The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our unaudited financial
statements and the notes related thereto which are included in "Item 1.
Financial Statements" of this Quarterly Report on Form 10Q.
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this
Quarterly Report on Form 10Q including, without limitation, statements under
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. When used in this Quarterly Report on Form 10Q,
words such as "anticipate," "believe," "estimate," "expect," "intend" and
similar expressions, as they relate to us or the Company's management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of management, as well as assumptions made by, and information currently
available to, the Company's management. Actual results could differ materially
from those contemplated by the forward-looking statements as a result of certain
factors detailed in our filings with the SEC. All subsequent written or oral
forward-looking statements attributable to us or persons acting on the Company's
behalf are qualified in their entirety by this paragraph.
Overview
We are a blank check company incorporated on June 29, 2020 as a Delaware
corporation and formed for the purpose of effecting a Business Combination with
one or more target businesses. We completed our Public Offering on December 15,
2020.
We intend to effectuate our Business Combination using cash from the proceeds of
our Public Offering and the sale of the Private Placement Warrants, our capital
stock, debt, or a combination of cash, stock and debt.
Recent Developments
Proposed Matterport Business Combination
On February 7, 2021, the Company entered into a Merger Agreement, by and among
the Company, First Merger Sub, Second Merger Sub, and Matterport, which provides
for, among other things: (a) the First Merger; and (b) immediately following the
First Merger and as part of the same overall transaction as the First Merger,
the Second Merger. The transactions set forth in the Merger Agreement, including
the Mergers, will constitute a "Business Combination" as contemplated by the
Company's Amended and Restated Certificate of Incorporation.
The Merger Agreement and the transactions contemplated thereby were unanimously
approved by the Board of Directors of the Company on February 7, 2021 and the
Matterport Board on February 7, 2021.
The Merger Agreement
Merger Consideration
Pursuant to the terms of the Merger Agreement, at the effective time of the
First Merger (the "Effective Time"), each share of Matterport's common stock,
par value $0.001 per share ("Matterport Common Stock"), will be converted into
the right to receive a number of newly-issued shares of the Company's Class A
common stock, par value $0.0001 per share ("Company Class A common stock"),
equal to the Per Share Company Common Stock Consideration (as defined in the
Merger Agreement) and each share of Matterport's preferred stock, par value
$0.001 per share ("Matterport Preferred Stock"), will be converted into the
right to receive a number of newly-issued shares of Company Class A common stock
equal to the Per Share Company Preferred Stock Consideration (as defined in the
Merger Agreement). Pursuant to the terms of the Merger Agreement, the Company is
required to use reasonable best efforts to cause the shares of Company Class A
common stock to be issued in connection with the transactions contemplated by
the Merger Agreement (the Business Combination) to be listed on Nasdaq at the
closing of the Business Combination.
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Pursuant to the Merger Agreement, the aggregate merger consideration payable at
the closing of the Business Combination to all of the stockholders and holders
of equity awards of Matterport will be an aggregate number of shares, or equity
awards exercisable for shares, of Company Class A common stock (deemed to have a
value of $10.00 per share) equal to $2,188,750,000, divided by $10.00.
In addition to the consideration to be paid at the closing of the Business
Combination, stockholders of Matterport will be entitled to receive their pro
rata share of an additional number of earn-out shares from the Company, issuable
in Company Class A common stock and subject to the terms provided in the Merger
Agreement, up to an aggregate of 23,460,000 shares collectively issuable to all
Matterport equity holders.
Treatment of Matterport's Equity Awards
Pursuant to the Merger Agreement, at the closing of the Business Combination,
each of Matterport's stock options, to the extent then outstanding and
unexercised, will automatically be converted into (a) an option to acquire a
certain number of shares of Company Class A common stock (pursuant to a ratio
based on the Per Share Company Common Stock Consideration), at an adjusted
exercise price per share and (b) the right to receive a pro rata portion of a
number of earn-out shares from the Company, issuable in Company Class A common
stock and subject to the terms provided in the Merger Agreement (including that
such right to receive earn-out shares is conditional on the holder continuing to
provide services to the Company), up to an aggregate of 23,460,000 shares
collectively issuable to all Matterport equity holders. Each such converted
option will be subject to the same terms and conditions as were applicable
immediately prior to such conversion.
Pursuant to the Merger Agreement, at the closing of the Business Combination,
each of Matterport's restricted stock units, to the extent then unvested and
outstanding, will automatically be converted into (a) an award of restricted
stock units covering a certain number of shares of Company Class A common stock
(pursuant to a ratio based on the Per Share Company Common Stock Consideration)
and (b) the right to receive a pro rata portion of a number of earn-out shares
from the Company, issuable in Company Class A common stock and subject to the
terms provided in the Merger Agreement (including that such right to
receive earn-out shares is conditional on the holder continuing to provide
services to the Company), up to an aggregate of 23,460,000 shares collectively
issuable to all Matterport equity holders. Each such converted restricted stock
unit will be subject to the same terms and conditions as were applicable
immediately prior to such conversion.
Private Placement Subscription Agreements
On February 7, 2021, the Company entered into subscription agreements (each, a
"Subscription Agreement" and collectively, the "Subscription Agreements") with
certain investors, including certain individuals (each, an "Individual Investor
Subscription Agreement"), institutional investors (each, an "Institutional
Investor Subscription Agreement") and Gores Sponsor VI LLC (the "Sponsor"),
pursuant to which the investors have agreed to purchase an aggregate of
29,500,000 shares of Class A common stock in a private placement for $10.00 per
share (the "Private Placement"). The proceeds from the Private Placement will
remain on the Company's balance sheet following the consummation of the Business
Combination.
Each Subscription Agreement will terminate with no further force and effect upon
the earliest to occur of: (a) such date and time as the Merger Agreement is
terminated in accordance with its terms; (b) upon the mutual written agreement
of the parties to such Subscription Agreement; (c) if any of the conditions to
closing set forth in such Subscription Agreement are not satisfied or waived on
or prior to the closing and, as a result thereof, the transactions contemplated
by such Subscription Agreement are not consummated at the closing; and (d) if
the closing of the Business Combination shall not have occurred by September 7,
2021. As of the date hereof, the shares of Class A common stock to be issued
pursuant to the Subscription Agreements have not been registered under the
Securities Act. The Company will, within 30 days after the closing, file with
the SEC a registration statement (the "Post-Closing Registration Statement")
registering the resale of such shares of Class A Common Stock and will use its
commercially reasonable efforts to have such Post-Closing Registration Statement
declared effective as soon as practicable after the filing thereof.
Recent Stockholder Action
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The Company and the members of its Board of Directors have been named as
defendants in a putative stockholder action filed in the Supreme Court of the
State of New York, County of New York, captioned Jamin Quimby v. Gores Holdings
VI, Inc., et al., Index No. 652761/2021, in connection with the proposed
business combination of the Company with Matterport, Inc. (the "Proposed
Transaction"). The complaint generally alleges breach of fiduciary duty and
aiding and abetting claims relating to, among other things, alleged
misstatements and omissions in the Form S-4 registration statement filed by the
Company with the SEC on April 6, 2021 in connection with the Proposed
Transaction (the "Registration Statement"). The complaint seeks, among other
things, injunctive relief and an award of attorneys' fees. The Company believes
the claims asserted in the Quimby matter are without merit, and intends to
vigorously defend against them.
Results of Operations
For the three months ended March 31, 2021, we had a net loss of ($29,974,034),
of which ($26,672,500) are non-cash losses related to the change in fair value
of the warrant liability. Our business activities during the quarter mainly
consisted of identifying and evaluating prospective acquisition candidates for a
Business Combination. We believe that we have sufficient funds available to
complete our efforts to effect a Business Combination with an operating business
by December 15, 2022. However, if our estimates 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 Business
Combination.
As indicated in the accompanying unaudited financial statements, at March 31,
2021, we had $176,595 in cash and deferred offering costs of $12,075,000.
Further, we expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete our Business
Combination will be successful.
Liquidity and Capital Resources
On July 24, 2020, the Sponsor purchased 17,250,000 shares of Class F Common
Stock for $25,000, or approximately $0.001 per share. On October 1, 2020, the
Sponsor surrendered 8,625,000 Founder Shares to us for no consideration, on
October 23, 2020, the Company effected a stock dividend with respect to its
Class F Common Stock of 6,468,750 shares thereof and on November 13, 2020 the
Sponsor surrendered 6,468,750 Founder Shares to us for no consideration,
resulting in an aggregate of 8,625,000 outstanding shares of Class F Common
Stock. As a result of such surrenders and stock dividend, the per-share purchase
price increased to approximately $0.003 per share. The number of Founder Shares
issued was determined based on the expectation that such Founder Shares would
represent 20% of the outstanding shares upon completion of the Public Offering.
On September 11, 2020, the Sponsor transferred 25,000 Founder Shares to each of
the independent directors at their original purchase price.
On December 15, 2020, the Company consummated its Public Offering of 34,500,000
Units at a price of $10.00 per Unit, including 4,500,000 Units as a result of
the underwriters' full exercise of their over-allotment option, generating gross
proceeds of $345,000,000. On the IPO Closing Date, we completed the private sale
of an aggregate of 4,450,000 Private Placement Warrants, each exercisable to
purchase one share of Common Stock at $11.50 per share, to our Sponsor, at a
price of $2.00 per Private Placement Warrant, generating gross proceeds, before
expenses, of $8,900,000. After deducting the underwriting discounts and
commissions (excluding the Deferred Discount, which amount will be payable upon
consummation of the Business Combination, if consummated) and the estimated
offering expenses, the total net proceeds from our Public Offering and the sale
of the Private Placement Warrants were $346,055,000, of which $345,000,000 (or
$10.00 per share sold in the Public Offering) was placed in the Trust Account.
The amount of proceeds not deposited in the Trust Account was $1,055,000 at the
closing of our Public Offering. Interest earned on the funds held in the Trust
Account may be released to us to fund our Regulatory Withdrawals, for a maximum
of 24 months and/or additional amounts necessary to pay our franchise and income
taxes.
On July 24, 2020, Company borrowed $300,000 by the issuance of an unsecured
promissory note from the Sponsor for $300,000 to cover expenses related to the
Public Offering. This Note was non-interest bearing and payable on the earlier
of June 30, 2021 or the completion of the Public Offering. This Note was repaid
in full upon the completion of the Public Offering.
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On March 19, 2021, the Sponsor made available to the Company a loan of up to
$2,000,000 pursuant to a promissory note issued by the Company to the Sponsor.
The proceeds from the note will be used for on-going operational expenses and
certain other expenses in connection with the Proposed Business Combination. The
note is unsecured, non-interest bearing and matures on the earlier of: (i)
January 31, 2022 or (ii) the date on which the Company consummates the Proposed
Business Combination. As of March 31, 2021, the amount advanced by Sponsor to
the Company was $600,000.
At March 31, 2021 and December 31, 2020, we had cash held outside of the Trust
Account of approximately $176,595 and $633,266, respectively, which is available
to fund our working capital requirements. Additionally, interest earned on the
funds held in the Trust Account may be released to us to fund our Regulatory
Withdrawals, for a maximum of 24 months and/or additional amounts necessary to
pay our franchise and income taxes.
At March 31, 2021 and December 31, 2020, the Company had current liabilities of
$48,141,857 and $18,690,703, respectively, and working capital of ($47,129,281)
and ($17,159,683), respectively, the balances of which are primarily related to
warrants we have recorded as liabilities. Other amounts related to accrued
expenses owed to professionals, consultants, advisors and others who are working
on seeking a Business Combination.
We intend to use substantially all of the funds held in the Trust Account,
including interest (which interest shall be net of Regulatory Withdrawals and
taxes payable) to consummate our Business Combination. Moreover, we may need to
obtain additional financing either to complete a Business Combination or because
we become obligated to redeem a significant number of shares of our Common Stock
upon completion of a Business Combination. Subject to compliance with applicable
securities laws, we would only complete such financing simultaneously with the
completion of our Business Combination. If we are unable to complete our
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 Business Combination, if cash on hand is insufficient, we may need
to obtain additional financing in order to meet our obligations. To the extent
that our capital stock or debt is used, in whole or in part, as consideration to
consummate our Business Combination, the remaining proceeds held in our Trust
Account, if any, will be used as working capital to finance the operations of
the target business or businesses, make other acquisitions and pursue our growth
strategy.
Contractual Obligations
As of March 31, 2021 and December 31, 2020, we did not have any long-term debt
obligations, capital lease obligations, operating lease obligations, purchase
obligations or long-term liabilities. In connection with the Public Offering, we
entered into an administrative services agreement to pay monthly recurring
expenses of $20,000 to The Gores Group for office space, utilities and
secretarial support. The administrative services agreement terminates upon the
earlier of the completion of a Business Combination or the liquidation of the
Company.
The underwriters are entitled to underwriting discounts and commissions of 5.5%
($18,975,000), of which 2.0% ($6,900,000) was paid at the IPO Closing Date, and
3.5% ($12,075,000) was deferred. The Deferred Discount will become payable to
the underwriters from the amounts held in the Trust Account solely in the event
that the Company completes a Business Combination, subject to the terms of the
underwriting agreement. The underwriters are not entitled to any interest
accrued on the Deferred Discount.
Recently Issued Accounting Pronouncements Not Yet Adopted
Management does not believe that any recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material effect on
the Company's financial statements based on current operations of the
Company. The impact of any recently issued accounting standards will be
re-evaluated on a regular basis or if a business combination is completed where
the impact could be material.
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