ALTIMETER GROWTH CORP. – 10-K / A – MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION AND OPERATING RESULTS.
The following discussion and analysis of the financial condition and results of operations of the Company should be read in conjunction with our audited financial statements and the accompanying notes which are included in “Section 8. Financial Statements and Supplementary Data” of this annual report on form 10 –
47 -------------------------------------------------------------------------------- Table of Contents Overview We are a blank check company incorporated in the
Cayman Islandson August 25, 2020formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar business combination with one or more businesses (the "Business Combination"). We intend to effectuate our Business Combination using cash derived from the proceeds of the Initial Public Offering and the sale of the Private Placement Warrants (as defined below), our shares, debt or a combination of cash, shares and debt. Recent Developments On April 12, 2021, we entered into a Business Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time, the "Business Combination Agreement"), by and among J1 Holdings Inc., a Cayman Islandsexempted company ("PubCo"), J2 Holdings Inc., a Cayman Islandsexempted company and direct wholly owned subsidiary of PubCo("Merger Sub 1") and J3 Holdings Inc., a Cayman Islandsexempted company and direct wholly owned subsidiary of PubCo("Merger Sub 2") and Grab Holdings Inc.a Cayman Islandsexempted company ("Grab"). The Business Combination was closed on December 1, 2021. Grab is the surviving entity and will continue as a wholly owned subsidiary of PubCo. On December 1, 2021, the Company merged with and into J2 holdings, with the Company continuing as the surviving corporation pursuant to the Business Combination Agreement. The combined company is operating under the name " J2 Holdings Inc.," which is a wholly-owned subsidiary of Grab Holdings Limited. Results of Operations We have neither engaged in any operations nor generated any operating revenues to date. Our only activities from inception through December 31, 2020were organizational activities and those necessary to prepare for the Initial Public Offering, described below. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We expect to generate non-operating income in the form of interest income on marketable securities held after the Initial Public Offering. We expect that we will incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, a Business Combination. As a result of the restatement described in Note 2 of the notes to the financial statements included herein, we revised our prior position on accounting for temporary equity and permanent equity and the earnings per share calculation. We restated our financial statements to revalue the Company's Class A ordinary shares subject to possible redemption and restate its earnings per share calculation, as described in the Explanatory Note of this Amendment. The Company's accounting related to temporary equity and permanent equity and its earnings per share calculation did not have any effect on the Company's previously reported investments held in trust or cash. Liquidity and Capital Resources On October 5, 2020, we completed the Initial Public Offering of 50,000,000 Units, which includes the full exercise by the underwriters of their over-allotment option in the amount of 5,000,000 Units, at a price of $10.00per Unit, generating gross proceeds of $500,000,000. Simultaneously with the closing of the Initial Public Offering, we completed the sale of 12,000,000 Private Placement Warrants to the Sponsor at a price of $1.00per Private Placement Warrant generating gross proceeds of $12,000,000. Following the Initial Public Offering and the sale of the Private Placement Warrants, a total of $500,000,000was placed in the Trust Account, and we had $1,961,900of cash held outside of a trust account (the "Trust Account") after payment of costs related to the Initial Public Offering, and available for working capital purposes. We incurred $28,244,738in transaction costs, including $10,000,000of underwriting fees, $17,500,000of deferred underwriting fees and $744,738of other costs. For the period from August 25, 2020(inception) through December 31, 2020, net cash used in operating activities was $392,490. Net loss of $130,999,889was impacted by formation cost paid by Sponsor in exchange for issuance of Class B ordinary shares of $5,000, change in the fair value of the warrant and FPAliabilities, and changes in operating assets and liabilities, which used $184,691of cash from operating activities. 48 -------------------------------------------------------------------------------- Table of Contents At December 31, 2020, we had cash held in the Trust Account of $500,000,000. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account, which interest shall be net of taxes payable and excluding deferred underwriting commissions, to complete our Business Combination. We may withdraw interest from the Trust Account to pay taxes, if any. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete a Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies. At December 31, 2020, we had cash of $855,972held outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination. In order to fund working capital deficiencies or finance transaction costs in connection with the Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as required. Upon completion of the Business Combination, we will repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust account will be used for such repayment. Up to $2,000,000of such loans are convertible into warrants, at a price of $1.00per warrant, at the option of the lender. The warrants would be identical to the Private Placement Warrants. We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, we may need to obtain additional financing because we become obligated to redeem a significant number of our public shares upon completion of our Business Combination, in which case we may issue additional securities or incur debt in connection with the Business Combination. As of December 1, 2021, substantial doubt about our ability to continue as a going concern related to the date for mandatory liquidation and dissolution was alleviated due to the closing of our business combination. Off-Balance Sheet Financing Arrangements We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2020. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets. Contractual Obligations We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee of $20,000for office space, utilities and secretarial, and administrative support services provided to the Company. We began incurring these fees on September 30, 2020and will continue to incur these fees monthly until the earlier of the completion of a Business Combination and the Company's liquidation. The underwriters are entitled to a deferred fee of $0.35per Unit, or $17,500,000. 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. We entered into forward purchase agreements which provides for the purchase by each of Altimeter Partners Fund, L.P.and JS Capital LLCof up to an aggregate of 20,000,000 units (the "forward purchase securities"), with each unit consisting of one Class A ordinary share and one-fifth of one redeemable warrant to purchase one Class A ordinary share at an exercise price of $11.50per whole share, for a purchase price of $10.00per unit, in a private placement to close concurrently with the closing of a Business Combination. Critical Accounting Policies The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of Americarequires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified any critical accounting policies. 49 -------------------------------------------------------------------------------- Table of Contents Warrant and FPA Liabilities The Company accounts for the Warrants and FPAs as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the Warrants and FPAs and the applicable authoritative guidance in Financial Accounting Standards Board("FASB") Accounting Standards Codification ("ASC") 480, "Distinguishing Liabilities from Equity" ("ASC 480"), and ASC 815, "Derivatives and Hedging" ("Warrants and FPAs ASC 815"). The assessment considers whether the are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815, including whether the Warrants and FPAs are indexed to the Company's own common shares and whether the holders of the Warrants could potentially require "net cash settlement" in a circumstance outside of the Company's control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance of the Warrants and execution of the FPAs and as of each subsequent quarterly period end date while the Warrants and FPAs are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, such warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, such warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of liability-classified warrants are recognized as a non-cash gain or loss on the statements of operations. Class A Ordinary Shares Subject to Possible Redemption We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification ("ASC") Topic 480, "Distinguishing Liabilities from Equity." Class A Ordinary shares subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, ordinary shares are classified as shareholders' equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, Class A ordinary shares subject to possible redemption is presented as temporary equity, outside of the shareholders' equity section of our balance sheet. Net Income (Loss) per Ordinary Share We apply the two-class method in calculating earnings per share. Net income per ordinary share, basic and diluted for Class A redeemable ordinary shares is calculated by dividing the interest income earned on the Trust Account by the weighted average number of Class A redeemable ordinary shares outstanding since original issuance. Net loss per ordinary share, basic and diluted for Class B non-redeemable ordinary shares is calculated by dividing the net income (loss), less income attributable to Class A redeemable ordinary shares, by the weighted average number of Class B non-redeemable ordinary shares outstanding for the periods presented. Recent Accounting Standards Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
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