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ARGUS CAPITAL CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

11/19/2021 | 05:07pm EST
This Quarterly Report on Form
includes forward-looking statements. These forward-looking statements are based
on our current expectations and beliefs concerning future developments and their
potential effects on us. There can be no assurance that future developments
affecting us will be those that we have anticipated. These forward-looking
statements involve a number of risks, uncertainties (some of which are beyond
our control) or other assumptions that may cause actual results or performance
to be materially different from those expressed or implied by these
forward-looking statements. Our forward-looking statements include, but are not
limited to, statements regarding our or our management team's expectations,
hopes, beliefs, intentions or strategies regarding the future. In addition, any
statements that refer to projections, forecasts or other characterizations of
future events or circumstances, including any underlying assumptions, are
forward-looking statements. The words "anticipate," "believe," "continue,"
"could," "estimate," "expect," "intends," "may," "might," "plan," "possible,"
"potential," "predict," "project," "should," "would" and similar expressions may
identify forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. Factors that might cause or
contribute to such forward-looking statements include, but are not limited to,
those set forth in the Risk Factors section of the Company's registration
statement and prospectus for the Company's offering filed with the SEC. The
following discussion should be read in conjunction with our financial statements
and related notes thereto included elsewhere in this report.
We are a blank check company incorporated on April 22, 2021 as a Delaware
corporation and formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses (a "Business Combination"). We
consummated our Public Offering (as defined below) on September 24, 2021 and are
currently in the process of locating suitable targets for our initial Business
Combination. We intend to use the cash proceeds from our Public Offering and the
Private Placement described below as well as additional issuances, if any, of
our capital stock, debt or a combination of cash, stock and debt to complete the
Business Combination.
We expect to incur significant costs in the pursuit of our initial Business
Combination. We cannot assure you that our plans to raise capital or to complete
our initial Business Combination will be successful.
Liquidity and Capital Resources
On September 24, 2021 we consummated a $304,750,000 Public Offering consisting
of 30,475,000 units at a price of $10.00 per unit ("Unit"). Each Unit consists
of one share of the Company's Class A common stock, $0.0001 par value (the
"Class A Common Stock") and
of one redeemable warrant (each, a "Public Warrant"). Simultaneously, with the
closing of the Public Offering, we consummated a $14,440,000 private placement
("Private Placement") of an aggregate of 9,626,667 warrants ("Private Placement
Warrants") at a price of $1.50 per warrant. Upon closing of the Public Offering
and Private Placement on September 24, 2021, $310,845,000 in proceeds (including
$10,666,250 of deferred underwriting commissions) from the Public Offering and
Private Placement was placed in a U.S.-based trust account maintained by
Continental Stock Transfer & Trust Company, acting as trustee (the "Trust
Account"). We also used funds held outside of the Trust Account to pay
underwriting commissions of $6,095,000 and deferred offering and formation
As of September 30, 2021, we had an unrestricted cash balance of $1,716,452 as
well as cash and investments held in the Trust Account of $799. Our working
capital needs will be satisfied through the funds, held outside of the Trust
Account, from the Public Offering. Interest on funds held in the Trust Account
may be used to pay taxes. Further, the Sponsor or an affiliate of the Sponsor or
certain of the Company's officers and directors may, but are not obligated to,
loan the Company funds as may be required. Up to $1,500,000 of such loans may be
convertible into warrants of the post-Business Combination entity at a price of
$1.50 per warrant at the option of the lender. Such warrants would be identical
to the Private Placement Warrants. The terms of such loans have not been
determined and no written agreements exist with respect to such loans.

  Table of Contents
Results of Operations and Known Trends or Future Events
We have neither engaged in any significant business operations nor generated any
revenues to date. All activities to date relate to the Company's formation and
the Public Offering (the "Public Offering"). We expect to generate
income in the form of interest income on cash, cash equivalents, and marketable
securities that will be held in the Trust Account (as defined below). We expect
to incur increased expenses as a result of being a public company (for legal,
financial reporting, accounting and auditing compliance), as well as for due
diligence expenses as we locate a suitable Business Combination.
For the three months ended September 30, 2021, we had a net loss of $1,566,987.
which consisted of $2,015 in interest from investment in trust offset by general
and administrative expenses of $50,140, franchise tax of $88,767, change in fair
value of warrant liabilities of $152,375 and warrant issuance transaction costs
of $1,277,720.
For the period from April 22, 2021 (inception) through September 30, 2021, we
had a net loss of $1,567,652 which consisted of $2,015 in interest from
investment in trust offset by general and administrative expenses of $50,805,
franchise tax of $88,767, change in fair value of warrant liabilities of
$152,375 and warrant issuance transaction costs of $1,277,720.
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 the Sponsor a monthly fee of $20,000 for office space, utilities
and secretarial, and administrative support services to the Company. We began
incurring these fees on September 25, 2021 and will continue to incur these fees
monthly until the earlier of the completion of the Business Combination or the
Company's liquidation.
The underwriter is entitled to a deferred fee of $0.35 per Unit, or $10,666,250
in the aggregate. The deferred fee will become payable to the underwriter 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
Registration Rights
The holders of the Founder Shares, Private Placement Warrants and Warrants that
may be issued upon conversion of working capital loans (and any Class A common
stock issuable upon the exercise of the Private Placement Warrants and warrants
that may be issued upon conversion of working capital loans and upon conversion
of the Founder Shares) are entitled to registration rights pursuant to a
registration rights agreement, requiring the Company to register such securities
for resale. The holders of these securities are entitled to make up to three
demands, excluding short form demands, that we register such securities. In
addition, the holders have certain "piggy-back" registration rights with respect
to registration statements filed subsequent to our completion of our initial
business combination. The Company will bear the expenses incurred in connection
with the filing of any such registration statements.

Critical Accounting Policies
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the unaudited condensed
financial statements and accompanying notes. Actual results could differ from
those estimates. The Company has identified the following as its critical
accounting policies:
Warrant Liability
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 stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to ASC 480
and ASC 815. We account for the Warrants in accordance with the guidance
contained in ASC 815-40 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 statements of operations. The Private Placement Warrants and
the Public Warrants for periods where no observable traded price was available
are valued using the Black-Scholes option and the Monte Carlo simulation model,
respectively. For periods subsequent to the detachment of the Public Warrants
from the Units, the Public Warrant quoted market
price will be used
as the fair value as of each relevant date.
Investments Held in Trust
The proceeds held in the trust account (the "Trust Account") were invested in
permitted 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 that invest only in direct U.S. government treasury

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Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible redemption
in accordance with the guidance in Accounting Standards Codification ("ASC")
Topic 480 "Distinguishing Liabilities from Equity." Shares of Class A common
stock subject to mandatory redemption are classified as a liability instrument
and is measured at redemption value. Conditionally redeemable common stock
(including 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 the Company's control) is classified as
temporary equity. At all other times, common stock is classified as
stockholders' equity. The Company's Class A common stock features certain
redemption rights that are considered to be outside of the Company's control and
subject to occurrence of uncertain future events. Accordingly, Class A common
stock subject to possible redemption is presented as temporary equity, outside
of the stockholders' equity section of the Company's unaudited condensed balance
Net Income (Loss) Per Share
Net income (loss) per common stock is computed by dividing net income (loss) by
the weighted average number of common stock outstanding for the period. The
Company applies
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 Pronouncements
In August 2020, the FASB issued Accounting Standards Update ("ASU")
Debt - Debt with Conversion and Other Options (Subtopic
and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic
to simplify accounting for certain financial instruments. ASU
eliminates the current models that require separation of beneficial conversion
and cash conversion features from convertible instruments and simplifies the
derivative scope exception guidance pertaining to equity classification of
contracts in an entity's own equity. The new standard also introduces additional
disclosures for convertible debt and freestanding instruments that are indexed
to and settled in an entity's own equity. ASU
amends the diluted earnings per share guidance, including the requirement to use
method for all convertible instruments. ASU
is effective January 1, 2024 and should be applied on a full or modified
retrospective basis, with early adoption permitted beginning on January 1, 2021.
The Company is currently assessing the impact, if any, that ASU
would have on its financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not effective,
accounting standards, if currently adopted, would have a material effect on the
Company's financial statements.
Sheet Arrangement
We did not have any
sheet arrangements as of September 30, 2021 as defined in Item 303(a)(4)(ii) of

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