Business Context and Reporting Period
This Form 10-Q covers the quarter ended June 30, 2020 and was filed by Longview Acquisition Corp., not Butterfly Network, Inc. Longview was a newly formed Delaware blank-check company incorporated on February 4, 2020, and had not commenced operating activities. Its purpose was to identify and complete a business combination.
The filing reports results for the three months ended June 30, 2020 and the period from inception through June 30, 2020. The company completed its initial public offering and fully exercised the underwriters’ over-allotment option during the quarter.
Financial Condition and Results
| Metric | Three months ended June 30, 2020 | Inception through June 30, 2020 |
|---|---|---|
| Operating revenue | $0 | $0 |
| Formation and operating costs | $120,229 | $121,229 |
| Interest income | $57,130 | $57,130 |
| Net loss | $63,099 | $64,099 |
| Net loss per Class B share | $0.01 | $0.01 |
| Net cash used in operating activities | Not separately presented | $393,961 |
- At June 30, 2020, total assets were $415.3 million, including $414.1 million in the Trust Account and $909,187 of cash outside the Trust Account.
- The Trust Account contained $414.0 million of deposited IPO and private-placement proceeds, invested primarily in U.S. Treasury securities.
- Total liabilities were $14.6 million, including $14.49 million of deferred underwriting fees and $67,667 of accrued expenses.
- Temporary equity consisted of 39,574,904 redeemable Class A shares recorded at $395.7 million. Stockholders’ equity was $5.0 million.
- The company had no long-term debt, capital leases, operating leases, or outstanding working-capital loans. It had a monthly $10,000 administrative-services commitment to a Sponsor affiliate.
- Margins and operating cash-flow conversion are not meaningful because the company had no operating revenue and was not conducting commercial operations.
Material Changes Versus the Prior Comparable Period
No prior comparable operating period was available because the company was formed on February 4, 2020 and had no prior-year operating history. The principal quarter-over-quarter developments were the completion of the IPO, the full exercise of the over-allotment option, and the placement of substantially all offering proceeds into the Trust Account.
- The company sold 41.4 million Units at $10.00 per Unit for gross proceeds of $414.0 million.
- The Sponsor purchased 6,853,333 private-placement warrants for $10.28 million.
- Total offering and transaction costs were $23.49 million, including $8.28 million of paid underwriting fees, $14.49 million of deferred underwriting fees, and $721,852 of other offering costs.
- Founder shares increased to 10.35 million following a stock dividend, and the underwriters’ full over-allotment exercise eliminated the related forfeiture condition.
Outlook, Risks, Contingencies, and Unusual Items
- Management expected to generate no operating revenue until, at the earliest, completion of a business combination.
- The company had until May 26, 2022 to complete a business combination. If unsuccessful, it would liquidate and redeem public shares using the Trust Account; warrants would expire worthless.
- Public stockholders generally had redemption rights in connection with a business combination or specified amendments, subject to the stated restrictions. The Sponsor waived redemption and liquidation rights for its Founder Shares.
- The company was required to complete a transaction with a target or targets having aggregate fair market value of at least 80% of the Trust Account’s applicable net assets and maintain at least $5,000,001 of net tangible assets at closing.
- COVID-19 could delay the search for, negotiation of, or completion of a business combination, although the specific financial impact was not determinable at the reporting date.
- Negative interest rates could reduce the amount available for public-share redemptions below $10.00 per share.
- Additional equity or debt financing could be required to complete a transaction or fund operations, and any such financing could dilute existing investors or increase leverage.
- The filing states that disclosure controls and procedures were effective and that there were no material changes in internal control over financial reporting.
Key Facts Investors Should Verify
- Confirm the filing identity: the supplied document is for Longview Acquisition Corp., whereas the request identifies Butterfly Network, Inc.
- Verify the status and terms of any subsequent business combination, including redemption levels and the disposition of the Trust Account.
- Review the $14.49 million deferred underwriting fee and the conditions under which it would be forfeited.
- Assess the effect of Founder Shares, public warrants, private-placement warrants, and potential additional financing on post-combination dilution.
- Confirm whether the May 26, 2022 business-combination deadline was extended, satisfied, or followed by liquidation.
- Evaluate the impact of COVID-19, target-company diligence, and any claims that could reduce Trust Account proceeds.