Overview
We are a blank check company incorporated on February 18, 2021 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 initial
business combination using cash from the proceeds of our offering and the sale
of the private placement warrants, our shares, debt or a combination of cash,
equity 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 since inception have been organizational activities and
those necessary for our initial public offering ("IPO"). We do not expect to
generate any operating revenues until after completion of our initial business
combination. Until such time that a business combination occurs, we will
generate non-operating income in the form of interest income on cash and cash
equivalents in the form of specified U.S. government treasury bills or specified
money market funds after the IPO. There has been no significant change in our
financial or trading position and no material adverse change has occurred since
the date of our audited financial statements. Until the completion of our
initial business combination, we expect to incur increased 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 net income of $5,027,251,
which consisted of formation and operating costs of $307,117 offset by the
change in the fair value of the warrant liability of $5,247,211 and interest
earned on investment held in the Trust Account of $87,157.
For the period from February 18, 2021 (inception) through March 31, 2021, we had
a net loss of $473, consisting of formation costs.
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, as described below, our
only source of liquidity was an initial purchase of shares of our Class B common
stock by Concord Sponsor Group II LLC (the "Sponsor") and loans from our
Sponsor.
On September 3, 2021, the Company consummated the IPO of 25,000,000 units (the
"Units" and, with respect to the Class A common stock included in the Units
sold, the "public shares") at $10.00 per Unit, generating gross proceeds of
$250,000,000.
Simultaneously with the closing of the IPO, the Company consummated the private
placement of 4,262,121 warrants to the Sponsor, 587,879 warrants to CA2
Co-Investment LLC (an affiliate of one of the underwriters of the IPO) ("CA2
Co-Investment"), and 75,000 warrants each to two of our anchor investors
(together, the "Private Warrants"), each at a price of $1.50 per Private
Warrant, generating total proceeds of $7,500,000.
The Company had granted the underwriters in the Initial Public Offering (the
"Underwriters") a 45-day option to purchase up to 3,750,000 additional Units to
cover over-allotments, if any. On September 27, 2021, the Underwriters partially
exercised the over-allotment option and, on September 28, 2021, purchased an
additional 3,009,750 Units (the "Over-Allotment Units"), generating gross
proceeds of $30,097,500, and incurred $601,950 in cash underwriting fees and
deferred underwriting fees of $1,053,413.
Simultaneously with the closing of the exercise of the over-allotment option,
the Company consummated the sale of 401,300 warrants (the "Over-Allotment
Warrants") at a purchase price of $1.50 per warrant in a private placement to
the Sponsor and CA2 Co-Investment, which generated gross proceeds of $601,950.
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Upon the closing of the Initial Public Offering, the sale of the Private
Placement Warrants, the sale of the Over-Allotment Warrants, and the sale of the
Over-Allotment Units, a total of $280,097,500 ($10.00 per Unit) was placed in a
U.S.-based trust account, with Continental Stock Transfer & Trust Company acting
as trustee, and invested only 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 selected by the Company meeting certain conditions of
Rule 2a-7 of the Investment Company Act, as determined by the Company, until the
earlier of: (i) the completion of a Business Combination and (ii) the
distribution of the funds held in the Trust Account.
The Sponsor agreed to loan the Company an aggregate of up to $200,000 to be used
for a portion of the expenses of IPO. The loan was non-interest bearing,
unsecured and due at the later of July 31, 2021 or the closing of the IPO. As of
September 3, 2021, the Sponsor had loaned to the Company an aggregate of
$175,000 under the promissory note to pay for formation costs and a portion of
the expenses of the IPO. The loan was repaid at the closing of the IPO out of
the offering proceeds not held in the Trust Account. The Company had no
borrowings under the promissory note as of March 31, 2022 and December 31, 2021.
As of March 31, 2022, we had available to us approximately $1.3 million of
proceeds held outside the Trust Account. We will use these funds primarily to
identify and evaluate target businesses, perform business due diligence on
prospective target businesses, travel to and from the offices or similar
locations of prospective target businesses or their representatives or owners,
review corporate documents and material agreements of prospective target
businesses, structure, negotiate and complete a business combination, and to pay
taxes to the extent the interest earned on the Trust Account is not sufficient
to pay our taxes.
In order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial business combination, our sponsors, an
affiliate of our sponsors or our officers and directors may, but are not
obligated to, loan us funds as may be required. If we complete our initial
business combination, we may repay such loaned amounts out of the proceeds of
the Trust Account released to us. In the event that our 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 loans
may be convertible into warrants at a price of $1.50 per warrant at the option
of the lender. The warrants would be identical to the private placement warrants
issued to our sponsors. The terms of such loans by our sponsors, an affiliate of
our sponsors or our officers and directors, if any, have not been determined and
no written agreements exist with respect to such loans. Prior to the completion
of our business combination, we do not expect to seek loans from parties other
than our sponsors, an affiliate of our sponsors or our officers and directors,
if any, as we do not believe third parties will be willing to loan such funds
and provide a waiver against any and all rights to seek access to funds in our
Trust Account. No such loans were made as of March 31, 2022.
On May 3, 2022, the Sponsor agreed to loan the Company up to $350,000 to be used
to pay operating expenses. This loan is non-interest bearing, unsecured, is not
convertible into warrants or any other securities, and due at the closing of a
business combination. The Company had not borrowed any amount under the
promissory note as of the date which these unaudited condensed financial
statements were issued.
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 initial 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 completion of
our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination.
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Off-Balance Sheet Financing 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 an
affiliate of the Sponsor a monthly fee of $20,000 for office space,
administrative and support services. We began incurring these fees on August 31,
2021 and will continue to incur these fees monthly until the earlier of the
completion of our initial Business Combination and our liquidation.
Critical Accounting Policies and Significant Judgments and Estimates
We prepare our financial statements in accordance with accounting principles
generally accepted in the United States of America. The preparation of financial
statements also requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, costs and expenses and related
disclosures. We base our estimates on historical experience and on various other
assumptions that we believe to be reasonable under the circumstances. Actual
results could differ significantly from the estimates made by our management.
There have been no material changes to our critical accounting policies and
estimates from those disclosed in our financial statements and the related notes
and other financial information included in our Form 10-K on file with the SEC.
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CONCORD ACQUISITION CORP II 
