References to the "Company," "D8 Holdings Corp.," "our," "us" or "we" refer to
D8 Holdings Corp. 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
report. Certain information contained in the discussion and analysis set forth
below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements are subject to known and unknown risks, uncertainties
and assumptions about us that may cause our actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Such statements include, but are not limited
to, possible business combinations and the financing thereof, and related
matters, as well as all other statements other than statements of historical
fact included in this Form 10-K. Factors that might cause or contribute to such
a discrepancy include, but are not limited to, those described in our other
Securities and Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated in the Cayman Islands on May 6, 2020
for the purpose of effecting a merger, share exchange, asset acquisition, share
purchase, reorganization or similar business combination with one or more
businesses that we have not yet selected ("Business Combination"). Although we
are not limited to a particular industry or sector for purposes of consummating
a Business Combination, we intend to focus our search on the consumer retail
sector. 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 D8 Sponsor LLC, a Cayman Islands limited liability company (the
"Sponsor"). Our registration statement for the initial public offering (the
"Initial Public Offering") was declared effective on July 14, 2020. On July 17,
2020, we consummated the Initial Public Offering of 30,000,000 units (the
"Units") at $10.00 per Unit, generating gross proceeds of $300.0 million. Each
Unit consists of one Class A ordinary share (the "Public Shares") of the
Company, par value $0.0001, and one-half of one redeemable warrant (the "Public
Warrants") of the Company, with each warrant entitling the holder thereof to
purchase one Class A Ordinary Share for $11.50 per share, subject to adjustment.
On July 24, 2020, the underwriters exercised the over-allotment option in full
and purchased an additional 4,500,000 Units (the "Over-Allotment Units"),
generating additional gross proceeds of $45.0 million. We incurred total
offering costs of approximately $19.5 million in underwriting fees (inclusive of
approximately $12.1 million in deferred underwriting fees).
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 8,000,000 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants")
to our Sponsor, each exercisable to purchase one Class A ordinary share at
$11.50 per share, at a price of $1.00 per Private Placement Warrant, generating
gross proceeds to the Company of $8.0 million. On July 24, 2020, simultaneously
with the sale of the Over-Allotment Units, we consummated a private sale of an
additional 900,000 Private Placement Warrants to our Sponsor, generating gross
proceeds of $900,000.
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Upon the closing of the Initial Public Offering and the Private Placement,
$345.0 million ($10.00 per Unit) of the net proceeds of the Initial Public
Offering and certain of the proceeds of the Private Placement was placed in
trust accounts ("Trust Account"), located in the United States with Continental
Stock Transfer & Trust Company acting as trustee, and is invested only in
U.S. government securities, within the meaning set forth in Section 2(a)(16) of
the Investment Company Act, having a maturity of 185 days or less or in money
market funds meeting certain conditions under Rule 2a-7 promulgated under the
Investment Company Act which invest only in direct U.S. government treasury
obligations, until the earlier of: (i) the completion of a Business Combination
or (ii) the distribution of the Trust Account as described below.
Our management has broad discretion with respect to the specific application of
the net proceeds of the Initial Public Offering and the sale of Private
Placement Units, although substantially all of the net proceeds are intended to
be applied generally toward consummating a Business Combination.
If the Company is unable to complete a Business Combination within 24 months
from the closing of the Initial Public Offering, or July 17, 2022 (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 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 earned on the funds held in the Trust Account and
not previously released to us (less taxes payable and up to $100,000 of interest
to pay dissolution expenses), divided by the number of then outstanding Public
Shares, which redemption will completely extinguish Public Shareholders' rights
as shareholders (including the right to receive further liquidation
distributions, if any) and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining shareholders and our
board of directors, liquidate and dissolve, subject, in the case of clauses
(ii) and (iii), to our obligations under Cayman Islands law to provide for
claims of creditors and in all cases subject to the other requirements of
applicable law.
RESULTS OF OPERATIONS
Results of Operations
Our entire activity from May 6, 2020 (inception) through December 31, 2020, was
in preparation for an Initial Public Offering, and since our Initial Public
Offering, our activity has been limited to the search for a prospective
initial Business Combination. We will not generate any operating revenues until
the closing and completion of our initial Business Combination.
For the period from May 6, 2020 (inception) through December 31, 2020, we had a
net loss of approximately $161,000, which consisted of approximately $352,000 of
general and administrative expenses, including approximately $55,000 of general
and administrative expenses with related party, offset by approximately $191,000
of net gain from investments held in the Trust Account.
Liquidity and Capital Resources
As of December 31, 2020, we had approximately $1.1 million in cash and working
capital of approximately $1.1 million.
Prior to the completion of the Initial Public Offering, our liquidity needs had
been satisfied through the payment of $25,000 of offering costs by our Sponsor
in exchange for the issuance of the Founder Shares, and a loan of approximately
$127,000 pursuant to the Note issued to our Sponsor. We repaid the Note in full
on July 17, 2020. Subsequent to the consummation of the Initial Public Offering
and Private Placement, our liquidity needs have been satisfied with the 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 Sponsor may, but is not obligated to, provide the Company
Working Capital Loans. To date, there are no Working Capital Loans outstanding.
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 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 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.
Management continues to evaluate the impact of the COVID-19 pandemic and has
concluded that the specific impact is not readily determinable as of the date of
the financial statements. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
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Related Party Transactions
Founder Shares
On May 14, 2020, our Sponsor paid $25,000, or approximately $0.003 per share, to
cover certain offering costs in consideration for 7,187,500 Class B ordinary
shares, par value $0.0001 (the "Founder Shares"). On June 25, 2020, our Sponsor
transferred 15,000 Founder Shares to Robert Kirby and 25,000 Founder Shares to
each of Michael Kives, Fred Langhammer and Terry Lundgren, resulting in the
Sponsor holding 7,097,500 Founder Shares. On July 14, 2020, we effected a share
capitalization of 1,437,500 Founder Shares resulting in 8,625,000 Class B
ordinary shares outstanding, of which the Sponsor now holds 8,535,000 Founder
Shares. All shares and the associated amounts have been retroactively restated
to reflect the share capitalization. Of the 8,625,000 Founder Shares
outstanding, up to 1,125,000 Founder Shares were subject to forfeiture to the
extent that the over-allotment option was not exercised in full by the
underwriters, so that the Founder Shares will represent 20.0% of the Company's
issued and outstanding shares after the Initial Public Offering. The
underwriters exercised their over-allotment option in full on July 24, 2020. As
a result, these shares were no longer subject to forfeiture.
The initial shareholders agreed, subject to limited exceptions, not to transfer,
assign or sell any of their Founder Shares and any Class A ordinary shares
issuable upon conversion thereof until the earlier to occur of: (i) one year
after the completion of the initial Business Combination, or (ii) the date on
which we complete a liquidation, merger, share exchange or other similar
transaction after the initial Business Combination that results in all of our
shareholders having the right to exchange their Class A ordinary shares for
cash, securities or other property; except to certain permitted transferees and
under certain circumstances (the "lock-up"). Notwithstanding the foregoing, if
(1) the closing price of Class A ordinary shares equals or exceeds $12.00 per
share (as adjusted for share sub-divisions, share capitalizations,
reorganizations, recapitalizations and the like) for any 20 trading days within
any 30-trading day period commencing at least 150 days after the initial
Business Combination or (2) if we consummate a transaction after the initial
Business Combination which results in our shareholders having the right to
exchange their shares for cash, securities or other property, the Founder Shares
will be released from the lock-up.
Private Placement Warrants
On July 17, 2020, simultaneously with the closing of the Initial Public
Offering, we consummated the Private Placement of 8,000,000 Private Placement
Warrants to our Sponsor, each exercisable to purchase one Class A ordinary share
at $11.50 per share, at a price of $1.00 per Private Placement Warrant,
generating gross proceeds to the Company of $8.0 million. On July 24, 2020,
simultaneously with the sale of the Over-Allotment Units, the Company
consummated a private sale of an additional 900,000 Private Placement Warrants
to our Sponsor, generating additional gross proceeds of $900,000.
Each warrant is exercisable to purchase one Class A ordinary share at $11.50 per
share. A portion of the proceeds from the Private Placement Warrants were added
to the proceeds from the Initial Public Offering held in the Trust Accounts. If
the Company does not complete a Business Combination within the Combination
Period, the Private Placement Warrants will expire worthless.
Our Sponsor, officers and directors agreed, subject to limited exceptions, not
to transfer, assign or sell any of their Private Placement Warrants until
30 days after the completion of the initial Business Combination.
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Sponsor Loan
On May 14, 2020, our Sponsor agreed to loan us up to $300,000 to cover expenses
related to the Initial Public Offering pursuant to a promissory note (the
"Note"). We borrowed approximately $127,000 under the Note and fully repaid this
Note on July 17, 2020.
Working Capital Loans
In addition, in order to 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 ("Working Capital Loans"). If the Company completes a Business
Combination, the Company would repay the Working Capital Loans. In the event
that a Business Combination does not close, we may use a portion of proceeds
held outside the Trust Accounts to repay the Working Capital Loans but no
proceeds held in the Trust Accounts would be used to repay the Working Capital
Loans. 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. The Working Capital Loans would either be repaid upon consummation
of a Business Combination or, at the lender's discretion, up to $1.5 million of
such Working Capital Loans may be convertible into private placement warrants at
a price of $1.00 per warrant. As of December 31, 2020, the Company had no
Working Capital Loans outstanding.
Administrative Support Agreement
Commencing on the date of the final prospectus, we agreed to pay our Sponsor a
total of $10,000 per month for office space, utilities, secretarial and
administrative support services. Upon completion of the Initial Business
Combination or the Company's liquidation, we will cease paying these monthly
fees. We incurred and paid approximately $55,000 in these fees for the period
from May 8, 2020 through December 31, 2020.
Other Contractual Obligations
Registration and Shareholder Rights
The holders of Founder Shares, Private Placement Warrants, and securities that
may be issued upon conversion of Working Capital Loans, if any, will be entitled
to registration rights pursuant to a registration rights agreement dated as of
July 14, 2020. These holders are entitled to certain demand and "piggyback"
registration rights. We will bear the expenses incurred in connection with the
filing of any such registration statements.
Underwriting Agreement
We granted the underwriters a 45-day option from the final prospectus relating
to the Initial Public Offering to purchase up to 4,500,000 additional Units to
cover over-allotments, if any, at the Initial Public Offering price less the
underwriting discounts and commissions. The underwriters exercised their
over-allotment option in full on July 24, 2020.
The underwriters were paid a cash underwriting discount of $0.20 per unit, or
$6.9 million in the aggregate, paid upon the closing of the 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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Critical Accounting Policies and Estimates
This management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with U.S. GAAP. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and the disclosure of contingent
assets and liabilities in our financial statements. On an ongoing basis, we
evaluate our estimates and judgments, including those related to fair value of
financial instruments and accrued expenses. We base our estimates on historical
experience, known trends and events and various other factors that we believe to
be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. We have identified the
following as our critical accounting policies:
Investments Held in the Trust Account
Our portfolio of investments held in the Trust Account is comprised of U.S.
government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act, with a maturity of 185 days or less, or investments in
money market funds that invest in U.S. government securities, or a combination
thereof. The investments held in the Trust Account are classified as trading
securities. Trading securities are presented on the balance sheets at fair value
at the end of each reporting period. Gains and losses resulting from the change
in fair value of these securities is included in net gain on investments 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.
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in
accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from
Equity." Shares of Class A ordinary shares subject to mandatory redemption (if
any) are classified as liability instruments and are measured at fair value.
Shares of conditionally redeemable Class A ordinary shares (including Class A
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, shares of Class A ordinary shares are classified as shareholders'
equity. Our Class A ordinary shares features certain redemption rights that are
considered to be outside of our control and subject to the occurrence of
uncertain future events. Accordingly, at December 31, 2020, 32,889,128 shares of
Class A ordinary shares subject to possible redemption are presented as
temporary equity, outside of the shareholders' equity section of the
accompanying balance sheets.
Net Loss Per Ordinary Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share." Net loss per ordinary share is computed by dividing net
loss by the weighted average number of ordinary shares outstanding during the
period, excluding ordinary shares subject to forfeiture. Weighted average shares
were reduced for the effect of an aggregate of 1,125,000 Class B ordinary shares
that were subject to forfeiture if the over-allotment option was not exercised
by the underwriters. On July 24, 2020, the underwriters exercised their
over-allotment option in full; thus, these Founder Shares were no longer subject
to forfeiture. We have not considered the effect of the warrants sold in the
Initial Public Offering and Private Placement to purchase an aggregate
of 26,150,000 shares of Class A ordinary shares in the calculation of diluted
earnings per ordinary share, since their inclusion would be anti-dilutive under
the treasury stock method. As a result, diluted per share is the same as basic
loss per ordinary share for the periods presented.
Our statements of operations include a presentation of income per share for
ordinary shares 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 ordinary shares is calculated by dividing the investment
income earned on the Trust Account, net of applicable income franchise taxes, by
the weighted average number of shares of Class A ordinary shares outstanding
since the initial issuance. Net loss per share, basic and diluted for Class B
ordinary shares is calculated by dividing the net income, less income
attributable to Class A ordinary shares, by the weighted average number of
shares of Class B ordinary shares outstanding for the period.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material impact on
our financial statements.
Off-Balance Sheet Arrangements
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.
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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. We will qualify as an "emerging growth company" and
under the JOBS Act will be 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 such, our financial statements may not be
comparable to companies that comply with 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 Initial Public Offering or until we are no
longer an "emerging growth company," whichever is earlier.
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