ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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. 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 “Cautionary 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
incorporated in the Cayman Islands on June 4, 2020 formed for the purpose of effecting a merger, share exchange, asset acquisition, stock 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 our initial public offering consummated on August 25, 2020 (the “Public Offering”), 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.
Agreement for Business Combination
On December 21, 2020, we entered into a merger agreement, with Beam Merger Sub, Inc. (“Merger Sub”) and Ouster, Inc.
(“Ouster”), relating to a proposed business combination transaction (the “Business Combination”) between the Company and Ouster (the “Merger Agreement”).
Pursuant to the Merger Agreement, the Company will domesticate as a Delaware corporation (and will be renamed “Ouster PubCo”) and
Merger Sub, a wholly owned subsidiary of the Company, will merge with and into Ouster, the separate corporate existence of Merger Sub will cease and Ouster will be the surviving corporation and a wholly owned subsidiary of the Company (the
“Merger”). In connection with the consummation of the Business Combination, the Company will change its name to “Ouster, Inc.”
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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.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from June 4, 2020 (inception) through
December 31, 2020 were organizational activities, those necessary to prepare for the Public Offering, identifying a target for our business combination, and activities in connection with the proposed acquisition of Ouster. 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.
For the period from June 4, 2020 (inception) through December 31, 2020, we had a net loss of $2,702,566, which consisted of
operating costs of $2,763,620, offset by interest earned on marketable securities held in the Trust Account of $57,914 and an unrealized gain on marketable securities held in the Trust Account of $3,140.
Liquidity and Capital Resources
On
August 25, 2020, we consummated the Public Offering of 20,000,000 units, at a price of $10.00 per unit, generating gross proceeds of $200,000,000. Simultaneously with the closing of the Public Offering, we consummated the sale of 6,000,000
private placement warrants to the Sponsor at a price of $1.00 per warrant, generating gross proceeds of $6,000,000.
Following the Public
Offering, and the sale of the private placement warrants, a total of $200,000,000 was placed in the Trust Account. We incurred $11,597,631 in transaction costs, including $4,000,000 of underwriting fees, $7,000,000 of deferred underwriting fees and
$597,631 of other costs.
For the period from June 4, 2020 (inception) through December 31, 2020, cash used in operating
activities was $729,512, which consisted of our net loss of $2,702,566, interest earned on marketable securities held in the Trust Account of $57,914, an unrealized gain on marketable securities of $3,140 and changes in operating assets and
liabilities, which provided $2,034,108 of cash.
As of December 31, 2020, we had cash and marketable securities held in the Trust
Account of $200,061,054. We may withdraw interest to pay our taxes, if any. Through December 31, 2020, we have not withdrawn any amounts to pay for our tax obligations. 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) 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 $697,957. 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 at the option of the lender. The warrants would be identical to the private placement
warrants.
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We monitor the adequacy of our working capital in order to meet the expenditures required
for operating our business prior to our initial business combination. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial
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 completion of our business combination, in which case we may issue additional securities or incur debt in connection with such business
combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account.
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.
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 the Sponsor a monthly fee of $10,000 for office space, utilities, secretarial and administrative support services, provided to the Company. We began incurring these fees on August 21, 2020 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 $7,000,000 in the aggregate. A portion of such amount not to exceed 40% of the total amount of deferred underwriting commissions held in the Trust Account may be paid at the sole discretion of the
Company to parties who may or may not participate in the Public Offering (but who are members of FINRA) that assist us in consummating a business combination. The election to make such payments to such parties will be solely at the discretion of our
management team. 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.
On December 4, 2020, we entered into an agreement with a service provider, pursuant to which the service provider will serve as the
placement agent for us in connection with a proposed private placement (the “Proposed Transaction”) of our equity or equity-linked securities (the “Equity Securities”). We agreed to pay the service provider a cash fee of equal to
50% of 3.5% of the gross proceeds of the total fair market of the Equity Securities sold in the Proposed Transaction subject to a minimum fee of $1,000,000 and reimbursable expenses not to exceed $50,000 without our prior written consent.
On December 4, 2020, we entered into an agreement with a service provider, pursuant to which the service provider will serve as media
relations, due diligence, and transaction preparation in connection with a proposed business combination. We agreed to pay the service provider a cash fee of (i) $15,000 per month until the consummation of a business combination, (ii) $200,000
payable only upon consummation of a business combination and (iii) a discretionary performance bonus in the amount of $200,000 upon the consummation of the business combination, at our sole discretion.
On December 5, 2020, we entered into an agreement with a service provider, pursuant to which the service provider will serve as the co-placement agent for us in connection with a proposed private placement (the “Transaction”) of our equity or equity-linked securities (the “Securities”). We agreed to pay the service provider a
cash fee of $2,800,000, payable at the closing of the business combination and a cash fee equal to 50% of 3.5% of the gross proceeds of the total Securities sold in the Transaction subject to a minimum fee of $2,200,000.
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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:
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 sheet.
Net Income (Loss) Per Ordinary 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.
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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Following the consummation of our Public Offering, the net proceeds of our Public Offering, including amounts in the Trust Account, have been
invested in U.S. government treasury bills, notes or bonds with a maturity of 185 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no
associated material exposure to interest rate risk.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Reference is made to pages F-1 through F-16 comprising a
portion of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
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Disclosure controls are procedures that are designed with the objective of ensuring that
information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also
designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required
disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officer”), the effectiveness of our disclosure controls and procedures as of December 31,
2020, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officer concluded that, as of December 31, 2020, our disclosure controls and procedures were effective.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and
procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect
the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide
absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can
be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Management’s Report on Internal
Controls Over Financial Reporting
This Annual Report on Form 10-K does not include a report of
management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Directors and Executive Officers
Our directors and executive officers are as follows:
Name Age Position
Joseph S. Sambuco 59 Chairman of the Board of Directors
Remy W. Trafelet 50 Chief Executive Officer and Director
James C. Flores 61 Director
Emil W. Henry, Jr. 59 Director
Manny De Zárraga 60 Director
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Joseph S. Sambuco has served as our Chairman since our inception.
Mr. Sambuco is the Chairman and Chief Executive Officer of Colonnade Properties LLC (“Colonnade”) which he founded along with Prudential Real Estate Investors in 2000. Under his leadership, he successfully built Colonnade into a
fully-integrated and diversified real estate investment, finance, operating and asset management company. Mr. Sambuco is also a director and President of St. Giles Hotels, USA, Inc., a hotel investment and operating company. Prior to forming
Colonnade, Mr. Sambuco was a Managing Director and the Chief Financial Officer of the Taylor Simpson Group, a real estate investment and asset management firm that acquired LF Property Investment Company, the real estate division of Lazard
Frères & Co LLC, where he began his career in 1982. Mr. Sambuco was actively involved Lazard’s financial advisory practice where he was responsible for advising clients about the real estate components for their mergers and
acquisitions, restructurings, and financings. Mr. Sambuco holds a B.A. in accounting from Rutgers University, which he graduated from in 1982. Mr. Sambuco serves on the Board of Hazeltree Fund Services and the Palm Beach Civic Association.
He is a former Trustee of the Palm Beach Day Academy and recently served on the board of Alico, Inc., an agricultural business. Mr. Sambuco is well qualified to sit on our board due to his comprehensive operational, capital markets and
investment management experience in the real estate sector. His widespread network of relationships in the real estate industry will significantly enhance the company’s deal sourcing efforts.
Remy W. Trafelet has served as our Chief Executive Officer and a director since our inception. Mr. Trafelet is
President and Chief Executive Officer of Trafelet & Company, LLC, a private investment firm that invests across a broad range of asset classes and industries, including financial services, energy, technology and agriculture.
Mr. Trafelet began his career in 1992 as an analyst at Fidelity Management and Research Company where he became a portfolio manager at age 25. In 2000, Mr. Trafelet formed Trafelet Delta Funds, which managed several long/short equity
portfolios. The firm grew to over $5.5 billion in assets under management with offices in New York and London. In 2009, Mr. Trafelet spun off the firm’s London operations to Habrok Capital Management, a global long/short equity hedge
fund. Mr. Trafelet is the Founder and Chairman of Hazeltree Fund Services, a FinTech company providing treasury solutions to more than 200 financial institutions with over $2.0 trillion of assets under advisory. From 2016 to 2019,
Mr. Trafelet served as President and Chief Executive Officer of Alico Inc. (NASDAQ: ALCO), an agribusiness holding company. During his tenure, he implemented a corporate restructuring and operating efficiency program, which improved the
company’s return on capital employed. Mr. Trafelet is a Trustee and Chairman of the Investment Committee for the Boys’ Club of New York and also serves as a member of the board for the Children’s Scholarship Fund. He is a former
Trustee and Chairman of the Investment Committee of Phillips Exeter Academy. Mr. Trafelet is also a former Trustee for The Eaglebrook School, and a board member of the Atlantic Salmon Federation. Mr. Trafelet graduated from Phillips Exeter
Academy and earned an A.B. from Dartmouth College, where he graduated with honors and was named a Presidential Scholar. Mr. Trafelet is a Chartered Financial Analyst. Mr. Trafelet is well qualified to sit on our board due to his extensive
and successful capital markets, investment and valuation experience specifically in the energy sector. His familiarity of running a publicly traded agricultural company and his operational knowledge will provide the company with highly valuable
experiences and perspectives as it seeks to identify an attractive business target.
James C. Flores has served on our
board of directors since the completion of our initial public offering. Mr. Flores has served as Chairman, Chief Executive Officer, and President of Sable Permian Resources since May of 2017. Sable engages in the acquisition, consolidation and
optimization of oil and gas upstream opportunities in the Permian Basin in West Texas. Since 1982, Mr. Flores has had an extensive career in the oil and gas industry in the roles of Chairman, Chief Executive Officer, and President of one
private and four public oil & gas exploration and production companies listed on the New York Stock Exchange. Initially, in 1994, he led Flores & Rucks, Inc. (the NYSE:FNR) and then Ocean Energy Inc. (the NYSE:OEI) in 1997. In
2001, he became the Chairman and CEO of Plains Resources Inc. (the NYSE:PLX) where under his leadership the exploration and production assets of PLX were spun off into Plains Exploration & Production Company (the NYSE:PXP). Mr. Flores
served in the capacity of PXP’s Chairman, CEO, and President where, after 10-plus years of substantial growth, PXP was acquired by Freeport-McMoRan Copper & Gold Inc. (the NYSE:FCX) in
May of 2013 where Mr. Flores served as Vice Chairman of FCX until November 2015. Prior to Sable Permian Resources, Mr. Flores served as Chairman and CEO of Freeport-McMoRan Oil & Gas, a wholly owned subsidiary of Freeport-McMoRan
Inc., the world’s largest publicly traded copper producer. Mr. Flores graduated from Louisiana State University with B.S. degrees in corporate finance and petroleum land management. He is a member of the National Petroleum Council, serves
as Trustee for the Baylor College of Medicine and is a Director for the Waterfowl Research Foundation. He was inducted into the All-American Wildcatters in 1999 and is a member of the World
Presidents’ Organization. He was recognized as the Executive of the Year in 2004 in Oil and Gas Investor magazine. In addition, Mr. Flores and his wife, Cherie, have endowed the LSU Flores MBA program. The Flores are dedicated supporters
to many philanthropic causes and organizations focusing on Medical, Arts, Academic, Service and Conservation efforts ranging locally from the United Way to national support of the Nature Conservancy and Ducks Unlimited. Mr. Flores is well
qualified to serve on our board due to his extensive investment, operational, and board experience in the oil and gas industry.
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Emil W. Henry, Jr. has served on our board of directors since the
completion of our initial public offering. Emil is the Founder, Chief Executive Officer and a Managing Director at Tiger Infrastructure Partners. Emil previously served as Global Head of Lehman Brothers’ infrastructure private equity business.
From 1990 to 2005, he was a Partner and Managing Director with Gleacher Partners, where he served as Chairman of Asset Management and led the firm’s investment activities. In 2005, Emil was appointed by the President and confirmed by the United
States Senate, unanimously, as Assistant Secretary of the Treasury. In this role, he served as attaché to the President’s Working Group on Financial Markets, oversaw the Office of Critical Infrastructure Protection, led the
Treasury’s efforts to establish emergency response protocols in the event of a financial crisis and was key advisor to two Treasury secretaries. Emil outlined publicly and prior to the financial crisis how a systemic crisis might unfold driven
by Fannie Mae’s and Freddie Mac’s concentrated holdings of sub-prime mortgages. Emil was awarded the Alexander Hamilton Award, the highest honor the Treasury can bestow upon a public
official. Earlier in his career, he was a member of Morgan Stanley’s private equity group. Emil currently serves on the boards of Easterly Government Properties, StoneCastle Financial, and numerous boards of Tiger Infrastructure portfolio
companies. Emil has represented the U.S. Treasury on the boards of the Securities Investor Protection Corporation (SIPC), and the National Gallery of Art and is a member of the Council on Foreign Relations. He is a frequent public speaker and author
on matters of public policy. He holds an MBA from Harvard Business School and a B.A. in Economics, cum laude, from Yale University. Mr. Henry is well qualified to serve on our board due to his extensive capital markets, investment and board
experience.
Manny De Zárraga has served on our board of directors since the completion of our initial public
offering. Manny is an executive managing director and member of JLL Capital Markets, Americas’ Executive Committee. He joined JLL as part of the HFF acquisition and serves as co-head of the
firm’s National Investment Advisory Group. Manny has more than 28 years of experience in real estate investment banking and specializes in the execution and expansion of the firm’s capital markets platform through the representation of
institutional and major global family offices owners of institutional-grade commercial real estate properties. He also oversees the firm’s Special Assets Group and is an active member of the Global Capital Team, with a special focus on the
Latin American markets. Prior to joining HFF in 2002, Manny was a principal and managing director at Sonnenblick-Goldman Company for 14 years and served on the firm’s operating committee. During his time there, he was involved in real estate
capital transactions made up of all major property types. He also serves since 1994 as the U.S. investment advisor to Grupo Multiplan and previously served as the privatization advisor to the government of Puerto Rico for the sale of
government-owned hotels. Prior to Sonnenblick-Goldman, Manny was vice president of the Trade Finance Corporation, where he worked in the development of a mortgage- based securitization program in conjunction with Salomon Brothers. Mr. De
Zárraga is well qualified to serve on our board due to his extensive advisory and capital markets experience in the real estate industry.
Number, Terms of Office and Appointment of Directors and Officers
Our board of directors consists of five members and is divided into three classes with only one class of directors being elected in each year,
and with each class (except for those directors appointed prior to our first annual meeting of shareholders) serving a three-year term. In accordance with NYSE corporate governance requirements, we are not required to hold an annual meeting until
one year after our first fiscal year end following our listing on NYSE. The term of office of the first class of directors, consisting of Mr. Henry, will expire at our first annual meeting of shareholders. The term of office of the second class
of directors, consisting of Messrs. Flores and De Zárraga, will expire at the second annual meeting of shareholders. The term of office of the third class of directors, consisting of Messrs. Sambuco and Trafelet, will expire at the third
annual meeting of shareholders.
Our officers are appointed by the board of directors and serve at the discretion of the board of
directors, rather than for specific terms of office. Our board of directors is authorized to appoint officers as it deems appropriate pursuant to our amended and restated memorandum and articles of association.
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Director Independence
The rules of the NYSE require that a majority of our board of directors be independent within one year of our Public Offering. An
“independent director” is defined generally as a person who, in the opinion of the Company’s board of directors, has no material relationship with the listed company (either directly or as a partner, shareholder or officer of an
organization that has a relationship with the Company). Our board of directors has determined that each of Messrs. Flores, Henry and De Zárraga is an “independent director” as defined in the NYSE listing standards and applicable SEC
rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Board Committees
Audit Committee
Our board of
directors has established an audit committee of the board of directors. Messrs. Flores, Henry and De Zárraga serve as the members of the audit committee, and Mr. De Zárraga chairs the audit committee. All members of our audit
committee are independent of and unaffiliated with our Sponsor and our underwriters.
Each member of the audit committee is financially
literate and our board of directors has determined that Mr. De Zárraga qualifies as an “audit committee financial expert” as defined in applicable SEC rules and has accounting or related financial management expertise.
We have adopted an audit committee charter, which details the principal functions of the audit committee, including:
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Nominating and Corporate Governance Committee
We have a nominating and corporate governance committee comprised of Messrs. Flores, Henry and De Zárraga. Mr. Henry serves as
chair of the nominating and corporate governance committee. All members of our nominating and corporate governance committee are independent of and unaffiliated with our Sponsor and our underwriters.
We have adopted a nominating and corporate governance committee charter, which details the purpose and responsibilities of the nominating and
corporate governance committee, including:
The charter provides that the nominating and corporate governance committee may, in its sole discretion,
retain or obtain the advice of, and terminate, any search firm to be used to identify director candidates, and will be directly responsible for approving the search firm’s fees and other retention terms.
We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess.
In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and
the ability to represent the best interests of our shareholders. Prior to our initial business combination, holders of our public shares will not have the right to recommend director candidates for nomination to our board of directors.
Compensation Committee
Our board
of directors has established a compensation committee of the board of directors. Messrs. Flores, Henry and De Zárraga serve as the members of the compensation committee, and Mr. Flores chairs the compensation committee. All members of
our compensation committee are independent of and unaffiliated with our Sponsor and our underwriters.
We have adopted a compensation
committee charter, which details the principal functions of the compensation committee, including:
• reviewing our executive compensation policies and plans;
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Notwithstanding the foregoing, as indicated above, other than the payment of customary fees we may elect to make to
members of our board of directors for director service and payment to an affiliate of our Sponsor of $10,000 per month, for up to 24 months, for office space, utilities and secretarial and administrative support and reimbursement of expenses, no
compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing shareholders, officers, directors or any of their respective affiliates, prior to, or for any services they render in order to
effectuate the consummation of an initial business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any
compensation arrangements to be entered into in connection with such initial business combination.
The charter provides that the
compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of
any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors
required by NYSE and the SEC.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics applicable to our directors, officers and employees. We have filed a copy of our Code of
Business Conduct and Ethics as an exhibit to our registration statement in connection with the Public Offering. You are able to review this document by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of
the Code of Business Conduct and Ethics and the charters of the committees of our board of directors will be provided without charge upon request from us in writing at 1400 Centrepark Blvd, Ste 810, West Palm Beach, FL 33401 or by telephone at (561)
712-7860. If we make any amendments to our Code of Business Conduct and Ethics other than technical, administrative or other non-substantive amendments, or grant any
waiver, including any implicit waiver, from a provision of the Code of Business Conduct and Ethics applicable to our principal executive officer, principal financial officer principal accounting officer or controller or persons performing similar
functions requiring disclosure under applicable SEC or NYSE rules, we will disclose the nature of such amendment or waiver on our website.
Delinquent
Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s executive officers, directors, and
persons who beneficially own more than ten percent of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of the Company’s common stock. Such
officers, directors, and persons are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms that they file with the SEC.
Based solely on a review of the copies of such forms that were received by the Company, except for a Form 4 filed on October 26, 2020 for
the Sponsor and Mr. Sambuco to report one transaction, the Company is not aware of any failures to file reports or report transactions in a timely manner during the year ended December 31, 2020.
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ITEM 11. EXECUTIVE COMPENSATION.
None of our officers or directors have received any cash compensation for services rendered to us. We will pay our Sponsor $10,000 per month
for office space, utilities, secretarial and administrative support services provided to members of our management team. In addition, our Sponsor, officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business
combinations. Our audit committee will review on a quarterly basis all payments that were made to our Sponsor, officers or directors, or our or their affiliates. Any such payments prior to an initial business combination will be made from funds held
outside the Trust Account. Other than quarterly audit committee review of such reimbursements, we do not expect to have any additional controls in place governing our reimbursement payments to our directors and officers for their out-of-pocket expenses incurred in connection with our activities on our behalf in connection with identifying and consummating an initial business combination. Other than
these payments and reimbursements, no compensation of any kind, including finder’s and consulting fees, will be paid by the Company to our Sponsor, officers and directors, or any of their respective affiliates, prior to completion of our
initial business combination.
After the completion of our initial business combination, directors or members of our management team who
remain with us may be paid consulting or management fees from the combined company. All of these fees will be fully disclosed to shareholders, to the extent then known, in the proxy solicitation materials or tender offer materials furnished to our
shareholders in connection with a proposed business combination. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such
compensation will be known at the time of the proposed business combination, because the directors of the post-combination business will be responsible for determining officer and director compensation. Any compensation to be paid to our officers
will be determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board of directors.
We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of
our initial business combination, although it is possible that some or all of our officers and directors may negotiate employment or consulting arrangements to remain with us after our initial business combination. The existence or terms of any such
employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the
consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our officers and directors that provide for benefits upon
termination of employment.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
SHAREHOLDER MATTERS.
We have no compensation plans under which equity securities are authorized for issuance.
The following table sets forth information regarding the beneficial ownership of our ordinary shares as of January 15, 2021, by:
• each of our officers and directors; and
• all of our officers and directors as a group.
The following table is based on 25,000,000 ordinary shares outstanding as of March 9, 2021, of which 20,000,000 were Class A shares
and 5,000,000 were Class B shares. Unless otherwise indicated, it is believed that all persons named in the table below have sole voting and investment power with respect to all ordinary shares beneficially owned by them.
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Joseph S. Sambuco(3) — —
Remy W. Trafelet(3) — —
James C. Flores(3) — —
mil W. Henry, Jr. (3) — —
Manny De Zárraga(3) — —
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Founder Shares
On June 30, 2020, the
Sponsor paid $25,000, or approximately $0.004 per share, to cover certain of our offering costs relating to the Public Offering in exchange for 5,750,000 Founder Shares. The Sponsor surrendered 750,000 Founder Shares to the Company for no
consideration in connection with the underwriters’ election to not exercise the overallotment option relating to the Public Offering at the end of the 45-day option period on October 5, 2020.
In connection with the Business Combination, each of the 5,000,000 Founder Shares will convert on a one-for-one basis into one share of Ouster PubCo common stock.
Private Placement Warrants
The Sponsor purchased an aggregate of 6,000,000 private placement warrants, each exercisable to purchase one Class A ordinary share at
$11.50 per share, at a price of $1.00 per warrant, or $6,000,000 in the aggregate, in connection with the Public Offering. The private placement warrants are identical to the warrants sold in the Public Offering except that the private placement
warrants, so long as they are held by the Sponsor or its permitted transferees, (i) are not be redeemable by the Company, (ii) may not (including the Class A ordinary shares issuable upon exercise of these warrants), subject to
certain limited exceptions, be transferred, assigned or sold by the holders until 30 days after the completion of our initial business combination, (iii) may be exercised by the holders on a cashless basis and (iv) are entitled to
registration rights.
In connection with the Business Combination, each of the 6,000,000 private placement warrants will convert
automatically into one warrant to purchase one share of Ouster PubCo common stock pursuant to the warrant agreement between the Company and Continental Stock Transfer & Trust Company, dated as of August 20, 2020.
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Subscription Agreements
Concurrently with the execution of the Merger Agreement, we entered into subscription agreements with certain institutional and accredited
investors (the “PIPE Investors”) and with Colonnade WPB LLC, an affiliate of the Sponsor (the “Sponsor Related PIPE Investor”), pursuant to which the PIPE Investors and Sponsor Related PIPE Investor have subscribed for shares of
Ouster PubCo common stock (the “PIPE Investment”). The Sponsor Related PIPE Investor is expected to fund $11,750,000 of the PIPE Investment, for which it will receive 1,175,000 shares of Ouster PubCo common stock. The Sponsor Related PIPE
Investor is controlled by our Chairman Joseph S. Sambuco.
The PIPE Investment will be consummated substantially concurrently with the
closing of the Business Combination.
Administrative Services Agreement
We currently utilize office space at 1400 Centrepark Boulevard, Suite 810, West Palm Beach, FL 33401 from the Sponsor as our executive offices.
Commencing upon consummation of the Public Offering, we pay the Sponsor $10,000 per month for office space, utilities, secretarial and administrative support services provided to members of our management team. Upon completion of our initial
business combination or our liquidation, we will cease paying these monthly fees.
Related Party Note and Advances
On June 30, 2020, the Sponsor agreed to loan the Company up to an aggregate amount of $300,000 to be used, in part, for transaction costs
incurred in connection with the Public Offering pursuant to an unsecured promissory note. The promissory note was non-interest bearing and payable on the earlier of December 31, 2020 and the completion of
the Public Offering. The outstanding balance of $126,005 under the promissory note was paid in full in connection with the closing of the Public Offering.
Our officers and directors are entitled to reimbursement for any
out-of-pocket expenses related to identifying, investigating, negotiating and completing an initial business combination. Our audit committee reviews on a quarterly
basis all payments that were made to the Sponsor, our officers, directors or its or their affiliates.
In addition, in order to finance
transaction costs in connection with an intended initial business combination, the Sponsor or an affiliate of the Sponsor or certain of our officers and directors may, but are not obligated to, loan the Company funds as may be required on a non-interest basis. If we complete the business combination, we would repay such loaned amounts. In the event that the 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 private placement warrants at a price of $1.00 per warrant at the option
of the lender. Such warrants would be identical to the private placement warrants. Except as set forth above, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans.
Registration Rights
The holders of the
Founder Shares, private placement warrants and the Class A ordinary shares underlying such private placement warrants and private placement warrants that may be issued upon conversion of working capital loans have registration rights to require
us to register a sale of any of our securities held by them pursuant to a registration rights agreement. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In
addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial business combination. We will bear the expenses incurred in connection with the
filing of any such registration statements.
In connection with the Business Combination, the registration rights agreement will be
amended and restated.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The following is a summary of fees paid or to be paid to Marcum LLP, or Marcum, for services rendered.
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Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our
year-end financial statements and services that are normally provided by Marcum in connection with regulatory filings. The aggregate fees billed by Marcum for professional services rendered for the audit of
our annual consolidated financial statements, review of the financial information included in our Forms 10-Q for the respective periods and other required filings with the SEC for the period from June 4,
2020 (inception) through December 31, 2020 totaled approximately $76,000. The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings.
Audit-Related Fees. Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the
audit or review of our consolidated financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and
reporting standards. We did not pay Marcum for consultations concerning financial accounting and reporting standards for the period from June 4, 2020 (inception) through December 31, 2020.
Tax Fees. We did not pay Marcum for tax planning and tax advice for the period from June 4, 2020 (inception) through December 31, 2020.
All Other Fees. We did not pay Marcum for other services for the period from June 4, 2020 (inception) through December 31, 2020.
Pre-Approval Policy
Our audit committee was formed upon the consummation of our Public Offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a
going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors,
including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the
audit).
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) The following documents are filed as part of this report:
(1) Financial Statements
Page
Report of Independent Registered Public Accounting Firm F-2
Consolidated Balance Sheet F-3
Consolidated Statement of Operations F-4
Consolidated Statement of Changes in Shareholders’ Equity F-5
Consolidated Statement of Cash Flows F-6
Notes to Consolidated Financial Statements F-7
(2) Financial Statement Schedule
None.
(3) Exhibits
We hereby file as part of this report the exhibits listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference
can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Section of the SEC, 100 F Street,
N.E., Washington, D.C. 20549, at prescribed rates or on the SEC website at www.sec.gov.
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COLONNADE ACQUISITION CORP.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PageNo.
Report of Independent Registered Public Accounting Firm F-2
Financial Statements:
Consolidated Balance Sheet as of December 31, 2020 F-3
Notes to Consolidated Financial Statements F-7
F-1
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Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Colonnade
Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Colonnade Acquisition Corp. (the “Company”) as of December 31, 2020,
the related consolidated statements of operations, changes in shareholders’ equity and cash flows for the period from June 4, 2020 (inception) through December 31, 2020, and the related notes (collectively referred to as the “financial
statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the period from June 4,
2020 (inception) through December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Explanatory
Paragraph — Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will
continue as a going concern. As more fully described in Note 1 to the financial statements, the Company’s business plan is dependent on the completion of a business combination and the Company’s cash and working capital as of December 31,
2020 are not sufficient to complete its planned activities, has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise
substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement
of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our
audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our
opinion.
/S/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2020.
Houston, Texas
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COLONNADE ACQUISITION CORP.
BALANCE SHEET
DECEMBER 31, 2020
ASSETS
Current Assets
Cash and marketable securities held in Trust Account 200,061,054
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accrued offering costs 100
Deferred underwriting fee payable 7,000,000
Commitments
Shareholders’ Equity
Additional paid-in capital 7,701,942
Total Shareholders’ Equity 5,000,009
Total Liabilities and Shareholders’ Equity $ 201,073,149
The accompanying notes are an integral part of the consolidated financial statements.
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COLONNADE ACQUISITION CORP.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JUNE 4, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
Formation and operational costs $ 2,763,620
Other income:
Interest earned on marketable securities held in Trust Account 57,914
Unrealized gain on marketable securities held in Trust Account 3,140
Basic and diluted weighted average shares outstanding, ordinary shares 6,150,329
Basic and diluted net loss per share, ordinary shares $ (0.45 )
The accompanying notes are an integral part of the consolidated financial statements.
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COLONNADE ACQUISITION CORP.
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE PERIOD FROM JUNE 4, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
Shares Amount Shares Amount Capital Deficit Equity
Balance – June 4, 2020 (inception) — $ — — $ — $ — $ — $ —
Forfeiture of Founder Shares — — (750,000 ) (75 ) 75 — —
The accompanying notes are an integral part of the consolidated financial statements.
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COLONNADE ACQUISITION CORP.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JUNE 4, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
Cash Flows from Operating Activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Interest earned on marketable securities held in Trust Account (57,914 )
Unrealized gain on marketable securities held in Trust Account (3,140 )
Changes in operating assets and liabilities:
Net cash used in operating activities (729,512 )
Cash Flows from Investing Activities:
Investment of cash in Trust Account (200,000,000 )
Net cash used in investing activities (200,000,000 )
Cash Flows from Financing Activities:
Proceeds from sale of Units, net of underwriting discounts paid 196,000,000
Proceeds from sale of Private Placement Warrants 6,000,000
Proceeds from promissory note – related party 126,005
Repayment of promissory note – related party (126,005 )
Payment of offering costs (572,531 )
Net cash provided by financing activities 201,427,469
Cash – Beginning —
Non-Cash Investing and Financing Activities:
Deferred underwriting fee payable 7,000,000
Offering costs included in accrued offering costs $ 100
The accompanying notes are an integral part of the consolidated financial statements.
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COLONNADE ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Colonnade Acquisition Corp. (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on June 4, 2020. The
Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (“Business Combination”).
Although the Company is not limited to a particular industry or geographic region for purposes of completing a Business Combination, the Company intends to
focus on industries that complements the Company’s management team’s expertise and network of relationships in the natural resources, energy, real estate and agricultural industries. The Company is an early stage and emerging growth
company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
The Company has one
subsidiary, Beam Merger Sub, Inc. (formerly known as C-Sweet Sub, Inc,), a direct wholly owned subsidiary of the Company incorporated in Delaware on December 15, 2020 (“Merger Sub”).
As of December 31, 2020, the Company had not commenced any operations. All activity for the period from June 4, 2020 (inception) through
December 31, 2020 relates to the Company’s formation, the initial public offering (“Initial Public Offering”), which is described below, identifying a target company for a Business Combination, and activities in connection with
the proposed acquisition of Ouster, Inc., a Delaware corporation (“Ouster”) (see Note 6). The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The
registration statement for the Company’s Initial Public Offering became effective on August 20, 2020. On August 25, 2020, the Company consummated the Initial Public Offering of 20,000,000 units (the “Units” and, with respect
to the Class A ordinary shares included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $200,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 6,000,000 warrants (the “Private Placement
Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to Colonnade Sponsor LLC (the “Sponsor”), generating gross proceeds of $6,000,000, which is described in Note 4.
Transaction costs amounted to $11,597,631, consisting of $4,000,000 of underwriting fees, $7,000,000 of deferred underwriting fees and $597,631 of other
offering costs.
Following the closing of the Initial Public Offering on August 25, 2020, an amount of $200,000,000 ($10.00 per Unit) from the net
proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) invested in U.S. government securities, within the meaning set forth in
Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund meeting
certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the
funds in the Trust Account to the Company’s shareholders, as described below.
The Company’s management has broad discretion with respect to the
specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward completing a Business Combination. The
Company must complete its initial Business Combination with one or more target businesses that together have a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the amount of any deferred underwriting
commissions held in the Trust Account) at the time of the agreement to enter into a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the issued and
outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that
the Company will be able to successfully effect a Business Combination.
The Company will provide its shareholders with the opportunity to redeem all or a
portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the
Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account
(initially $10.00 per share), calculated as of two business days prior to the completion of a Business Combination, including any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its
tax obligations. There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
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If the Company seeks shareholder approval, the Company will complete a Business Combination only if it
receives an ordinary resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote of a majority of the shareholders who vote at a general meeting of the Company. If a shareholder vote is not required
under applicable law or stock exchange listing requirements and the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association,
conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially the same information as would be included in a proxy statement with the
SEC prior to completing a Business Combination. If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased in or
after the Initial Public Offering in favor of approving a Business Combination and to waive its redemption rights with respect to any such shares in connection with a shareholder vote to approve a Business Combination. However, in no event will the
Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its Public Shares and the related Business Combination, and instead
may search for an alternate Business Combination. Additionally, each public shareholder may elect to redeem its Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against a proposed Business Combination.
Notwithstanding the foregoing, if the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the
tender offer rules, the Company’s Amended and Restated Memorandum and Articles of Association provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in
concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 20% of the
Public Shares without the Company’s prior written consent.
The Sponsor has agreed (a) to waive its redemption rights with respect to any
Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Memorandum and Articles of Association (i) to modify the substance or
timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to
shareholders’ rights or pre-initial business combination activity, unless the Company provides the public shareholders with the opportunity to redeem their Public Shares in conjunction with any such
amendment and (iii) to waive its rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination.
The Company will have until August 25, 2022 (the “Combination Period”) to complete a Business Combination. If the Company is unable to complete
a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than 10 business days thereafter, redeem 100% of the
outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned (less taxes payable and up to $100,000 of
interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation
distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the Company’s board of directors, dissolve and liquidate, subject in each case to its
obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
The Sponsor has agreed to waive its
liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares
will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission
(see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be
available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit
($10.00).
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The Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a third
party for services rendered or products sold to the Company, or by a prospective target business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce
the amount of funds in the Trust Account to below the lesser of (1) $10.00 per Public Share and (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00
per Public Share due to reductions in the value of trust assets, less taxes payable. This liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the
Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities
Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the
possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent public accountants), prospective target businesses or
other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Risks and Uncertainties
Management continues to
evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its
operations and/or search for a target company, the specific impact is not readily determinable as of the date of these consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Liquidity and Going Concern
As of December 31, 2020, the Company had $697,957 in its operating bank accounts, $200,061,054 in securities held in the Trust Account to be used for a
Business Combination or to repurchase or redeem its ordinary shares in connection therewith and working capital deficit of $1,336,251. As of December 31, 2020, approximately $61,000 of the amount on deposit in the Trust Account represented
interest income, which is available to pay the Company’s tax obligations.
Until the consummation of a Business Combination, the Company will be
using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and
structuring, negotiating and consummating the Business Combination.
The Company will need to raise additional capital through loans or additional
investments from its Sponsor, stockholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they
deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. 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 a potential transaction, 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. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through August 25, 2022, the deadline to complete a
Business Combination pursuant to the Company’s Amended and Restated Certificate of Incorporation (unless otherwise amended by stockholders). 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 the Company be unable to continue as a going concern.
NOTE 2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America
(“GAAP”) and pursuant to the rules and regulations of the SEC.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its majority owned subsidiary where the Company has the ability to
exercise control. All significant intercompany balances and transactions have been eliminated in consolidation. Activities in relation to the non-controlling interest are not considered to be significant and
are, therefore, not presented in the accompanying consolidated financial statements.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business
Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to,
not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from
the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
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