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 from inception to September 30, 2021 were organizational
activities, those necessary to prepare for the initial public offering, (the
"Initial Public Offering" or "IPO"), described below, and, after the IPO,
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 in connection with
completing a business combination.
We classify the warrants issued in connection with our Initial Public Offering
as liabilities at their fair value and adjust the warrant instrument 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.
For the period from February 18, 2021 (inception) through September 30, 2021, we
had net income of $4,638,326, which consisted of formation and operating costs
of $191,047 and offering costs attributable to the warrant liability of
$1,029,225 offset by the change in the fair value of the warrant liability of
$5,853,167 and interest earned on investment held in the trust account of
$5,431.
For the three months ended September 30, 2021, we had net income of $4,638,799,
which consisted of formation and operating costs of $190,574 and offering costs
attributable to the warrant liability of $1,029,225 offset by the change in the
fair value of the warrant liability of $5,853,167 and interest earned on
investments held in the trust account of $5,431.
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.
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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.
As of September 30, 2021, offering costs totaling $14,215,397 were initially
charged to stockholders' equity (consisting of $5,006,950 of underwriting
discount, $9,803,413 of deferred underwriting discount, and $434,259 of other
offering costs offset by $1,029,225 of transaction costs attributable to the
warrant liability and recorded in the statement of operations).
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.
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.
Off-Balance Sheet Financing 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.
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,
2020 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
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:
Warrant Liability
We account for the warrants issued in connection with our initial public
offering in accordance with the guidance contained in ASC 815-40 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 initial fair value of the public warrants was estimated using
the closing public market price and the Modified Black Scholes Model for the
private placement warrants.
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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 Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Class A common stock subject to
mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable shares (including shares that features
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, shares are
classified as stockholders' equity. Our Class A common stock feature certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, Class A common subject to
possible redemption is presented as temporary equity, outside of the
stockholders' equity section of our balance sheet.
Recent Accounting Standards
In August 2020, the FASB issued Accounting Standards Update ("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. 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. The provisions of ASU 2020-06 are applicable
for fiscal years beginning after December 15, 2021, with early adoption
permitted no earlier than fiscal years beginning after December 15, 2020. The
Company is currently evaluating the impact of ASU 2020-06 on its 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 financial statements.
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