Business Context and Reporting Period
This Form 10-Q covers the three months ended September 30, 2020, and the period from February 4, 2020, inception, through September 30, 2020. The filing is for Longview Acquisition Corp., not Butterfly Network, Inc.; Longview was a blank-check company formed to pursue a business combination and had not commenced operating activities.
The company completed its initial public offering and full over-allotment exercise during May and June 2020. It had no operating revenue and was principally identifying a target business.
Financial Condition and Results
| Metric | Three months ended September 30, 2020 | Since inception through September 30, 2020 |
|---|---|---|
| Operating revenue | $0 | $0 |
| Formation and operating costs | $462,905 | $584,134 |
| Interest income from Trust Account | $165,021 | $222,151 |
| Net loss | $327,036 | $391,135 |
| Class B basic and diluted loss per share | $0.03 | $0.04 |
| Cash outside Trust Account | $759,102 at September 30 | — |
| Trust Account investments | $414,222,151 at September 30 | — |
| Cash used in operating activities | — | $544,046 |
At September 30, 2020, total assets were $415.2 million, including $414.2 million in the Trust Account. Current liabilities were $309,842, and deferred underwriting fees payable were $14.49 million. Stockholders’ equity was $5.0 million. The balance sheet classified $395.4 million of Class A common stock subject to possible redemption as temporary equity.
The company had no long-term debt, capital leases, operating leases, or outstanding working-capital loans. It had $14.49 million of deferred underwriting fees payable and a $10,000 monthly administrative-services obligation to a Sponsor affiliate.
Trust Account assets consisted primarily of U.S. Treasury securities. The company reported no material market or interest-rate risk due to the short-term nature of the investments.
Material Changes Versus the Prior Comparable Period
A meaningful prior-year or prior-quarter comparable period was not available because the company was incorporated on February 4, 2020. The company progressed from formation to completing its public offering, raising $414.0 million through the sale of 41.4 million units and $10.28 million through the sale of private-placement warrants.
During the third quarter, operating costs increased the accumulated deficit from $64,099 at June 30, 2020, to $391,135 at September 30, 2020. Trust Account investments increased through offering proceeds and earned $222,151 of interest from inception through September 30.
Guidance, Outlook, Risks and Unusual Items
- The company expected no operating revenue until after completion of a business combination and expected to continue incurring costs related to identifying, evaluating, and completing a transaction.
- The company had until May 26, 2022, unless extended by stockholder action, to complete a business combination. If unsuccessful, it would liquidate and redeem public shares from the Trust Account; the warrants could expire worthless.
- Public stockholders generally had redemption rights for their pro rata share of the Trust Account in connection with a business combination or liquidation. The company was required to maintain at least $5,000,001 of net tangible assets to complete a transaction.
- Management stated that it did not currently expect to need additional funds for operations, but additional financing could be required to complete a business combination or satisfy substantial redemption requests.
- The company warned that issuing equity or debt in a business combination could dilute investors, subordinate common-stock holders, increase leverage, and restrict financial flexibility.
- COVID-19 could impair the search for a target or delay or prevent a business combination. The specific financial impact was not determinable at the reporting date.
- Negative interest rates could reduce the per-share redemption amount below $10.00.
- The company incurred $23.49 million of offering costs, including $8.28 million of paid underwriting fees, $14.49 million of deferred underwriting fees, and $721,852 of other offering costs.
- Management concluded that disclosure controls and procedures were effective as of September 30, 2020, and reported no material change in internal control over financial reporting.
Important Facts for Investors to Verify
- Confirm the issuer identity: the supplied filing is Longview Acquisition Corp.’s 10-Q, not a Butterfly Network, Inc. filing.
- Verify whether and when Longview completed a business combination, including any subsequent name change, target acquisition, merger consideration, or redemption activity.
- Review the status and ultimate payment or forfeiture of the $14.49 million deferred underwriting fee.
- Assess public-share redemption levels and the resulting ownership dilution from Founder Shares, public warrants, private-placement warrants, and any additional financing.
- Confirm the Trust Account balance, permitted withdrawals for taxes, and the applicable liquidation deadline and terms.
- Review the impact of COVID-19 and any later developments affecting the target search or transaction timetable.