We paid a total of $12,000,000 in underwriting discounts and commissions and $588,903 for other offering costs related to the initial public offering. In addition, the underwriters agreed to defer $21,000,000 in underwriting discounts and commissions.
(g) Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Item 6. Selected Financial Data.
Item 7. Management’s discussion and analysis of financial condition and results of operations
References to the “Company,” “us,” “our” or “we” refer to Avanti Acquisition Corp. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and related notes included herein.
In this Amendment No. 2 (“Amendment No. 2”) to the Annual Report on Form 10-K of Avanti Acquisition Corp. (the “Company”) for the period ended December 31, 2020, we are restating (i) the Post IPO Balance Sheet, as previously revised in the 2020 Form 10-K/A No. 1, and (ii) FY 2020 statements as previously revised in the 2020 Form 10-K/A No. 1.
We have re-evaluated our application of ASC 480-10-S99-3A to our accounting and classification of the Public Shares, issued as part of the units sold in the initial public offering on October 6, 2020. Historically, a portion of the Public Shares was classified as permanent equity to maintain shareholders’ equity greater than $5 million on the basis that we will not redeem our Public Shares in an amount that would cause our net tangible assets to be less than $5,000,001, as described in the Charter. Pursuant to such re-evaluation, our management has determined that the Public Shares include certain provisions that require classification of all of the Public Shares as temporary equity regardless of the net tangible assets redemption limitation contained in the Charter. In addition, in connection with the change in presentation for the Public Shares, management determined it should restate earnings per share calculation to allocate income and losses shared pro rata between the two classes of ordinary shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of ordinary shares share pro rata in the income and losses of our Company.
On November 24, 2021, the Audit Committee concluded, after discussion with the Company’s management, that our previously issued (i) Post IPO Balance sheet, as previously revised in the 2020 Form 10-K/A No. 1, (ii) FY 2020 Financial Statements as previously restated in the 2020 Form 10-K/A No. 1, (iii) Q1 2021 Financial Statements included in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with the SEC on July 12, 2021 and (iv) Q2 Financial Statements included in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed with the SEC on August 13, 2021, should be restated to report all Public Shares as temporary equity and should no longer be relied upon. As such, the Company is restating the Post IPO Balance Sheet and the FY 2020 Financial Statements herein and intends to restate the Q1 2021 Financial Statements and the Q2 2021 Financial Statements in the Q3 Form 10-Q/A.
The restatement does not have an impact on our cash position.
Our management has concluded that in light of the classification error described above, a material weakness exists in our internal control over financial reporting and that our disclosure controls and procedures were not effective.
In connection with the restatement, our management reassessed the effectiveness of our disclosure controls and procedures for the periods affected by the restatement. As a result of that reassessment, we determined that our disclosure controls and procedures for such periods were not effective with respect to our internal controls around the proper accounting and classification of complex financial instruments. For more information, see Item 9A included in this Amendment No. 2.
The restatement is more fully described in Note 2 of the notes to the financial statements included herein.
We are a blank check company incorporated in the Cayman Islands on July 24, 2020 formed 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 our initial public offering and the sale of the private placement warrants, our shares, debt or a combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a business combination will be successful.
We have neither engaged in any operations nor generated any operating revenues to date. Our only activities from inception through December 31, 2020 were organizational activities, those necessary to prepare for the initial public offering, described below, and identifying a target company for a Business Combination. 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 classify the Warrants and FPA issued in connection with our Initial Public Offering as liabilities at their fair value and adjust the Warrant and FPA instruments to fair value at each reporting period. This liability is subject to
re-measurement
at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations.
For the period from July 24, 2020 (inception) through December 31, 2020, we had a net loss of $25,755,683, which consisted of operating expenses of $225,770, a change in fair value of warrant liabilities of $11,440,000, loss on initial issuance of private warrants of $3,500,000 transaction costs allocable to warrants of $2,115,252 and a change in the fair value of the FPA liability of $8,483,278, offset by interest earned on marketable securities held in the Trust Account of $8,617.
Liquidity and Capital Resources
On October 6, 2020, we consummated an initial public offering (the “Initial Public Offering”) of 60,000,000 units, at a price of $10.00 per unit, generating gross proceeds of $600,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 14,000,000 private placement warrants (“Private Placement Warrants”) to the Sponsor at a price of $1.00 per Private Placement Warrant generating gross proceeds of $14,000,000.