References in this report (the "Quarterly Report") to the "Company," "our," "us"
or "we" refer to AXIOS Sustainable Growth Acquisition Corporation. The following
discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with the unaudited condensed 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
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act, and Section 21E of 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
SEC filings.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company
for the purpose of effecting a merger, share exchange, asset acquisition, share
purchase, recapitalization, reorganization or other similar business combination
with one or more businesses. Although there is no restriction or limitation on
what industry our target operates in, it is our intention to pursue prospective
targets that are engaged in agribusiness, plant-based proteins, food processing
and AgTech, with our target search focused on agricultural companies in Central
and Eastern Europe.
As of June 30, 2022, we had not commenced any operations. All activity for the
period from November 30, 2021 (inception), through June 30, 2022, relates to the
formation and the Initial Public Offering. We will not generate any operating
revenues until after the completion of our initial Business Combination, at the
earliest. We will generate non-operating income in the form of interest income
from the proceeds derived from the Initial Public Offering.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 9,920,000 Private Placement Warrants at a price of $1.00 per Private
Placement Warrant in the Private Placement to our Sponsor and I-Bankers.
Following the closing of the Initial Public Offering on February 18, 2022, an
amount of $175,950,000 ($10.20 per Unit) from the net proceeds of the sale of
the Units in the Initial Public Offering and the Private Placement was placed in
a Trust Account with Continental Stock Transfer & Trust Company acting as
trustee.
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We cannot assure you that our plans to complete our initial Business Combination
will be successful. If we are unable to complete the initial Business
Combination within 12 months (or up to 18 months if the Sponsor extends the time
to complete an initial Business Combination by depositing into the Trust Account
$1,725,000 ($0.10 per share) for each three-month extension) from the closing of
the Initial Public Offering, or during any extended time that we have to
consummate a Business Combination beyond 18 months as a result of a shareholder
vote to amend our Amended and Restated Memorandum and Articles of Association,
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 pay taxes
(less up to $100,000 of interest to pay dissolution expenses and which interest
shall be net of taxes payable), divided by the number of then issued and
outstanding Public Shares, which redemption will completely extinguish Public
Shareholders' rights as shareholders (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 our remaining shareholders
and our board of directors, liquidate and dissolve, subject in each case to our
obligations under Cayman Islands law to provide for claims of creditors and the
requirements of other applicable law. There will be no redemption rights or
liquidating distributions with respect to our warrants, which will expire
worthless if we fail to complete a Business Combination within the Combination
Period.
Results of Operations
As of June 30, 2022, we have neither engaged in any operations nor generated any
revenues. Our only activities since inception through June 30, 2022 have been
organizational activities and those necessary to prepare for the Initial Public
Offering. We do not expect to generate any operating revenues until after
completion of our initial Business Combination. We generate non-operating income
in the form of interest income on marketable securities held in the Trust
Account. We are incurring 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.
For the three and six months ended June 30, 2022, we had a net loss of $593,323
and $1,641,862, respectively, consisting primarily of general and administrative
expenses of $736,584 and $1,856,004, respectively.
Liquidity and Capital Resources
As of June 30, 2022, we had cash of $887,957.
For the six months ended June 30, 2022, the net increase in cash was $887,957.
Cash used in operating activities for the six months ended June 30, 2022, was
$2,062,103 and is primarily the result of a net loss of $1,641,862.
On February 18, 2022, the Company consummated its Initial Public Offering of
17,250,000 Units, including the issuance of 2,250,000 Units as a result of the
underwriter's exercise of its over-allotment option. Each Unit consists of one
Class A ordinary share of the Company, par value $0.0001 per share (an "Ordinary
Share"), one right to acquire one-tenth of an Ordinary Share, and one redeemable
warrant of the Company. Each right entitles the holder thereof to receive
one-tenth (1/10) of one Ordinary Share upon consummation of our initial Business
Combination. Each warrant entitles the holder thereof to purchase one Ordinary
Share for $11.50 per share, subject to adjustment. The Units were sold at a
price of $10.00 per Unit, generating gross proceeds to the Company of
$172,500,000. The Company granted the underwriters of the Initial Public
Offering a 30-day option to purchase up to an additional 2,250,000 Units to
cover over-allotments, if any.
Substantially concurrently with the closing of the Initial Public Offering, the
Company completed the private sale of 9,920,000 Private Placement Warrants at a
purchase price of $1.00 per Private Placement Warrant, to the Sponsor and
I-Bankers, generating gross proceeds to the Company of $9,920,000. Of such
amount, 8,445,000 Private Placement Warrants were purchased by the Sponsor and
1,475,000 Private Placement Warrants were purchased by I-Bankers.
A total of $175,950,000, comprised of proceeds from the Initial Public Offering
and the sale of the Private Placement Warrants, was placed in a U.S.-based trust
account at JPMorgan Chase Bank, N.A., maintained by Continental Stock Transfer &
Trust Company acting as trustee.
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In connection with our assessment of going concern considerations in accordance
with ASU 2014-15, "Disclosures of Uncertainties about an Entity's Ability to
Continue as a Going Concern," management has determined that the Combination
Period is less than one year from the date of the issuance of the financial
statements. There is no assurance that the Company's plans to consummate a
Business Combination will be successful within the Combination Period, which is
less than 12 months from the issuance date of the financial statements. As a
result, there is substantial doubt that the Company can sustain operations for a
period of at least one year from the issuance date of these financial
statements. The financial statements do not include any adjustments that might
result from the outcome of the uncertainty.
Off-balance Sheet Financing Arrangements
As of June 30, 2022, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations, purchase obligations or long-term liabilities, other than (i) an
agreement to pay the Sponsor up to a maximum of $180,000 in the aggregate for
office space, utilities and secretarial and administrative services, which
administrative fees shall be paid on a monthly basis at $15,000 until the
maximum fee is reached, or if earlier, until the consummation of our Business
Combination or our liquidation, and (ii) a Working Capital Loan which has
advances of $133,849 outstanding as of August 15, 2022.
Critical Accounting Policies and Estimates
The preparation of condensed 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:
Class A ordinary shares subject to possible redemption
The Company accounts for its Class A ordinary shares subject to possible
redemption in accordance with the guidance enumerated in ASC 480 "Distinguishing
Liabilities from Equity". Ordinary shares subject to mandatory redemption are
classified as a liability instrument and are measured at fair value.
Conditionally redeemable ordinary shares (including ordinary shares 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 the
Company's control) are classified as temporary equity. At all other times,
ordinary shares are classified as shareholders' equity. The Company's Class A
ordinary shares feature certain redemption rights that are considered by the
Company to be outside of the Company's control and subject to the occurrence of
uncertain future events.
Net Loss per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC
Topic 260, "Earnings Per Share." The Company has two classes of ordinary shares,
which are referred to as Class A ordinary shares and Class B ordinary shares.
Income and losses are shared pro rata between the two classes of ordinary
shares. Net loss per ordinary share is computed by dividing net loss by the
weighted average number of ordinary shares outstanding for the period. Accretion
associated with the redeemable Class A ordinary shares is excluded from income
(loss) per ordinary share as the redemption value approximates fair value.
The calculation of diluted loss per ordinary share does not consider the effect
of the warrants issued in connection with the (i) Initial Public Offering, and
(ii) the Private Placement since the exercise of the warrants is contingent upon
the occurrence of future events. The Company did not include any dilutive
securities or other contracts that could, potentially, be exercised or converted
into ordinary shares and then share in the earnings of the Company because to do
so would be anti-dilutive as the Company had a loss for the period. As a result,
diluted net loss per ordinary share is the same as basic net loss per ordinary
share for the periods presented.
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Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments
are derivatives or contain features that qualify as embedded derivatives in
accordance with ASC Topic 815, "Derivatives and Hedging." For derivative
financial instruments that are accounted for as liabilities, the derivative
instrument is initially recorded at its fair value on the grant date and is then
re-valued at each reporting date, with changes in the fair value reported in the
statements of operations. The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as
equity, is evaluated at the end of each reporting period. Derivative liabilities
are classified in the balance sheet as current or non-current based on whether
or not net-cash settlement or conversion of the instrument could be required
within 12 months of the balance sheet date.
Recent Accounting Pronouncements
In August 2020, the FASB issued 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. ASU 2020-06 is effective for the Company on January 1, 2022.
Adoption of the ASU did not impact the Company's financial position.
Management does not believe that any recently issued, but not effective,
accounting standards, except as noted above, if currently adopted, would have a
material effect on the Company's financial statements.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. 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, our 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: (1) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404 of the
Sarbanes-Oxley Act; (2) 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; (3) comply with any requirement that
may be adopted by the Public Company Accounting Oversight Board ("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 (4) disclose certain executive
compensation-related items such as the correlation between executive
compensation and performance and comparisons of the Chief Executive Officer's
compensation to median employee compensation. These exemptions will apply for a
period of five years following the completion of the Initial Public Offering or
until we are no longer an "emerging growth company," whichever is earlier.
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