SVF INVESTMENT CORP. References to the "Company," "SVF Investment Corp. " "our," "us" or "we" refer toSVF Investment Corp. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the 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 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. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our otherSEC filings. Overview We are a blank check company incorporated as aCayman Islands exempted company onOctober 5, 2020 . We were formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the "Business Combination"). We are an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies. Our sponsor isSVF Sponsor LLC , aDelaware limited liability company (the "Sponsor"). The registration statement for our Initial Public Offering was declared effective onJanuary 7, 2021 . OnJanuary 12, 2021 , we consummated its Initial Public Offering of 60,375,000 units (the "Units" and, with respect to the Class A ordinary shares included in the Units being offered, the "Public Shares"), including 7,875,000 additional Units to cover over-allotments (the "Over-Allotment Units"), at$10.00 per Unit, generating gross proceeds of approximately$603.8 million , and incurring offering costs of approximately$33.9 million , of which approximately$21.1 million was deferred underwriting commissions. OnApril 22, 2021 , the underwriters made a payment to us in an amount of$600,000 to reimburse certain of our expenses in connection with this offering. Simultaneously with the closing of the Initial Public Offering, we consummated the private placement ("Private Placement") of 9,383,333 warrants (each, a "Private Placement Warrant" and collectively, the "Private Placement Warrants"), at a price of$1.50 per Private Placement Warrant with our Sponsor, generating gross proceeds of approximately$14.1 million . Upon the closing of the Initial Public Offering and the Private Placement, approximately$603.8 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement were placed in a trust account ("Trust Account") withContinental Stock Transfer & Trust Company acting as trustee and invested inUnited States "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 of 1940, as amended, or the Investment Company Act. which invest only in directU.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. 20 -------------------------------------------------------------------------------- Table of Contents If we are unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, orJanuary 12, 2023 , (the "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 our income taxes, if any (less up to$100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding Public Shares, which redemption will completely extinguish Public Shareholders' rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations underCayman Islands law to provide for claims of creditors and the requirements of other applicable law. Liquidity and Capital Resources As ofMarch 31, 2021 , we had approximately$706,000 in operating cash, and working capital of approximately$991,000 . Our liquidity needs to date have been satisfied through a contribution of$25,000 from Sponsor to cover certain expenses in exchange for the issuance of the Founder Shares, a loan of up to approximately$300,000 from the Sponsor pursuant to the Note, of which approximately$173,000 was outstanding as ofDecember 31, 2020 and approximately$296,000 in total prior to the Initial Public Offering, and subsequent to the Initial Public Offering, the proceeds of$2.0 million from the consummation of the Private Placement not held in the Trust Account. We repaid the Note in full onJanuary 13, 2021 . In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, provide us Working Capital Loans. To date, there were no amounts outstanding under any Working Capital Loan. As ofMarch 31, 2021 , there was$2.0 million outstanding under the Working Capital Loan. Based on the foregoing, management believes that it 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, we will be using these funds 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. Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that the specific impact is not readily determinable as of the date of the unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty. Results of Operations Our entire activity since inception up toMarch 31, 2021 was in preparation for our formation and the Initial Public Offering. We will not be generating any operating revenues until the closing and completion of our initial Business Combination. For the three months endedMarch 31, 2021 , we had net loss of approximately$12.6 million , which consisted of general and administrative expenses of approximately$767,000 , general and administrative expenses to related party of$28.1 million , offering costs associated with derivative liabilities of approximately$2.6 million , partially offset by change in fair value of derivative liabilities of approximately$18.8 million and income from investments held in the Trust Account of approximately$8,000 . Of the approximately$28.1 million in general and administrative expenses with related parties,$28.1 million is a noncash charge for the excess initial fair value of Private Placement Warrants over the purchase price for such warrants paid by our Sponsor. 21 -------------------------------------------------------------------------------- Table of Contents Contractual Obligations Registration and Shareholder Rights The holders of the Founder Shares, Private Placement Warrants, and warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) were entitled to registration rights pursuant to a registration and shareholder rights agreement. The holders of these securities were entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain "piggy-back" registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements. Underwriting Agreement We granted the underwriters a 45-day option from the date of this prospectus to purchase up to 7,875,000 additional Units at the Initial Public Offering price less the underwriting discounts and commissions. OnJanuary 12, 2021 , the underwriters fully exercised the over-allotment option. The underwriters were entitled to an underwriting discount of$0.20 per unit, or approximately$12.1 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition,$0.35 per unit, or approximately$21.1 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. Forward Purchase Agreement We entered into a forward purchase agreement (a "Forward Purchase Agreement") with certain investors (the "Forward Purchase Investor"), which provides for the purchase of$250,000,000 of forward purchase units (the "Forward Purchase Units"), with each unit consisting of one Class A ordinary share (a "Forward Purchase Share") and one-fifth of one warrant to purchase one Class A ordinary share at$11.50 per share (a "Forward Purchase Warrant"), for a purchase price of$10.00 per unit, in a private placement to occur concurrently with the closing of the initial Business Combination. The Forward Purchase Agreement also provides that the Forward Purchase Investor may elect to purchase up to an additional$50,000,000 of Forward Purchase Units, which will also have a purchase price of$10.00 per Unit and consist of one Class A ordinary share and one-fifth of one warrant. Any elections to purchase up to 5,000,000 additional Forward Purchase Units will take place in one or more private placements in such amounts and at such time as the Forward Purchase Investor determines, but no later than simultaneously with the closing of the initial Business Combination. We and the Forward Purchase Investor may determine, by mutual agreement, to increase the number of additional Forward Purchase Units at any time prior to the initial Business Combination. The obligations under the Forward Purchase Agreement do not depend on whether any Class A ordinary shares are redeemed by the Public Shareholders. The forward purchase securities will be issued only in connection with the closing of the initial Business Combination. The proceeds from the sale of forward purchase securities may be used as part of the consideration to the sellers in the initial Business Combination, expenses in connection with the initial Business Combination or for working capital in the post-transaction company. Critical Accounting Policies Derivative liabilities We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The 12,075,000 warrants issued in connection with the Initial Public Offering (the "Public Warrants"), the 9,383,333 Private Placement Warrants, the 5,000,000 committed forward purchase warrants and the 1,000,000 additional forward purchase warrants are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, we recognize the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our unaudited condensed statement of operations. The fair value of the Public Warrants issued in connection with the Public Offering, Private Placement Warrants and forward purchase agreement were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants and forward purchase warrants have been estimated using a Monte Carlo simulation model each measurement date. The fair value of Public Warrants issued in connection with the Initial Public Offering have subsequently been measured based on the listed market price of such warrants. 22 -------------------------------------------------------------------------------- Table of Contents Offering Costs Associated with the Initial Public Offering Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with derivative liabilities are expensed as incurred, presented as non-operating expenses in the statement of operations. Offering costs associated with the Class A ordinary shares were charged to shareholders' equity (deficit) upon the completion of the Initial Public Offering. For the three months endedMarch 31, 2021 , of the total offering costs of the Initial Public Offering, approximately$2.6 million is included in offering cost-derivative liabilities in the unaudited condensed statement of operations and approximately$30.8 million is included in the unaudited condensed statement of changes in shareholders' equity (deficit). 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 ASC Topic 480 "Distinguishing Liabilities from Equity." Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders' equity. Our Class A ordinary shares 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, as ofMarch 31, 2021 , 51,037,939 Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders' equity (deficit) section of our unaudited condense balance sheets. Net loss per Ordinary Shares Net loss per ordinary share is computed by dividing net loss by the weighted-average number of ordinary shares outstanding during the periods. Our unaudited condensed statement of operations includes a presentation of loss per share for ordinary shares subject to possible redemption in a manner similar to the two-class method of loss per ordinary share. Net loss per ordinary share, basic and diluted, for Class A ordinary shares subject to possible redemption is calculated by dividing the proportionate share of income or loss from investments held in Trust Account, net of applicable income taxes, by the weighted average number of Class A ordinary shares subject to possible redemption outstanding for the period. Net loss per ordinary share, basic and diluted, for non-redeemable ordinary shares is calculated by dividing the net loss, adjusted for income or loss from investment attributable to Class A ordinary shares subject to possible redemption, by the weighted average number of non-redeemable ordinary shares outstanding for the period. Non-redeemable ordinary shares include Founder Shares and non-redeemable shares of Class A ordinary shares as these shares do not have any redemption features. Non-redeemable ordinary shares participate in the income or loss from investments based on non-redeemable shares' proportionate interest. Non-cash compensation to Sponsor We record non-cash compensation recognized as a result of the fair value of the Private Placement Warrants being in excess of the amount paid by the Sponsor, pursuant to ASC 718, Share-based Compensation. 23 -------------------------------------------------------------------------------- Table of Contents Recent Issued Accounting Standards Our 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. Off-Balance Sheet Arrangements As ofMarch 31, 2021 , 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 unaudited 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. Item 3. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item. As ofMarch 31, 2021 , we were not subject to any market or interest rate risk. The net proceeds of the Initial Public Offering, including amounts in the Trust Account, will be invested inU.S. government securities with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, that invest only in directU.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk. We have not engaged in any hedging activities since our inception and we do not expect to engage in any hedging activities with respect to the market risk to which we are exposed. Item 4. Controls and Procedures OnApril 12, 2021 , the staff at theSecurities and Exchange Commission (the "SEC") issued a statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies ("SPACs") (the "SEC Statement"). In the SEC Statement, theSEC staff noted that certain provisions in the typical SPAC warrant agreement may require that the warrants be classified as a liability measured at fair value, with changes in fair value reported each period in earnings, as compared to the historical treatment of the warrants as equity, which has been the practice of most SPACs, including us. We had previously classified our private placement warrants public warrants and forward purchase warrants as equity (for a full description of our private placement warrants, public warrants and forward purchase warrants refer to the registration statement on Amendment No.2 to Form S-1 (File No. 333-251541), filed in connection with the Company's initial public offering, declared effective by theSEC onJanuary 7, 2021 ). 24 -------------------------------------------------------------------------------- Table of Contents After considering the SEC Statement, we concluded that there were misstatements in theJanuary 12, 2021 audited closing balance sheet we filed with theSEC on Form 8-K onJanuary 20, 2021 . Based on the guidance in Accounting Standards Codification ("ASC") 815-40, "Derivatives and Hedging - Contracts in Entity's Own Equity", we concluded that provisions in the warrant agreement preclude the warrants from being accounted for as components of equity. As the warrants meet the definition of a derivative as contemplated in ASC 815, the warrants should have been recorded as derivative liabilities on the balance sheet and measured at fair value at inception and at each reporting date in accordance with ASC 820, "Fair Value Measurement", with changes in fair value recognized in the statement of operations in the period of change. Further, ASC 815 requires that upfront costs and fees related to items for which the fair value option is elected (our warrant liabilities) should have been recognized as expense as incurred. We have corrected the accounting for the warrants in this Quarterly Report on Form 10-Q. The effect of the restatement on specific line items in ourJanuary 12, 2021 audited closing date balance sheet can be found in footnote 10 of the Notes to unaudited condensed Financial Statements. Evaluation of Disclosure Controls and Procedures In connection with the restatement of ourJanuary 12, 2021 audited closing balance sheet, our management reassessed the effectiveness of our disclosure controls and procedures as ofMarch 31, 2021 . As a result of that reassessment and in light of the SEC Statement, our management determined that our disclosure controls and procedures as ofMarch 31, 2021 were not effective solely as a result of its classification of the warrants as components of equity instead of as derivative liabilities. In light of the material weakness that we identified, we performed additional analysis as deemed necessary to ensure that our unaudited condensed financial statements for the three months endedMarch 31, 2021 , were prepared in accordance withU.S. generally accepted accounting principles. Accordingly, management believes that the unaudited condensed financial statements included in this Quarterly Report on Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the period presented. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, as the circumstances that led to the restatement of our previously filed financial statements described above had not yet been identified. In light of the restatement of the previously filed financial statements, we plan to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
© Edgar Online, source
