Item
1. Financial Statements.
EDTECHX
HOLDINGS ACQUISITION CORP. II
UNAUDITED
CONDENSED BALANCE SHEET
DECEMBER
31, 2020
Assets:
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
|
|
$
|
1,112,000
|
|
Prepaid
expenses
|
|
|
161,093
|
|
Total
current assets
|
|
|
1,273,093
|
|
Investments
held in Trust Account
|
|
|
116,728,736
|
|
Total
Assets
|
|
$
|
118,001,829
|
|
|
|
|
|
|
Liabilities
and Stockholders’ Equity:
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
78,986
|
|
Accrued
expenses
|
|
|
86,300
|
|
Franchise
tax payable
|
|
|
119,452
|
|
Note
payable - related party
|
|
|
108,226
|
|
Total
current liabilities
|
|
|
392,964
|
|
Deferred
underwriting commissions
|
|
|
4,025,000
|
|
Total
Liabilities
|
|
|
4,417,964
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
Class A common stock, $0.0001 par value; 10,697,917 shares subject
to possible redemption at $10.15 per share
|
|
|
108,583,858
|
|
|
|
|
|
|
Stockholders’
Equity:
|
|
|
|
|
Preferred
stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
-
|
|
Class A common stock, $0.0001 par value; 50,000,000 shares authorized;
802,083 shares issued and outstanding (excluding 10,697,917 shares subject to possible redemption)
|
|
|
80
|
|
Class
B common stock, $0.0001 par value; 10,000,000 shares authorized; 2,875,000 shares issued and outstanding
|
|
|
288
|
|
Additional
paid-in capital
|
|
|
5,179,326
|
|
Accumulated
deficit
|
|
|
(179,687
|
)
|
Total
stockholders’ equity
|
|
|
5,000,007
|
|
Total
Liabilities and Stockholders’ Equity
|
|
$
|
118,001,829
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
EDTECHX
HOLDINGS ACQUISITION CORP. II
UNAUDITED
CONDENSED STATEMENT OF OPERATIONS
|
|
For the Three Months Ended December 31,
2020
|
|
|
For The Six months ended
December 31,
2020
|
|
General and administrative expenses
|
|
$
|
35,969
|
|
|
$
|
51,704
|
|
General and administrative expenses - related party
|
|
|
5,000
|
|
|
|
5,000
|
|
Franchise tax expenses
|
|
|
119,452
|
|
|
|
119,452
|
|
Total operating expenses
|
|
|
(160,421
|
)
|
|
|
(176,156
|
)
|
Gain on investments Held in Trust Account
|
|
|
3,736
|
|
|
|
3,736
|
|
Net Loss
|
|
$
|
(156,685
|
)
|
|
$
|
(172,420
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average Class B common stock outstanding, basic and diluted
|
|
|
2,926,250
|
|
|
|
2,713,182
|
|
|
|
|
|
|
|
|
|
|
Net loss per Class B common stock, basic and diluted
|
|
$
|
(0.05
|
)
|
|
$
|
(0.06
|
)
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
EDTECHX
HOLDINGS ACQUISITION CORP. II
UNAUDITED
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2020
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Class A
|
|
|
Class B(1)
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance - July 1, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
2,875,000
|
|
|
$
|
288
|
|
|
$
|
24,712
|
|
|
$
|
(7,267
|
)
|
|
$
|
17,733
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(15,735
|
)
|
|
|
(15,735
|
)
|
Balance - September 30, 2020 (unaudited)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
2,875,000
|
|
|
$
|
288
|
|
|
$
|
24,712
|
|
|
$
|
(23,002
|
)
|
|
$
|
1,998
|
|
Sale of units in initial public offering, gross
|
|
|
11,500,000
|
|
|
|
1,150
|
|
|
|
-
|
|
|
|
-
|
|
|
|
114,998,850
|
|
|
|
-
|
|
|
|
115,000,000
|
|
Offering costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,786,448
|
)
|
|
|
-
|
|
|
|
(6,786,448
|
)
|
Sale of private placement warrants to the Sponsors and an affiliate of the underwriters in private placement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,525,000
|
|
|
|
-
|
|
|
|
5,525,000
|
|
Common stock subject to possible redemption
|
|
|
(10,697,917
|
)
|
|
|
(1,070
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(108,582,788
|
)
|
|
|
-
|
|
|
|
(108,583,858
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(156,685
|
)
|
|
|
(156,685
|
)
|
Balance - December 31, 2020 (unaudited)
|
|
|
802,083
|
|
|
$
|
80
|
|
|
|
2,875,000
|
|
|
$
|
288
|
|
|
$
|
5,179,326
|
|
|
$
|
(179,687
|
)
|
|
$
|
5,000,007
|
|
|
(1)
|
In
December 2020, the Sponsor contributed an aggregate of 1,437,500 shares of Class B common stock to the Company for no consideration,
resulting in a decrease in the total number of shares of Class B common stock outstanding from 4,312,500 to 2,875,000. All shares
and associated amounts have been retroactively restated to reflect the share contribution (see Note 4).
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
EDTECHX
HOLDINGS ACQUISITION CORP. II
UNAUDITED
CONDENSED STATEMENT OF CASH FLOWS
FOR
THE SIX MONTHS ENDED DECEMBER 31, 2020
Cash Flows from Operating Activities:
|
|
|
|
Net loss
|
|
$
|
(172,420
|
)
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
General and administrative expenses paid by Sponsor through note payable
|
|
|
24,589
|
|
Net gain on investments held in Trust Account
|
|
|
(3,736
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
Prepaid expenses
|
|
|
(161,093
|
)
|
Accounts payable
|
|
|
41,708
|
|
Franchise tax payable
|
|
|
119,452
|
|
Accrued Expenses
|
|
|
(1,000
|
)
|
Net cash used in operating activities
|
|
|
(152,500
|
)
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
Cash deposited in Trust Account
|
|
|
(116,725,000
|
)
|
Net cash used in investing activities
|
|
|
(116,725,000
|
)
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
Proceeds received from initial public offering, gross
|
|
|
115,000,000
|
|
Proceeds received from private placement
|
|
|
5,525,000
|
|
Offering costs paid
|
|
|
(2,535,500
|
)
|
Net cash provided by financing activities
|
|
|
117,989,500
|
|
|
|
|
|
|
Net increase in cash
|
|
|
1,112,000
|
|
Cash - beginning of the period
|
|
|
-
|
|
Cash - end of the period
|
|
$
|
1,112,000
|
|
|
|
|
|
|
Supplemental disclosure of noncash activities:
|
|
|
|
|
Offering costs included in accounts payable
|
|
$
|
37,278
|
|
Offering costs included in accrued expenses
|
|
$
|
86,300
|
|
Offering costs included in note payable
|
|
$
|
77,370
|
|
Deferred underwriting commissions in connection with the initial public offering
|
|
$
|
4,025,000
|
|
Initial value of common stock subject to possible redemption
|
|
$
|
93,922,703
|
|
Change in value of common stock subject to possible redemption
|
|
$
|
14,661,152
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
EDTECHX
HOLDINGS ACQUISITION CORP. II
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
1 — Description of Organization and Business Operations
EdtechX
Holdings Acquisition Corp. II (the “Company”) is a blank check company incorporated in Delaware on May 27, 2020.
The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses (the “Business Combination”). The Company is an emerging
growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As
of December 31, 2020, the Company had not commenced any operations. All activity for the three and six months ended December
31, 2020 relate to the Company’s formation and the initial public offering (the “Initial Public Offering”)
described below. The Company will not generate any operating revenues until after the completion of its initial Business
Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and
cash equivalents from the proceeds derived from the Initial Public Offering (as defined below). The Company has selected June
30 as its fiscal year end.
The
Company’s Sponsors are IBIS Capital Sponsor II LLC and IBIS Sponsor II EdtechX LLC, limited liability companies affiliated
with certain of the Company’s officers and directors (the “Sponsors”). The registration statement for
the Company’s Initial Public Offering became effective on December 10, 2020. On December 15, 2020, the Company consummated
its Initial Public Offering of 10,000,000 units (the “Units”) at $10.00 per Unit, generating gross proceeds of $100.0 million,
and incurring offering costs of approximately $6.0 million, inclusive of $3.5 million in deferred underwriting commissions
(Note 5). The underwriters exercised the over-allotment option in full and on December 17, 2020 purchased an additional 1,500,000
Units (the “Over-Allotment Units”), generating gross proceeds of $15.0 million, and the Company incurred additional
offering costs of $825,000 in underwriting fees, inclusive of $525,000 in deferred underwriting fees (the “Over-Allotment”).
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”)
of 5,000,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”)
at a price of $1.00 per Private Placement Warrant to the Sponsors and MIHI LLC, an affiliate of Macquarie Capital (USA) Inc.,
one of the underwriters of the Initial Public Offering, generating proceeds of $5.0 million (Note 4). Simultaneously with the
consummation of the sale of the Over-Allotment Units, the Sponsors, MIHI LLC and Jefferies LLC, the representative of the underwriters
in the Initial Public Offering, purchased an additional 525,000 Private Warrants for an aggregate purchase price of an additional
$525,000.
Upon
the closing of the Initial Public Offering and the Private Placement, $101.5 million ($10.15 per Unit) of the net proceeds of
the sale of the Units in the Initial Public Offering and of the Private Placement Warrants in the Private Placement were placed
in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer &
Trust Company acting as trustee, and will be invested only in U.S. “government securities,” within the meaning of
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 1940, as amended (the “Investment
Company Act”), which invest only in direct U.S. government treasury obligations, as determined by the Company, until the
earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described
below. Upon the closing of the Over-Allotment and additional sale of Private Placement Warrants on December 17, 2020, an
aggregate of approximately $15.2 million of additional net proceeds were placed in the Trust Account, for a total of approximately
$116.7 million held in Trust Account.
The
Company’s 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 Warrants, although substantially all of the net proceeds are intended to be applied
generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business
Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market
value of at least 80% of the value of the funds held in the Trust Account (excluding the amount of any deferred underwriting commissions,
as described in Note 5, and taxes payable on the interest earned on the Trust Account) at the time of the agreement to enter
into the initial Business Combination. However, the Company only intends to complete a Business Combination if the post-transaction company
owns or acquires 50% or more of the voting securities of the target or otherwise acquires a controlling interest in the target
sufficient for it not to be required to register as an investment company under the Investment Company Act.
EDTECHX
HOLDINGS ACQUISITION CORP. II
UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
Company will provide the holders (the “Public Stockholders”) of the Company’s outstanding shares of Class A
common stock, par value $0.0001 per share, sold in the Initial Public Offering (the “Public Shares”) with the opportunity
to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection
with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as
to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the
Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion
of the amount then held in the Trust Account (initially anticipated to be $10.15 per Public Share). The per-share amount
to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions
the Company will pay to the underwriters (as discussed in Note 5). These Public Shares have been recorded at a redemption value
and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting
Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” The Company will proceed with a Business Combination if a majority of the shares voted are voted
in favor of the Business Combination. The Company will not redeem the Public Shares in connection with a Business Combination
in an amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not required by law
and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to
its Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions
pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents
with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law,
or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in
conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each
public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction
or do not vote at all or are not a holder of record of Public Shares on the record date established in connection with a Business
Combination. If the Company seeks stockholder approval in connection with a Business Combination, the initial stockholders (as
defined below) agreed to vote their Founder Shares (as defined below in Note 4) and any Public Shares purchased during or after
the Initial Public Offering in favor of a Business Combination. In addition, the initial stockholders agreed to waive their redemption
rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.
The
Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other
person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect
to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.
The
holders of the Founder Shares (the “initial stockholders”) agreed not to propose an amendment to the Certificate of
Incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company
does not complete a Business Combination within the Combination Period (as defined below) or with respect to any other material
provisions relating to stockholders’ rights or pre-initial Business Combination activity, unless the Company provides
the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
If
the Company is unable to complete a Business Combination within 18 months from the closing of the Initial Public Offering,
or June 15, 2022, (the “Combination Period”) and the Company’s stockholders have not amended the Certificate
of Incorporation to extend such Combination Period, the Company 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 the Company to pay its taxes and working capital
needs (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 Public 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 the board of directors, liquidate and dissolve, subject in the case of clauses
(ii) and (iii) to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law.
EDTECHX
HOLDINGS ACQUISITION CORP. II
UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
initial stockholders agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder
Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial stockholders
acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust
Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period.
The underwriters agreed to waive their rights to the deferred underwriting commission (see Note 5) held in the Trust Account in
the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts
will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares.
In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution
(including Trust Account assets) will be only $10.15. In order to protect the amounts held in the Trust Account, the Sponsors
have agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent
registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with
which the Company has entered into a letter of intent, confidentiality or other similar agreement or business combination agreement
(a “Target”), reduce the amount of funds in the Trust Account to below the lesser of (i) $10.15 per Public Share and
(ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account,
if less than $10.15 per Public Share due to reductions in the value of the trust assets, less taxes payable, provided that such
liability will not apply to any claims by a third party or Target that executed a waiver of any and all rights to the monies held
in the Trust Account (whether or not such waiver is enforceable) not will it apply to any claims under the Company’s indemnity
of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act
of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsors will
have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective
target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right,
title, interest or claim of any kind in or to monies held in the Trust Account.
Liquidity
and Capital Resources
As
of December 31, 2020, the Company had approximately $1.1 million in cash, and working capital, net of franchise tax payable
of approximately $1.0 million.
The
Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of
$25,000 from the Sponsor to cover for certain offering costs on behalf of the Company in exchange for issuance of Founders Shares
(as defined in Note 4), and loan proceeds from the Sponsors of approximately $108,000 under the Note, which remains outstanding
to date (Note 4). Subsequent from the consummation of the Initial Public Offering, the Company’s liquidity has been satisfied
through the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside of the Trust
Account.
Based
on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its
needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time, the Company
will be using the funds held outside of the Trust Account 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.
On
January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new
strain of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak
as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues
to evolve. Management is continuing to evaluate the impact of the COVID-19 pandemic and has concluded that while it
is reasonably possible that the virus could have an effect on the Company’s financial position, results of its operations
and/or search for a target company, the specific impact is not readily determinable as of the date of these unaudited condensed
financial statements. The unaudited condensed financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
EDTECHX
HOLDINGS ACQUISITION CORP. II
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
2 — Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements of the Company have been prepared in accordance with United States generally
accepted accounting principles (“GAAP”) for interim financial information and Article 8 of Regulation S-X. Accordingly,
they do not include all the information and footnotes required by GAAP. In the opinion of management, all adjustments (consisting
of normal accruals) considered for a fair presentation have been included. Operating results for the six months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal period
ending June 30, 2021 or any future period.
The
accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and
notes thereto included in the Form 8-K and the final prospectus filed by the Company with the SEC on December 15, 2020 and December
11, 2020, respectively.
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the
Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies that are not emerging growth companies including,
but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements
of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in
its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and stockholder approval of any golden parachute payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition
period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is
irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued
or revised and it has different application dates for public or private companies, the Company, as an emerging growth company,
can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s unaudited condensed financial statements with another public company that is neither an emerging growth
company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because
of the potential differences in accounting standards used.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company does not have any cash equivalents as of December 31, 2020.
Concentration
of Credit Risk
Financial instruments that potentially
subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may
exceed the Federal Depository Insurance Coverage limit of $250,000. At December 31, 2020, the Company has not experienced losses
on these accounts and management believes the Company is not exposed to significant risks on such accounts. The Company’s
investments held in the Trust Account as of December 31, 2020 is comprised of investments in U.S. Treasury securities with an original
maturity of 185 days or less or investments in a money market funds that comprise only U.S. treasury securities money market funds.
EDTECHX
HOLDINGS ACQUISITION CORP. II
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Investments
Held in the Trust Account
The
Company’s 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 Company’s investments held in the Trust Account
are classified as trading securities. Trading securities are presented on the unaudited condensed balance sheet 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 from 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.
Fair
Value of Financial Instruments
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the
inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
These tiers include:
|
●
|
Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
|
|
|
|
●
|
Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as
quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that
are not active; and
|
|
|
|
|
●
|
Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own
assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value
drivers are unobservable.
|
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy.
In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest
level input that is significant to the fair value measurement.
As
of December 31, 2020, the carrying values of cash, prepaid expenses, accounts payable, accrued expenses, franchise tax
payable and notes payable related party approximate their fair values due to the short-term nature of the instruments. The
Company’s investments held in Trust Account are comprised of investments in U.S. Treasury securities with an original
maturity of 185 days or less or investments in a money market funds that comprise only U.S. treasury securities and are
recognized at fair value. The fair value of investments held in Trust Account is determined using quoted prices in
active markets.
Use
of Estimates
The
preparation of unaudited condensed financial statements in conformity with GAAP requires the Company’s management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the unaudited condensed financial statements and the reported amounts of revenues and expenses during the reporting
period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate
of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed financial
statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming
events. Accordingly, the actual results could differ significantly from those estimates.
Offering
Costs Associated with the Initial Public Offering
Deferred
offering costs consisted of legal, accounting, underwriting fees and other costs incurred that were directly related to the Initial
Public Offering and that were charged to stockholders’ equity upon the completion of the Initial Public Offering on December
15, 2020.
EDTECHX
HOLDINGS ACQUISITION CORP. II
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Net
Loss Per Share of Common Stock
The Company complies with accounting and
disclosure requirements of ASC Topic 260, “Earnings Per Share.” Net loss per share is computed by dividing net loss
by the weighted average number of common shares outstanding during the period. An aggregate of 10,697,917 shares of common
stock subject to possible redemption as of December 31, 2020 have been excluded from the calculation of basic loss per common share,
since such shares, if redeemed, only participate in their pro rata share of the Trust earnings. The Company has not considered
the effect of the warrants sold in the Initial Public Offering and Private Placement to purchase an aggregate of 11,275,000 Class
A shares of common stock in the calculation of diluted loss per common share, since the exercise of the warrants are contingent
upon occurrence of future events. As a result, diluted loss per share is the same as basic loss per share for the periods presented.
Reconciliation
of net loss per share of common stock
|
|
For the Three Months Ended December 31,
2020
|
|
|
For The Six months ended
December 31,
2020
|
|
Net (loss) income
|
|
|
(156,685
|
)
|
|
$
|
(172,420
|
)
|
Less: Income attributable to common stock subject to possible redemption
|
|
|
-
|
|
|
|
-
|
|
Adjusted net loss
|
|
$
|
(156,685
|
)
|
|
$
|
(172,420
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding, basic and diluted
|
|
|
2,926,250
|
|
|
|
2,713,125
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share of common stock
|
|
$
|
(0.05
|
)
|
|
$
|
(0.06
|
)
|
Class A
Common Stock Subject to Possible Redemption
The Company accounts for its Class A
common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities
from Equity.” Class A common stock subject to mandatory redemption (if any) is classified as liability instruments and
are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features
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 common stock
is classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption rights that
are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly,
at December 31, 2020, 10,697,917 shares of Class A common stock subject to possible redemption is presented at redemption
value as temporary equity, outside of the stockholders’ equity section of the Company’s unaudited condensed balance
sheet.
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.”
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between
the unaudited condensed financial statements carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be realized. Deferred tax assets were deemed immaterial as
of December 31, 2020.
FASB
ASC 740 prescribes a recognition threshold and a measurement attribute for the unaudited condensed financial statements recognition
and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position
must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as
of December 31, 2020. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax
expense. No amounts were accrued for the payment of interest and penalties as of December 31, 2020. The Company is currently not
aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company is subject to income tax examinations by major taxing authorities since inception.
EDTECHX
HOLDINGS ACQUISITION CORP. II
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not yet effective, accounting standards updates, if currently adopted, would have
a material effect on the accompanying unaudited condensed financial statements.
Note
3 — Initial Public Offering
On
December 15, 2020, the Company consummated its Initial Public Offering of 10,000,000 Units at $10.00 per Unit, generating
gross proceeds of $100.0 million, and incurring offering costs of approximately $6.0 million, inclusive of $3.5 million
in deferred underwriting commissions. The underwriters exercised the over-allotment option in full and on December 17, 2020 purchased
an additional 1,500,000 Over-Allotment Units, generating gross proceeds of $15.0 million, and the Company incurred additional
offering costs of $825,000 in underwriting fees, inclusive of $525,000 in deferred underwriting fees.
Each
Unit consists of one share of Class A common stock, and one-half of one redeemable warrant (each, a “Public Warrant”).
Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share,
subject to adjustment (see Note 6).
Note
4 — Related Party Transactions
Founder
Shares
On
June 30, 2020, the Sponsors purchased 4,312,500 shares of the Company’s Class B common stock, par value $0.0001 per share,
(the “Founder Shares”) for an aggregate price of $25,000. In December 2020, the Sponsor contributed an aggregate of
1,437,500 shares of Class B common stock to the Company for no consideration, resulting in a decrease in the total number of shares
of Class B common stock outstanding from 4,312,500 to 2,875,000. All shares and associated amounts have been retroactively restated
to reflect the share contribution. In connection with the Initial Public Offering, the Sponsors contributed to the Company’s
capital an aggregate of 40,000 Founder Shares and the Company issued a like number of shares to one of the underwriters in the
Initial Public Offering — see “Private Placement” below. The initial stockholders agreed to forfeit up to 375,000
Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriters, so that the Founder
Shares would represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering. On December
17, 2020, the underwriters fully exercised the over-allotment option to purchase an additional 1,500,000 Units; thus, these 375,000
shares of Class B common stock were no longer subject to forfeiture.
The
initial stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the
earlier to occur of: (A) one year after the completion of the initial Business Combination or (B) subsequent to the
initial Business Combination, (x) if the reported closing price of the Class A common stock equals or exceeds $12.00
per share (as adjusted for stock splits, stock dividends, 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 (y) the
date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in
all of the stockholders having the right to exchange their shares of common stock for cash, securities or other property. Any
permitted transferees will be subject to the same restrictions and other agreements of our initial stockholders with respect to
any Founder Shares.
Private
Placement Warrants and Founder Shares
On
December 15, 2020, the Sponsors, the underwriters and MIHI purchased an aggregate of 5,000,000 Private Placement Warrants, and
40,000 Founder Shares for an aggregate purchase price of approximately $5.0 million in the Private Placement that occurred
simultaneously with the closing of the Initial Public Offering. Simultaneously with the consummation of the sale of the Over-Allotment
Units on December 17, 2020, the Sponsors, MIHI LLC, and Jefferies LLC, the representative of the underwriters in the Initial Public
Offering, purchased an additional 525,000 Private Warrants for an aggregate purchase price of an additional $525,000.
EDTECHX
HOLDINGS ACQUISITION CORP. II
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Each
Private Placement Warrant is exercisable for one whole share of Class A common stock at a price of $11.50 per share. The Founder
Shares are described above. A portion of the proceeds from the sale of the Private Placement Warrants were added to the net proceeds
from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the
Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable for
cash and exercisable on a cashless basis so long as they are held by the initial purchasers or their permitted transferees.
The
purchasers of the Private Placement Warrants agreed, subject to limited exceptions, not to transfer, assign or sell any of their
Private Placement Warrants (except to permitted transferees) until 30 days after the completion of the initial Business Combination.
Related
Party Loans
On
June 30, 2020, the Sponsors agreed to loan the Company an aggregate of up to $150,000 to cover expenses related to the Initial
Public Offering pursuant to a promissory note (the “Note”). This loan is non-interest bearing and payable on
the earlier of December 31, 2020 or the completion of the Initial Public Offering. As of December 31, 2020, the Company had
borrowed approximately $108,000 under the Note. The Note still remains outstanding to date.
In
addition, in order to finance transaction costs in connection with a Business Combination, the Sponsors or an affiliate of the
Sponsors, or the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds
as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay
the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans
would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the
Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in
the Trust Account would be used to repay the Working Capital 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 warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the
Private Placement Warrants. 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. As of December 31, 2020, the Company had no borrowings under the Working
Capital Loans.
Administrative
Services Agreement
The Company entered into an agreement that provided that, commencing
on the effective date of the offering prospectus and continuing until the earlier of the Company’s consummation of a Business
Combination and the Company’s liquidation, to the Company agreed to pay the Sponsors a total of $10,000 per month for providing
the Company with office space and certain office and secretarial services. For the three and six months ended December 31, 2020,
$5,000 of these expenses were incurred. As of December 31, 2020, $25,000 of these fees were prepaid by the Company and are included
in prepaid expenses on the unaudited condensed balance sheet.
The
Sponsors, officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses
incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing
due diligence on suitable Business Combinations. The Company’s audit committee will review on a quarterly basis all payments
that were made to the Sponsors, officers, directors or the Company’s or their affiliates and will determine which expenses
and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses
incurred by such persons in connection with activities on the Company’s behalf.
EDTECHX
HOLDINGS ACQUISITION CORP. II
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
5 — Commitments & Contingencies
Registration
Rights
The
holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans,
if any, (and the securities underlying such securities) are entitled to registration rights pursuant to a registration rights
agreement signed upon the consummation of the Initial Public Offering. The Company will bear the expenses incurred in connection
with the filing of any such registration statements.
Underwriting
Agreement
The
underwriters were entitled to an underwriting discount of $0.20 per unit, or $2.0 million in the aggregate, which was paid
upon the closing of the Initial Public Offering. An additional fee of $0.35 per unit, or $3.5 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 the Company completes a Business Combination, subject to the
terms of the underwriting agreement.
Upon
closing of the Over-allotment on December 17, 2020, the underwriters received approximately $300,000 in fees paid upfront and
eligible for an additional deferred underwriting commissions of $525,000.
Note
6 — Stockholders’ Equity
Class A Common Stock —
The Company is authorized to issue 50,000,000 shares of Class A common stock with a par value of $0.0001 per share. As
of December 31, 2020, there were 11,500,000 shares of Class A common stock issued or outstanding, including 10,697,917 shares
of Class A common stock subject to possible redemption.
Class B
Common Stock — The Company is authorized to issue 10,000,000 shares of Class B common stock with
a par value of $0.0001 per share. On June 30, 2020, the Company issued 4,312,500 shares of Class B common stock.
In December 2020, the Sponsor contributed an aggregate of 1,437,500 shares of Class B common stock to the Company for no
consideration, resulting in a decrease in the total number of shares of Class B common stock outstanding from 4,312,500 to 2,875,000.
All shares and associated amounts have been retroactively restated to reflect the share contribution. Of the 2,875,000 shares
of Class B common stock outstanding, up to 375,000 shares were subject to forfeiture to the Company by the initial stockholders
for no consideration to the extent that the underwriter’s over-allotment option was not exercised in full or in part,
so that the initial stockholders would collectively own 20% of the Company’s issued and outstanding common stock after the
Initial Public Offering. On December 17, 2020, the underwriters fully exercised the over-allotment option to purchase an additional
1,500,000 Units; thus, these 375,000 shares of Class B common stock were no longer subject to forfeiture.
Common
stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Holders of
record of the Class A common stock and holders of record of the Class B common stock will vote together as a single
class on all matters submitted to a vote of the stockholders, with each share of common stock entitling the holder to one vote
except as required by law.
The
Class B common stock will automatically convert into Class A common stock at the time of the initial Business Combination
on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described herein. In the
case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued in connection
with the initial Business Combination, the number of shares of Class A common stock issuable upon conversion of all Founder
Shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common
stock outstanding upon the completion of the Initial Public Offering, plus the total number of shares of Class A common stock
issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed
issued, by the Company in connection with or in relation to the consummation of the initial Business Combination, excluding any
shares of Class A common stock or equity-linked securities exercisable for or convertible into shares of Class A
common stock issued, or to be issued, to any seller in the initial Business Combination and any private placement-equivalent warrants
issued upon conversion of Working Capital Loans; provided that such conversion of Founder Shares will never occur on a less than
one for one basis.
EDTECHX
HOLDINGS ACQUISITION CORP. II
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per
share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s
board of directors. As of December 31, 2020, there were no shares of preferred stock issued or outstanding.
Warrants —
Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation
of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days
after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided
in each case that the Company has an effective registration statement under the Securities Act covering the shares of Class A
common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company
permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under
the Securities Act). The Company has agreed that as soon as practicable, but in no event later than 15 business days after the
closing of the initial Business Combination, the Company will use its best efforts to file with the SEC and have an effective
registration statement covering the shares of Class A common stock issuable upon exercise of the warrants and to maintain
a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. If a registration
statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the 60th business
day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration
statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants
on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding
the above, if the Company’s shares of Class A common stock are at the time of any exercise of a warrant not listed
on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1)
of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so
on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company
so elect, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not
so elect, it will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption
is not available.
The
warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of
a Business Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional shares
of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of the
initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock
(with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any
such issuance to the initial stockholders or their affiliates, without taking into account any Founder Shares held by the initial
stockholders or their affiliates, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross
proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding
of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions),
and (z) the volume weighted average trading price of the common stock during the 20 trading day period starting on the trading
day prior to the day on which the Company consummates the initial Business Combination (such price, the “Market Value”)
is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the
higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described below will
be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The
Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of
Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable
until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private
Placement Warrants will be non-redeemable so long as they are held by the Sponsors or their permitted transferees. If the
Private Placement Warrants are held by someone other than the Sponsors or their permitted transferees, the Private Placement Warrants
will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
EDTECHX
HOLDINGS ACQUISITION CORP. II
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Once
the warrants become exercisable, the Company may redeem the outstanding warrants for cash (except as described herein with respect
to the Private Placement Warrants):
|
●
|
in
whole and not in part;
|
|
●
|
at
a price of $0.01 per warrant;
|
|
●
|
upon
a minimum of 30 days’ prior written notice of redemption; and
|
|
●
|
if,
and only if, the reported closing price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock
splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day
period commencing once the warrants become exercisable and ending on the third trading day prior to the date on which the Company
sends the notice of redemption to the warrant holders.
|
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise
the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
In
no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination
within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive
any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held
outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
Note
7 — Subsequent Events
Management has evaluated subsequent events
and transactions occurring through the date the unaudited condensed financial statements were issued. Other than as described
herein, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed
financial statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References
to the “Company,” “our,” “us” or “we” refer to EdtechX Holdings Acquisition Corp.
II 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 in Delaware on May 27, 2020 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business
Combination”). Our sponsors are IBIS Capital Sponsor II LLC and IBIS Sponsor II EdtechX LLC, limited liability companies
affiliated with certain of the Company’s officers and directors (the “Sponsors”).
The
registration statement for our Initial Public Offering (“Initial Public Offering”) became effective on December 10,
2020. On December 15, 2020, the Company consummated its Initial Public Offering of 10,000,000 units (the “Units”)
at $10.00 per Unit, generating gross proceeds of $100.0 million, and incurring offering costs of approximately $6.0
million, inclusive of $3.5 million in deferred underwriting commissions. The underwriters exercised the over-allotment option
in full and on December 17, 2020 purchased an additional 1,500,000 Units (the “Over-Allotment Units”), generating
gross proceeds of $15.0 million, and the Company incurred additional offering costs of $825,000 in underwriting fees, inclusive
of $525,000 in deferred underwriting fees (the “Over-Allotment”).
Simultaneously
with the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 5,000,000
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a
price of $1.00 per Private Placement Warrant to the Sponsors and MIHI LLC, an affiliate of Macquarie Capital (USA) Inc., one of
the underwriters of the Initial Public Offering, generating proceeds of $5.0 million (Note 4). Simultaneously with the consummation
of the sale of the Over-Allotment Units, the Sponsors, MIHI LLC, and Jefferies LLC, the representative of the underwriters in
the Initial Public Offering, purchased an additional 525,000 Private Warrants for an aggregate purchase price of an additional
$525,000.
Upon
the closing of the Initial Public Offering and the Private Placement, $101.5 million ($10.15 per Unit) of the net proceeds
of the sale of the Units in the Initial Public Offering and of the Private Placement Warrants in the Private Placement were placed
in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer &
Trust Company acting as trustee, and will be invested only in U.S. “government securities,” within the meaning of
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 1940, as amended (the “Investment
Company Act”), which invest only in direct U.S. government treasury obligations, as determined by the Company, until the
earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described
below. Upon the closing of the Over-Allotment on December 17, 2020, an aggregate of approximately $15.2 million of the
additional net proceeds from the consummation of the Over-Allotment were placed in the Trust Account, for a total of approximately
$116.7 million held in Trust Account.
If
we are unable to complete a Business Combination within 18 months from the closing of the Initial Public Offering, or June
15, 2022, (the “Combination Period”) and our stockholders have not amended the Certificate of Incorporation to extend
such 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 to pay its taxes and working capital needs (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
Public 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 the board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to our obligations
under Delaware law to provide for claims of creditors and the requirements of other applicable law.
Results
of Operations
Our
entire activity from May 27, 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 three months ended December 31, 2020, we had a loss of approximately $157,000, which consisted of approximately $41,000 of
general and administrative expenses, inclusive of $5,000 general administrative expense related party, and approximately $119,000
of franchise tax expense, partly offset by approximately $4,000 of gain on investments held in Trust Account.
For the six months ended December 31, 2020, we had a loss of
approximately $172,000, which consisted of approximately $57,000 of general and administrative expenses, inclusive of $5,000 of
general and administrative expenses related party, and approximately $119,000 of franchise tax expense, partly offset by approximately
$4,000 of gain on investments held in Trust Account.
Liquidity
and Capital Resources
As
of December 31, 2020, we had approximately $1.1 million in cash and working capital of approximately $1.0 million, net of franchise
tax payable.
Prior
to December 31, 2020, our liquidity needs were satisfied through a payment of $25,000 from the Sponsor to cover for certain offering
costs on behalf of the Company in exchange for issuance of Founders Shares (as defined in Note 4), and loan proceeds from the
Sponsor of approximately $108,000 under the Note, which remain outstanding to date (Note 4). Subsequent from the consummation
of the Initial Public Offering, our liquidity needs have been satisfied through the net proceeds from the consummation of the
Initial Public Offering and the Private Placement held outside of the Trust Account.
Based
on the foregoing, management believes that we will have sufficient working capital and borrowing capacity to meet its needs through
the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will
be using these funds held outside of the Trust Account 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.
Related
Party Transactions
Founder
Shares
On
June 30, 2020, our Sponsors purchased 4,312,500 shares of our Class B common stock, par value $0.0001 per share, (the “Founder
Shares”) for an aggregate price of $25,000. In December 2020, our Sponsor contributed an aggregate of 1,437,500 shares of
Class B common stock to our Company for no consideration, resulting in a decrease in the total number of shares of Class B common
stock outstanding from 4,312,500 to 2,875,000. All shares and associated amounts have been retroactively restated to reflect the
share contribution. In connection with the Initial Public Offering, our Sponsors contributed to our Company’s capital an
aggregate of 40,000 Founder Shares and the Company issued a like number of shares to one of the underwriters in the Initial Public
Offering — see “Private Placement” below. The initial stockholders agreed to forfeit up to 375,000 Founder Shares
to the extent that the over-allotment option was not exercised in full by the underwriters, so that the Founder Shares would represent
20.0% of the Company’s issued and outstanding shares after the Initial Public Offering. On December 17, 2020, the underwriters
fully exercised the over-allotment option to purchase an additional 1,500,000 Units; thus, these 375,000 shares of Class B common
stock were no longer subject to forfeiture.
The
initial stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the
earlier to occur of: (A) one year after the completion of the initial Business Combination or (B) subsequent to the
initial Business Combination, (x) if the reported closing price of the Class A common stock equals or exceeds $12.00
per share (as adjusted for stock splits, stock dividends, 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 (y) the
date on which we complete a liquidation, merger, capital stock exchange or other similar transaction that results in all of the
stockholders having the right to exchange their shares of common stock for cash, securities or other property. Any permitted transferees
will be subject to the same restrictions and other agreements of our initial stockholders with respect to any Founder Shares.
Private
Placement Warrants and Founder Shares
On
December 15, 2020, our Sponsors, the underwriters and MIHI purchased an aggregate of 5,000,000 Private Placement Warrants, and
40,000 Founder Shares for an aggregate purchase price of approximately $5.0 million in the Private Placement that occurred
simultaneously with the closing of the Initial Public Offering. Simultaneously with the consummation of the sale of the Over-Allotment
Units on December 17, 2020, our Sponsors, MIHI LLC, and Jefferies LLC, the representative of the underwriters in the Initial Public
Offering, purchased an additional 525,000 Private Warrants for an aggregate purchase price of an additional $525,000.
Each
Private Placement Warrant is exercisable for one whole share of Class A common stock at a price of $11.50 per share. The Founder
Shares are described above. A portion of the proceeds from the sale of the Private Placement Warrants were added to the net proceeds
from the Initial Public Offering held in the Trust Account. If we do not complete a Business Combination within the Combination
Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable for cash
and exercisable on a cashless basis so long as they are held by the initial purchasers or their permitted transferees.
The
purchasers of the Private Placement Warrants agreed, subject to limited exceptions, not to transfer, assign or sell any of their
Private Placement Warrants (except to permitted transferees) until 30 days after the completion of the initial Business Combination.
Related
Party Loans
On
June 30, 2020, our Sponsors agreed to loan us an aggregate of up to $150,000 to cover expenses related to the Initial Public
Offering pursuant to a promissory note (the “Note”). This loan is non-interest bearing and payable on the earlier
of December 31, 2020 or the completion of the Initial Public Offering. As of December 31, 2020, we had borrowed approximately
$108,000 under the Note. The Note still remains outstanding to date.
In
addition, in order to finance transaction costs in connection with a Business Combination, our Sponsors or an affiliate of our
Sponsors, or our officers and directors or their affiliates may, but are not obligated to, loan us funds as may be required (“Working
Capital Loans”). If we complete a Business Combination, we would repay the Working Capital Loans out of the proceeds of
the Trust Account released to us. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust
Account. In the event that a Business Combination does not close, we may use a portion of proceeds held outside the Trust Account
to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital 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 warrants of the post Business Combination entity
at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. 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. As of December 31, 2020, we had no borrowings under the Working Capital Loans.
Administrative
Services Agreement
We entered into an agreement that provided that, commencing
on the effective date of the offering prospectus and continuing until the earlier of our consummation of a Business Combination
and our liquidation, we agreed to pay our Sponsors a total of $10,000 per month for providing us with office space and certain
office and secretarial services. For the three and six months ended December 31, 2020 December 31, 2020, $5,000 of these expenses
were incurred as presented on the unaudited condensed statement of operations. As of December 31, 2020, $25,000 of these fees were
prepaid by the Company and are included in prepaid expenses on the unaudited condensed balance sheet.
Our
Sponsors, officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses
incurred in connection with activities on our Company’s behalf such as identifying potential target businesses and performing
due diligence on suitable Business Combinations. Our audit committee will review on a quarterly basis all payments that were made
to our Sponsors, officers, directors or our Company’s or their affiliates and will determine which expenses and the amount
of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by
such persons in connection with activities on our Company’s behalf.
Contractual
Obligations
Underwriting
Agreement
The
underwriters were entitled to an underwriting discount of $0.20 per unit, or $2.0 million in the aggregate, which was paid
upon the closing of the Initial Public Offering. An additional fee of $0.35 per unit, or $3.5 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.
Upon
closing of the Over-allotment on December 17, 2020, the underwriters received approximately $300,000 in fees paid upfront and
eligible for an additional deferred underwriting commissions of $525,000.
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 United States generally accepted accounting principles. The
preparation of these unaudited condensed 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 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. Management has identified the following as its critical
accounting policies:
Class A
Common Stock Subject to Possible Redemption
We account for Class A common stock
subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.”
Class A common stock subject to mandatory redemption (if any) is classified as liability instruments and are measured at fair
value. Conditionally redeemable Class A common stock (including Class A common stock that features 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 common stock is classified as
stockholders’ equity. Our Company’s Class A common stock feature certain redemption rights that are considered
to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, at December
31, 2020, 10,697,917 shares of Class A common stock subject to possible redemption is presented at redemption value as temporary
equity, outside of the stockholders’ equity section of the unaudited condensed balance sheet.
Net
Loss Per Share of Common Stock
Net loss per share is computed by dividing
net loss by the weighted average number of common shares outstanding during the period. An aggregate of 10,697,917 shares
of common stock subject to possible redemption as of December 31, 2020 have been excluded from the calculation of basic loss per
common share, since such shares, if redeemed, only participate in their pro rata share of the Trust earnings. The Company has not
considered the effect of the warrants sold in the Initial Public Offering and Private Placement to purchase an aggregate of 11,275,000
Class A shares of common stock in the calculation of diluted loss per common share, as they are not yet exercisable. As a result,
diluted loss per share is the same as basic loss per share for the periods presented.
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.
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.
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 condensed 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.