References in this report (the "Quarterly Report") to "we," "us," "our" or the
"Company" refer to Better World Acquisition Corp. References to our "management"
or our "management team" refer to our officers and directors, and references to
the "Sponsor" refer to BWA Holdings LLC. The following discussion and analysis
of the Company's financial condition and results of operations should be read in
conjunction with the financial statements and the notes thereto contained
elsewhere in this Quarterly Report. Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that
involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 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", the Company's
financial position, business strategy and the plans and objectives of management
for future operations, are forward-looking statements. Words such as "expect,"
"believe," "anticipate," "intend," "estimate," "seek" and variations 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 Amendment No. 1 to the Annual Report on Form 10-K/A filed with the
U.S. Securities and Exchange Commission (the "SEC") on December 14, 2021.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations gives effect to the restatement of our financial statements as of
December 31, 2020, March 31, 2021 and June 30, 2021. Management identified
errors made in its historical financial statements where, at the closing of our
Initial Public Offering, we improperly valued our common subject to possible
redemption. We previously determined the common stock subject to possible
redemption to be equal to the redemption value of $10.00 per share of common
stock while also taking into consideration a redemption cannot result in net
tangible assets being less than $5,000,001. Management determined that the
common stock issued during the Initial Public Offering can be redeemed or become
redeemable subject to the occurrence of future events considered outside of the
Company's control. Therefore, management concluded that the redemption value
should include all common stock subject to possible redemption, resulting in the
common stock subject to possible redemption being equal to their redemption
value. As a result, management has noted a reclassification error related to
temporary equity and permanent equity. This resulted in a restatement to the
initial carrying value of the common stock shares subject to possible redemption
with the offset recorded to additional paid-in capital (to the extent
available), accumulated deficit and common stock.
Overview
We are a blank check company formed under the laws of the State of Delaware on
August 5, 2020 for the purpose of entering into a merger, share exchange, asset
acquisition, stock purchase, recapitalization, reorganization or other 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 the Initial Public Offering and the sale of the
Private Warrants, 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 a Business
Combination will be successful.
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from August 5, 2020 (inception) through September 30, 2021
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and identifying a target company for a
Business Combination. We do not expect to generate any operating revenues until
after the completion of our Business Combination. We generate non-operating
income in the form of interest income on marketable securities held in the Trust
Account. We incur expenses as a result of being a public company (for legal,
financial reporting, accounting and auditing compliance), as well as for due
diligence and transaction expenses.
For the three months ended September 30, 2021, we had a net income of $1,475,730
which consists of the change in fair value of warrant liability of $2,192,941
and interest earned on marketable securities held in the Trust Account of
$23,138, and unrealized loss on marketable securities held in the Trust Account
of $4,654, offset by formation and operational costs of $735,695.
For the nine months ended September 30, 2021, we had a net income of $2,207,258,
which consists of the change in fair value of warrant liability of $3,302,913
and interest earned on marketable securities held in the Trust Account of
$58,976, and unrealized loss on marketable securities held in the Trust Account
of $5,829, offset by formation and operational costs of $1,148,802.
For the period from August 5, 2020 (inception) through September 30, 2020, we
had a net loss of $725, which consists of formation and operational costs.
Liquidity and Capital Resources
On November 17, 2020, we consummated the Initial Public Offering of 11,000,000
units, at $10.00 per Unit, generating gross proceeds of $110,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 4,800,000 Private Warrants at a price of $1.00 per Private Warrant
in a private placement to our Sponsor and EarlyBirdCapital, Inc. 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.
Following the Initial Public Offering, the partial exercise of the
over-allotment option, and the sale of the Private Warrants, a total of
$127,447,860 was placed in the Trust Account. We incurred $2,880,354 in Initial
Public Offering related costs, including $2,523,720 of underwriting fees and
$356,634 of other costs.
For the nine months ended September 30, 2021, cash used in operating activities
was $528,273. Net income of $2,207,258 was affected by the change in fair value
of warrant liability of $3,302,913, interest earned on marketable securities
held in the Trust Account of $58,976, and an unrealized loss on marketable
securities held in our Trust Account of $5,829. Changes in operating assets and
liabilities provided $620,529 of cash for operating activities.
For the period from August 5, 2020 (inception) through September 30, 2020, cash
used in operating activities was $0. Net loss of $725 was offset by the changes
in operating assets and liabilities.
As of September 30, 2021, 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 $937 and marketable securities held in the trust account of
$127,514,899 (including approximately $67,976 of interest income and unrealized
gains, net of unrealized losses) 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 September 30, 2021, we did not withdraw any interest earned
on the trust account to pay our taxes.
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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 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 September 30, 2021, we had cash of $494,905 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 September 30, 2021. 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 three and
nine months ended September 30, 2021, the Company incurred $30,000 and $90,000
in fees for these services, respectively. At September 30, 2021 and December 31,
2020, fees of $40,000 and $20,000 are included in accounts payable and accrued
expenses in the accompanying balance sheets, respectively.
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.
The Company has engaged EarlyBirdCapital as an advisor in connection with a
Business Combination to assist the Company in holding meetings with its
stockholders to discuss the potential Business Combination and the target
business' attributes, introduce the Company to potential investors that are
interested in purchasing the Company's securities in connection with a Business
Combination, assist the Company in obtaining stockholder approval for the
Business Combination and assist the Company with its press releases and public
filings in connection with the Business Combination. The Company will pay
EarlyBirdCapital a cash fee for such services upon the consummation of a
Business Combination in an amount equal to 3.5% of the gross proceeds of the
Initial Public Offering, or $4,416,510, (exclusive of any applicable finders'
fees which might become payable); provided that up to 30% of the fee may be
allocated at the Company's sole discretion to other FINRA members that assist
the Company in identifying and consummating a Business Combination.
Additionally, the Company will pay EarlyBirdCapital a cash fee equal to 1.0% of
the total consideration payable in a Business Combination if EarlyBirdCapital
introduces the Company to the target business with which the Company completes a
Business Combination.
Critical Accounting Policies
The preparation of condensed 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:
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Warrant Liability
The Company accounts for the Private Warrants in accordance with the guidance
contained in ASC 815-40-15-7D and 7F under which the Private Warrants do not
meet the criteria for equity treatment and must be recorded as liabilities.
Accordingly, the Company classifies the Private Warrants as liabilities at their
fair value and adjusts the Private 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 statements of
operations. The Private Warrants for periods where no observable traded price
was available are valued using a binomial lattice simulation model.
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") 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 condensed balance sheets.
Net Income (Loss) per Common 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.
Accretion associated with the redeemable shares of common stock is excluded from
net income (loss) per common share as the redemption value approximates fair
value.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, "Debt-Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in
Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models
required under current GAAP. ASU 2020-06 removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope
exception and it also simplifies the diluted earnings per share calculation in
certain areas. ASU 2020-06 is effective for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal years, with
early adoption permitted. The Company is currently assessing the impact, if any,
that ASU2020-06 would have on its financial position, results of operations or
cash flows.
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 condensed financial statements.
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BETTER WORLD ACQUISITION CORP. 
