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.
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Overview
We are a blank check company formed under the laws of the State of Delaware on
August 7, 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 Warrants, 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 (other than searching for a Business
Combination after our initial public offering) nor generated any revenues to
date. Our only activities from inception through December 31, 2020 were
organizational activities, those necessary to prepare for the initial public
offering, described below, and initial activities in connection with searching
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 7, 2020 (inception) through December 31, 2020, we had
a net loss of $350,866, which consisted of interest earned on marketable
securities held in the Trust Account of $2,673, offset by operating expenses of
$353,559.
Liquidity and Capital Resources
On November 19, 2020, we consummated the initial public offering of 23,000,000
Units, which included the full exercise by the underwriters of their
over-allotment option in the amount of 3,000,000 Units, at a price of $10.00 per
Unit, generating gross proceeds of $230,000,000. Simultaneously with the closing
of the initial public offering, we consummated the sale of 9,650,000 Private
Placement Warrants at a price of $1.00 per Private Placement Warrant in a
private placement to our stockholders, generating gross proceeds of $9,650,000.
Following the initial public offering, the full exercise of the over-allotment
option, and the sale of the Private Placement Warrants, a total of $232,300,000
was placed in the Trust Account. We incurred $13,143,093 in transaction costs,
including $4,600,000 of underwriting fees, $8,050,000 of deferred underwriting
fees and $493,093 of other offering costs.
For the period from August 7, 2020 (inception) through December 31, 2020, net
cash used in operating activities was $310,096. Net loss of $350,866 was
impacted by interest earned on Trust investments of $2,673 and changes in
operating assets and liabilities, which provided $43,443 of cash from operating
activities.
At December 31, 2020, we had marketable securities held in the Trust Account of
$232,302,673. 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 taxes. 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.
At December 31, 2020, we had cash of $1,971,811 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, 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, 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.
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
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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.
Going Concern
We have until May 19, 2021 to consummate a Business Combination unless a
resolution is passed by our board of directors at the request of the Sponsor to
extend the period of time the Company will have to consummate a Business
Combination, which may occur up to two times, each for an additional 6 months
(until May 19, 2022), subject to the Sponsor purchasing additional Private
Placement Warrants. It is uncertain that we will be able to consummate a
Business Combination by this time. If a Business Combination is not consummated
within the completion window, there will be a mandatory liquidation and
subsequent dissolution. Management has determined that the mandatory
liquidation, should a Business Combination not occur, and potential subsequent
dissolution raises substantial doubt about our ability to continue as a going
concern. No adjustments have been made to the carrying amounts of assets or
liabilities should we be required to liquidate after the completion window.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of December 31, 2020.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement the Sponsor a
monthly fee of $10,000 for office space, secretarial and administrative
services. We began incurring these fees on November 19, 2020 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 $8,050,000
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 we complete a
Business Combination, subject to the terms of the underwriting agreement.
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 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, if any, is classified as a liability instrument
and is measured at fair value. Conditionally redeemable common stock (including
common stock that feature 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, common stock is classified as stockholders' equity. Our Class A common
stock features certain redemption rights that are considered to be outside of
our control and subject to occurrence of uncertain future events. Accordingly,
shares of Class A common stock subject to possible redemption are presented as
temporary equity, outside of the stockholders' equity section of our balance
sheet.
Net Income (Loss) per Common Share
We apply the two-class method in calculating earnings per share. Net income per
common share, basic and diluted for Class A redeemable common stock is
calculated by dividing the interest income earned on the Trust Account, net of
applicable franchise and income taxes, by the weighted average number of Class A
redeemable common stock outstanding for the period. Net loss per common share,
basic and diluted for Class B non-redeemable common stock is calculated by
dividing the net income, less income attributable to Class A redeemable common
stock, by the weighted average number of Class B non-redeemable common stock
outstanding for the period presented.
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
financial statements.
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