In this Annual Report of BowX Acquisition Corp. on Form
10-K for the fiscal year ended December 31, 2020, we are restating (i) our audited financial statements as of, and for the period from May 19, 2020 (inception) through December 31, 2020,
(ii) our unaudited interim financial statements as of, and for the periods ended September 30, 2020.
The restatement results from
our prior accounting for our Private Placement Warrants issued in connection with the Private Placements in August 2020 which had been classified as a component of equity on the premise that the instruments were indexed to our own stock and were
eligible to be accounted for as equity instruments instead of classifying them as derivative liabilities.
On April 12, 2021, the SEC
Staff issued a public statement entitled Staff Statement on Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies. In the SEC Staff Statement, the SEC Staff expressed its view that certain terms
and conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPACs balance sheet as opposed to equity. Since issuance on August 7, 2020, our warrants were accounted for as equity within our
balance sheets, and after discussion and evaluation, including with our independent auditors, we have concluded that our Private Placement Warrants should be presented as liabilities with subsequent fair value remeasurement.
Therefore, we, in consultation with out Audit Committee, concluded that our previously issued Financial Statements as of and for the period
from May 19, 2020 (inception) through December 31, 2020, as of and for the three months ended September 30, 2020 and the period from May 19, 2020 (inception) through September 30, 2020 (collectively, the Affected Periods)
should be restated because of a misapplication in the guidance around accounting for our Private Placement Warrants and should no longer be relied upon.
Historically, the Private Placement Warrants were reflected as a component of equity as opposed to liabilities on the balance sheets and the
statements of operations did not include the subsequent non-cash changes in estimated fair value of the Warrants, based on our application of Financial Accounting Standards Board (FASB) Accounting
Standards Codification (ASC) Topic 815-40, Derivatives and Hedging, Contracts in Entitys Own Equity (ASC 815-40). The views expressed in the SEC
Staff Statement were not consistent with our historical interpretation of the specific provisions within its warrant agreement and the Companys application of ASC 815-40 to the warrant agreement. We
reassessed our accounting for Private Placement Warrants issued in August 2020, in light of the SEC Staffs published views. Based on this reassessment, we determined that the Private Placement Warrants should be classified as liabilities
measured at fair value upon issuance, with subsequent changes in fair value reported in our Statement of Operations each reporting period.
Our accounting for the Private Placement Warrants as components of equity instead of as derivative liabilities did not have any effect on our
previously reported revenue, operating expenses, operating income, cash flows or cash.
In connection with the restatement, our management
reassessed the effectiveness of its disclosure controls and procedures for the periods affected by the restatement. As a result of that reassessment, we determined that its disclosure controls and procedures for such periods were not effective with
respect to the classification of our Private Placement Warrants as components of equity instead of as derivative liabilities. For more information, see Item 9A included in this Annual Report on Form
10-K/A.
We have not amended our previously filed Quarterly Reports on Form 10-Q for the period 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 Annual Report on Form 10-K, 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.
Overview
We are a blank check company
incorporated as a Delaware corporation on May 19, 2020. We were formed for the purpose of for the purpose of effecting an initial business combination with a target business. Although we are not limited to a particular industry or sector
for purposes of consummating a Business Combination, we initially intend to focus our search on target businesses in the technology, media and telecommunications industries. 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 BowX Sponsor, LLC, a Delaware limited liability company of which
Vivek Ranadivé, the Companys Chairman and Co-Chief Executive Officer, and Murray Rode, our Co-Chief Executive Officer and Chief Financial Officer, are
the managing members (the Sponsor). The registration statement for the IPO was declared effective on August 4, 2020. On August 7, 2020, we consummated our IPO of 42,000,000 units (the Units
and, with respect to the Class A common stock included in the Units being offered, the Public Shares) at $10.00 per Unit, generating gross proceeds of $420.0 million, and incurring offering costs of approximately
$23.6 million, inclusive of $14.7 million in deferred underwriting commissions. On August 10, 2020, the underwriter exercised the over-allotment option to purchase an additional of 6,300,000 Units at the IPO price at $10.00 per
Unit and we consummated the sale of such Units on August 13, 2020, generating additional gross proceeds of $63.0 million, and incurring additional offering costs of approximately $3.5 million, inclusive of approximately
$2.2 million in deferred underwriting commissions.
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