References to the "Company," "Cascadia Acquisition Corp.," "Cascadia," "our,"
"us" or "we" refer to Cascadia 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 other
SEC filings.
Overview
We are a blank check company incorporated in Delaware on February 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 is Cascadia Acquisition Sponsor LLC, a Delaware limited liability
company (the "Sponsor"). The registration statement for our initial public
offering (the "Initial Public Offering") was declared effective on August 25,
2021. On August 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. On October 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. On October 9, 2021, the underwriter's
over-allotment option expired unexercised.
Following the closing of the Initial Public Offering on August 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") in the United States maintained by Continental Stock Transfer &
Trust Company, as trustee, and will be invested in U.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 under
Delaware law to provide for claims of creditors and the requirements of other
applicable law.
Results of Operations
Our entire activity since inception up to September 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 ended September 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 from February 16, 2021 (inception) through September 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.

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Liquidity and Capital Resources
As of September 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 on August 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 of September 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 of September 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 pay Cascadia 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 indemnify
Cascadia 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 on October 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.

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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 the Financial 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 the Financial
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. At September 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 ended
September 30, 2021 and for the period from February 16, 2021 (inception) through
September 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
In August 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 February 16, 2021 (inception). Adoption of the ASU did not impact the Company's 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 the Company's financial statements.


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