CASCADIA ACQUISITION CORP. References to the "Company," "
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 our
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 our 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
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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 incorporated in
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 registration statement for Initial Public Offering was declared effective onAugust 25, 2021 . OnAugust 30, 2021 , we consummated our Initial Public Offering of 15,000,000 Units, at$10.00 per Unit, generating gross proceeds of$150,000,000 , and incurring offering costs of$8,868,326 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 11, 2021 , the underwriter waived the election to exercise its over-allotment option. Each Unit consists of one share of the Company's Class A common stock,$0.0001 par value, and one-half of one redeemable 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 Private Placement Warrants at a price of$1.00 per Private Placement Warrant to the Sponsor, generating total gross proceeds of$5,000,000 . 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 11, 2021 , the underwriter waived the election to exercise its over-allotment option. 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 inthe United States maintained byContinental Stock Transfer & Trust Company , as trustee, and invested inU.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (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. 51
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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.
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.
Liquidity and Capital Resources, and Going Concern
As of
Our liquidity needs prior to the consummation of the Initial Public Offering
were satisfied through the payment of
Based on the foregoing, we do not believe we have sufficient liquidity to meet
our current and future estimated financial obligations. 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.
If we complete a business combination, we would repay any working capital loans
out of the proceeds of the Trust Account released to us. Except for the
foregoing, the terms of such working capital loans, if any, have not been
determined and no written agreements exist with respect to such loans through
Additionally, if our estimates of the costs of undertaking in-depth due
diligence and negotiating our initial business combination are less than the
actual amount necessary to do so, or the amount of interest available to us from
the Trust Account is less than we expect as a result of the current interest
rate environment, we may have insufficient funds available to operate our
business prior to our initial business combination. Moreover, we may need to
obtain additional financing either to consummate our initial business
combination or because we become obligated to redeem a significant number of our
Public Shares upon consummation of our initial business combination, in which
case we may issue additional securities or incur debt in connection with such
business combination. Subject to compliance with applicable securities laws, we
would only consummate such financing simultaneously with the consummation of our
initial business combination. Following our initial business combination, if
cash on hand is insufficient, we may need to obtain additional financing in
order to meet our obligations. If we are unable to complete a business
combination by
Our anticipated shortfall of sufficient liquidity to meet our current and future estimated financial obligations raises substantial doubt about our ability to continue as a going concern for a period of time within one year after the date that the accompanying financial statements are issued. We plan to address this uncertainty through working capital loans, and through consummation of our initial business combination. There is no assurance that working capital loans will be available to the Company or that our plans to consummate our initial business combination will be successful.
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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 this Annual Report. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Results of Operations
Our entire activity since inception up to
For the period fromFebruary 16, 2021 (inception) throughDecember 31, 2021 , we had net income of approximately$1,905,000 , which consisted of a loss from operations of approximately$570,000 , which was comprised of approximately$395,000 of general and administrative expenses, approximately$175,000 of franchise tax expense, and non-operating income of approximately$2,475,000 , which was comprised of dividend income earned on marketable securities held in Trust Account of approximately$2,000 , a change in fair value of derivative warrant liabilities of$2,800,000 and offering costs associated with derivative warrant liabilities of approximately$327,000 .
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. The Company andCascadia Capital Holdings, LLC agreed to end these payments after theFebruary 2022 payment. 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 waived the election to exercise its over-allotment option onOctober 11, 2021 .
The underwriter received a cash underwriting discount of
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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 FASB ASC 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 statement of operations. The initial fair value of the Public
Warrants and Private Placement Warrants were estimated using a Monte-Carlo
simulation model. The fair value of the Public Warrants and Private Placement
Warrants have subsequently been measured based on the listed market price of the
Public Warrants or inputs derived from the Public Warrants.
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 FASB 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. AtDecember 31, 2021 , we had outstanding warrants to purchase up to 12,500,000 Class A common shares. The weighted average of 54
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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 period from
Recent Accounting Standards
In
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 U.S. 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.
Off-Balance
Sheet Arrangements
As ofDecember 31, 2021 , we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
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