References to "we", "us", "our" or the "Company" are to RMG Acquisition
Corporation II, except where the context requires otherwise. The following
discussion should be read in conjunction with our condensed financial statements
and related notes thereto included elsewhere in this report.
Cautionary Note Regarding Forward-Looking Statements
§ This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act that
are not historical facts, and involve risks and uncertainties that could cause
actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this
Form 10-Q including, without limitation, statements in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding the Company's financial position, business strategy and the plans
and objectives of management for future operations, are forward-looking
statements. Words such as "anticipate," "believe," "continue," "could,"
"estimate," "expect," "intends," "may," "might," "plan," "possible,"
"potential," "predict," "project," "should," "would" and variations thereof
and similar words and expressions are intended to identify such
forward-looking statements. Such forward-looking statements relate to future
events or future performance, but reflect management's current beliefs, based
on information currently available. A number of factors could cause actual
events, performance or results to differ materially from the events,
performance and results discussed in the forward-looking statements. For
information identifying important factors that could cause actual results to
differ materially from those anticipated in the forward-looking statements,
please refer to the Risk Factors section of the Company's final prospectus for
its Initial Public Offering filed with the SEC on December 11, 2020. The
Company's securities filings can be accessed on the EDGAR section of the SEC's
website at www.sec.gov. Except as expressly required by applicable securities
law, the Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future
events or otherwise.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company
on July 28, 2020 (date of inception) for the purpose of effecting a merger,
share exchange, asset acquisition, share purchase, reorganization or similar
business combination with one or more businesses that the Company has not yet
identified (the "initial Business Combination"). We are an emerging growth
company and, as such, we are subject to all of the risks associated with
emerging growth companies. Our sponsor is RMG Sponsor II, LLC, a Delaware
limited liability company (the "Sponsor").
Our registration statement for our initial public offering (the "Initial Public
Offering") was declared effective on December 9, 2020. On December 14, 2020, we
consummated our Initial Public Offering of 34,500,000 units (the "Units" and,
with respect to the Class A ordinary shares included in the Units being offered,
the "Public Shares"), including 4,500,000 additional Units to cover
over-allotments (the "Over-Allotment Units"), at $10.00 per Unit, generating
gross proceeds of $345.0 million, and incurring offering costs of approximately
$19.7 million, inclusive of approximately $12.1 million in deferred underwriting
commissions and $400,000 in deferred legal fees.
Simultaneously with the closing of our Initial Public Offering, we consummated
the private placement ("Private Placement") of 7,026,807 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants")
at a price of $1.50 per Private Placement Warrant to our Sponsor, generating
proceeds of approximately $10.5 million.
Upon the closing of our Initial Public Offering and the Private Placement,
$345.0 million ($10.00 per Unit) of the net proceeds of our Initial Public
Offering and certain of the proceeds of the Private Placement was held in
a trust account ("Trust Account") with Continental Stock Transfer & Trust
Company acting as trustee and invested in United States government treasury
bills with a maturity of 185 days or less or in money market funds investing
solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under
the Investment Company Act 1940, as amended, or the Investment Company Act, as
determined by us, until the earlier of: (i) the completion of a Business
Combination and (ii) the distribution of the Trust Account as described below.
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If we are unable to complete a Business Combination within 24 months from the
closing of our Initial Public Offering, or December 14, 2022 (the "Combination
Period"), we will (i) cease all operations except for the purpose of winding up;
(2) as promptly as reasonably possible but not more than 10 business days
thereafter, redeem the Public Shares, at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the Trust Account, including
interest (less up to $100,000 of interest to pay dissolution expenses and which
interest shall be net of taxes payable, expenses relating to the administration
of the trust account and limited withdrawals for working capital), divided by
the number of then issued and outstanding Public Shares, which redemption will
completely extinguish Public Shareholders' rights as shareholders (including the
right to receive further liquidating distributions, if any); and (3) as promptly
as reasonably possible following such redemption, subject to the approval of the
remaining shareholders and the board of directors, liquidate and dissolve,
subject in each case to our obligations under Cayman Islands law to provide for
claims of creditors and the requirements of other applicable law.
Results of Operations
Our entire activity since inception through September 30, 2020 related to our
formation and the preparation for our Initial Public Offering. We expect to
incur increased 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 search for, and completing a Business
Combination..
For the period from July 28, 2020 (inception) through September 30, 2020, we had
a net loss of approximately $19,100, which consists solely of general and
administrative expenses.
Liquidity and Capital Resources
Our liquidity needs prior to the consummation of our Initial Public Offering
were satisfied through the payment of $25,000 by our Sponsor to cover certain
expenses on behalf of us in exchange for issuance of Founders Shares, and loan
proceeds from our Sponsor of approximately $151,000 under the Note. We repaid
the Note in full on December 15, 2020. Subsequent to the consummation of our
Initial Public Offering, our liquidity needs have been satisfied through the net
proceeds from the consummation of our Initial Public Offering and our Private
Placement held outside of the Trust Account.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity to meet its needs through the earlier of the
consummation of a Business Combination or one year from this filing. Over this
time period, we will be using the funds held outside of the Trust Account for
paying existing accounts payable, identifying and evaluating prospective initial
Business Combination candidates, performing due diligence on prospective target
businesses, paying for travel expenditures, selecting the target business to
merge with or acquire, and structuring, negotiating and consummating the
Business Combination.
In addition, in order to finance transaction costs in connection with a Business
Combination, our Sponsor, members of our founding team or any of their
affiliates may, but are not obligated to, loan us funds as may be required
("Working Capital Loans"). As of September 30, 2020, there were no amounts
outstanding under any Working Capital Loan.
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Related Party Transactions
Founder Shares
In July 2020, our Sponsor paid an aggregate of $25,000 to cover for certain
expenses on our behalf in exchange for issuance of 8,625,000 Class B ordinary
shares (the "Founder Shares"). On December 2, 2020, our Sponsor effected a
surrender of 2,875,000 Class B ordinary shares to us for no consideration. On
December 9, 2020, we effected a share split with respect to the Class B ordinary
shares, resulting in an aggregate of 8,625,000 Class B ordinary shares
outstanding. All shares and associated amounts have been retroactively restated
to reflect the share surrender and the share split. The holders of the Founder
Shares agreed to forfeit up to an aggregate of 1,125,000 Founder Shares, on a
pro rata basis, to the extent that the option to purchase additional units was
not exercised in full by the underwriters, so that the Founder Shares would
represent 20% of our issued and outstanding shares after our Initial Public
Offering. The underwriter exercised its over-allotment option in full on
December 14, 2020; thus, the 1,125,000 Founder Shares are no longer subject to
forfeiture.
Our Initial Shareholders agreed not to transfer, assign or sell any of their
Founder Shares until the earlier to occur of (i) one year after the completion
of our Initial Business Combination; and (ii) subsequent to our initial Business
Combination (x) if the last reported sale price of Class A ordinary shares
equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share
dividends, rights issuances, consolidations, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period
commencing at least 150 days after our initial Business Combination or (y) the
date on which we complete a liquidation, merger, amalgamation, share exchange,
reorganization or other similar transaction that results in all of the Public
Shareholders having the right to exchange their ordinary shares for cash,
securities or other property.
Related Party Reimbursements and Loans
Our Sponsor agreed to loan us up to $300,000 to be used for the payment of costs
related to our Initial Public Offering pursuant to a promissory note (the
"Note"). The Note is non-interest bearing, unsecured and due upon the closing of
our Initial Public Offering. As of September 30, 2020, we borrowed approximately
$151,000 under the Note. The Note was repaid in full on December 15, 2020.
In addition, in order to finance transaction costs in connection with a Business
Combination, our Sponsor, members of our founding team or any of our affiliates
may, but are not obligated to, loan us funds as may be required ("Working
Capital Loans"). If we complete a Business Combination, we would repay the
Working Capital Loans out of the proceeds of the Trust Account released to us.
Otherwise, the Working Capital Loans would be repaid only out of funds held
outside the Trust Account. In the event that a Business Combination does not
close, we may use a portion of proceeds held outside the Trust Account to repay
the Working Capital Loans but no proceeds held in the Trust Account would be
used to repay the Working Capital Loans. The Working Capital Loans would either
be repaid upon consummation of a Business Combination, without interest, or, at
the lenders' discretion, up to $1,500,000 of such Working Capital Loans may be
convertible into warrants of the post Business Combination entity at a price of
$1.50 per warrant. The warrants would be identical to the Private Placement
Warrants. Except for the foregoing, the terms of such Working Capital Loans, if
any, have not been determined and no written agreements exist with respect to
such loans. To date, we have no borrowings under the Working Capital Loans.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations;
Quarterly Results
As of September 30, 2020, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments
or contractual obligations other than obligations disclosed herein. No unaudited
quarterly operating data is included in this annual report, as we have conducted
no operations to date.
Contractual Obligations
Underwriting Agreement
We granted the underwriters a 45-day option from the date of this prospectus to
purchase up to 4,500,000 additional Units at our Initial Public Offering price
less the underwriting discounts and commissions. The underwriter exercised its
over-allotment option in full on December 14, 2020.
The underwriters were entitled to an underwriting discount of $0.20 per unit, or
$6.9 million in the aggregate, paid upon the closing of our Initial Public
Offering. In addition, $0.35 per unit, or approximately $12.1 million in the
aggregate will be payable to the underwriters for deferred underwriting
commissions. 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.
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Administrative Services Agreement
Commencing on the effective date of our Initial Public Offering, we agreed to
pay an affiliate of our Sponsor a total of $40,000 per month for office space,
administrative and support services (including salaries). Upon completion of our
Initial Business Combination or our liquidation, we will cease paying these
monthly fees.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States 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. The
Company has identified the following as its critical accounting policies:
Net Loss Per Ordinary Share
Net loss per share is computed by dividing net loss by the weighted average
number of ordinary shares outstanding during the period. At September 30, 2020,
the Company did not have any dilutive securities and other contracts that could,
potentially, be exercised or converted into ordinary shares and then share in
the earnings of the Company. As a result, diluted loss per share is the same as
basic loss per share for the period presented.
Deferred Offering Costs Associated with our Initial Public Offering
Deferred offering costs consist of legal, accounting, and other costs incurred
through the date of the financial statements that are directly related to our
Initial Public Offering and were charged to shareholders' equity upon the
completion of our Initial Public Offering in December 2020.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. Section 102(b)(1) of the JOBS Act exempts emerging
growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a
Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the
new or revised financial accounting standards. The JOBS Act provides that a
company can elect to opt out of the extended transition period and comply with
the requirements that apply to non-emerging growth companies but any such an
election to opt out is irrevocable. We have elected to irrevocably opt out of
such extended transition period, which means that when a standard is issued or
revised and it has different application dates for public or private companies,
we will adopt the new or revised standard at the time public companies adopt the
new or revised standard. This may make comparison of our financial statements
with another emerging growth company that has not opted out of using the
extended transition period difficult or impossible because of the potential
differences in accountant standards used.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company", we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection
Act, (iii) comply with any requirement that may be adopted by the PCAOB
regarding mandatory audit firm rotation or a supplement to the auditor's report
providing additional information about the audit and the financial statements
(auditor discussion and analysis), and (iv) disclose certain executive
compensation related items such as the correlation between executive
compensation and performance and comparisons of the CEO's compensation to median
employee compensation. These exemptions will apply for a period of five years
following the completion of our initial public offering or until we are no
longer an "emerging growth company," whichever is earlier.
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