References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Epiphany Technology Acquisition Corp. References to our
"management" or our "management team" refer to our officers and directors,
references to the "Sponsor" refer to Epiphany Technology Sponsor LLC. The
following discussion and analysis of our 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, as amended (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended (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 Quarterly Report including, without limitation, statements in
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding 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 final prospectus for its Initial Public Offering filed with the U.S.
Securities and Exchange Commission (the "SEC"). The Company's securities filings
can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except
as expressly required by applicable securities law, the Company disclaims any
intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise. In
connection with the change in presentation for the Class A ordinary shares
subject to redemption, the Company also revised its earnings per share
calculation to allocate net income (loss) evenly to Class A and Class B ordinary
shares. This presentation contemplates a Business Combination as the most likely
outcome, in which case, both classes of ordinary shares share pro rata in the
income (loss) of the Company.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations has been amended and restated to give effect to the restatement of
our financial statements as of 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 Class A common
stock subject to possible redemption. We previously determined the Class A
common stock subject to possible redemption to be equal to the redemption value
of $10.00 per share of Class A 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 Class A 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 Class A common
stock subject to possible redemption, resulting in the Class A 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 Class A common stock subject to possible redemption with
the offset recorded to additional
paid-in
capital (to the extent available), accumulated deficit and Class A common stock.
Overview
We are a blank check company formed under the laws of the State of Delaware on
September 28, 2020 for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar Business
Combination with one or more target businesses. We intend to effectuate our
initial Business Combination using cash from the proceeds of our Initial Public
Offering and the concurrent private placement, the proceeds of the sale of our
shares in connection with our initial Business Combination, shares issued to the
owners of the target, debt issued to bank or other lenders or the owners of the
target, or a combination of the foregoing.
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.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception through September 30, 2021 were
organizational activities, those necessary to prepare for the Initial Public
Offering, described below, and, subsequent to the Initial Public Offering,
searching and identifying a target company for a 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. 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 expenses.
For the three months ended September 30, 2021, we had a net income of
$2,907,067, which consists of a change in the fair value warrant liabilities of
$3,149,833 and interest income on marketable securities held in the Trust
Account of $26,161, offset by formation and operational costs of $268,927.
For the nine months ended September 30, 2021, we had a net income of $5,801,913,
which consists of a change in the fair value warrant liabilities of $7,533,833
and interest income on marketable securities held in the Trust Account of $
82,054, offset by transaction cost allocable to warrants of $1,029,081 and
formation and operational costs of $784,893.
For the period from September 28, 2020 (inception) through December 31, 2020, we
had a net loss of $1,465, which consisted of formation and operating expenses.

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Liquidity and Capital Resources
On January 12, 2021, we consummated the Initial Public Offering of 40,250,000
units (the "Units" and, with respect to the Class A common stock included in the
Units sold, the "Public Shares"), which included the full exercise by the
underwriters of their over-allotment option to purchase an additional 5,250,000
Units, at $10.00 per Unit, generating gross proceeds of $402,500,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 800,000 units (the "Placement Units") to Epiphany Technology Sponsor
LLC (the "Sponsor") and Cantor Fitzgerald & Co. ("Cantor") at a price of $10.00
per Unit, generating gross proceeds of $8,000,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option and the sale of the Placement Units, a total of $402,500,000 was placed
in the Trust Account. We incurred $21,598,082 in transaction costs, including
$6,000,000 of underwriting fees, net of $1,000,000 reimbursed from the
underwriters, $15,137,500 of deferred underwriting fees and $460,582 of other
offering costs.
For the nine months ended September 30, 2021, cash used in operating activities
was $1,020,338. Net income of $5,801,913 was affected by changes in the fair
value of warrant liabilities of $7,533,833, interest earned on investments and
marketable securities held in the Trust Account of $82,054 and transaction costs
allocable to warrants of $1,029,081. Changes in operating assets and liabilities
used $235,445 of cash from operating activities.
For the period from September 28, 2020 (inception) through December 31, 2020, we
do not have cash used in operating activities.
As of September 30, 2021, we had cash and investments held in the Trust Account
of $402,582,054. Interest income on the balance in the Trust Account may be used
by us to pay taxes. During the three and nine months ended September 30, 2021,
we did not withdraw interest earned on the Trust Account to pay for our
franchise 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 (less deferred underwriting commissions) to complete our initial
Business Combination. To the extent that our capital stock or debt is used, in
whole or in part, as consideration to complete our initial 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 September 30, 2021, we had $545,080 of cash held outside of the Trust
Account. 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, and 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 out of the proceeds of the Trust Account
released to us. 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 units
identical to the Placement Units, at a price of $10.00 per unit at the option of
the lender. The units would be identical to the Placement Units.

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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 a 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 consummation of our initial Business Combination, in which case we
may issue additional securities or incur debt in connection with such initial
Business Combination. Subject to compliance with applicable securities laws, we
would only complete such financing simultaneously with the completion of our
initial 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. In addition,
following our initial Business Combination, if cash on hand is insufficient, we
may need to obtain additional financing in order to meet our obligations.
Off-Balance
Sheet Arrangements
We did not have any
off-balance
sheet arrangements as of September 30, 2021.
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 an
affiliate of our Sponsor a monthly fee of $15,000 for office space, utilities
and secretarial and administrative support. We began incurring these fees on
January 12, 2021 and will continue to incur these fees monthly until the earlier
of the completion of the initial Business Combination and our liquidation.
The underwriters are entitled to a deferred fee of (i) 3.5% of the gross
proceeds of the initial 35,000,000 units sold in our initial public offering, or
$12,250,000, and (ii) 5.5% of the gross proceeds from the units sold pursuant to
the over-allotment option, or $2,887,500. 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.
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.
Warrant Liability
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to ASC 480
and ASC Topic 815, "Derivatives and Hedging" ("ASC 815"). We account for our
warrants in accordance with the guidance contained in Accounting Standards
Codification
("ASC")815-40under
which the warrants that do not meet the criteria for equity treatment and must
be recorded as liabilities. Accordingly, we classify our warrants as liabilities
at their fair value and adjust the warrants to fair value at each reporting
period. This liability is subject tore-measurement at each balance sheets date
until exercised, and any change in fair value is recognized in our statements of
operations. The fair value of our private placement warrants was determined
using a binomial lattice model incorporating the
Cox-Ross-Rubenstein
methodology. The public warrants for periods where no observable traded price
was available are valued using a binomial lattice model incorporating the
Cox-Ross-Rubenstein
methodology. For periods subsequent to the detachment of the public warrants
from the Units, the public warrant quoted market price was used as the fair
value as of each relevant date.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in the Financial Accounting Standards Board's
("FASB") ASC Topic 480 "Distinguishing Liabilities from Equity." Shares of
Class A common stock subject to mandatory redemption, if any, are classified as
a liability instrument and are measured at fair value. Conditionally redeemable
common stock (including common stock that feature redemption rights that is
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 Class A common stock features certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, shares of Class A common
stock subject to possible redemption are presented as temporary equity, outside
of the stockholders' equity section of our condensed balance sheets.


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Net Income (Loss) per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC
Topic 260, "Earnings Per Share". The Company has two classes of shares, which
are referred to as Class A common stock and Class B common stock. Net income
(loss) per common stock 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 earnings per share. Accretion
associated with the redeemable shares of Class A common stock is excluded from
earnings 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 evaluating the
impact of adoption of ASU
2020-06.
Management does not believe that any 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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