such as the correlation between executive
compensation and performance and comparisons of the CEO's compensation to median
employee compensation. These exemptions will apply for a period of five years
following the completion of our Initial Public Offering or until we are no
longer an "emerging growth company," whichever is earlier.
Recent Accounting Pronouncements
Our management does not believe there are any other recently issued, but not yet
effective, accounting pronouncements, if currently adopted, that would have a
material effect on our consolidated financial statements.

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