The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited
consolidated 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/A. 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/A.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations has been amended and restated to give effect to the restatement and
revision of our financial statements. We are restating our historical financial
results to reclassify our warrants as derivative liabilities pursuant to ASC
815-40 rather than as a component of equity as we had previously treated them.
Other than as disclosed in the Explanatory Note and with respect to the impact
of the restatement, no further information in this Item 7 has been amended and
this Item 7 does not reflect any events occurring after the initial filing on
March 30, 2021. The impact of the restatement is more fully described in the
Explanatory Note and in "Note 2-Restatement of Previously Issued Financial
Statements" to our accompanying financial statements. For further detail
regarding the restatement adjustments, see Explanatory Note and Item 9A:
Controls and Procedures, both contained herein.
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Overview
We are a blank check company incorporated in the Cayman Islands on June 7, 2019,
formed for the purpose of effecting a merger, amalgamation, share exchange,
asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses. We intend to effectuate our business
combination using cash derived from the proceeds of the IPO, our shares, debt or
a combination of cash, shares 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.
Recent Developments
On December 10, 2020, we entered into a Merger Agreement with Merger Sub, WMH
and Ghost Media Group, LLC, a Nevada limited liability company, solely in its
capacity as the securityholder representative thereunder (the "Holder
Representative").
Pursuant to the Merger Agreement, Merger Sub will merge with and into WMH with
WMH continuing as the surviving entity and a subsidiary of the Company (refer to
as "Surviving Pubco" following the Business Combination) (the "Merger" and the
other transactions contemplated by the Merger Agreement, the "Business
Combination").
As a result of the Business Combination, each of our issued and outstanding
Class A ordinary shares and Class B ordinary shares will convert into a share of
Class A common stock of Surviving Pubco, and each issued and outstanding warrant
to purchase Class A ordinary shares of the Company will be exercisable by its
terms to purchase an equal number of shares of Class A common stock of Surviving
Pubco.
The merger consideration (the "Merger Consideration") to be paid to holders of
the limited liability company interests of WMH (each, a "WMH Equity Holder") at
the closing of the Business Combination ("the Closing") pursuant to the Merger
Agreement will be equal to $1.31 billion and will be paid in a mix of cash and
equity consideration.
The Merger Agreement contains customary representations, warranties and
covenants by the parties thereto and the Closing is subject to certain
conditions as further described in the Merger Agreement.
On January 13, 2021, we held an Extraordinary General Meeting pursuant to which
our shareholders approved extending the extension date. In connection with the
approval of the extension, shareholders elected to redeem an aggregate of 1,425
Class A ordinary shares. As a result, an aggregate of $14,489 (or approximately
$10.17 per share) was released from our trust account to pay such shareholders.
On February 18, 2021, we issued a note in the amount of up to $750,000 to the
sponsor for general working capital purposes. The note is non-interest bearing
and payable upon the earlier to occur of (i) June 10, 2021 or (ii) the
consummation of a Business Combination. If we do not consummate a Business
Combination, we may use a portion of any funds held outside the trust account to
repay the note; however, no proceeds from the trust account may be used for such
repayment.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception through December 31, 2020 were organizational
activities, those necessary to prepare for the IPO, identifying a target for our
Business Combination and activities in connection with the proposed acquisition
of WMH. 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. We are incurring
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 completing a Business Combination.
As a result of the restatement described in Note 2 of the notes to the financial
statements included herein, we classify the warrants issued in connection with
our Initial Public Offering as liabilities at their fair value and adjust the
warrant instrument 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 our statement of operations.
For the year ended December 31, 2020, we had a net loss of $52,021,521, which
consists of operating costs of $3,864,234 and a change in the fair value of the
warrant liability of $50,420,000 offset by interest earned on marketable
securities held in the trust account of $2,257,985 and an unrealized gain on
marketable securities held in the trust account of $4,728.
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For the nine months ended September 30, 2020, we had a net loss of $2,743,662,
which consists of operating and formation costs of $839,460, a change in the
fair value of the warrant liability of $4,095,000, and an unrealized loss on
marketable securities held in the Trust Account of 16,343, offset by interest
income on marketable securities held in the Trust Account of $2,207,141.
For the three months ended September 30, 2020, we had a net loss of $1,418,960,
which consists of operating and formation costs of $159,017, a change in the
fair value of the warrant liability of $1,305,000 and an unrealized loss on
marketable securities held in the Trust Account of $297,069, offset by interest
income on marketable securities held in the Trust Account of $342,126.
For the six months ended June 30, 2020, we had a net loss of $1,324,702, which
consists of operating and formation costs of $680,443 and a change in the fair
value of the warrant liability of $2,790,000, offset by interest income on
marketable securities held in the Trust Account of $1,865,015 and an unrealized
gain on marketable securities held in the Trust Account of $280,726.
For the three months ended June 30, 2020, we had a net loss of $3,146,809, which
consists of operating and formation costs of $222,827, an unrealized loss on
marketable securities held in the Trust Account of $871,960, and a change in the
fair value of the warrant liability of $2,985,000, offset by interest income on
marketable securities held in the Trust Account of $932,978.
For the three months ended March 31, 2020, we had net income of $1,822,107,
which consists of interest income on marketable securities held in the Trust
Account of $932,037, an unrealized gain on marketable securities held in the
Trust Account of $1,152,686, and a change in fair value of the warrant liability
of $195,000, offset by operating and formation costs of $457,616.
For the period from June 7, 2019 (inception) through December 31, 2019, we had
net income of $5,352,568, which consists of interest income on marketable
securities held in the Trust Account of $1,812,577, a change in the fair value
of the warrant liability of $4,645,000 and an unrealized gain on marketable
securities held in the Trust Account of $112,416, offset by operating and
formation costs of $306,834, compensation expense of $280,000 and transaction
costs of $630,591.
For the period from June 7, 2019 (inception) through September 30, 2019, we had
a net loss of $822,468, which consists of operating and formation costs of
$138,620, a change in the fair value of the warrant liability of $460,000,
transaction costs of $630,591, and compensation expense of $280,000, offset by
interest income on marketable securities held in the Trust Account of $620,669
and an unrealized gain on marketable securities held in the Trust Account of
$66,074.
For the three months ended September 30, 2019, we had a net loss of $817,468,
which consists of operating and formation costs of $133,620, a change in the
fair value of the warrant liability of $460,000, transaction costs of $630,591,
and compensation expense of $280,000, offset by interest income on marketable
securities held in the Trust Account of $620,669 and an unrealized gain on
marketable securities held in the Trust Account of $66,074.
On August 12, 2019, upon the consummation of our IPO, we had total assets of
$251,801,230, which consists of cash held in an operating account of $1,774,430,
cash held in the Trust account of $250,000,000, and prepaid expenses of $26,800.
We had total liabilities of $27,099,592, which consists of accrued offering
costs of $444,592, a deferred underwriting fee payable of $8,750,000, and a
warrant liability of $17,905,000. There were 21,970,163 Class A ordinary shares
subject to possible redemption, representing a commitment of $219,701,630 at
redemption value. Total shareholders' equity was $5,000,008, which consists of
$303 of Class A ordinary shares (excluding Class A ordinary shares subject to
possible redemption), $719 of Class B ordinary shares, additional paid-in
capital of $5,914,577, offset by an accumulated deficit of $915,591.
Going Concern, Liquidity and Capital Resources
August 12, 2019, we consummated the IPO of 25,000,000 Units, at a price of
$10.00 per unit, generating gross proceeds of $250,000,000. Simultaneously with
the closing of the IPO, we consummated the sale of 7,000,000 private placement
warrants to our sponsor at a price of $1.00 per warrant, generating gross
proceeds of $7,000,000.
Following the IPO and the sale of the private placement warrants, a total of
$250,000,000 was placed in the trust account. We incurred $14,413,362 in
transaction costs, including $5,000,000 of underwriting fees, $8,750,000 of
deferred underwriting fees and $663,362 of other offering costs.
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For the year ended December 31, 2020, cash used in operating activities was
$581,882. Net loss of $52,021,521 was affected by interest earned on marketable
securities held in the trust account of $2,257,985and an unrealized gain on
marketable securities of $4,728 offset by a non-cash charge for the change in
the fair value of warrant liabilities of $50,420,000. Changes in operating
assets and liabilities provided $3,282,352 of cash from operating activities.
For the period from June 7, 2019 (inception) through December 31, 2019, cash
used in operating activities was $467,049. Net income of $5,352,568 was affected
by compensation expense of $280,000 and transaction costs of $630,591 offset by
interest earned on marketable securities held in the trust account of
$1,812,577, a non-cash charge for the change in the fair value of warrant
liabilities of $4,645,000, an unrealized gain on marketable securities of
$112,416 and changes in operating assets and liabilities, which used $160,215 of
cash from operating activities.
As of December 31, 2020, we had marketable securities held in the trust account
of $254,187,706. We intend to use substantially all of the funds held in the
trust account, including any amounts representing interest earned on the trust
account (which interest shall be net of taxes payable and excluding deferred
underwriting commissions) to complete our Business Combination. To the extent
that our share capital is used, in whole or in part, as consideration to
complete a 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 $312,707 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,
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
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, at a price of $1.00 per warrant unit at the option of
the lender. The warrants would be identical to the private placement warrants.
On February 18, 2021, we issued a note in the amount of up to $750,000 to the
sponsor for general working capital purposes.
We will need to raise additional capital through loans or additional investments
from our sponsors, or an affiliate of the sponsor, officers, directors, or third
parties. Our sponsors 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. These conditions raise substantial
doubt about our ability to continue as a going concern through July 10, 2021,
the date that we will be required to cease all operations, except for the
purpose of winding up, if a Business Combination is not consummated. These
financial statements do not include any adjustments relating to the recovery of
the recorded assets or the classification of the liabilities that might be
necessary should we be unable to continue as a going concern.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities which would be considered
off-balance sheet arrangements as of December 31, 2020. 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.
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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 our sponsor
a monthly fee of $20,000 for office space, and administrative and support
services, provided to the Company. We began incurring these fees on August 7,
2019 and will continue to incur these fees monthly until the earlier of the
completion of a Business Combination and the Company's liquidation.
The underwriters are entitled to a deferred fee of $0.35 per unit, or $8,750,000
in the aggregate, which 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 consolidated 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 Liability
We account for the warrants issued in connection with our Initial Public
Offering in accordance with the guidance contained in ASC 815-40-15-7D 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 our statement of
operations. The fair value of the warrants was estimated using a Modified Black
Scholes Option Pricing Model approach.
Class A Ordinary Shares Subject to Redemption
We account for our Class A ordinary shares subject to possible conversion in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Class A ordinary shares subject to
mandatory redemption are classified as a liability instrument and are measured
at fair value. Conditionally redeemable ordinary shares (including ordinary
shares that feature 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) are classified as temporary equity. At all other
times, ordinary shares are classified as shareholders' equity. Our Class A
ordinary shares feature certain redemption rights that are considered to be
outside of our control and subject to occurrence of uncertain future events.
Accordingly, Class A ordinary shares subject to possible redemption are
presented at redemption value as temporary equity, outside of the shareholders'
equity section of our consolidated balance sheets.
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 ordinary shares subject to possible
redemption is calculated by dividing the interest income earned on the Trust
Account, net of applicable taxes, if any, by the weighted average number of
shares of Class A ordinary shares subject to possible redemption outstanding for
the period. Net loss per common share, basic and diluted for non-redeemable
Class B ordinary shares is calculated by dividing net income less income
attributable to Class A ordinary shares subject to possible redemption, by the
weighted average number of shares of non-redeemable Class B ordinary shares
outstanding for the period presented.
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.
Recent Accounting Standards
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 consolidated financial statements.
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