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, as amended (the "Securities Act")
and Section 21E of 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 Form 10-Q including, without limitation,
statements in this "Management's Discussion and Analysis of Financial Condition
and Results of Operations" regarding 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 final prospectus for its Initial Public Offering filed with the U.S.
Securities and Exchange Commission (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.
We are a blank check company formed under the laws of the State of Delaware on
December 2, 2020 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or other similar business
combination with one or more businesses. We intend to effectuate our business
combination using cash from the proceeds of the IPO and the sale of the private
placement warrants, our capital stock, debt or a combination of cash, stock and
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 classify the warrants issued in connection with our IPO and concurrent
private placement as liabilities at their fair value and adjust the warrant
liability to fair value at each reporting period. This liability is subject to
re-measurement at each balance sheet date until exercised, and any change in
fair value is recognized in our statement of operations.
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from January 1, 2021 through September 30, 2021 were
organizational activities, those necessary to identify a target company for a
business combination, as described below. We do not expect to generate any
operating revenues until after the completion of our initial business
combination. We expect to generate non-operating income in the form of interest
income on marketable securities held after the IPO. 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 September 30, 2021, we had net income of $2,285,294,
which consists of operating costs of $1,102,893, offset by interest income from
bank of $12, interest earned on investments held in Trust Account of $3,710, and
a non-cash change in fair value of derivative liability of $3,384,465.
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For the nine months ended September 30, 2021, we had net income of $4,235,582,
which consists of operating costs of $2,577,305, transaction costs related to
warrant issuance of $622,106, offset by a non-cash change in fair value of
derivative liability of $7,427,721, interest income from bank of $53 and
interest earned on investments held in Trust Account of $7,219.
As noted in Note 2 to the Company's financial statements as of September 30,
2021, the Company concluded it should revise its financial statements to present
all redeemable Class A common stock as temporary equity and recognize accretion
from the initial book value to redemption value at the time of its initial
public offering. In connection with the change in presentation for the Class A
common stock subject to redemption, the Company also revised its income (loss)
per common share calculation to allocate net income (loss) evenly to Class A and
Class B common stock. There has been no change in the Company's total assets,
liabilities or operating results.
Liquidity and Capital Resources
On January 29, 2021, we consummated the IPO of 24,150,000 units at a price of
$10.00 per unit, which includes the full exercise by the underwriters of their
over-allotment option in the amount of 3,150,000 units, generating gross
proceeds of $241.5 million. Simultaneously with the closing of the IPO, we
consummated the sale of 4,553,333 private placement warrants at a price of $1.50
per private placement warrant in a private placement to our stockholders,
generating gross proceeds of $6.83 million.
Following the IPO, the full exercise of the over-allotment option by the
underwriters and the sale of the private placement warrants, a total of $241.5
million was placed in the Trust Account. We incurred $13.6 million in
transaction costs, including $4.4 million of underwriting fees, $8.45 million of
deferred underwriting fees and $0.8 million of other offering costs.
For the nine months ended September 30, 2021, cash used in operating activities
was $1,254,133 comprised of net income of $4,235,582 and changes in fair value
of warrant liabilities of $7,427,721, interest earned on investments held in
Trust Account of $7,219, transaction cost related to warrant liability of
$622,106, and the changes in operating assets and liabilities of $1,323,119.
As of September 30, 2021, we had cash and investments held in the Trust Account
of approximately $241.5 million. We intend to use substantially all of the funds
held in the Trust Account, including any amounts representing interest earned on
the Trust Account to complete our initial business combination. We may withdraw
interest to pay taxes. 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 September 30, 2021, we had approximately $0.4 million of cash held outside
of the Trust Account. 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
The Sponsor, or an affiliate of the Sponsor, or certain of our officers and
directors or their affiliates may, but are not obligated to, extend us working
capital loans as may be required in order to fund working capital deficiencies
or finance transaction costs in connection with an initial business combination.
If we complete an initial business combination, we would repay the working
capital loans out of the proceeds of the Trust Account released to us.
Otherwise, the working capital loans would be repaid only out of funds held
outside the Trust Account. In the event that an initial business combination
does not close, we may use a portion of proceeds held outside the Trust Account
to repay the working capital loans but no proceeds held in the Trust Account
would be used to repay the working capital loans. The working capital loans
would either be repaid upon consummation of an initial business combination,
without interest, or, at the lender's discretion, up to $2.0 million of such
working capital loans may be convertible into warrants of the post-business
combination entity. The warrants would be identical to the private placement
warrants. 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
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 an initial 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 initial business combination. Moreover, we may need to
obtain additional financing either to complete 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 initial
business combination. Subject to compliance with applicable securities laws, we
would only complete such financing simultaneously with the consummate of our
initial business combination. If we are unable to consummate our initial
business combination because we do not have sufficient funds available to us, we
will be forced to cease operations and liquidate the Trust Account. In addition,
following our initial business combination, if cash on hand is insufficient, we
may need to obtain additional financing in order to meet our obligations.
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Related Party Transactions
Payments to an Affiliate
Commencing as of February 2021, we have been and will continue to make payments
of approximately $70,000 per month on an annualized basis to Climate Real Impact
Solutions Services LLC, an entity owned by John Cavalier, our Chief Financial
Officer, and David Crane, our Chief Executive Officer, and managed by Ms.
Frank-Shapiro, our Chief Operating Officer, for consulting services rendered to
us. Messrs. Cavalier and Crane also receive health insurance benefits from
Climate Real Impact Solutions Services LLC. Upon completion of the proposed
business combination, it is expected that we would cease to make any further
On December 11, 2020, we issued the promissory note to the Sponsor, pursuant to
which we borrowed $250,000 from the Sponsor in order to pay certain transaction
expenses associated with our initial public offering. The promissory note was
non-interest bearing and payable on the earlier of June 30, 2021 or the
consummation of the our initial public offering. Upon completion of the initial
public offering on January 29, 2021, we repaid the promissory note in full. As
of September 30, 2021, the outstanding balance under the promissory note was $0.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 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.
We did not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than as described below.
The underwriters are entitled to a deferred fee of $0.35 per unit, or
approximately $8.45 million 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 we consummate an initial business combination, subject to the
terms of the underwriting agreement.
We entered into various consulting arrangements with several service providers
for administrative services and potential target financial analysis and due
diligence services to us. These arrangements provide for aggregate monthly fees
of approximately $70,000.
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 our 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:
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Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption, if any,
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' equity section of our condensed balance sheets.
We account for the warrants in accordance with the guidance contained in
ASC 815-40-15-7D and 7F under which the warrants do not meet the criteria for
equity treatment and must be recorded as liabilities. Accordingly, we classify
the warrants as liabilities at their fair value and adjust the warrants to fair
value at each reporting period. This liability is 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 fair value of the warrants issued
in the initial public offering has been estimated using a Monte Carlo simulation
methodology as of the date of the initial public offering and such warrants'
quoted market prices as of March 31, 2021 and September 30, 2021. The private
placement warrants were valued using a Modified Black Scholes Option Pricing
Net Income (Loss) per share of Common Stock
Net income (loss) per share of common stock is computed by dividing net
income (loss) by the weighted average number of common stock outstanding for the
period. The Company applies the two-class method in calculating net income
(loss) per share. Accretion associated with the redeemable shares of Class A
common stock is excluded from earnings per share as the redemption value
approximates fair value.
Recent Accounting Standards
Our 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 financial statements.
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