References to the "Company," "Broadstone Acquisition Corp.," "Broadstone,"
"our," "us" or "we" refer to Broadstone Acquisition Corp. The following
discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with the unaudited condensed financial
statements and the notes thereto contained elsewhere in this report. Certain
information contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act. We have based these forward-looking statements
on our current expectations and projections about future events. These
forward-looking statements are subject to known and unknown risks, uncertainties
and assumptions about us that may cause our actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Factors that might cause or contribute to
such a discrepancy include, but are not limited to, those described in our other
SEC filings.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company
on May 13, 2020. We were formed for the purpose of effecting a merger, share
exchange, asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses (the "Business Combination"). We are an
emerging growth company and, as such, we are subject to all of the risks
associated with emerging growth companies.
Our sponsor is Broadstone Sponsor LLP, a United Kingdom limited liability
partnership (the "Sponsor"). Our registration statement for the initial public
offering (the "Initial Public Offering") was declared effective on September 10,
2020. On September 15, 2020, we consummated the Initial Public Offering of
30,000,000 units (the "Units" and, with respect to the Class A ordinary shares
included in the Units, the "Public Shares"), at $10.00 per Unit, generating
gross proceeds of $300.0 million, and incurring offering costs of approximately
$16.6 million, inclusive of approximately $10.5 million in deferred underwriting
commissions. On October 14, 2020, the underwriters partially exercised their
over-allotment option to purchase an additional 530,301 units (the
"Over-Allotment Units"). On October 14, 2020, we completed the sale of the
Over-Allotment Units to the underwriters (the "Over-Allotment"), generating
gross proceeds of approximately $5.3 million, and incurred additional offering
costs of approximately $292,000 in underwriting fees (inclusive of approximately
$186,000 in deferred underwriting commissions).
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 8,000,000 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants")
to our Sponsor, each exercisable to purchase one Class A ordinary share at
$11.50 per share, at a price of $1.00 per Private Placement Warrant, generating
gross proceeds to the Company of approximately $8.0 million. Simultaneously with
the closing of the Over-Allotment Units, on October 14, 2020, we consummated the
second closing of the Private Placement, resulting in the purchase of an
aggregate of an additional 106,060 Private Placement Warrants by our Sponsor,
generating gross proceeds to the Company of approximately $106,060.
Upon the closing of the Initial Public Offering, the Over-Allotment and the
Private Placement, $305.3 million ($10.00 per Unit) of the net proceeds of the
Initial Public Offering and certain of the proceeds of the Private Placement was
placed in a trust account ("Trust Account"), located in the United States at
J.P. Morgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company
acting as trustee, and was invested only in United States "government
securities" within the meaning of Section 2(a)(16) of the Investment Company Act
having a maturity of 185 days or less or in money market funds meeting certain
conditions under Rule 2a-7 promulgated under the Investment Company Act that
invest only in direct U.S. government treasury obligations, until the earlier of
(i) the completion of a Business Combination and (ii) the distribution of the
Trust Account.
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Our management has broad discretion with respect to the specific application of
the net proceeds of the Initial Public Offering and the sale of Private
Placement Warrants, although substantially all of the net proceeds are intended
to be applied generally toward consummating a Business Combination.
If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or September 15, 2022 (the "Combination
Period"), we will (i) cease all operations except for the purpose of winding up,
(ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the Public Shares, 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 up to $100,000 of
interest to pay dissolution expenses), divided by the number of then issued and
outstanding Public Shares, which redemption will completely extinguish Public
Shareholders' rights as shareholders (including the right to receive further
liquidation distributions, if any) and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the remaining shareholders
and the board of directors, liquidate and dissolve, subject in each case to our
obligations under Cayman Islands law to provide for claims of creditors and
other requirements of applicable law.
Results of Operations
Our entire activity since inception through March 31, 2021 related to our
formation, the preparation for the Initial Public Offering, and since the
closing of the Initial Public Offering, the search for a prospective initial
Business Combination. We have neither engaged in any operations nor generated
any revenues to date. We will not generate any operating revenues until after
completion of our initial Business Combination. We will generate non-operating
income in the form of interest income on cash and cash equivalents. We expect to
incur increased 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 March 31, 2021, we had net income of $9,696,749,
which consists of operating and transaction costs of $235,261, offset by
interest income on marketable securities held in the Trust Account of $4,510 and
the gain from the change in fair value of warrant liabilities of $9,927,500.
Liquidity and Capital Resources
As of March 31, 2021, we had approximately $1.7 million in our operating bank
account and working capital of approximately $1.4 million.
To date, our liquidity needs have been satisfied through a payment of $25,000
from our Sponsor to cover certain expenses on our behalf in exchange for the
issuance of the Founder Shares to our Sponsor, a loan of approximately $133,000
pursuant to a promissory note issued to our Sponsor and the net proceeds from
the consummation of the Private Placement not held in the Trust Account. We
repaid the promissory note on September 15, 2020. In addition, in order to
finance transaction costs in connection with a Business Combination, our
officers, directors and Initial Shareholders may, but are not obligated to,
provide us Working Capital Loans. To date, there were no amounts outstanding
under any Working Capital Loans.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity from our Sponsor or an affiliate of our Sponsor,
or our officers and directors to meet our needs through the earlier of the
consummation of a Business Combination or one year from this filing. Over this
time period, we will be using these funds for paying existing accounts payable,
identifying and evaluating prospective initial Business Combination candidates,
performing due diligence on prospective target businesses, paying for travel
expenditures, selecting the target business to merge with or acquire, and
structuring, negotiating and consummating the Business Combination.
We continue to evaluate the impact of the COVID-19 pandemic and has concluded
that the specific impact is not readily determinable as of the date of the
balance sheet. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
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Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities,
other than an administrative services agreement to pay our Sponsor $10,000 per
month for office space, secretarial and administrative services provided to us.
Critical Accounting Policies
This management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of our financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses and the disclosure of contingent assets and liabilities in
our financial statements. On an ongoing basis, we evaluate our estimates and
judgments, including those related to fair value of financial instruments and
accrued expenses. We base our estimates on historical experience, known trends
and events and various other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. We have identified the following as our critical
accounting policies:
Class A Ordinary Shares Subject to Possible Redemption
We account for Class A ordinary shares subject to possible redemption in
accordance with the guidance in Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities
from Equity." Class A ordinary shares subject to mandatory redemption (if any)
are classified as liability instruments and are measured at fair value.
Conditionally redeemable Class A ordinary shares (including Class A 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, Class A ordinary shares are classified as shareholders' equity. Our
Class A ordinary shares feature certain redemption rights that are considered to
be outside of our control and subject to the occurrence of uncertain future
events. Accordingly, as of March 31, 2021, 27,478,369 Class A ordinary shares
subject to possible redemption are presented as temporary equity, outside of the
shareholders' equity section of the balance sheet.
Net Income (Loss) Per Ordinary Share
Net income (loss) per share is computed by dividing net income by the
weighted-average number of ordinary shares outstanding during the periods. Our
statement of operations includes a presentation of income (loss) per share for
ordinary shares subject to redemption in a manner similar to the two-class
method of income per share. Net income per ordinary share, basic and diluted for
Class A ordinary shares is determined by dividing the income earned on
investments held in the Trust Account of $4,510 for the three months ended
March 31, 2021 by the weighted average number of Class A ordinary shares
outstanding for the period. Net loss per ordinary share, basic and diluted for
Class B ordinary shares is determined by dividing the net loss of $9,806,254 for
the three months ending March 31, 2021, less income attributable to Class A
ordinary shares of $4,510, by the weighted average number of Class B ordinary
shares outstanding for the period.
Recent Accounting Standards
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.
Off-Balance Sheet Arrangements
As of March 31, 2021, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
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JOBS Act
The JOBS Act contains provisions that, among other things, relax certain
reporting requirements for qualifying public companies. We will qualify as an
"emerging growth company" and under the JOBS Act will be 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, our
financial statements may not be comparable to companies that comply with new or
revised accounting pronouncements as of public company effective dates.
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 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.
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