References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to CIIG Capital Partners II, Inc. References to our "management"
or our "management team" refer to our officers and directors, and references to
the "Sponsor" refer to CIIG Management II, LLC. The following discussion and
analysis of the Company's financial condition and results of operations should
be read in conjunction with the 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.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") that are not historical
facts and involve risks and uncertainties that could cause actual results to
differ materially from those expected and projected. All statements, other than
statements of historical fact included in this Quarterly Report including,
without limitation, statements in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" regarding the completion of the
proposed business combination, the Company's financial position, business
strategy and the plans and objectives of management for future operations, are
forward-looking statements. Words such as "expect," "believe," "anticipate,"
"intend," "estimate," "seek" and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect
management's current beliefs, based on information currently available. A number
of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the Risk Factors section of the
Company's Annual Report on Form 10-K filed with the SEC. The Company's
securities filings can be accessed on the EDGAR section of the SEC's website at
www.sec.gov. Except as expressly required by applicable securities law, the
Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on
January 6, 2021 for the purpose of effecting an initial business combination. We
intend to effectuate our initial business combination using cash from the
proceeds of the initial public offering and the sale of the private placement
warrants, our capital stock, debt or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete an initial
business combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from January 6, 2021 (inception) through March 31, 2022 were
organizational activities, those necessary to prepare for the initial public
offering, described below, and identifying a target company for an initial
business combination. We do not expect to generate any operating revenues until
after the 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 incur 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 months ended March 31, 2022, we had a net loss of $747,202, which
consists of formation and operational costs of $792,049, offset by interest
earned on cash and marketable securities held in the trust account of $44,847.
For the period from January 6, 2021 (inception) through March 31, 2021, we had a
net loss of $1,000, which consists of formation and operational costs.
Liquidity and Capital Resources
On September 17, 2021, we consummated the initial public offering of 28,750,000
units, which includes the full exercise by the underwriter of its over-allotment
option in the amount of 3,750,000 units, at $10.00 per unit, generating gross
proceeds of $287,500,000. Simultaneously with the closing of the initial public
offering, we consummated the sale of 12,062,500 private placement warrants at a
price of $1.00 per private placement warrant in a private placement to the
Sponsor generating gross proceeds of $12,062,500.
Following the initial public offering, the full exercise of the over-allotment
option, and the sale of the private placement warrants, a total of $291,812,500
was placed in the trust account. We incurred $16,342,432 in initial public
offering related costs, including $5,750,000 of underwriting fees and $529,932
of other offering costs.
For the three months ended March 31, 2022, cash used in operating activities was
$369,261. Net loss of $747,202 was affected by interest earned on cash and
marketable securities held in the trust account of $44,847. Changes in operating
assets and liabilities provided $422,788 of cash from operating activities.
For the period from January 6, 2021 (inception) through March 31, 2021, we do
not have cash used in operating activities.
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As of March 31, 2022, we had marketable securities held in the trust account of
$291,875,629 (including approximately $44,847 of interest income) consisting of
U.S. Treasury Bills with a maturity of 185 days or less. Interest income on the
balance in the trust account may be used by us to pay taxes. Through March 31,
2022, the Company withdrew $12,000 interest earned from the trust account.
We intend to use substantially all of the funds held in the trust account,
including any amounts representing interest earned on the trust account (less
income taxes payable and deferred underwriting commissions), to complete our
initial business combination. To the extent that our capital stock or debt is
used, in whole or in part, as consideration to complete our initial business
combination, the remaining proceeds held in the trust account will be used as
working capital to finance the operations of the target business or businesses,
make other acquisitions and pursue our growth strategies.
As of March 31, 2022, we had cash of $311,103. We intend to use the funds held
outside the trust account primarily to identify and evaluate target businesses,
perform business due diligence on prospective target businesses, travel to and
from the offices, plants or similar locations of prospective target businesses
or their representatives or owners, review corporate documents and material
agreements of prospective target businesses, and structure, negotiate and
complete an initial business combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with an initial business combination, the Sponsor, or certain of our
officers and directors or their affiliates may, but are not obligated to, loan
us funds as may be required. If we complete an initial business combination, we
would repay such loaned amounts. In the event that an initial business
combination does not close, we may use a portion of the working capital held
outside the trust account to repay such loaned amounts but no proceeds from our
trust account would be used for such repayment. Up to $1,500,000 of such working
capital loans may be converted into warrants of the post initial business
combination entity at a price of $1.00 per warrant. The warrants would be
identical to the private placement warrants.
We will need to raise additional capital through loans or additional investments
from our Sponsor or an affiliate of our Sponsor or certain of our directors and
officers. Our Sponsor or an affiliate of our Sponsor or certain of our directors
and officers may, but are not obligated to, loan us funds, from time to time or
at any time, in whatever amount they deem reasonable in their sole discretion,
to meet our working capital needs. Accordingly, we may not be able to obtain
additional financing. If we are unable to raise additional capital, we may be
required to take additional measures to conserve liquidity, which could include,
but not necessarily be limited to, curtailing operations, suspending the pursuit
of a potential transaction and reducing overhead expenses. We cannot provide any
assurance that new financing will be available to us on commercially acceptable
terms, if at all.
In connection with our assessment of going concern considerations in accordance
with Financial Accounting Standards Board ("FASB") ASC Topic 205-40, "Basis of
Presentation - Going Concern," management has determined that the expected
shortfall in working capital over the period of time between the date the
financial statements are issued and our estimated initial business combination
date raises substantial doubt about our ability to continue as a going concern
until the earlier of the consummation of our initial business combination or the
date we are required to liquidate. Based on the above factors, management
determined there is substantial doubt about our ability to continue as a going
concern within one year after the date the financial statements are issued. The
financial statements do not include any adjustment that might be necessary if we
are unable to continue as a going concern. Our Sponsor or an affiliate of our
Sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds, from time to time or at any time, in whatever amount they deem
reasonable in their sole discretion, to meet our working capital needs.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of March 31, 2022. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
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 the Company
will agree to pay an affiliate of the Sponsor a total of $10,000 per month for
office space, utilities and secretarial and administrative support. We began
incurring these fees on September 14, 2021 and will continue to incur these fees
monthly until the earlier of the completion of the initial business combination
and our liquidation.
The underwriters are entitled to a deferred fee of $0.35 per unit, or
$10,062,500 in the aggregate. The deferred fee will become payable to the
underwriters from the amounts held in the trust account solely in the event that
the Company completes an initial business combination, subject to the terms of
the underwriting agreement.
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Critical Accounting Policies
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 Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from
Equity." Shares of Class A common stock subject to mandatory redemption is
classified as a liability instrument and is measured at fair value.
Conditionally redeemable common stock (including common stock that feature
redemption rights that is either within the control of the holder or subject to
redemption upon the occurrence of uncertain events not solely within our
control) is classified as temporary equity. At all other times, common stock is
classified as stockholders' equity. Our Class A common stock features certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, shares of Class A common
stock subject to possible redemption are presented as temporary equity, outside
of the stockholders' deficit section of our condensed balance sheets.
Net Loss Per Common Share
Net income per common share is computed by dividing net income by the weighted
average number of common shares outstanding for the period. We have two classes
of common stock, which are referred to as Class A common stock and Class B
common stock. Income and losses are shared pro rata between the two classes of
common stock. This presentation contemplates an initial business combination as
the most likely outcome, in which case, both classes of common stock share pro
rata in our income (loss). Accretion associated with the redeemable shares of
Class A common stock is excluded from income per common share as the redemption
value approximates fair value.
Recent Accounting Standards
In August 2020, the FASB issued 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 U.S. GAAP. ASU 2020-06 removes certain settlement
conditions that are required for equity contracts to qualify for the derivative
scope exception, and it also simplifies the diluted earnings per share
calculation in certain areas. ASU 2020-06 is effective for fiscal years
beginning after December 15, 2023, including interim periods within those fiscal
years, with early adoption permitted. We adopted ASU 2020-06 effective as of
January 06, 2021. The adoption of ASU 2020-06 did not have an impact on our
financial statements.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our condensed financial statements.
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