References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Americas Technology Acquisition Corp. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to ATAC Limited Partnership. The following
discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with the financial statements and the
notes thereto contained elsewhere in this Quarterly 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
All statements other than statements of historical fact included in this
Quarterly Report including, without limitation, statements under this "Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding our financial position, business strategy and the plans
and objectives of management for future operations, are forward-looking
statements. When used in this Quarterly Report, words such as "anticipate,"
"believe," "estimate," "expect," "intend" and similar expressions, as they
relate to us or our management, identify forward-looking statements. Such
forward-looking statements are based on the beliefs of our management, as well
as assumptions made by, and information currently available to, the Company's
management. Actual results could differ materially from those contemplated by
the forward-looking statements as a result of certain factors detailed in our
filings with SEC. All subsequent written or oral forward-looking statements
attributable to us or persons acting on our behalf are qualified in their
entirety by this paragraph.
The following discussion and analysis of our financial conditions and results of
operations should be read in conjunction with the unaudited condensed financial
statements and the notes thereto included in this Quarterly Report under "Item 1
Financial Statements". Certain information contained in the discussion and
analysis set forth below includes forward-looking statements that involve risks
and uncertainties.
Overview
We are a blank check company incorporated in the Cayman Islands on September 8,
2020 formed for the purpose of effecting a merger, amalgamation, share exchange,
asset acquisition, share purchase, reorganization or other similar business
combination with one or more businesses or entities (a "Business Combination").
We intend to effectuate our Business Combination using cash derived from the
proceeds of the initial public offering ("Initial Public Offering") and the sale
of the private warrants, our shares, debt or a combination of cash, shares and
debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Recent Developments
On June 1, 2022, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Rally Communitas Corp., a Delaware corporation
("Rally"), Americas Technology Acquisition Holdings Inc., a Delaware corporation
and a wholly-owned subsidiary of ATAC ("Pubco"), Americas Technology Purchaser
Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Pubco
(the "Purchaser Merger Sub"), Americas Technology Company Merger Sub Inc., a
Delaware corporation and a wholly-owned subsidiary of Pubco (the "Company Merger
Sub" and together with Purchaser Merger Sub, the "Merger Subs"), Jorge E.
Marcos, in the capacity as the representative from and after the effective time
of the Merger (as defined below) (the "Effective Time") of the shareholders of
Pubco (other than the Rally Security Holders and their successors and assignees)
(the "Purchaser Representative"), and Numaan Akram, in the capacity as the
representative of the Rally Security Holders from and after the Effective Time
(the "Seller Representative").
On June 14, 2021, the Company held a shareholder meeting to extend the date by
which the Company has to consummate a Business Combination (the "Combination
Period") from June 17, 2022 to December 17, 2022. As part of the meeting,
shareholders exercised their right to redeem 7,362,342 ordinary shares for an
aggregate cash balance of $75,897,772 and approved the extension amendment
extending the Combination Period from June 17, 2022 to December 17, 2022.
Pursuant to the extension amendment, on June 16, 2022,
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the Sponsor deposited $413,766 (or $0.10 per Public Share that was not redeemed)
into the Company's Trust Account and thereby extended the period the Company has
to complete an initial Business Combination from June 17, 2022 to September 17,
2022. In order to further extend the Combination Period from September 17, 2022,
an additional $137,922 (or $0.033 per Public Share that was not redeemed) will
be deposited into the Company's Trust Account for each month. The Sponsor or its
designees will have the sole discretion whether to continue extending for
additional calendar months until December 17, 2022 and if the Sponsor determines
not to continue extending for additional calendar months, no additional funds
will be deposited into the Trust Account.
On July 26, 2022, ATAC, Rally, Pubco, the Seller Representative and the
Purchaser Representative entered into an amendment (the "Amendment") to the
Merger Agreement. The Amendment clarifies and revises certain provisions of the
Merger Agreement relating to (i) the securities for which the investors (the
"Support Investors") that enter into support subscription agreements to purchase
securities of Pubco immediately prior to the closing as a condition to the
consummation of ATAC's initial Business Combination under the Merger Agreement
will subscribe pursuant to such agreements, (ii) the contingent value rights to
be issued by Pubco at the closing to non-redeeming ATAC shareholders and the
Support Investors and (iii) the expected composition of the board of directors
of Pubco (the "Pubco Board") immediately following consummation of the Business
Combination, subject to approval of the proposal related to the election of
directors to the Pubco Board that will be contained in a registration statement
on Form S-4 (as amended, the "Merger Registration Statement") that Pubco
initially filed with the SEC in connection with the Business Combination on July
29, 2022, as amended.
On November 8, 2022, ATAC, Rally, Pubco, the Seller Representative and the
Purchaser Representative entered into the Second Amendment to the Merger
Agreement. The Second Amendment clarifies and revises certain provisions of the
Merger Agreement relating to the fact that the parties to the Merger Agreement
have mutually agreed that: (i) at the Closing of the transactions contemplated
by the Merger Agreement, Pubco will not issue securities previously referred to
in the transaction documents as "Private CVRs" (including "Support CVRs") and
provide for various related adjustments to the terms and conditions of the
Merger Agreement and other transaction documents referred to therein (including
the Pubco securities for which investors, once identified, will subscribe
pursuant to the agreements referred to in the Merger Agreement as Support
Subscription Agreements), (ii) the condition to the Closing set forth in Section
7.1(h) of the Merger Agreement, waivable by ATAC and Rally that, at the Closing,
ATAC and Pubco have cash and cash equivalents, including funds remaining in
ATAC's Trust Account established at the time of its initial public offering
(after giving effect to the completion and payment of redemptions by ATAC
shareholders and payment of each party's transaction expenses (to the extent due
and unpaid at Closing)) and the aggregate amount of any Purchaser Transaction
Financing (including the Support Subscription Agreements) at least equal to $20
million and (iii) to remove from the Merger Agreement the condition to the
Closing relating to net tangible assets at Closing set forth in Section 7.1(g)
of the Merger Agreement.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from September 8, 2020 (inception) through September 30,
2022 were organizational activities, those necessary to prepare for Initial
Public Offering, described below, and identifying a target company for a
Business Combination. We do not expect to generate any operating revenues until
after the completion of our Business Combination. We generate non-operating
income in the form of interest income on marketable securities held in the Trust
Account. We incur expenses as a result of being a public company (for legal,
financial reporting, accounting and auditing compliance), as well as for due
diligence expenses. In the pursuit of a Business Combination with a target, we
may agree to cover certain expenses of a target in connection with such Business
Combination. We do not expect these expenses to be material.
For the three months ended September 30, 2022, we had a net loss of $183,170,
which consisted of general and administrative expenses of $527,172, offset by
interest earned on cash and marketable securities held in the Trust Account of
$168,710, unrealized gain on investments of $11,792 and change in fair value of
warrant liabilities of $163,500.
For the nine months ended September 30, 2022, we had a net income of $902,877,
which consisted of interest earned on cash and marketable securities held in the
Trust Account of $271,551 and change in fair value of warrant liabilities of
$2,229,050, offset by general and administrative expenses of $1,597,724.
For the three months ended September 30, 2021, we had net income of $615,201,
which consists of change in fair value of warrant liability gain of $872,000 and
interest earned on marketable securities held in Trust Account of $2,419, offset
by formation and operational costs of $259,218.
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For the nine months ended September 30, 2021, we had a net income of $2,141,624,
which consists of change in fair value of warrant liability gain of $2,779,500
and interest earned on marketable securities held in Trust Account of $17,841,
offset by formation and operational costs of $655,717.
Liquidity and Capital Resources
On December 17, 2020, we consummated the Initial Public Offering of 11,500,000
Units, at a price of $10.00 per Unit, which included the full exercise by the
underwriter of its over-allotment option in the amount of 1,500,000 Units,
generating gross proceeds of $115,000,000. Simultaneously with the closing of
the Initial Public Offering, we consummated the sale of 5,450,000 private
warrants to the Sponsor at a price of $1.00 per private warrant generating gross
proceeds of $5,450,000.
Following the Initial Public Offering, the full exercise by the underwriters of
their over-allotment option and sale of the private warrants, a total of
$116,150,000 was placed in the Trust Account. We incurred $2,712,986 in
transaction costs, including $2,300,000 of cash underwriting fees, and $412,986
of other offering costs.
For the nine months ended September 30, 2022, net cash used in operating
activities was $901,043. Net income of $902,877 was affected by interest earned
on cash and marketable securities held in the Trust Account of $271,551, and
change in fair value of warrant liabilities of $2,229,050. Changes in operating
assets and liabilities provided $696,681 of cash from operating activities.
For the nine months ended September 30, 2021, cash used in operating activities
was $473,045. Net income of $2,141,624 was affected by change in fair value of
warrant liability of $2,779,500, interest earned on marketable securities held
in Trust Account of $17,841. Changes in operating assets and liabilities
provided $182,672 of cash for operating activities.
As of September 30, 2022, we had cash and marketable securities held in the
Trust Account of $43,261,353 (including $271,551 of interest income) consisting
of U.S. treasury bills with a maturity of 185 days or less. We may withdraw
interest from the Trust Account to pay taxes, if any. We intend to use
substantially all of the funds held in the Trust Account, including any amounts
representing interest earned on the Trust Account (less income taxes payable),
to complete our Business Combination. To the extent that our share capital or
debt is used, in whole or in part, as consideration to complete our Business
Combination, the remaining proceeds held in the Trust Account will be used as
working capital to finance the operations of the target business or businesses,
make other acquisitions and pursue our growth strategies.
As of September 30, 2022, we had cash of $4,126. We intend to use the funds held
outside the Trust Account primarily to identify and evaluate target businesses,
perform business due diligence on prospective target businesses, travel to and
from the offices, plants or similar locations of prospective target businesses
or their representatives or owners, review corporate documents and material
agreements of prospective target businesses, and structure, negotiate and
complete a Business Combination.
In order to fund working capital deficiencies or 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,
loan us funds as may be required. If we complete a Business Combination, we may
repay such loaned amounts out of the proceeds of the Trust Account released to
us. In the event that a Business Combination does not close, we may use a
portion of the working capital held outside the Trust Account to repay such
loaned amounts, but no proceeds from our Trust Account would be used for such
repayment. Up to $1,500,000 of such loans may be convertible into warrants, at a
price of $1.00 per warrant, at the option of the lender. The warrants would be
identical to the private warrants.
We will need to raise additional capital through loans or additional investments
from our Sponsor, shareholders, officers, directors, or third parties. Our
officers, directors and Sponsor may, but are not obligated to, loan us funds,
from time to time or at any time, in whatever amount they deem reasonable in
their sole discretion, to meet our working capital needs. Accordingly, we may
not be able to obtain additional financing. If we are unable to raise additional
capital, we may be required to take additional measures to conserve liquidity,
which could include, but not necessarily be limited to, curtailing operations,
suspending the pursuit of a potential transaction, and reducing overhead
expenses. We cannot provide any assurance that new financing will be available
to us on commercially acceptable terms, if at all. These conditions raise
substantial doubt about our ability to continue as a going concern through
September 17, 2022, the date that we will be required to cease all operations,
except for the purpose of winding up, if a Business Combination is not
consummated. These conditions raise substantial doubt about our ability to
continue as a going concern.
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Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our financial instruments, including
issued share purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to Accounting
Standards Codification ("ASC") 480 and ASC 815-15. The classification of
derivative instruments, including whether such instruments should be recorded as
liabilities or as equity, is reassessed at the end of each reporting period.
We issued an aggregate of 5,450,000 private warrants in connection with our
Initial Public Offering and private placement, which are recognized as
derivative liabilities in accordance with ASC 815-40. Accordingly, we recognize
the warrants as liabilities at fair value and adjust the instruments to fair
value at each reporting period. The liabilities are subject to remeasurement at
each balance sheet date until exercised, and any change in fair value is
recognized in the Company's statements of operations. The fair value of the
private placement warrants has been estimated using a Binomial Lattice Model at
each measurement date.
Going Concern
In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standard Board's ("FASB") Accounting
Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about an
Entity's Ability to Continue as a Going Concern," the Company has until June 17,
2022 to consummate the proposed Business Combination. It is uncertain that the
Company will be able to consummate the proposed Business Combination by this
time. Additionally, the Company may not have sufficient liquidity to fund the
working capital needs of the Company through one year from the issuance of these
financial statements. If a Business Combination is not consummated by this date,
there will be a mandatory liquidation and subsequent dissolution of the Company.
Management has determined that the liquidity condition and mandatory
liquidation, should a Business Combination not occur, and potential subsequent
dissolution, raises substantial doubt about the Company's ability to continue as
a going concern. No adjustments have been made to the carrying amounts of assets
or liabilities should the Company be required to liquidate after September 17,
2022. The Company intends to complete the proposed Business Combination before
the mandatory liquidation date. However, there can be no assurance that the
Company will be able to consummate any Business Combination by September 17,
2022.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 2022. We do not participate
in transactions that create relationships with unconsolidated entities or
financial partnerships, often referred to as variable interest entities, which
would have been established for the purpose of facilitating off-balance sheet
arrangements. We have not entered into any off-balance sheet financing
arrangements, established any special purpose entities, guaranteed any debt or
commitments of other entities, or purchased any non-financial assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay an
affiliate of our Sponsor and our Chief Executive Officer approximately $7,000
per month for office space and advisory services relating to our search for, and
consummation of, an initial Business Combination. We also pay Alberto Pontonio,
one of our directors, a fee of approximately $3,000 per month for certain
general and administrative services, including office space, utilities and
secretarial support, as we may require from time to time.
The underwriters are entitled to a fee under our business combination marketing
agreement of $0.20 per Unit, or $2,300,000 in the aggregate. The fee under our
business combination marketing agreement 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.
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The Company has engaged EarlyBirdCapital, Inc. ("EarlyBirdCapital"), the
underwriter in the Initial Public Offering, as an advisor in connection with its
Business Combination to assist in holding meetings with the Company shareholders
to discuss a potential Business Combination and the target business' attributes,
introduce the Company to potential investors that are interested in purchasing
its securities in connection with its initial Business Combination, assist in
obtaining shareholder approval for the Business Combination and assist with
press releases and public filings in connection with a Business Combination. The
Company will pay EarlyBirdCapital a cash fee for such services upon the
consummation of its initial Business Combination in an amount equal to 3.5% of
the gross proceeds of the Initial Public Offering (exclusive of any applicable
finder's fees which might become payable).
Critical Accounting Policies
The preparation of condensed consolidated financial statements and related
disclosures in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements, and
income and expenses during the periods reported. Actual results could materially
differ from those estimates. We have identified the following critical
accounting policies:
Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible redemption in accordance
with the guidance in ASC Topic 480, "Distinguishing Liabilities from Equity."
Ordinary Shares subject to mandatory redemption is classified as a liability
instrument and is measured at fair value. Conditionally redeemable ordinary
shares (including ordinary shares that features redemption rights that is either
within the control of the holder or subject to redemption upon the occurrence of
uncertain events not solely within our control) is classified as temporary
equity. At all other times, ordinary shares are classified as shareholders'
equity. Our ordinary shares feature certain redemption rights that are
considered to be outside of our control and subject to occurrence of uncertain
future events. Accordingly, ordinary shares subject to possible redemption is
presented as temporary equity, outside of the shareholders' deficit section of
our condensed consolidated balance sheets.
Warrant Liabilities
We account for the private warrants issued in connection with our Initial Public
Offering in accordance with the guidance contained in ASC 815-40-15-7D under
which the warrants do not meet the criteria for equity treatment and must be
recorded as liabilities. Accordingly, we classify the private warrants as
liabilities at their fair value and adjust the private warrants to fair value at
each reporting period. This liability is subject to re-measurement at each
balance sheet date until exercised, and any change in fair value is recognized
in our statements of operations. The fair value of the private warrants was
estimated using a Binomial Lattice Model.
Net (Loss) Income per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC
Topic 260, "Earnings Per Share". The Company has one class of shares, which are
referred to ordinary shares. Income and losses are shared pro rata between the
ordinary shares. Net (loss) income per ordinary share is computed by dividing
net (loss) income by the weighted average number of ordinary shares outstanding
for the period. Accretion associated with the redeemable ordinary shares is
excluded from (loss) income 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 the accounting principles generally accepted in the
United States of America ("GAAP"). ASU 2020-06 removes certain settlement
conditions that are required for equity contracts to qualify for the derivative
scope exception and it also simplifies the diluted earnings per share
calculation in certain areas. ASU 2020-06 is effective for fiscal years
beginning after December 15, 2023, including interim periods within those fiscal
years, with early adoption permitted. The Company is currently assessing the
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impact, if any, that ASU2020-06 would have on its financial position, results of
operations or cash flows. The Company has not adopted this guidance as of
September 30, 2022.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our condensed consolidated financial statements.
Factors That May Adversely Affect Our Results of Operations
Our results of operations and our ability to complete an initial Business
Combination may be adversely affected by various factors that could cause
economic uncertainty and volatility in the financial markets, many of which are
beyond our control. Our business could be impacted by, among other things,
downturns in the financial markets or in economic conditions, increases in oil
prices, inflation, increases in interest rates, supply chain disruptions,
declines in consumer confidence and spending, the ongoing effects of the
COVID-19 pandemic, including resurgences and the emergence of new variants, and
geopolitical instability, such as the military conflict in the Ukraine. We
cannot at this time fully predict the likelihood of one or more of the above
events, their duration or magnitude or the extent to which they may negatively
impact our business and our ability to complete an initial Business Combination.
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AMERICAS TECHNOLOGY ACQUISITION CORP. 
