You should read the following discussion and analysis of our financial condition
and results of operations in conjunction with our audited financial statements
and related notes included in Part II, Item 8 of this Annual Report on Form
10-K. This discussion and other parts of this report contain forward-looking
statements that involve risks and uncertainties, such as statements of our
plans, objectives, expectations and intentions. Our actual results could differ
materially from those discussed in these forward-looking statements. See
"Cautionary Note Regarding Forward-Looking Statements." Factors that could cause
or contribute to such differences include, but are not limited to, those
discussed in Item 1A "Risk Factors."
Overview
We are a blank check company incorporated in Delaware on August 31, 2020. We
were formed for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with
one or more businesses. We are not limited to a particular industry or sector
for purposes of consummating a business combination. We are an early stage and
emerging growth company and, as such, we are subject to all the risks associated
with early stage and emerging growth companies.
Our sponsor is 5:01 Acquisition LLC, an entity affiliated with two of our
directors. The registration statement for our IPO was declared effective
October 13, 2020. On October 16, 2020, we consummated the IPO of 8,000,000
shares of our Class A common stock (each, a public share and collectively, the
public shares) at $10.00 per share, generating gross proceeds of $80.0 million,
and incurring offering costs of approximately $4.9 million, inclusive of
$2.8 million in deferred underwriting commissions. The underwriter was granted a
45-day option from the date of the final prospectus relating to our IPO to
purchase up to 1,200,000 additional shares to cover over-allotments, if any, at
$10.00 per share. The underwriters partially exercised their over-allotment
option and on November 12, 2020 purchased an additional 256,273 shares of
Class A common stock, generating gross proceeds of approximately $2.6 million,
and incurred additional offering costs of approximately $141,000 in underwriting
fees (inclusive of approximately $90,000 in deferred underwriting fees).
Simultaneously with the closing of our IPO, we consummated the private placement
of 360,000 shares of our Class A common stock (each, a private placement share
and collectively, the private placement shares), at a price of $10.00 per
private placement share to our sponsor, generating proceeds of $3.6 million.
With the closing of the underwriters' over-allotment on November 12, 2020, we
consummated the second closing of the private placement, resulting in the
purchase by our sponsor of an aggregate of an additional 5,126 private placement
shares, generating gross proceeds of approximately $51,000.
Upon the closing of the IPO and the private placement, $80.0 million ($10.00 per
share) of the net proceeds of the sale of the public shares in the IPO and of
the private placement shares in the private placement were placed in a trust
account located in the United States, and invested in money market funds meeting
certain conditions under Rule 2a-7 under the Investment Company Act and which
invest solely in U.S. Treasuries, as determined by us, until the earlier of:
(i) the completion of a business combination and (ii) the distribution of the
trust account.
In addition, our sponsor agreed to forfeit up to 300,000 shares of our Class B
common stock, par value $0.0001, or the founder shares, to the extent that the
over-allotment option was not exercised in full by the underwriters. The
underwriters partially exercised their over-allotment option on November 12,
2020 and on November 30, 2020, our sponsor forfeited 235,932 shares of our
Class B common stock.
We only have 24 months from the closing of our IPO, or until October 16, 2022,
to complete our initial business combination. We refer to this time period as
the "Combination Period." If we are unable to complete a business combination
during the Combination Period, we will (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but not more than
ten business days thereafter, redeem 100% of the outstanding public shares
(including any public shares issued in the IPO or any public shares or shares
that the initial stockholders or their affiliates purchased in the IPO or later
acquired in the open market or in private transactions), which redemption will
completely extinguish public stockholders'

                                       41

--------------------------------------------------------------------------------

TABLE OF CONTENTS



rights as stockholders (including the right to receive further liquidation
distributions, if any), subject to applicable law, and (iii) as promptly as
reasonably practicable following such redemption, subject to the approval of the
remaining holders of common stock and the board of directors, proceed to
commence a voluntary liquidation and thereby a formal dissolution of our
company, subject (in the case of (ii) and (iii) above) to our obligations to
provide for claims of creditors and the requirements of applicable law.
Covid-19
On January 30, 2020, the World Health Organization, or WHO, announced a global
health emergency because of a new strain of coronavirus, or COVID-19. In
March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the
rapid increase in exposure globally. The full impact of the COVID-19 pandemic
continues to evolve. The impact of the COVID-19 pandemic on our results of
operations, financial position and cash flows will depend on future
developments, including the duration and spread of the pandemic and related
advisories and restrictions. These developments and the impact of the COVID-19
pandemic on the financial markets and the overall economy are highly uncertain
and cannot be predicted. If the financial markets and/or the overall economy are
impacted for an extended period, our results of operations, financial position
and cash flows may be materially adversely affected. Additionally, our ability
to complete an initial business combination, may be materially adversely
affected due to significant governmental measures being implemented to contain
the COVID-19 pandemic or treat its impact, including travel restrictions, the
shutdown of businesses and quarantines, among others, which may limit our
ability to have meetings with potential investors or affect the ability of a
potential target company's personnel, vendors and service providers to negotiate
and consummate an initial business combination in a timely manner. Our ability
to consummate an initial business combination may also be dependent on the
ability to raise additional equity and debt financing, which may be impacted by
the COVID-19 pandemic and the resulting market downturn.
Results of Operations
Our entire activity since inception up to December 31, 2020 has been related to
our formation, IPO, which was consummated on October 16, 2020, and since the
IPO, our activity has been limited to the search for a prospective initial
business combination, and we will not be generating any operating revenues until
the closing and completion of our initial business combination. 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.
For the period from August 31, 2020 (inception) through December 31, 2020, we
had a net loss of approximately $209,000, which consisted of approximately
$163,000 in general and administrative expenses, approximately $47,000 in
franchise tax expense, offset by approximately $480 in interest income on the
trust account.
Liquidity and Capital Resources
As of December 31, 2020, we had approximately $1.1 million outside of the trust
account, approximately $480 of interest income available in the trust account to
pay for tax obligations and working capital of approximately $1.3 million.
Our liquidity needs to date have been satisfied through a capital contribution
of $20,000 from our sponsor to purchase the founder shares (as defined below),
the related party loan under a promissory note of $300,000, which was repaid in
full on October 16, 2020, and the net proceeds from the consummation of the
private placement not held in the trust account. In addition, in order to
finance transaction costs in connection with a business combination, our
officers, directors and initial stockholders may, but are not obligated to,
provide working capital loans. As of December 31, 2020, there were no amounts
outstanding under any working capital loans.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity from our sponsor or an affiliate of our sponsor,
or certain of our officers and directors to meet our 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 these funds for paying existing accounts
payable, identifying and

                                       42

--------------------------------------------------------------------------------

TABLE OF CONTENTS



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.
Commitments and Contingencies
Registration Rights
The holders of founder shares and private placement shares are entitled to
registration rights pursuant to a registration and stockholder rights agreement.
The holders of these securities are entitled to make up to three demands that we
register such securities, subject to specified conditions. In addition, the
holders have certain "piggy-back" registration rights with respect to
registration statements filed subsequent to the consummation of the business
combination. We will bear the expenses incurred in connection with the filing of
any such registration statements. However, the registration and stockholder
rights agreement will provide that we will not be required to effect or permit
any registration or cause any registration statement to become effective until
termination of the applicable lock-up period.
Underwriting Agreement
We granted the underwriter a 45-day option to purchase up to 1,200,000
additional units to cover any over-allotments, at the IPO price less the
underwriting discounts and commissions. On November 12, 2020, the underwriter
partially exercised the over-allotment option.
The underwriter was entitled to an underwriting discount of $0.20 per share, or
$1.6 million in the aggregate, paid upon the closing of the IPO. In addition,
$0.35 per share, or $2.9 million in the aggregate will be payable to the
underwriter for deferred underwriting commissions. The deferred fee will become
payable to the underwriter 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.
The underwriter received an additional fee of approximately $51,000 upon closing
of the underwriter's over-allotment option and approximately $90,000 in deferred
underwriting commissions.
Critical Accounting Policies and Estimates
Investments held in Trust Account
Our portfolio of investments held in trust is comprised solely of investments in
money market funds that invest in U.S. government securities. Our investments
held in the trust account are classified as trading securities. Trading
securities are presented on the balance sheet at fair value at the end of each
reporting period. Gains and losses resulting from the change in fair value of
these investments are included in interest income held in trust account in the
accompanying statement of operations. The estimated fair values of investments
held in the trust account are determined using available market information,
other than for investments in open-ended money market funds with published daily
net asset values, or NAV, in which case we use NAV as a practical expedient to
fair value. The NAV on these investments is typically held constant at $1.00 per
unit.
Class A Common Stock Subject to Possible Redemption
Class A common stock subject to mandatory redemption (if any) are classified as
liability instruments and are measured at fair value. Conditionally redeemable
Class A common stock (including shares of Class A common stock 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, Class A common
stock are classified as stockholders' equity. Our Class A common stock feature
certain redemption rights that are considered to be outside of our control and
subject to occurrence of uncertain future events. Accordingly, at December 31,
2020, 7,593,256 shares of Class A common stock subject to possible redemption
were presented at redemption value as temporary equity, outside of the
stockholders' equity section of our balance sheet.

                                       43

--------------------------------------------------------------------------------

TABLE OF CONTENTS



Net Income (Loss) Per Common Share
Our statement of operations includes a presentation of income per share for
common stock subject to redemption in a manner similar to the two-class method
of income per share. Net income per share, basic and diluted for Class A common
stock is calculated by dividing the interest income held in the trust account of
approximately $480, net of applicable income and franchise taxes of
approximately $480 for the period from August 31, 2020 (inception) to
December 31, 2020, respectively, by the weighted average number of shares of
Class A common stock outstanding for the period. Net loss per share, basic and
diluted for Class B common stock for the period from August 31, 2020 (inception)
through December 31, 2020 is calculated by dividing the net loss of
approximately $209,000, less net income attributable to Class A common stock of
approximately $0, resulting in a net loss of approximately $209,000, by the
weighted average number of Class B common stock outstanding for the period.
Recent Accounting Pronouncements
Our management does not believe that there are any other recently issued, but
not yet effective, accounting pronouncements, if currently adopted, would have a
material effect on our balance sheet.
Off-Balance Sheet Arrangements and Contractual Obligations
As of December 31, 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.
JOBS Act
The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As a result, the financial statements may not
be comparable to companies that comply with new or revised accounting
pronouncements as of public company effective dates.
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 IPO or until we are no longer an "emerging
growth company," whichever is earlier.
ITEM 7A.

© Edgar Online, source Glimpses