References to the "Company," "Cascadia Acquisition Corp. ," "Cascadia," "our," "us" or "we" refer toCascadia 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 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 includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, 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 otherSEC filings. Overview We are a blank check company incorporated inDelaware onFebruary 16, 2021 . We were formed 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 (the "Business Combination"). Although we are not limited to a particular industry or sector for purposes of consummating a Business Combination, we intend to concentrate on sourcing business combination opportunities in industry sectors that are being fundamentally reshaped by the introduction of advanced technologies, such as robotics, automation and artificial intelligence ("RAAI"), commonly referred to as "Industry 4.0." In addition to RAAI, which we expect will be a key theme and focus as we source business combination opportunities, we plan to also utilize the experience and relationship networks of our management team and board of directors to identify and source attractive and high growth opportunities in the environmental, social and governance, and specifically, the sustainability arena. Our sponsor isCascadia Acquisition Sponsor LLC , aDelaware limited liability company (the "Sponsor"). The registration statement for our initial public offering (the "Initial Public Offering") was declared effective onAugust 25, 2021 . OnAugust 30, 2021 , we consummated our Initial Public Offering of 15,000,000 units (the "Units" and, with respect to the shares of Class A common stock included in the Units being offered, the "Public Shares"), at$10.00 per Unit, generating gross proceeds of$150,000,000 , and incurring offering costs of$8,830,225 of which$5,250,000 was for deferred underwriting commissions. We granted the underwriter a 45-day option to purchase up to an additional 2,250,000 Units at the Initial Public Offering price to cover over-allotments, if any. OnOctober 9, 2021 , the underwriter's over-allotment option expired unexercised. Each Unit consists of one share of the Company's Class A common stock,$0.0001 par value, and one-half of one redeemable warrant ("Public Warrant"). Each Public Warrant entitles the holder to purchase one share of Class A common stock at an exercise price of$11.50 per whole share. Simultaneously with the consummation of the closing of the Initial Public Offering, we consummated the private placement of an aggregate of 5,000,000 warrants (each, a "Private Placement Warrant" and collectively, the "Private Placement Warrants") a price of$1.00 per Private Placement Warrant to the Sponsor, generating total gross proceeds of$5,000,000 (the "Private Placement"). We granted the underwriter a 45-day option to purchase up to an additional 450,000 Private Placement Warrants at the Initial Public Offering to cover over-allotments, if any. OnOctober 9, 2021 , the underwriter's over-allotment option expired unexercised. Following the closing of the Initial Public Offering onAugust 30, 2021 , an amount of$150,000,000 , or$10.00 per Unit, from the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the "Trust Account") inthe United States maintained byContinental Stock Transfer & Trust Company , as trustee, and will be invested inU.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 in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the funds in the Trust Account to the Company's stockholders, as described below. Our management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, 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. The Nasdaq rules provide that the Initial Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the value of the Trust Account (excluding deferred underwriting costs and taxes payable on the income earned on the Trust Account) at the time of the signing a definitive agreement to enter a Business Combination. We will only complete a Business Combination if the post-business combination company owns or acquires 50% or more of the outstanding 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 of 1940, as amended (the "Investment Company Act"). We will have until 18 months from the closing of the Initial Public Offering to complete a Business Combination (the "Combination Period"). If we are unable to complete a Business Combination within 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 the Company to pay its tax obligations (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 our board of directors, dissolve and liquidate, subject in each case to our obligations underDelaware law to provide for claims of creditors and the requirements of other applicable law. Results of Operations Our entire activity since inception up toSeptember 30, 2021 was in preparation for our formation and the Initial Public Offering. We will not be generating any operating revenues until the closing and completion of our initial Business Combination. For the three months endedSeptember 30, 2021 , we had a net loss of approximately$799,000 , which consisted of a loss from operations of approximately$97,000 , which was comprised of approximately$80,000 general and administrative expenses and approximately$17,000 of franchise tax expense, and a non-operating loss of approximately$702,000 , which was comprised of a change in fair value of derivative warrant liabilities of$375,000 and offering costs associated with derivative warrant liabilities of approximately$327,000 . For the period fromFebruary 16, 2021 (inception) throughSeptember 30, 2021 , we had a net loss of approximately$802,000 , which consisted of a loss from operations of approximately$100,000 , which was comprised of approximately$80,000 general and administrative expenses, approximately$17,000 of franchise tax expense and approximately$3,000 from formation costs, and a non-operating loss of approximately$702,000 , which was comprised of a change in fair value of derivative warrant liabilities of$375,000 and offering costs associated with derivative warrant liabilities of approximately$327,000 . 17 -------------------------------------------------------------------------------- Table of Contents Liquidity and Capital Resources As ofSeptember 30, 2021 , we had$825,895 of cash in our operating bank account and$1,306,849 of working capital. Our liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of$25,000 from our Sponsor to cover for certain offering costs on our behalf in exchange for issuance of Class B common shares (the "Founder Shares"), and loan proceeds of$123,795 under a promissory note. We repaid the promissory note in full onAugust 30, 2021 . Our liquidity needs have been satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement. 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 with working capital loans. As ofSeptember 30, 2021 , there were no amounts outstanding under any working capital loans. Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using the funds held outside of the Trust Account 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 the Company's financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Off-Balance Sheet Arrangements As ofSeptember 30, 2021 , we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K. Commitments and Contractual Obligations Administrative Services Agreement Commencing on the date of the Initial Public Offering, we entered into an agreement to payCascadia Capital Holdings, LLC a total of$10,000 per month for executive, and other operational support, including accounting services and office space provided to members of our management team. Upon completion of the Business Combination or the Company's liquidation, the Company will cease paying these monthly fees. The Company and the Sponsor have agreed to indemnifyCascadia Capital Holdings, LLC and its affiliates in connection with the services provided pursuant to the services agreement. In addition, our 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. Underwriting Agreement We granted the underwriter a 45-day option to purchase up to 2,250,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. The underwriter's over-allotment option expired unexercised onOctober 9, 2021 . The underwriter received a cash underwriting discount of$0.55 per Unit, or$8,250,000 in the aggregate of which$3,000,000 was paid upon the closing of the Initial Public Offering. The representative of the underwriter has agreed to defer underwriting commissions of 3.5% of the gross proceeds of this offering. Upon and concurrently with the completion of our initial business combination,$5,250,000 , which constitutes the underwriter's deferred commissions will be paid to the underwriter from the funds held in the Trust Account. 18 -------------------------------------------------------------------------------- Table of Contents Critical Accounting Policies Derivative Warrant Liabilities and Class A Common Stock Subject to Possible Redemption We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We account for warrants based on an assessment of specific terms and applicable authoritative guidance in theFinancial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities from Equity" ("ASC 480") and FASB ASC Topic 815, "Derivatives and Hedging" ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company's own common stock and whether the warrant holders could potentially require "net cash settlement" in a circumstance outside of the Company's control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent reporting period while the warrants are outstanding. Because the Company does not control the occurrence of events, such as a tender offer or exchange, that may trigger cash settlement of the warrants where not all of the shareholders also receive cash, the warrants do not meet the criteria for equity treatment thereunder, as such, the warrants must be recorded as a derivative liability. We issued 7,500,000 Public Warrants to investors in our Initial Public Offering and issued 5,000,000 Private Placement Warrants. All of our outstanding warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, we recognize the warrant instruments as liabilities at fair value and adjust the instruments to fair value at each reporting period. The liabilities are 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 Public Warrants and Private Placement Warrants were estimated using a Monte Carlo simulation model. The Company will provide its holders of the outstanding Public Shares (the "public stockholders") with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be$10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company's warrants. The Public Shares subject to redemption are recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with theFinancial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 480, Distinguishing Liabilities from Equity ("ASC 480"). Net Loss per Common Share We comply with accounting and disclosure requirements of FASB ASC Topic 260, "Earnings Per Share". Net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period as calculated using the two-class method. AtSeptember 30, 2021 , we had outstanding warrants to purchase up to 12,500,000 Class A common shares. The weighted average of these shares was excluded from the calculation of diluted net loss per common share since the exercise of the warrants is contingent upon the occurrence of future events. As a result, diluted net loss per common share is the same as basic net loss per common share for the three months endedSeptember 30, 2021 and for the period fromFebruary 16, 2021 (inception) throughSeptember 30, 2021 . We have two classes of common shares, Class A common shares and Class B common shares. Earnings and losses are shared pro rata between the two classes of common shares. Recent Accounting Standards InAugust 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
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