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 15.
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.
Overview
We are a blank check company formed under the laws of the State of Delaware on
July 9, 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.
Recent Developments
As previously disclosed, the Company, entered into that certain Business
Combination Agreement, dated as of July 21, 2021, as amended by that certain
Amendment No. 1 to the Business Combination Agreement, dated as of December 30,
2021 (as amended, supplemented or otherwise modified from time to time, the
"Business Combination Agreement"), by and among (i) Company, (ii) OP Group
Holdings, LLC, a Delaware limited liability company ("OP Group"), (iii) Paylink
Holdings Inc., a Delaware corporation ("Blocker"), (iv) Normandy Holdco LLC, a
Delaware limited liability company ("Blocker Owner"), (v) Olive Ventures
Holdings, Inc., a Delaware corporation and wholly-owned subsidiary of Blocker
("PubCo"), (vi) Milestone Merger Sub Inc., a Delaware corporation and
wholly-owned subsidiary of PubCo ("Milestone Merger Sub"), (vii) MDH Merger Sub
Inc., a Delaware corporation and wholly-owned subsidiary of PubCo ("MDH Merger
Sub"), and (viii) CF OMS LLC, a Delaware limited liability company ("CF OMS",
and collectively, the "Contracting Parties").
On April 1, 2022, the Company and OP Group entered into a Termination of
Business Combination Agreement (the "Termination Agreement") pursuant to which
the Company and OP Group mutually agreed to terminate the Business Combination
Agreement.
As a result of the termination of the Business Combination Agreement, the
Business Combination Agreement is of no further force and effect and none of the
Contracting Parties shall have any further liability thereunder, with the
exception of (i) the agreements contained in Section 9.9(a) (Communications;
Press Release; SEC Filings), Section 9.10 (Expenses), Section 13.2 (Effect of
Termination) and Article XIV (Miscellaneous) of the Business Combination
Agreement, (ii) any corresponding definitions to the foregoing clause (i) set
forth in Section 1.1 (Certain Definitions) of the Business Combination Agreement
and (iii) the Confidentiality Agreement, dated as of February 8, 2021, by and
between the Company and OP Group, each of which shall each survive the
termination of the Business Combination Agreement and continue in full force and
effect in accordance with their respective terms. Neither party will be required
to pay the other a termination fee as a result of the mutual decision to enter
into the Termination Agreement.
The termination of the Business Combination Agreement also terminates and makes
void the Transaction Support Agreement (as defined in the Business Combination
Agreement) and the Sponsor Letter Agreement (as defined in the Business
Combination Agreement), each of which were executed concurrently with the
Business Combination Agreement.
The foregoing descriptions of the Business Combination Agreement, the
Termination Agreement, the Transaction Support Agreement, and the Sponsor Letter
Agreement are not complete and are qualified in their entirety by reference to
and the terms and conditions of, respectively, (i) the Business Combination
Agreement, a copy of which was previously filed as Exhibit 2.1 to the Company's
Current Report on Form 8-K on July 21, 2021, (ii) Amendment No. 1 to Business
Combination Agreement, a copy of which was previously filed as Exhibit 2.1 to
the Company's Current Report on Form 8-K on December 30, 2021, (iii) the
Termination Agreement, a copy of which is filed with this Current Report on Form
8-K as Exhibit 10.1, and the terms of which are incorporated by reference
herein, (iv)
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the Transaction Support Agreement, a copy of which was previously filed as
Exhibit 10.2 to the Company's Current Report on Form 8-K on July 21, 2021, and
(v) the Sponsor Letter Agreement, a copy of which was previously filed as
Exhibit 10.3 to the Company's Current Report on Form 8-K on July 21, 2021.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities from inception through December 31, 2021 were
organizational activities, those necessary to prepare for the Initial Public
Offering, described below, and, subsequent to the Initial Public Offering,
identifying a target company for a Business Combination and activities in
connection with the proposed acquisition of Blocker and OP Group. We do not
expect to generate any operating revenues until after the completion of our
initial 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 in
connection with searching for, and completing, a Business Combination.
For the year ended December 31, 2021, we had a net income of $5,258,009, which
consisted of a change in fair value of warrant liabilities of $9,492,000 and
income earned on our marketable securities held in the Trust Account of $29,717,
partially offset by transaction costs allocable to warrant liabilities of
$727,230 and operational costs of $3,536,478
For the period from July 9, 2020 (inception) through December 31, 2020, we had a
net loss of $1,000, which consisted of formation and operational costs.
Liquidity and Capital Resources
On February 4, 2021, we consummated the Initial Public Offering of 27,600,000
Units, at a price of $10.00 per Unit, which included the full exercise by the
underwriters of their over-allotment option in the amount of 3,600,000 Units,
generating gross proceeds of $276,000,000. Simultaneously with the closing of
the Initial Public Offering, we consummated the sale of 6,550,000 Private
Placement Warrants to the Sponsor at a price of $1.00 per Private Placement
Warrant generating gross proceeds of $6,550,000.
For the year ended December 31, 2021, cash used in operating activities was
$907,188. Net income of $5,258,009 was affected by interest earned on marketable
securities held in the Trust Account of $29,717, the change in fair value of
warrant liabilities of $9,492,000 and transaction costs incurred in connection
with warrant liabilities of $727,230. Changes in operating assets and
liabilities provided $2,629,290 of cash for operating activities.
For the period from July 9, 2020 (inception) through December 31, 2020, cash
used in operating activities was $0. Net loss of $1,000 was affected by the
changes in operating assets and liabilities.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Placement Warrants, a total of $276,000,000
was placed in the Trust Account. We incurred $15,612,362 in transaction costs,
including $5,520,000 of underwriting fees, $9,660,000 of deferred underwriting
fees and $432,362 of other offering costs.
As of December 31, 2021, we had $276,029,717 of marketable securities held in
the Trust Account. 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. 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, 2021, we had $92,993 of cash held outside of the Trust
Account.
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 a mutually agreed amount of
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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. As of December 31, 2021, the Sponsor advances amounted to
$377,543 and subsequently an additional $157,000 for an aggregate amount of
$535,000, which are currently due on demand.
Going Concern
We will need to raise additional capital through loans or additional investments
from our Sponsor, stockholders, officers, directors, or third parties. Our
officers, directors and Sponsor may, but are not obligated to, loan us funds,
from time to time or at any time, in whatever amount they deem reasonable in
their sole discretion, to meet our working capital needs. Accordingly, we may
not be able to obtain additional financing. 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. The Company has until
February 4, 2023 to consummate a Business Combination. It is uncertain that the
Company will be able to consummate a Business Combination by this time. If a
Business Combination is not consummated by this date, there will be a mandatory
liquidation and subsequent dissolution of the Company. Management has determined
that the mandatory liquidation, should a Business Combination not occur, and
potential subsequent dissolution raises substantial doubt about the Company's
ability to continue as a going concern. No adjustments have been made to the
caring amounts of assets or liabilities should the Company be required to
liquidate after February 4, 2023. These conditions raise substantial doubt about
our ability to continue as a going concern for at least one year from the date
that the financial statements are issued.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2021. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
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 office space, utilities,
secretarial and administrative support services. We began incurring these fees
on January 28, 2021 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 $9,660,000
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 the Company
completes 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:
Warrant Liabilities
We account for the Warrants in accordance with the guidance contained in ASC
815-40 under which the Warrants do not meet the criteria for equity treatment
and must be recorded as liabilities. Accordingly, we classify the Warrants as
liabilities at their fair value and adjust the Warrants to fair value at each
reporting period. This liability is subject to re-measurement at each balance
sheet date until exercised, and any change in fair value is recognized in the
statements of operations.
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Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible conversion 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
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,
all Class A common stock subject to possible redemption is presented at
redemption value as temporary equity, outside of the stockholders' equity
section of our balance sheets.
We recognize changes in redemption value immediately as they occur and adjust
the carrying value of redeemable common stock to equal the redemption value at
the end of each reporting period. Increases or decreases in the carrying amount
of redeemable common stock are affected by charges against additional paid- in
capital and accumulated deficit.
Net Income Per Common Share
Net income (loss) per common share is computed by dividing net income (loss) by
the weighted average number of common stock outstanding for the period. Shares
subject to forfeiture are not included in basic and diluted weighted average
shares outstanding until the forfeiture restrictions lapse. Remeasurement
associated with the redeemable shares of Class A common stock is excluded from
income (loss) per common share as the redemption value approximates fair value.
The calculation of diluted income (loss) per common share does not consider the
effect of the warrants issued in connection with the (i) Initial Public
Offering, and (ii) the private placement since the exercise of the warrants is
contingent upon the occurrence of future events. The warrants are exercisable to
purchase 20,350,000 Class A common stock in the aggregate. As of December 31,
2021 and 2020, the Company did not have any dilutive securities or other
contracts that could, potentially, be exercised or converted into common stock
and then share in the earnings of the Company.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in
Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06") to simplify accounting for
certain financial instruments. ASU 2020-06 eliminates the current models that
require separation of beneficial conversion and cash conversion features from
convertible instruments and simplifies the derivative scope exception guidance
pertaining to equity classification of contracts in an entity's own equity. The
new standard also introduces additional disclosures for convertible debt and
freestanding instruments that are indexed to and settled in an entity's own
equity. ASU 2020-06 amends the diluted earnings per share guidance, including
the requirement to use the if-converted method for all convertible instruments.
ASU 2020-06 is effective January 1, 2024 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on January
1, 2021. We early adopted ASU 2020-06 on January 1, 2021. The adoption of ASU
2020-06 did not have an impact on our financial statements.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.
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