References to the "Company," "us," "our" or "we" refer to Better World
Acquisition Corp. The following discussion and analysis of our financial
condition and results of operations should be read in conjunction with our
audited financial statements and related notes included herein. Certain
information contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties. Our actual
results may differ materially from those anticipated in these forward-looking
statements as a result of many factors, including those set forth elsewhere in
this Report.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations has been amended and restated to give effect to the restatement and
revision of our financial statements as of December 31, 2020 and for the period
from August 5, 2020 (inception) through December 31, 2020. We are restating our
historical financial results to reclassify our temporary equity and permanent
equity. The Company also restated its income (loss) per common share calculation
to allocate net income (loss) evenly to redeemable and non-redeemable common
stock. The impact of the restatement is reflected in the Management's Discussion
and Analysis of Financial Condition and Results of Operations below. Other than
as disclosed in the Explanatory Note and with respect to the impact of the
Restatement, no other information in this Item 7 has been amended and this Item
7 does not reflect any events occurring after the Original Filing. The impact of
the restatement is more fully described in Note 2 to our financial statements
included in Item 15 of Part IV of this Amendment and Item 9A. Controls and
Procedures, both contained herein.
Overview
We are a blank check company incorporated on August 5, 2020 as a Delaware
corporation and formed for the purpose of entering into a merger, share
exchange, asset acquisition, stock purchase, recapitalization, reorganization or
similar business combination with one or more businesses or entities (an
"initial business combination"). We intend to effectuate our initial business
combination using cash from the proceeds of our initial public offering (as
defined below) and the private placement warrants (as defined below), our
capital stock, debt or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete an initial
business combination will be successful.
Results of Operations
Our only activities from August 5, 2020 (inception) through December 31, 2020
were organizational activities, those necessary to consummate the IPO, described
below, and identifying a target company for an initial business combination. We
do not expect to generate any operating revenues until after the completion of
our initial business combination. We generate non-operating income in the form
of interest income on marketable securities held in the trust account (as
defined below). 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.
For the period from August 5, 2020 (inception) through December 31, 2020, we had
a net loss of $4,187,718, which consisted of operating costs of $121,087, a
change in fair value of warrants of $4,069,896 and transaction costs related to
the initial public offering of $11,564, offset by interest income on marketable
securities held in the trust account of $11,521 and an unrealized gain of
$3,308.
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Liquidity and Capital Resources
On November 17, 2020, we consummated our initial public offering ("IPO") of
11,000,000 units (the "units"), at a price of $10.00 per Unit, generating gross
proceeds of $110,000,000. Simultaneously with the closing of the IPO, we
consummated the private sale of 4,800,000 warrants (the "private placement
warrants") to our Sponsor and EarlyBirdCapital, generating gross proceeds of
$4,800,000.
On November 19, 2020, in connection with the underwriters' partial exercise of
their over-allotment option, we consummated the sale of an additional 1,618,600
units at a price of $10.00 per unit, generating total gross proceeds of
$16,186,000. In addition, we also consummated the sale of an additional 485,580
private placement warrants at $1.00 per private placement warrant, generating
total gross proceeds of $485,580.
For the period from August 5, 2020 (inception) through December 31, 2020, cash
used in operating activities was $147,816. Net loss of $4,187,718 was affected
by interest earned on investments held in the trust account of $11,521, change
in fair value of warrant liability of $4,069,896, transaction costs incurred in
connection with the initial public offering of $11,564 and unrealized gain on
investments held in trust account of $3,308. Changes in operating assets and
liabilities used $26,729 of cash for operating activities.
As of December 31, 2020, in the U.S.-based trust account (the "trust account")
maintained by Continental Stock Transfer & Trust Company, acting as trustee, we
had cash held of $1,214 and marketable securities held in the trust account of
$127,461,475 (including approximately $11,500 of interest income) consisting of
securities held in a money market fund that invests in U.S. Treasury securities
with a maturity of 180 days or less. Interest income on the balance in the trust
account may be used by us to pay taxes. Through December 31, 2020, we did not
withdraw any interest earned on the trust account to pay our taxes.
We intend to use substantially all of the funds held in the trust account, to
acquire a target business and to pay our expenses relating thereto, including a
fee payable to Imperial Capital, upon consummation of our initial business
combination for assisting us in connection with our initial business
combination. To the extent that our capital stock is used in whole or in part as
consideration to effect an initial business combination, the remaining funds
held in the trust account will be used as working capital to finance the
operations of the target business. Such working capital funds could be used in a
variety of ways including continuing or expanding the target business'
operations, for strategic acquisitions and for marketing, research and
development of existing or new products. Such funds could also be used to repay
any operating expenses or finders' fees which we had incurred prior to the
completion of our initial business combination if the funds available to us
outside of the trust account were insufficient to cover such expenses.
As of December 31, 2020, we had cash of $1,023,178 held outside the trust
account. We intend to use the funds held outside the trust account for
identifying and evaluating prospective acquisition candidates, performing
business due diligence on prospective target businesses, traveling to and from
the offices, plants or similar locations of prospective target businesses,
reviewing corporate documents and material agreements of prospective target
businesses, selecting the target business to acquire and structuring,
negotiating and consummating the initial business combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with an initial business combination, the Insiders, or certain of our
officers and directors or their affiliates may, but are not obligated to, loan
us funds as may be required. If we complete our initial business combination, we
would repay such loaned amounts. In the event that our initial 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 units would be identical to the private placement warrants.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate 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 initial business combination. Moreover, we may need to
obtain additional financing either to complete our initial business combination
or because we become obligated to redeem a significant number of our public
shares upon completion of our initial business combination, in which case we may
issue additional securities or incur debt in connection with such initial
business combination.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2020. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
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Contractual Obligations
The Company has agreed, commencing on November 12, 2020 through the earlier of
the Company's consummation of an initial business combination and its
liquidation, to pay an affiliate of the Company's management a total of $10,000
per month for office space, utilities and secretarial support. For the period
from August 5, 2020 (inception) through December 31, 2020, the Company incurred
$20,000 in fees for these services. At December 31, 2020, fees of $20,000 is
included in accrued expenses in the accompanying balance sheet.
The Company granted the underwriters a 45-day option from the date of IPO to
purchase up to 1,650,000 additional Units to cover over-allotments, if any, at
the IPO price less the underwriting discounts and commissions. On November 19,
2020, the underwriters partially exercised their over-allotment option to
purchase an additional 1,618,600 units at $10.00 per unit and forfeited the
remaining over-allotment option.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Warrant Liability
The Company accounts for the private placement warrants in accordance with the
guidance contained in ASC 815-40-15-7D and 7F under which the private placement
warrants do not meet the criteria for equity treatment and must be recorded as
liabilities. Accordingly, the Company classifies the private placement warrants
as liabilities at their fair value and adjusts the private placement warrants to
fair value at each reporting period. This liability is subject to re-measurement
at each balance sheet date until exercised, and any change in fair value is
recognized in our statement of operations. The private placement warrants for
periods where no observable traded price was available are valued using a
binomial lattice simulation model.
Common Stock Subject to Possible Redemption (restated, Amendment 1, See Note 2)
We account for our common stock subject to possible conversion in accordance
with the guidance in Accounting Standards Codification Topic 480 "Distinguishing
Liabilities from Equity." Common stock subject to mandatory redemption is
classified as a liability instrument and measured at fair value. Conditionally
redeemable common stock (including common stock that features redemption rights
that are either within the control of the holder or subject to redemption upon
the occurrence of uncertain events not solely within our control) is classified
as temporary equity. At all other times, common stock is classified as
stockholders' equity. Our common stock features certain redemption rights that
are considered to be outside of our control and subject to occurrence of
uncertain future events. Accordingly, common stock subject to possible
redemption is presented at redemption value as temporary equity, outside of the
stockholders' equity section of our balance sheet.
We recognize changes in redemption value immediately as they occur and adjusts
the carrying value of redeemable common stocks to equal the redemption value at
the end of each reporting period. Immediately upon the closing of the Initial
Public Offering, we recognized the accretion from initial book value to
redemption amount value. The change in the carrying value of redeemable common
stocks resulted in charges against additional paid-in capital and accumulated
deficit.
Net Income (Loss) per Common Share (restated, Amendment 1, See Note 2)
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share". Net income (loss) per common share is computed by dividing
net income (loss) by the weighted average number of common shares outstanding
for the period. The Company applies the two-class method in calculating income
(loss) per common share. Accretion associated with the redeemable shares of
common stock is excluded from income (loss) per common share as the redemption
value approximates fair value.
We have not considered the effect of the warrants sold in the Initial Public
Offering and private placement to purchase an aggregate of 17,904,180 shares in
the calculation of diluted income (loss) per share, since the exercise of the
warrants is contingent upon the occurrence of future events. As of December 31,
2020, we did not have any dilutive securities or other contracts that could,
potentially, be exercised or converted into common stock and then share in our
earnings. As a result, diluted net income (loss) per common share is the same as
basic net income (loss) per common share for the periods 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 financial statements.
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BETTER WORLD ACQUISITION CORP. 
