References to the "Company," "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 unaudited condensed
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 Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, 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-Q. 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 as a Cayman Islands exempted company
on May 6, 2020. We were formed for the purpose of effecting a merger, share
exchange, asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses (the "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.
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.
16
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
Our entire activity since inception through September 30, 2020 related to our
formation, the preparation for the Initial Public Offering, and since the
closing of the Initial Public Offering, the search for a prospective initial
Business Combination. We have neither engaged in any operations nor generated
any revenues to date. We will not generate any operating revenues until after
completion of our initial Business Combination. We will generate non-operating
income in the form of interest income on cash and cash equivalents. 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 three months ended September 30, 2020, we had net loss of approximately
$91,000, which consisted of approximately $157,000 in general and administrative
costs, $25,000 in administrative fees and approximately $91,000 in net gain from
investments held in Trust Accounts.
For the period from May 6, 2020 (inception) through September 30, 2020, we had
net loss of approximately $118,000, which consisted of approximately $184,000 in
general and administrative costs, $25,000 in related party administrative fees
and approximately $91,000 in net gain from investments held in Trust Accounts.
Liquidity and Capital Resources
As of September 30, 2020, we had approximately $1.2 million in our operating
bank account, approximately $1.2 million of working capital, and no interest
income available in the Trust Accounts to pay for our tax obligations, if any.
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.
17
We continue to evaluate the impact of the COVID-19 pandemic and have concluded
that the specific impact is not readily determinable as of the date of the
balance sheet. The financial statement does not include any adjustments that
might result from the outcome of this uncertainty.
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.
18
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 September 30, 2020, the Company had no
Working Capital Loans outstanding.
Administrative Services 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. For the three months ended September 30, 2020 and for the period from May
6, 2020 (inception) through September 30, 2020, the Company incurred and paid
approximately $25,000 in such administrative fees.
Contractual Obligations
Registration 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.
19
Critical Accounting Policies
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 accounting principles generally accepted in the United States of
America. The preparation of our 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. The Company has identified the following as its
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 unaudited condensed 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
Class A ordinary shares subject to mandatory redemption (if any) are classified
as liability instruments and are measured at fair value. 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
the Company's control) are classified as temporary equity. At all other times,
Class A 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 the occurrence of uncertain future events.
Accordingly, at September 30, 2020, 32,926,373 Class A ordinary shares subject
to possible redemption are presented as temporary equity, outside of the
shareholders' equity section of the Company's balance sheet.
Net Income Per Ordinary Share
Net income per share is computed by dividing net income by the weighted-average
number of ordinary shares outstanding during the periods. We have not considered
the effect of the warrants sold in the Initial Public Offering and the Private
Placement to purchase an aggregate of 26,150,000 of our Class A ordinary shares
in the calculation of diluted income per share, since their inclusion would be
anti-dilutive under the treasury stock method.
Our unaudited condensed 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 ordinary share,
basic and diluted for Class A ordinary shares are calculated by dividing the
income earned on investments held in the Trust Accounts, net of applicable taxes
available to be withdrawn from the Trust Accounts, resulting in net income of
approximately $91,000 and $91,000 for the three months period ended September
30, 2020 and for the period from May 6, 2020 (inception) through September 30,
2020, respectively, by the weighted average number of Class A ordinary shares
outstanding for the periods. Net loss per ordinary share, basic and diluted for
Class B ordinary shares for the three months ended September 30, 2020 and for
the period from May 6, 2020 (inception) through September 30, 2020 is calculated
by dividing the net loss of approximately $91,000 and $118,000, less income
attributable to Class A ordinary shares, resulting in a net loss of
approximately $182,000 and $209,000, respectively, by the weighted average
number of Class B ordinary shares outstanding for the periods.
Recent Accounting Pronouncements
Our management does not believe that any recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.
20
Off-Balance Sheet Arrangements
As of September 30, 2020, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (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 Initial Public Offering or until we are no
longer an "emerging growth company," whichever is earlier.
© Edgar Online, source Glimpses
D8 HLDG