The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including those set forth under "Special Note Regarding Forward-Looking
Statements," "Item 1A. Risk Factors" and elsewhere in this Annual Report on Form
10-K.
Overview
We are a blank check company formed under the laws of the State of Delaware on
October 2, 2020 for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with
one or more businesses or entities (a "Business Combination"). We intend to
effectuate our Business Combination using cash from the proceeds of the Initial
Public Offering and the sale of the Private Units, 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 a 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 October 2, 2020 (inception) through December 31, 2021
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and identifying a target company for a
Business Combination. We do not expect to generate any operating revenues until
after the completion of our 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 year ended December 31, 2021, we had a net loss of $563,546, which
consists of operating costs of $581,362 and interest income from the bank of
$234, offset by an unrealized gain on marketable securities held in our Trust
Account of $1,297 and interest income on marketable securities held in the Trust
Account of $16,753.
For the period from October 2, 2020 (inception) through December 31, 2020, we
had a net loss of $1,450, which consists of operating costs.
Liquidity and Capital Resources
On August 30, 2021, we consummated the Initial Public Offering of 15,000,000
Units, at $10.00 per Unit, generating gross proceeds of $150,000,000, which is
described in Note 4, we consummated the sale of 645,000 Units at a price of
$10.00 per Private Unit in a private placement to the Sponsor, generating gross
proceeds of $6,450,000.
On September 7, 2021, the Company consummated the sale of an additional
2,118,624 Units pursuant to the partial exercise of the underwriters'
over-allotment option and the sale of an additional 63,559 Private Placement
Units.
Of the gross proceeds of the IPO and Private Placement, an aggregate of
$172,898,105 ($10.10 per unit sold in the offering, including the over-allotment
option) was deposited into a trust account with Continental Stock Transfer &
Trust Company acting as trustee.
For the year ended December 31, 2021, cash used in operating activities was
$1,113,235. Net loss of $563,546 was affected by interest earned on marketable
securities held in the Trust Account of $16,753 and unrealized gain on
marketable securities held in Trust Account of $1,297. Changes in operating
assets and liabilities used $531,639 of cash for operating activities.
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For the period from October 2, 2020 (inception) through December 31, 2020, cash
used in operating activities was $0. Net loss of $1,450 was affected by changes
in operating assets and liabilities provided $1,450 of cash for operating
activities.
As of December 31, 2021, we had marketable securities held in the Trust Account
of $172,916,155 (including approximately $16,753 of interest income and $1,297
of unrealized gains) 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 December 31, 2021, we have not withdrawn any 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), to complete our Business Combination. To the extent that
our capital stock or debt is used, in whole or in part, as consideration to
complete our 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 December 31, 2021, we had cash of $413,067. 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 a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a 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 a Business Combination, we would repay such
loaned amounts. In the event that a 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
convertible into units of the post-Business Combination entity at a price of
$10.00 per unit. The units would be identical to the Private Units.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a Business Combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our Business Combination. Moreover, we may need to obtain additional
financing either to complete our Business Combination or because we become
obligated to redeem a significant number of our Public Shares upon consummation
of our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination.
Going Concern
In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standard Board's Accounting Standards
Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability
to Continue as a Going Concern," the Company may not have sufficient funds
available to complete a Business Combination. Management has determined that the
liquidity condition, should a Business Combination not occur, and potential
subsequent dissolution raises substantial doubt about the Company's ability to
continue as a going concern. No adjustments have been made to the carrying
amounts of assets or liabilities should the Company be required to liquidate.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2021. 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.
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Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities.
The underwriters were entitled to a cash underwriting discount of $0.20 per
Unit, or $3,000,000 in the aggregate paid upon the closing of the Initial Public
Offering.
The Company engaged EarlyBirdCapital, the representative of underwriter in the
Initial Public Offering, as an advisor in connection with its Business
Combination to assist in holding meetings with the shareholders to discuss the
potential Business Combination and the target business' attributes, introduce
the Company to potential investors that are interested in purchasing securities
in connection with the Initial Business Combination, assist in obtaining
shareholder approval for the Business Combination and assist the Company with
press releases and public filings in connection with the Business Combination.
The Company will pay EarlyBirdCapital a cash fee for such services upon the
consummation a Business Combination in an aggregate amount equal to 3.5% of the
gross proceeds of the Initial Public Offering. Additionally, the Company will
pay EarlyBirdCapital a cash fee equal to 1.0% of the total consideration payable
in the Business Combination if it introduces the Company to the target business
with which it completes a Business Combination, provided that the foregoing fee
will not be paid prior to the date that is 60 days from the effective date of
the Initial Public Offering.
Critical Accounting Policies
The preparation of 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:
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Common stock subject to mandatory
redemption is classified as a liability instrument and measured at fair value.
Conditionally redeemable common stock (including common stock that features
redemption rights that are 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 common stock features certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, common stock subject to
possible redemption is presented at redemption value as temporary equity,
outside of the stockholders' equity section of our balance sheets.
Net Income Per Common Share
Net income (loss) per common stock is computed by dividing net income (loss) by
the weighted average number of common stock outstanding for the period.
Accretion associated with the redeemable shares of common stock is excluded from
earnings per 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 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 1,
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 consolidated financial statements.
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