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.
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