The following discussion and analysis provides information concerning our
results of operations and financial condition. This discussion should be read in
conjunction with our accompanying financial statements and the notes thereto.
Additionally, see note 2 in the accompanying financial statements for an
overview of new accounting standards that we have adopted or that we plan to
adopt that have had or may have an impact on our financial statements.
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Overview
The accompanying financial statements and the other information herein refer to
Liberty Media Acquisition Corporation as "LMAC," the "Company," "us," "we" and
"our" unless the context otherwise requires. We are a blank check company
incorporated in Delaware on November 6, 2020 for the purpose of effecting a
merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar initial business combination with one or more
businesses. Our sponsor is Liberty Media Acquisition Sponsor, LLC, a Delaware
limited liability company ("Sponsor").
On November 6, 2020, the Sponsor purchased 17,250,000 shares of the Company's
Series F common stock, par value $0.0001 per share (the "Founder Shares"), for
an aggregate price of $25,000. On November 18, 2020, the Sponsor contributed an
aggregate of 2,875,000 Founder Shares to the Company's capital for no
consideration resulting in the Sponsor holding an aggregate of 14,375,000
Founder Shares, including 1,875,000 Founder Shares that were subject to
forfeiture for no consideration to the extent that the underwriters'
over-allotment option was not exercised in full or in part. On January 26, 2021,
the underwriter exercised the full over-allotment option and therefore the
1,875,000 Founder Shares are no longer subject to forfeiture. The fair value of
the Founder Shares at the date of our initial public offering ("IPO") date was
determined to be approximately $139,000,000 based on the value of the Series A
common stock that was issued on the same day as a proxy for value. The value of
these shares will not ultimately be realized until an initial business
combination is completed.
The registration statement for our IPO became effective on January 21, 2021. On
January 26, 2021, we consummated the IPO of 57,500,000 units (the "Units"),
including 7,500,000 Units sold pursuant to the full exercise of the
underwriters' over-allotment option. Each Unit consists of one share of Series A
common stock of the Company, par value $0.0001 per share ("Series A Common
Stock"), and one-fifth of one redeemable warrant of the Company. Each whole
warrant entitles the holder thereof to purchase one share of Series A Common
Stock for $11.50 per share, subject to adjustment, following the later of 30
days after the consummation of the initial business combination and 12 months
from the closing of the IPO. The Units were sold at a price of $10.00 per Unit,
generating gross proceeds to the Company of $575,000,000.
Substantially concurrent with the closing of the IPO, the Company completed the
private placement of 10,000,000 warrants (the "Private Placement Warrants") at a
purchase price of $1.50 per Private Placement Warrant, to our Sponsor,
generating gross proceeds to the Company of $15,000,000 (the "Private
Placement"). The Private Placement Warrants are identical to the warrants sold
as part of the Units in the IPO except that, so long as they are held by the
Sponsor or its permitted transferees: (1) they will not be redeemable by the
Company; (2) they (including the Series A Common Stock issuable upon exercise of
these warrants) may not, subject to certain limited exceptions, be transferred,
assigned or sold by the Sponsor until 30 days after the consummation of the
initial business combination; (3) they may be exercised by the holders on a
cashless basis; and (4) they (including the Series A Common Stock issuable upon
exercise of these warrants) are entitled to registration rights.
A total of $575,000,000, comprised of proceeds from the IPO and the issuance of
the Private Placement Warrants was placed in a U.S.-based Trust Account at J.P.
Morgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust
Company, acting as trustee (the "Trust Account"). Except with respect to
interest earned on the funds held in the Trust Account that may be released to
the Company to pay its taxes, if any, the funds held in the Trust Account will
not be released from the Trust Account until the earliest of: (1) the
consummation of the initial business combination; (2) the redemption of any
Series A Common Stock properly submitted in connection with a stockholder vote
to amend the Company's Amended and Restated Certificate of Incorporation (A) to
modify the substance or timing of the Company's obligation to allow redemptions
in connection with the initial business combination or to redeem 100% of its
Series A Common Stock if the Company does not complete its initial business
combination within 24 months from the closing of the IPO (or 27 months from the
closing of the IPO if the Company has executed a letter of intent, agreement in
principle or definitive agreement for an initial business combination within 24
months from the closing of the IPO, which we refer to as an "agreement in
principle event") or (B) with respect to any other provision relating to
stockholders' rights or pre-initial business combination activity; and (3) the
redemption of all of the Series A Common Stock if it is unable to complete its
initial business combination within 24 months from the closing of the IPO (or 27
months if an agreement in principle event has occurred), subject to applicable
law.
Our Sponsor, executive officers and directors have agreed that we only have 24
months from the closing of the IPO to complete an initial business combination
(or 27 months if an agreement in principle event has occurred). If we have not
completed an initial business combination within such 24-month period (or 27
months if an agreement in principle
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event has occurred) or during any extended time that we have to consummate an
initial business combination beyond 24 months (or 27 months if an agreement in
principle event has occurred) as a result of a stockholder vote to amend our
Amended and Restated Certificate of Incorporation, we will: (1) cease all
operations except for the purposes of winding up; (2) as promptly as reasonably
possible but not more than 10 business days thereafter, redeem the Series A
Common Stock, 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 less up to $100,000 of interest to pay
dissolution expenses), divided by the number of then issued and outstanding
shares of Series A Common Stock, which redemption will completely extinguish
public stockholders' rights as stockholders (including the right to receive
further liquidating distributions, if any); and (3) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining
stockholders and our board of directors, dissolve and liquidate, subject in each
case to our obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. There will be no redemption rights
or liquidating distributions with respect to our warrants, which will expire
worthless if we fail to complete an initial business combination within such
24-month period (or 27 months if an agreement in principle event has occurred).
Results of Operations
From November 6, 2020 (inception) until our IPO on January 26, 2021, our entire
activity was in preparation for our IPO, and, following our IPO through
December 31, 2021, our entire activity has been limited to the search for a
prospective initial business combination.
For the years ended December 31, 2021 and 2020, we had net losses of $23,956,566
and $1,300, respectively, which consisted of $21,060,185 and zero of unrealized
losses on financial instruments, net, respectively, and $2,805,400 and $1,300 of
general and administrative expenses, respectively, and non-cash interest expense
related to the Working Capital Loan (see note 3 to the accompanying financial
statements) of $144,393 and zero, offset slightly by $53,412 and zero of
interest earned on the cash and marketable securities held in the Trust Account,
respectively. Changes in the fair value of financial instruments recognized in
the statements of operations are primarily due to market factors primarily
driven by changes in the fair value of the underlying shares of the financial
instruments.
Liquidity and Capital Resources
As of December 31, 2021, we had $287,403 in cash (excluding funds held in the
Trust Account) which, along with other assets, resulted in a working capital
deficit of $427,813.
Our liquidity needs prior to the consummation of the IPO were satisfied through
the proceeds of $25,000 from the sale of Founder Shares to our Sponsor, and loan
proceeds from our Sponsor of $169,933 under a promissory note we entered into
with our Sponsor (the "Note"). We repaid the Note in full on January 26, 2021.
Subsequent to the consummation of the IPO, our liquidity needs have been
satisfied through the net proceeds held outside of the Trust Account from the
consummation of the IPO and the Private Placement. See "Overview" for additional
information regarding the IPO, Private Placement and Trust Account.
Additionally, on April 15, 2021, the Company entered into a Working Capital Loan
with the Sponsor (see note 3 to the accompanying financial statements). During
the first quarter of 2022, we amended the Working Capital Loan to increase the
aggregate principal to $4,000,000. As of December 31, 2021 we had borrowed
$1,000,000 and an additional $1,000,000 was borrowed during the first quarter of
2022.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity to meet the Company's needs through the earlier
of the consummation of the initial business combination or one year from this
filing. Over this time period, the Company will be using the funds held outside
of the Trust Account for paying existing accounts payable, payments under the
shared services and facilities sharing arrangements, 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 initial business combination. If the Company's estimate of the
costs of undertaking due diligence and other activities related to consummating
the initial business combination is less than the actual amount necessary to do
so, the Company may have insufficient funds available to operate its business
prior to the initial business combination. Moreover, the Company will need to
raise additional capital through loans from its Sponsor and/or third parties.
The Sponsor is not under any obligation to advance funds to, or to invest in,
the Company. 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 its business plan, 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.
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We do not have any long-term debt obligations, finance lease obligations,
operating lease obligations, purchase obligations or long-term liabilities.
On January 26, 2021, we entered into a services agreement and facilities sharing
agreement pursuant to which we pay LMC and certain of its subsidiaries a total
of $91,666 per month for office space, administrative and support services.
The underwriters are entitled to underwriting discounts and commissions of 5.5%,
of which 2.0% ($11,500,000) was paid at the closing of the IPO and 3.5%
($20,125,000) was deferred. The deferred underwriting discount will be paid to
the underwriters upon the consummation of the initial business combination
subject to the terms of the underwriting agreement.
Critical Accounting Estimates
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 estimates:
Financial Instruments
We account for the Public Warrants, Private Placement Warrants and Forward
Purchase Agreement, (collectively the "Financial Instruments") in accordance
with the guidance contained in Accounting Standards Codification Topic 815,
Derivatives and Hedging, under which the Financial Instruments do not meet the
criteria for equity treatment and must be recorded as liabilities. Accordingly,
we classify the Financial Instruments as liabilities at their fair value and
adjust the Financial Instruments to fair value at each reporting period. The
Public Warrants, at the IPO date where no observable traded price was available,
were valued using a Monte Carlo simulation. For periods subsequent to when the
Public Warrants traded separately from the Units, the Public Warrant quoted
market price was used as the fair value of the Public Warrants. The fair value
of the Private Placement Warrants is determined using a Black-Scholes option
pricing model using observable market data as the significant inputs
(volatility, risk free rate and dividend yield). The fair value of the Forward
Purchase Agreement (as described in note 3 of the accompanying financial
statements) is calculated as the difference between the present value of the
aggregate $250,000,000 commitment and the fair value of the common stock and
warrants to be issued pursuant to the Forward Purchase Agreement, based on the
public trading price of the Units (as defined in note 1 of the accompanying
financial statements) issued in the Company's Initial Public Offering.
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