References to the "Company," "our," "us" or "we" refer to Levere 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.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company
on January 15, 2021, for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses, or the Business Combination. Our
sponsor is Goggo Network Gmbh, a German company limited by shares, or our
Sponsor.
The registration statement for our initial public offering, or IPO, was declared
effective on March 18, 2021. On March 23, 2021, we consummated the IPO of
25,000,000 Units (as defined below), at $10.00 per Unit, generating gross
proceeds of $250.0 million. The Company granted the Underwriters in the IPO, or
the Underwriters, a 45-day option to purchase up to 3,750,000 additional Units
to cover over-allotments, if any. On March 31, 2021, the Underwriters partially
exercised the over-allotment option and purchased an additional 2,128,532 Units,
generating an aggregate of gross proceeds of approximately $21.3 million. Each
Unit consists of one Class A ordinary share, and one-third of one redeemable
warrant to purchase one Class A ordinary share, or a Public Warrant, at a price
of $11.50 per whole share, or the "Units" and, with respect to the Class A
ordinary shares included in the Units sold, the Public Shares. We incurred
transaction costs for the IPO and over-allotment of approximately $15.7 million,
inclusive of approximately $9.5 million in deferred underwriting commissions.
Simultaneously with the closing of the IPO, we consummated the private placement
of 4,666,667 warrants at a price of $1.50 per warrant, or thePrivate Placement
Warrants, and together with the Public Warrants, the Warrants, to the Sponsor,
generating gross proceeds of $7.0 million, or the IPO Private Placement.
Simultaneously with the closing of the exercise of the overallotment option, we
completed the sale of an aggregate of an additional 283,804 Private Placement
Warrants to the Sponsor, at a purchase price of $1.50 per Private Placement
Warrant, generating gross proceeds of approximately $0.4 million, or the
Over-Allotment Private Placement and together with the IPO Private Placement,
the Private Placements.
Upon the closing of the IPO and exercise of the over-allotment option, and the
simultaneous Private Placements, approximately $271.3 million ($10.00 per Unit)
of the net proceeds were placed in a trust account, or Trust Account, located in
the United States with Continental Stock Transfer & Trust Company acting as
trustee, and invested only in U.S. "government securities," within the meaning
of Section 2(a)(16) of the Investment Company Act of 1940, as amended, or 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, as determined by us, until the earlier of: (i) the completion of a
Business Combination and (ii) the distribution of the Trust Account as described
below.
If we have not completed a Business Combination within 24 months from the
closing of the IPO, 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 to pay its taxes (less up to $100,000 of interest
to pay dissolution expenses), divided by the number of then outstanding Public
Shares, which redemption will completely extinguish stockholders' rights as
stockholders (including the right to receive further liquidating distributions,
if any), and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the remaining stockholders and our board of
directors, liquidate and dissolve, subject in each case to our obligations under
Delaware law to provide for claims of creditors and the requirements of other
applicable law.
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Recent Developments
On April 12, 2021, the staff of the Securities and Exchange Commission, or the
SEC, released the "Staff Statement on Accounting and Reporting Considerations
for Warrants Issued by Special Purpose Acquisition Companies", or the Staff
Statement. The Staff Statement addresses certain accounting and reporting
considerations related to warrants of a kind similar to those issued by the
Company at the time of its IPO in March 2021.
The Warrants were classified as equity in our previously issued audited balance
sheet as of March 23, 2021. In light of the Staff Statement and guidance in
Accounting Standards Codification, or ASC, 815-40, "Derivatives and Hedging -
Contracts in Entity's Own Equity", or ASC 815-40, in particular as applicable to
certain provisions in the Warrants related to tender or exchange offer
provisions as well as provisions that provided for potential changes to the
settlement amounts dependent upon the characteristics of the holder of the
warrant, we evaluated the terms of the warrant agreement entered into in
connection with our IPO and concluded that our Warrants include provisions that,
based on ASC 815-40, preclude the Warrants from being classified as components
of equity. The Warrants are not eligible for an exception from derivative
accounting, and therefore should be classified as a liability measured at fair
value, with changes in fair value reported each period in earnings.
Results of Operations
For the three months ended March 31, 2021, we had a net loss of approximately
$0.8 million, which included a loss from operations of $0.05 million, offering
cost expense allocated to warrants of $0.6 million, and a loss from the change
in fair value of warrant liabilities of $0.1 million. Our business activities
from inception to March 31, 2021 consisted primarily of our formation and
completing our IPO and, since the completion of our IPO, our activity has been
limited to identifying and evaluating prospective acquisition targets for a
Business Combination.
Liquidity and Capital Resources
As of March 31, 2021, we had approximately $1.7 million in our operating bank
account, and working capital of approximately $1.2 million.
Our liquidity needs up to March 23, 2021 had been satisfied through (i) a
capital contribution from our Sponsor of $25,000 for the 7,187,500 Class B
ordinary shares, par value $0.0001 per share, or the Founder Shares, and
(ii) proceeds from the loan under an unsecured promissory note from our Sponsor
of up to $300,000. Subsequent to the consummation of our IPO, our liquidity
needs have been satisfied through the net proceeds from the Private Placements
not held in the Trust Account. 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, provide us working capital loans. As of March 31, 2021, there were no
amounts outstanding under any working capital loan.
Based on the foregoing, our management believes that we will have sufficient
working capital and borrowing capacity to meet our needs through the earlier of
the consummation of a Business Combination or one year from the date of this
filing. During this time period, we will use the funds held outside of the Trust
Account to pay existing accounts payable, identify and evaluating prospective
initial Business Combination candidates, perform due diligence on prospective
initial Business Combination candidates, pay for travel expenditures, and
structure, negotiate and consummate the initial Business Combination.
Contractual Obligations
As of March 31, 2021, we do not have any long-term debt obligations, capital
lease obligations, operating lease obligations, purchase obligations or
long-term liabilities.
Critical Accounting Policies
This management's discussion and analysis of our financial condition and results
of operations is based on our unaudited condensed financial statements, which
have been prepared in accordance with U.S. GAAP. The preparation of these
unaudited condensed financial statements requires us to make estimates and
judgments that affect the reported
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amounts of assets, liabilities, revenues and expenses and the disclosure of
contingent assets and liabilities in our unaudited condensed 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.
Warrants Liability
We evaluated the Warrants in accordance with ASC 815-40 and concluded that a
provision in the Warrant Agreement related to certain tender or exchange offers
as well as provisions that provided for potential changes to the settlement
amounts dependent upon the characteristics of the holder of the warrant,
precludes the Warrants from being accounted for as components of equity. As the
Warrants meet the definition of a derivative as contemplated in ASC 815-40 and
are not eligible for an exception from derivative accounting, the Warrants are
recorded as derivative liabilities on our Balance Sheet and measured at fair
value at inception (on the date of the IPO) and at each reporting date in
accordance with ASC 820, "Fair Value Measurement", with changes in fair value
recognized in our Statement of Operations in the period of change.
Offering Costs Associated with the Initial Public Offering
We comply with the requirements of the ASC 340-10-S99-1, "Other Assets and
Deferred Costs." Offering costs consisted of legal, accounting, underwriting
fees and other costs incurred through the IPO that were directly related to the
IPO. Offering costs are allocated to the separable financial instruments issued
in the IPO based on a relative fair value basis, compared to total proceeds
received. Offering costs associated with Warrant liabilities are expensed as
incurred, presented as non-operating expenses in our Statement of
Operations. Offering costs associated with the Class A ordinary shares were
charged to shareholders' equity upon the completion of the IPO. Transaction
costs of the IPO, including the partial exercise of the over-allotment, amounted
to $15,722,172, of which $618,405 were allocated to expense associated with the
Warrant liability.
Ordinary Shares Subject to Possible Redemption
The Company accounts for its ordinary shares subject to possible redemption in
accordance with the guidance in ASC 480 "Distinguishing Liabilities from
Equity." Ordinary shares subject to mandatory redemption is classified as a
liability instrument and is measured at fair value. Conditionally redeemable
ordinary shares (including ordinary shares 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 the Company's control) is
classified as temporary equity. At all other times, ordinary shares are
classified as shareholders' equity. The Company's ordinary shares feature
certain redemption rights that are considered to be outside of the Company's
control and subject to occurrence of uncertain future events. Accordingly,
ordinary shares subject to possible redemption is presented at redemption value
as temporary equity, outside of the shareholders' equity section of the
Company's condensed balance sheets.
Net Loss Per Share
Net loss per share is computed by dividing net loss by the weighted average
number of ordinary shares outstanding during the period. The Company applies the
two-class method in calculating earnings per share. Ordinary shares subject to
possible redemption at March 31, 2021, which are not currently redeemable and
are not redeemable at fair value, have been excluded from the calculation of
basic net loss per ordinary share since such shares, if redeemed, only
participate in their pro rata share of the Trust Account earnings.
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 unaudited condensed financial statements.
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Off-Balance Sheet Arrangements
As of March 31, 2021, we
did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii)
of Regulation S-K.
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LEVERE HOLDINGS CORP. 
