References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Northern Star Acquisition Corp. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to Northern Star Sponsor 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, as amended (the "Securities Act")
and Section 21E of 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 "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. 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 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.
This "Management's Discussion and Analysis of Financial Condition and Results of
Operations" has been amended and restated to give effect to the restatement of
our financial statements, as more fully described in Note 2 to our financial
statements entitled "Restatement of Previously Issued Financial Statements". For
further detail regarding the restatement, see "Explanatory Note" and "Item 4.
Controls and Procedures."
Overview
We are a blank check company formed under the laws of the State of Delaware on
July 8, 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 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 raise capital or to
complete our initial Business Combination will be successful.
Recent Developments
On December 16, 2020, we entered into a Merger Agreement with the Merger Sub and
BarkBox. BarkBox is an omni-channel brand for dogs serving over 1 million dogs
monthly through BarkBox and Super Chewer subscriptions and broad retail
distribution of its comprehensive suite of best-in-class, proprietary products.
Pursuant to the Merger Agreement, Merger Sub will merge with and into BarkBox,
with BarkBox surviving the Merger. As a result of the Merger, BarkBox will
become a wholly-owned subsidiary of the Company, with the stockholders of
BarkBox becoming securityholders of the Company.
Under the Merger Agreement, the stockholders and other equity derivative holders
of BarkBox will receive an aggregate of 150,000,000 shares of our Class A common
stock, par value $0.0001 per share, subject to adjustment as set forth in the
Merger Agreement.
The Merger is expected to be consummated early in the second quarter of 2021,
after the required approval by our stockholders and Barkbox and the fulfillment
of certain other conditions set forth in the Merger Agreement.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through December 31, 2020 were organizational activities,
those necessary to prepare for the Initial Public Offering, described below,
and, after our Initial Public Offering, 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. 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.
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For the three months ended December 31, 2020, we had a net loss of $34,628,253,
which consisted of operating costs of $1,040,231 and a change of $33,607,289 for
the change in fair value of warrant liabilities, offset by interest income on
marketable securities held in the Trust Account of $16,202 and an unrealized
gain on marketable securities held in our Trust Account of $3,065. Additionally,
we recognize non-cash gains and losses within other income (expense) related to
changes in recurring fair value measurement of our warrant liabilities at each
reporting period.
For the period from July 8, 2020 (inception) through December 31, 2020, we had a
net loss of $34,628,699, which consisted of operating costs of $1,040,677 and a
change of $33,607,289 for the change in fair value of warrant liabilities,
offset by interest income on marketable securities held in the Trust Account of
$16,202 and an unrealized gain on marketable securities held in our Trust
Account of $3,065.
Liquidity and Capital Resources
On November 13, 2020, we consummated the Initial Public Offering of 25,000,000
Units, at $10.00 per unit, generating gross proceeds of $250,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 4,500,000 Private Warrants to the Sponsor at a price of $1.50 per
warrant, generating gross proceeds of $6,750,000.
On November 24, 2020, the Company sold an additional 435,000 Units for total
gross proceeds of $4,350,000 in connection with the underwriters' partial
exercise of their over-allotment option. Simultaneously with the partial closing
of the over-allotment option, we also consummated the sale of an additional
58,000 Private Warrants at $1.50 per Private Warrant, generating total proceeds
of $87,000.
Following the Initial Public Offering, the exercise of the over-allotment option
and the sale of the Private Warrants, a total of $254,350,000 was placed in the
Trust Account. We incurred $14,437,777 in transaction costs (including
$13,926,600 charged to additional paid-in capital and $511,117 charged to
formation and operating costs), including $5,087,000 of underwriting fees,
$8,902,250 of deferred underwriting fees and $448,527 of other costs.
For the period from July 8, 2020 (inception) through December 31, 2020, net cash
used in operating activities was $711,299. Net loss of $34,628,699 was impacted
by a change of $33,607,289 for the change in fair value of warrant liabilities
and the interest of $16,202 earned on marketable securities held in the Trust
Account. Unrealized gain of $3,065 on marketable securities held in trust
account, increase in prepaid expense of $34,897 and $364,275 accrued expenses.
As of December 31, 2020, we had cash and marketable securities held in the Trust
Account of $254,369,267 (including approximately $19,000 of interest income and
unrealized gains) consisting of U.S. Treasury Bills with a maturity of 180 days
or less. 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 deferred underwriting commissions and income taxes payable), to complete
our Business Combination. We may withdraw interest to pay taxes. Through
December 31, 2020, we did not withdraw any of interest earned on the Trust
Account to pay our franchise and income 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.
As of December 31, 2020, we had cash of $1,128,851 held outside 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, the Sponsor or an affiliate of the
Sponsor or certain of our directors and officers may, but are not obligated to,
loan us funds as may be required. 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 loans may be
convertible into warrants identical to the Private Warrants, at a price of $1.50
per warrant at the option of the lender.
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 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.
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 described below.
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The underwriters are entitled to a deferred fee of $0.35 per Unit, or $8,902,250
in the aggregate. The deferred fee will be forfeited by the underwriters solely
in the event that the Company fails to complete a Business Combination, subject
to the terms of the underwriting agreement.
In November 2020, we entered into consulting agreements with several consultants
assist to us with due diligence, deal structuring, and investor relations
services in connection with a potential merger, capital share exchange and asset
acquisition or similar business combination.
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:
Warrant Liabilities
We account for the warrants issued in connection with our initial public
offering in accordance with Accounting Standards Codification ("ASC") 815-40,
"Derivatives and Hedging-Contracts in Entity's Own Equity" ("ASC 815"), under
which the warrants do not meet the criteria for equity classification and must
be recorded as liabilities. As the warrants meet the definition of a derivative
as contemplated in ASC 815, the Warrants are measured at fair value at inception
and at each reporting date in accordance with ASC 820, Fair Value Measurement,
with changes in fair value recognized in the Statement of Operations in the
period of change.
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 is classified as a liability instrument and is
measured at fair value. Conditionally redeemable common stock (including common
stock that features 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) 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,
Class A common stock subject to possible redemption is presented at redemption
value as temporary equity, outside of the stockholders' equity section of our
condensed balance sheet.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
consolidated financial statements.
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