References to the "Company," "us," "our" or "we" refer to Apeiron Capital
Investment Corp. The following discussion and analysis of our financial
condition and results of operations should be read in conjunction with our
audited financial statements and related notes included herein.
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Report
including, without limitation, statements under this "Management's Discussion
and Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward- looking statements. When used in
this Report, words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to us or the Company's
management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of 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 the SEC.
All subsequent written or oral forward-looking statements attributable to us or
persons acting on the Company's behalf are qualified in their entirety by this
paragraph. The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with the 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.
Overview
We are a blank check company formed under the laws of the State of Delaware on
December 28, 2020 for the purpose of effectuating a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or other similar
business combination with one or more businesses. We intend to effectuate our
business combination using cash from the proceeds of our initial public offering
and the sale of the private placement warrants, our securities, debt or a
combination of cash, securities and our 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.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from December 28, 2020 (inception) through December 31, 2021
were organizational activities, those necessary to prepare for our 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.
For the period from January 1, 2021 (commencement of operations) through
December 31, 2021, we had net income of $486,473, which consisted of the change
in fair value of warrant liabilities of $1,087,250 and interest earned on
marketable securities held in the trust account of $2,082, offset by transaction
costs associated with our initial public offering of $368,544 and operating and
formation costs of $234,315.
For the period from December 28, 2020 (inception) through December 31, 2020
there were no operational results to report.
Liquidity and Capital Resources
On November 12, 2021, we consummated our initial public offering of 17,250,000
Units, which includes the full exercise by the underwriters of their
over-allotment option in the amount of 2,250,000 Units, at $10.00 per Unit,
generating gross proceeds of $172,500,000. Simultaneously with the closing of
our initial public offering, we consummated the sale of 8,200,000 private
placement warrants at a price of $1.00 per private placement warrant in a
private placement to the sponsor and Cantor, the representative of the
underwriters of our initial public offering (the "Underwriters"), generating
gross proceeds of $8,200,000.
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Following our initial public offering on November 12, 2021, including the full
exercise of the over-allotment option, and the private placement, a total of
$175,950,000 (or $10.20 per unit) was placed in the trust account. We incurred
$12,644,008 in our initial public offering related costs, including $3,000,000
of underwriting fees, net of reimbursement, $9,075,000 of deferred underwriting
fees, and $569,008 of other offering costs.
For the period from January 1, 2021 (commencement of operations) through
December 31, 2021, cash used in operating activities was $454,420. Net income of
$486,473 was affected by the change in fair value of warrant liabilities of
$1,087,250, interest earned on marketable securities held in the trust account
of $2,082, and transaction costs associated with the initial public offering of
$368,544. Changes in operating assets and liabilities used $220,105 of cash for
operating activities.
As of December 31, 2021, we had marketable securities held in the trust account
of $175,952,082 (including approximately $2,082 of interest income) consisting
of U.S. Treasury bills with a maturity of 185 days or less. Interest income on
the balance in the trust account may be used by us to pay taxes. Through
December 31, 2021, we have not withdrawn any interest earned from the trust
account.
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
deferred underwriting commissions and income taxes payable), to complete our
business combination. To the extent that our capital stock 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 December 31, 2021, we had cash of $751,572. 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 certain of our officers
and directors or their affiliates may, but are not obligated to, loan us funds
as may be required. If we complete a business combination, we would repay such
loaned amounts. 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 working capital loans may be
convertible into warrants of the post-business combination entity at a price of
$1.00 per warrant. The warrants would be identical to the private placement
warrants.
We may need to raise additional capital through loans or additional investments
from our sponsor, stockholders, 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
February 12, 2023, 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.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2021. 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 our sponsor
a total of up to $10,000 per month for office space, utilities and secretarial
and administrative support. We
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began incurring these fees on November 8, 2021 and will continue to incur these
fees monthly until the earlier of the completion of the business combination and
our liquidation.
The underwriters of our initial public offering are entitled to a deferred fee
of (i) $0.50 per unit of the initial 15,000,000 units sold in our initial public
offering, or $7,500,000 in the aggregate, and (ii) $0.70 per unit sold pursuant
to the over-allotment option, or up to an aggregate of $1,575,000. The deferred
fee will become payable to the underwriters from the amounts held in the trust
account solely in the event that the Company completes a business combination,
subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of 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:
Warrant Liabilities
We account for the 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 warrants as liabilities at
their fair value and adjust the 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 statement of
operations.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Class A common stock subject to
mandatory redemption is classified as a liability instrument and measured at
fair value. Conditionally redeemable Class A common stock (including Class A
common stock 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, common stock is 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 occurrence of uncertain future events. Accordingly,
Class A common stock subject to possible redemption is presented at redemption
value as temporary equity, outside of the stockholders' deficit section of our
balance sheet.
Net Income per Common Share
Net income per common stock is computed by dividing net income by the weighted
average number of shares of common stock outstanding for the period. We apply
the two-class method in calculating earnings per share. Accretion associated
with the redeemable shares of Class A common stock is excluded from earnings per
share as the redemption value approximates fair value.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board ("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 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 February 24, 2021. Adoption of the ASU 2020-06 did not have an impact on our
financial position, results of operations or cash flows.
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 financial statements.
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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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