LERER HIPPEAU ACQUISITION CORP. Management’s Report on Financial Condition and Results of Operations (Form 10-Q/A)

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References to the "Company," "Lerer Hippeau Acquisition Corp.," "Lerer Hippeau,"
"our," "us" or "we" refer to Lerer Hippeau Acquisition Corp. 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.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form
10-Q/A
includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (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 U.S. Securities
and Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated in Delaware on January 12, 2021. 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 LHAC Sponsor LLC, a Delaware limited liability company (the
"Sponsor"). The registration statement for our Initial Public Offering was
declared effective on March 4, 2021. On March 9, 2021, we consummated our
Initial Public Offering of 22,266,185 shares of Class A common stock, including
the issuance of 2,266,185 shares of Class A common stock as a result of the
underwriters' partial exercise of their over-allotment option, (each, a "Public
Share" and collectively, the "Public Shares") at $10.00 per share, generating
gross proceeds of approximately $222.7 million, and incurring offering costs of
approximately $12.9 million, inclusive of approximately $7.8 million in deferred
underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 685,324 shares of Class A common
stock (each, a "Private Placement Share" and collectively, the "Private
Placement Shares"), at a price of $10.00 per Private Placement Share to the
Sponsor, generating proceeds of approximately $6.9 million.
Upon the closing of the Initial Public Offering and the Private Placement,
approximately $222.7 million ($10.00 per share) of the net proceeds of the sale
of the Public Shares in the Initial Public Offering and of the Private Placement
Shares in the Private Placement were placed in a trust account ("Trust Account")
located in the United States with Continental Stock Transfer & Trust Company
acting as trustee, and will be invested only in United States "government
securities" within the meaning of Section 2(a)(16) of the Investment Company Act
of 1940, as amended (the "Investment Company Act") having a maturity of 185 days
or less or in money market funds meeting certain conditions under Rule
2a-7
promulgated under the Investment Company Act which invest only in direct U.S.
government treasury obligations, 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.

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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
(net of amounts disbursed to management for working capital purposes, if
permitted, and excluding the amount of any deferred underwriting commissions) at
the time 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 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.
If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or March 9, 2023, or during any extended
period of time that we may have to consummate a Business Combination as a result
of an amendment to our certificate of incorporation (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
and not previously released to us to pay our taxes (less 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 Stockholders'
rights as stockholders (including the right to receive further liquidating
distributions, if any), and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the remaining stockholders and the
board of directors, liquidate and dissolve, subject in each case to the
Company's obligations under Delaware law to provide for claims of creditors and
the requirements of other applicable law.
Liquidity and Capital Resources
As of September 30, 2021, we had approximately $648,000 in our operating bank
account, and working capital of approximately $1.2 million (not taking into
account approximately $144,000 in franchise tax obligations that may be paid
using investment income earned in Trust Account).
Our liquidity needs to date have been satisfied through a cash contribution of
$25,000 from the Sponsor to purchase the Founder Shares (as defined in Note 4),
the loan of approximately $65,000 from the Sponsor pursuant to the Note (as
defined in Note 4), and the proceeds from the consummation of the Private
Placement not held in the Trust Account. The Company fully repaid the Note on
March 11, 2021. In addition, in order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the Sponsor, or
certain of the Company's officers and directors may, but are not obligated to,
provide the Company Working Capital Loans (as defined in Note 4). 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 our 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 from inception up to September 30, 2021, was for our
formation and the Initial Public Offering and, subsequent to the Initial Public
Offering, the search for a target for our initial Business Combination. We will
not be generating any operating revenues until the closing and completion of our
initial Business Combination.

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For the three months ended September 30, 2021, we had a net loss of
approximately $375,000, which consisted of approximately $297,000 in general and
administrative expenses, approximately $30,000 in administrative
expenses-related party, approximately $50,000 in franchise tax expenses, offset
by approximately $3,000 in gain on investments held in Trust Account.
For the period from January 12, 2021 (inception) through September 30, 2021, we
had a net loss of approximately $761,000, which consisted of approximately
$563,000 in general and administrative expenses, approximately $68,000 in
administrative expenses-related party, approximately $144,000 in franchise tax
expenses, offset by approximately $14,000 in gain on investments held in Trust
Account.
Contractual Obligations
Administrative Services Agreement
Commencing on the date that our securities were first listed on NASDAQ and
continuing until the earlier of our consummation of a Business Combination or
our liquidation, we agreed to pay the Sponsor a total of $10,000 per month for
office space, secretarial and administrative services provided to members of our
management team.
The Sponsor, executive officers and directors, or any of their respective
affiliates will be reimbursed for any
out-of-pocket
expenses incurred in connection with activities on our behalf such as
identifying potential target businesses and performing due diligence on suitable
business combinations. Our audit committee will review on a quarterly basis all
payments that were made to the Sponsor, executive officers or directors, or our
or their affiliates.
During the three months ended September 30, 2021, and the period from
January 12, 2021 (inception) through September 30, 2021, we incurred $30,000 and
approximately $68,000 in expenses for these services, respectively, which is
included in administrative expenses-related party on the accompanying statement
of operations. As of September 30, 2021, we had outstanding approximately $8,000
included in accrued expenses on the unaudited condensed balance sheet related to
these expenses.
Registration Rights
The holders of Founder Shares, Private Placement Shares and shares that may be
issued upon conversion of Working Capital Loans, if any, are entitled to
registration rights pursuant to a registration rights agreement signed upon the
consummation of the Initial Public Offering. These holders are 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 date of the final prospectus relating to the Initial Public
Offering to purchase up to 3,000,000 additional Public Shares to cover
over-allotments, if any, at the Initial Public Offering price, less underwriting
discounts and commissions. On March 9, 2021, the underwriters partially
exercised the over-allotment option to purchase 2,266,185 Public Shares and
forfeited the remainder of their option.
The underwriters were entitled to an underwriting discount of $0.20 per Public
Share, or approximately $4.5 million in the aggregate, paid upon the closing of
the Initial Public Offering. In addition, $0.35 per Public Share, or
approximately $7.8 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 Estimates
This management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with U.S. GAAP. The preparation of these 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 financial statements. On an ongoing basis,

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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 gain
from investments held in the Trust Account in the accompanying unaudited
condensed statement of operations. The estimated fair values of investments held
in the Trust Account are determined using available market information.
Class A Common Stock Subject to Possible Redemption
Class A common stock subject to mandatory redemption (if any) are classified as
liability instruments and are measured at fair value. Conditionally redeemable
Class A common stock (including shares of Class A common stock 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 common
stock are classified as stockholders' equity. Our Class A common stock features
certain redemption rights that are considered to be outside of our control and
subject to the occurrence of uncertain future events. Accordingly, as of
September 30, 2021, 22,266,185 shares of Class A common stock subject to
possible redemption at the redemption amount were presented at redemption value
as temporary equity, outside of the stockholders' equity section of our
unaudited condensed balance sheet.
We recognize changes in redemption value immediately as they occur and adjusts
the carrying value of the Class A common stock subject to possible redemption to
equal the redemption value at the end of each reporting period. 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 common shares
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share." We have two classes of shares, which are referred to as
Class A common stock and Class B common stock. Income and losses are shared pro
rata between the two classes of shares. Net income per common share is
calculated by dividing the net income by the weighted average shares of common
stock outstanding for the respective period. Accretion associated with the
redeemable Class A common stock is excluded from earnings per share as the
redemption value approximates fair value.
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standards Update ("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 12, 2021. Adoption of the ASU did not impact our financial position,
results of operations or cash flows.

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Management does not believe that any other recently issued, but not yet
effective, accounting standards if currently adopted would have a material
effect on the accompanying 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.
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.

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