References in this quarterly report on Form 10-Q (the "Quarterly Report") to
"we," "us" or the "Company" refer to Golden Falcon Acquisition Corp. References
to our "management" or our "management team" refer to our officers and
directors, and references to the "Sponsor" refer to Golden Falcon Sponsor Group,
LLC. The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the condensed
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 Quarterly Report 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 our
Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the
"Form 10-K") filed with the U.S. Securities and Exchange Commission (the "SEC")
on March 31, 2022, as well as Item 1A, Part II of this Quarterly Report. 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 formed under the laws of the State of Delaware on
August 24, 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 raise capital or to
complete our initial business combination will be successful.
On November 7, 2022, we filed a Preliminary Proxy Statement on Schedule 14A
relating to a special meeting in lieu of annual meeting of stockholders of the
Company, that is anticipated to be held in December 2022 to approve an amendment
to our amended and restated certificate of incorporation (the "Charter
Amendment") which would, if implemented, allow us to extend the date by which we
have to consummate a business combination (the "Extension") for an additional
six months, from December 22, 2022 to June 22, 2023, or such earlier date as
determined by our board of directors (such later date, the "Extended Date", and
such proposal, the "Charter Amendment Proposal"). We will also seek stockholder
approval to amend the Investment Management Trust Agreement, dated as of
December 17, 2020 (the "Trust Agreement"), by and between the Company and
Continental Stock Transfer & Trust Company, to change the date on which the
trustee must commence liquidation of the trust account to the Extended Date (the
"Trust Amendment Proposal").
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through September 30, 2022 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, along with non-operating income or expense related to the change in
fair value of the warrant liabilities and the convertible promissory note. 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 three months ended September 30, 2022, we had a net income of
$1,256,116, which consists of interest earned on marketable securities held in
the trust account of $1,555,959, change in fair value of warrant liabilities of
$784,500, unrealized gain on marketable securities held in the trust account of
$110,504 and change in fair value of convertible promissory note - related party
of $27,500, partially offset by formation and operational costs of $829,255 and
provision for income taxes of $393,092.
For the nine months ended September 30, 2022, we had a net income of
$15,198,906, which consists of interest earned on marketable securities held in
the trust account of $2,310,067, change in fair value of convertible promissory
note - related party of $174,022 and change in fair value of warrant liabilities
of $14,889,810, partially offset by formation and operational costs of
$1,711,003, unrealized loss on marketable securities held in the trust account
of $39,779, and provision for income taxes of $424,213.
For the three months ended September 30, 2021, we had a net income of
$7,806,256, which consists of interest earned on marketable securities held in
the trust account of $39,274, unrealized loss on marketable securities held in
the trust account of $9,879, change in fair value of convertible promissory note
$17,900 and change in fair value of warrant liabilities of $8,106,500, partially
offset by formation and operational costs of $367,297.
For the nine months ended September 30, 2021, we had a net income of
$19,735,413, which consists of interest earned on marketable securities held in
the trust account of $117,044, unrealized loss on marketable securities held in
the trust account of $6,914, change in fair value of convertible promissory note
$17,900 and change in fair value of warrant liabilities of $21,181,500,
partially offset by formation and operational costs of $1,587,945.
Liquidity and Capital Resources
On December 22, 2020, we consummated the initial public offering of 34,500,000
units, at $10.00 per unit, which included the full exercise by the underwriters
of their over-allotment option in the amount of 4,500,000 units, generating
gross proceeds of $345,000,000. Simultaneously with the closing of the initial
public offering, we consummated the sale of 8,900,000 private placement warrants
to the Sponsor at a price of $1.00 per warrant, generating gross proceeds of
$8,900,000.
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Following the initial public offering, the full exercise of the over-allotment
option, and the sale of the private placement warrants, a total of $345,000,000
was placed in the trust account. Transaction costs amounted to $19,455,706,
consisting of $6,900,000 of underwriting fees, net of reimbursement, $12,075,000
of deferred underwriting fees and $480,706 of other offering costs.
For the nine months ended September 30, 2022, net cash used in operating
activities was $918,676. Net income of $15,198,906 was affected by the change in
fair value of warrant liabilities of $14,889,810, change in fair value of
convertible promissory note - related party of $174,022, interest earned on
marketable securities held in trust account of $2,310,067 and an unrealized gain
on marketable securities held in trust account of $39,779. Changes in operating
assets and liabilities provided $1,216,538 of cash from operating activities
primarily due to a decrease in prepaid expenses and an increase in accounts
payable and accrued expenses and income taxes payable.
For the nine months ended September 30, 2021, net cash used in operating
activities was $1,078,901. Net income of $19,735,413 was affected by the change
in fair value of warrant liabilities of $21,181,500, change in fair value of
convertible promissory note of $17,900, interest earned on marketable securities
held in trust account of $117,044 and an unrealized gain on marketable
securities held in trust account of $6,914. Changes in operating assets and
liabilities provided $509,044 of cash from operating activities primarily due to
a decrease in prepaid expenses and an increase in accounts payable and accrued
expenses.
For the nine months ended September 30, 2022, net cash provided by financing
activities was $300,000 as a result of the drawdowns on the convertible
promissory note.
For the nine months ended September 30, 2021, net cash provided by financing
activities was $120,000 as a result of the drawdown on the convertible
promissory note.
At September 30, 2022 we had cash and marketable securities held in the trust
account of $346,782,294 consisting of U.S. Treasury Bills with a maturity of 185
days or less. Interest income on the balance in the trust account may be used by
us to pay taxes. As of September 30, 2022, net cash provided by investing
activities was $658,833 as a result of permitted withdrawals of interest earned
on the trust account to pay our franchise and income taxes.
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, franchise taxes, and income taxes payable),
to complete our business combination. 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 September 30, 2022, we had cash of $52,037 outside of the trust account,
accounts payable and accrued expenses of $1,175,377, and income taxes payable of
$173,213. We intend to use the funds held outside the trust account in addition
to the remaining amount unborrowed on the convertible promissory note of
$379,889 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,
lend us funds as may be required. If we complete a business combination, we
would repay such lent 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 lent amounts but no proceeds from our trust account would
be used for such repayment. On September 13, 2021, the Sponsor agreed to lend us
an aggregate of up to $1,000,000 pursuant to the convertible promissory note for
working capital purposes. At September 30, 2022, there was $620,111 of
cumulative cash advanced under the convertible promissory note. The convertible
promissory note was valued using the fair value method. The advances of $300,000
for the nine months ended September 30, 2022 were initially valued at $160,622
whereas the difference of $139,378 was recorded as a credit to stockholders'
deficit. The change in the fair value of the note recorded in the statements of
operations for the three and nine months ended September 30, 2022 were $27,500
and $174,022, respectively, resulting in a fair value of the convertible
promissory note of $246,200. For the three and nine months ended September 30,
2021, the change in fair value of the note recorded in the condensed statements
of operations was $17,900, resulting in a fair value of the convertible
promissory note of $102,100.
Going Concern
As of September 30, 2022, we had $52,037 in our operating bank account,
$346,782,294 in marketable securities held in the trust account to be used for a
business combination, or to repurchase or redeem our stock in connection
therewith, and a working capital deficit of $1,035,493, which excludes the
permitted withdrawal should we elect to withdraw from the trust account for
franchise taxes payable of $19,347 or income taxes payable of $173,213. As of
September 30, 2022, $1,782,294 of the amount on deposit in the trust account
represented interest income, $39,779 of which was recorded as an unrealized
loss. Interest income earned on the trust account is available to pay our tax
obligations. Through September 30, 2022, $658,833 was withdrawn from the trust
account to pay our tax obligations.
We may raise additional capital through loans or additional investments from the
Sponsor or an affiliate of the Sponsor or certain of its directors and officers.
The Sponsor may but is not obligated to (except as described below), lend the
Company funds, from time to time in whatever amounts it deems reasonable in its
sole discretion, to meet the Company's working capital needs. On September 13,
2021, the Sponsor agreed to lend the Company an aggregate of up to $1,000,000
for working capital purposes pursuant to a convertible promissory note. We had
drawn an aggregate of $620,111 under the convertible promissory note as of
September 30, 2022, which includes drawdowns of $120,000 on September 13, 2021,
$114,311 on October 5, 2021, $70,800 on October 26, 2021, $15,000 on
November 29, 2021, $150,000 on January 31, 2022, and $150,000 on March 31, 2022.
There can be no assurance that we will be able to obtain additional financing
prior to completing the Business Combination, however. 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 raise additional capital, we 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. We cannot provide any
assurance that new financing will be available to us on commercially acceptable
terms, if at all.
In connection with the Company's assessment of going concern considerations in
accordance with ASC Subtopic 205-40, Presentation of Financial Statements -
Going Concern, pursuant to our amended and restated certificate of
incorporation, we have until December 22, 2022 to consummate a business
combination. We plan to hold a meeting in December 2022 to approve an amendment
to our amended and restated certificate of incorporation to allow us to extend
the date for an additional six months, from December 22, 2022 to June 22, 2023
or such earlier date as determined by our board of directors, in order to
consummate a business combination. If a business combination is not consummated
by December 22, 2022, or our stockholders have not approved the Extension, there
will be a mandatory liquidation and subsequent dissolution of the Company after
December 22, 2022. Although we intend to consummate a business combination on or
before December 22, 2022, or by the Extended Date if the Extension is approved
by the Company's stockholders, it is uncertain that we will be able to
consummate a business combination by December 22, 2022 or that our stockholders
will approve the Extension. This, as well as its liquidity condition, raise
substantial doubt about the Company's ability to continue as a going concern. No
adjustments have been made to the carrying amounts of assets or liabilities
should the Company be required to liquidate after December 22, 2022.
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Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of September 30, 2022.
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 an
affiliate of the Sponsor a monthly fee of $10,000 for certain administrative,
research, transaction and other support services. We began incurring these fees
on December 22, 2020 and will continue to incur these fees monthly until the
earlier of the completion of the business combination and our liquidation. In
addition for both the three and nine months ended September 30, 2022, the
Company reimbursed such affiliate of the Sponsor for certain costs incurred on
the Company's behalf in the amounts of $6,075 which is included in general and
administrative expenses in the accompanying condensed statement of operations.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or
$12,075,000 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
We prepare our financial statements in accordance with accounting principles
generally accepted in the United States of America. The preparation of financial
statements also requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, costs and expenses and related
disclosures. We base our estimates on historical experience and on various other
assumptions that we believe to be reasonable under the circumstances. Actual
results could differ significantly from the estimates made by our management.
There have been no material changes to our critical accounting policies and
estimates from those disclosed in our financial statements and the related notes
and other financial information included in our Form 10-K for the year ended
December 31, 2021, on file with the SEC.
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