ABG ACQUISITION CORP. I Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q/A)

References to the "Company," "ABG Acquisition Corp. I," "ABG" "our," "us" or
"we" refer to ABG Acquisition Corp. I. The following discussion and analysis of
the Company's financial condition and results of operations should be read in
conjunction with the unaudited interim 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.
Restatement
In this Amendment No. 1 ("Amendment No. 1") to the Quarterly Report on Form
10-Q
for the quarterly period ended September 30, 2021, as filed with the Securities
and Exchange Commission ("SEC") on November 15, 2021 (the "Q3 2021 Form 10-Q"),
we are restating (i) unaudited interim financial statements included in our
Quarterly Report on Form
10-Q
for the quarterly period ended March 31, 2021, filed with the SEC on May 13,
2021 and previously reported as revised in the Q3 2021 Form 10-Q; (ii) unaudited
interim 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 12,
2021 and previously reported as revised in the Q3 2021 Form 10-Q; and (iii) Note
2 to the unaudited interim financial statements and Item 4 of Part I included in
our Q3 2021 Form 10-Q (collectively, the "Affected Periods").
On November 15, 2021, we filed our Q3 2021 Form 10-Q, which included a Note 2,
Revision to Previously Reported Financial Statements, that describes a revision
to our classification of the Class A ordinary shares subject to redemption
issued in our initial public offering ("IPO") on February 19, 2021. As described
in Note 2, upon our IPO, we classified a portion of the Class A ordinary shares
as permanent equity to maintain net tangible assets greater than $5,000,000 on
the basis that we will consummate our initial business combination only if we
have net tangible assets of at least $5,000,001. Previously, we did not consider
redeemable shares classified as temporary equity as part of net tangible assets.
Our management revised its interpretation to include temporary equity in net
tangible assets. As a result, we corrected the error by restating all Class A
ordinary shares subject to redemption as temporary equity. This resulted in an
adjustment to the initial carrying value of the Class A ordinary shares subject
to possible redemption with the offset recorded to additional
paid-in
capital (to the extent available), accumulated deficit and Class A ordinary
shares.
In connection with the change in presentation for the Class A ordinary shares
subject to possible redemption, we also revised our earnings per share
calculation to allocate income and losses shared pro rata between the two
classes of shares. This presentation differs from the previously presented
method of earnings per share, which was similar to the
two-class
method.
We determined the changes were not qualitatively material to our previously
reported financial statements and did not restate our financial statements.
Instead, we revised our previously issued financial statements in Note 2 to our
Q3 2021 Form
10-Q.
Although the qualitative factors that we assessed tended to support a conclusion
that the misstatements were not material, these factors were not strong enough
to overcome the significant quantitative errors in the financial statements. The
qualitative and quantitative factors support a conclusion that the misstatements
are material on a quantitative basis. Management concluded that the misstatement
was such of magnitude that it is probable that the judgment of a reasonable
person relying upon the financial statements would have been influenced by the
inclusion or correction of the foregoing items. As such, upon further
consideration of the change, we determined the change in classification of the
Class A ordinary shares and change to our presentation of earnings per share is
material quantitatively and we should restate our previously issued financial
statements.
Therefore, on December 28, 2021, our management and the audit committee of our
board of directors (the "Audit Committee") concluded that our previously
reported revision to the Affected Periods should be restated to report all
Class A ordinary shares included in the offering as temporary equity and should
no longer be relied upon. As such, we have restated these financial statements
for the Affected Periods.
The restatement does not have an impact on our cash position and cash held in
the Trust Account.
After
re-evaluation,
our management has concluded that in light of the errors described above, a
material weakness existed in our internal control over financial reporting
during the Affected Periods and that our disclosure controls and procedures were
not effective. For more information see Item 4 - Controls and Procedures,
contained herein.
We have not amended our previously filed Quarterly Report on Form
10-Q
for the periods affected by the restatement. The financial information that has
been previously filed or otherwise reported for these periods is superseded by
the information in this Amendment No. 1, and the financial statements and
related financial information contained in such previously filed reports should
no longer be relied upon.
The restatement is more fully described in Note 2 of the notes to the financial
statements included herein.
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 other SEC filings.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company
on November 17, 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 is ABG Acquisition Holdings I LLC, a Cayman Islands limited
liability company (the "Sponsor"). The registration statement for our Initial
Public Offering was declared effective on February 16, 2021. On February 19,
2021, we consummated its Initial Public Offering of 15,065,000 Class A ordinary
shares (the "Public Shares"), including the 1,965,000 Public Shares as a result
of the underwriters' full exercise of their over-allotment option, at an
offering price of $10.00 per Public Share, generating gross proceeds of
approximately $150.7 million, and incurring offering costs of approximately
$8.9 million, of which approximately $5.3 million was for deferred underwriting
commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 501,300 Class A ordinary shares
(the "Private Placement Shares"), at a price of $10.00 per Private Placement
Share to the Sponsor, generating gross proceeds of approximately $5.0 million.
Upon the closing of the Initial Public Offering and the Private Placement,
approximately $150.7 million ($10.00 per Public Share) 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"), located in the United States
at J.P. Morgan Chase Bank, N.A. with Continental Stock Transfer & Trust Company
acting as trustee, and invested only in 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 in any open-ended investment company that holds
itself out as a money market fund meeting the conditions of paragraphs (d)(2),
(d)(3) and (d)(4) of Rule
2a-7
of the Investment Company Act of 1940, as amended (the "Investment Company
Act"), as determined by us, until the earlier of: (i) the completion of a
Business Combination and (ii) the distribution of the Trust Account as described
below.
Our 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 Shares, although substantially all of the net proceeds are intended to
be applied generally toward consummating a Business Combination. There is no
assurance that we will be able to complete a Business Combination successfully.
We must complete one or more initial Business Combinations having an aggregate
fair market value of at least 80% of the net assets held in the Trust Account
(excluding the amount of any deferred underwriting discount held in trust) at
the time of the signing of the agreement to enter into the initial Business
Combination. However, we will only complete a Business Combination if the
post-transaction company owns or acquires 50% or more of the outstanding 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.

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If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or February 19, 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
(less taxes payable and 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 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 each case, to our obligations under Cayman Islands law to
provide for claims of creditors and in all cases subject to the other
requirements of applicable law.
Liquidity and Capital Resources
As of September 30, 2021, we had approximately $618,000 in our operating bank
account and working capital of approximately $823,000.
Our liquidity needs to date have been satisfied through a contribution of
$25,000 from Sponsor to cover for certain expenses in exchange for the issuance
of the Founder Shares, the loan of $100,000 from the Sponsor pursuant to the
Note, and the proceeds from the consummation of the Private Placement not held
in the Trust Account. We fully repaid the Note on February 22, 2021. In
addition, in order to finance transaction costs in connection with a Business
Combination, our Sponsor or an affiliate of our Sponsor, or certain of our
officers and directors may, but are not obligated to, provide us with Working
Capital Loans. As of September 30, 2021, there were no amounts outstanding under
any Working Capital Loan.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity from our Sponsor or an affiliate of our Sponsor,
or certain of our officers and directors 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 on the industry and has concluded that while it is reasonably possible
that the virus could have a negative effect on our financial position, results
of our operations and/or search for a target company, the specific impact is not
readily determinable as of the date of the financial statements. The 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 to September 30, 2021, was in preparation
for our formation and the Initial Public Offering and after the Initial Public
Offering searching for a target. We will not be generating any operating
revenues until the closing and completion of our initial Business Combination.
For the three months ended September 30, 2021, we had net loss of approximately
$216,000, which consisted of approximately $218,000 in general and
administrative expenses, including $30,000 of general and administrative
expenses to related party, partly offset by approximately $2,000 in income from
investments held in the Trust Account.
For the nine months ended September 30, 2021, we had net loss of approximately
$593,000, which consisted of approximately $598,000 in general and
administrative expenses, including $80,000 of general and administrative
expenses to related party, partly offset by approximately $5,000 in income from
investments held in the Trust Account.

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Contractual Obligations
Administrative Support Agreement
Commencing on the date that our securities were first listed on Nasdaq, we
agreed to pay our Sponsor a total of $10,000 per month office space, utilities,
administrative services and remote support services provided to members of the
management team. Upon completion of the initial Business Combination or our
liquidation, we will cease paying these monthly fees.
We incurred $30,000 and $80,000 in such fees included as general and
administrative expenses to related party on the accompanying unaudited condensed
statements of operations for the three and nine months ended September 30, 2021,
respectively. As of September 30, 2021, and December 31, 2020, we had no balance
outstanding for such services on the accompanying condensed balance sheets.
Registration and Shareholder Rights
The holders of Founder Shares and Private Placement Shares that may be issued
upon conversion of Working Capital Loans were entitled to registration rights
pursuant to a registration and shareholder rights agreement signed upon
consummation of the Initial Public Offering. These holders were entitled to
certain demand and "piggyback" registration rights. 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 final prospectus relating to the Initial Public Offering to
purchase up to 1,965,000 additional shares to cover over-allotments, if any, at
the Initial Public Offering price less the underwriting discounts and
commissions. The underwriters fully exercised the over-allotment option on
February 19, 2021.
The underwriters were entitled to an underwriting discount of $0.20 per Public
Share, or approximately $3.0 million in the aggregate, paid upon the closing of
the Initial Public Offering. In addition, $0.35 per share, or approximately
$5.3 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.
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 GAAP. The preparation of our 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. We have identified the following as our critical
accounting policies:
Investments Held in the Trust Account
Our portfolio of investments 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 and generally have a readily determinable fair
value, or a combination thereof. When our investments held in the Trust Account
are comprised of U.S. government securities, the investments are classified as
trading securities. When our investments held in the Trust Account are comprised
of money market funds, the investments are recognized at fair value. Trading
securities and investments in money market funds are presented on the balance
sheets at fair value at the end of each reporting period. Gains and losses
resulting from the change in fair value of these securities are included in
income from investments held in Trust Account in the accompanying unaudited
condensed statements of operations. The estimated fair values of investments
held in the Trust Account are determined using available market information.

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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 our control and subject to the occurrence of uncertain future
events. Accordingly, at September 30, 2021, 15,065,000 Class A ordinary shares
subject to possible redemption are presented as temporary equity, outside of the
shareholders' equity section of our balance sheets.
Under ASC 480-10S99, the Company has elected to recognize changes in the
redemption value immediately as they occur and adjust the carrying value of the
security to equal the redemption value at the end of each reporting period. This
method would view the end of the reporting period as if it were also the
redemption date for the security. Effective with the closing of the Initial
Public Offering, we recognized the accretion from initial book value to
redemption amount, which resulted in charges against additional
paid-in
capital (to the extent available) and accumulated deficit.
Net Income (Loss) Per Ordinary Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share." We have two classes of ordinary shares, which are referred
to as Class A ordinary shares and Class B ordinary shares. Income and losses are
shared pro rata between the two classes of ordinary shares. Net income (loss)
per ordinary share is calculated by dividing the net income (loss) by the
weighted average ordinary shares outstanding for the respective period.
At September 30, 2021, we did not have any dilutive securities and other
contracts that could potentially be exercised or converted into ordinary shares
and then share in our earnings. Accretion associated with the redeemable Class A
ordinary shares is excluded from earnings per ordinary share as the redemption
value approximates fair value.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU
No. 2020-06,
Debt-Debt with Conversion and Other Options (
Subtopic
470-20
) and Derivatives and Hedging-Contracts in Entity's Own Equity
(Subtopic
815-40
): Accounting for Convertible Instruments and Contracts in an Entity's Own
Equity
("ASU
2020-06"),
which simplifies accounting for convertible instruments by removing major
separation models required under current GAAP. The ASU also removes certain
settlement conditions that are required for equity-linked contracts to qualify
for the derivative scope exception, and it simplifies the diluted earnings per
share calculation in certain areas. We adopted ASU
2020-06
on January 1, 2021. Adoption of the ASU did not impact our financial position,
results of operations or cash flows.
Our management do not believe that any other recently issued, but not yet
effective, accounting standards updates, if currently adopted, would have a
material effect on our unaudited condensed financial statements.
Off-Balance
Sheet Arrangements
As of September 30, 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 financial statements may not be comparable to
companies that comply with new or revised accounting pronouncements as of public
company effective dates.

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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 Securities Exchange Act of 1934, as amended, or the Exchange Act, and are
not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures (restated)
Evaluation of disclosure controls and procedures
Under the supervision and with the participation of our management, including
our principal executive officer and principal financial and accounting officer,
we conducted an evaluation of the effectiveness of our disclosure controls and
procedures as of the end of the fiscal quarter ended September 30, 2021, as such
term is defined in Rules
13a-15(e)
and
15d-15(e)
under the Exchange Act. Based on this evaluation our management, including our
principal executive officer and principal financial and accounting officer, has
concluded that during the period covered by this report, our disclosure controls
and procedures were not effective as of September 30, 2021, because of a
material weakness in our internal control over financial reporting. A material
weakness is a deficiency, or a combination of deficiencies, in internal control
over financial reporting, such that there is a reasonable possibility that a
material misstatement of our annual or interim financial statements will not be
prevented or detected on a timely basis. Specifically, our management has
concluded that our control around the interpretation and accounting for certain
complex features of the Class A ordinary shares was not effectively designed or
maintained. This material weakness resulted in the restatement of our interim
financial statements for the quarters ended March 31, 2021, and June 30, 2021.
Disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in our Exchange Act reports is recorded,
processed, summarized, and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to our management, including our principal executive officer and principal
financial and accounting officer or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended September 30, 2021, covered by this
Amendment No. 1, that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
Our Chief Executive Officer and Chief Financial Officer performed additional
accounting and financial analyses and other post-closing procedures including
consulting with subject matter experts related to the accounting for certain
complex features of the Class A ordinary shares. Our management has expended,
and will continue to expend, a substantial amount of effort and resources for
the remediation and improvement of our internal control over financial
reporting. While we have processes to properly identify and evaluate the
appropriate accounting technical pronouncements and other literature for all
significant or unusual transactions, we have expanded and will continue to
improve these processes to ensure that the nuances of such transactions are
effectively evaluated in the context of the increasingly complex accounting
standards.
PART
II-OTHER
INFORMATION

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