The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our audited financial statements
and the notes related thereto contained elsewhere in this report. Certain
information contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties. 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
"Cautionary Note Regarding Forward-Looking Statements and Risk Factor Summary,"
"Item 1A. Risk Factors" and elsewhere in this report.
Overview
We are a blank check company incorporated on October 7, 2020 as a Delaware
corporation and formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses, which we refer to as our initial
business combination. We intend to effectuate our initial business combination
using cash from the proceeds of our initial public offering and the private
placement of the private placement warrants, the proceeds of the sale of our
shares in connection with our initial business combination, shares issued to the
owners of the target, debt issued to bank or other lenders or the owners of the
target, or a combination of the foregoing.
We expect to continue to incur significant costs in the pursuit of our initial
business combination. We cannot assure you that our plans to complete our
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 inception through December 31, 2021 were organizational
activities and those necessary to prepare for our initial public offering,
described below, and, since our initial public offering, our activity has been
limited to identifying a target company for our 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 in
connection with searching for, and completing, our initial business combination.
For the year ended December 31, 2021, we had a net loss of $2,163,886, which
consisted of formation and operating costs of $2,695,564, offset by interest
income on marketable securities held in the trust account of $17,214, change in
fair value of convertible promissory note - related party totaling $169,797 and
change in warrant liability fair value of $344,667.
For the period from October 7, 2020 (inception) to December 31, 2020, we had a
net loss of $53,709, which consisted of formation and operating costs of
$53,709.
Liquidity, Capital Resources and Going Concern
Until the consummation of our initial public offering, our only source of
liquidity was an initial purchase of founder shares by our sponsor and loans
from our sponsor.
On January 28, 2021, we consummated our initial public offering of 28,750,000
units, including the issuance of 3,750,000 units as a result of the
underwriters' full exercise of their over-allotment option, at $10.00 per unit,
generating total gross proceeds of $287,500,000. Simultaneously with the
consummation of our initial public offering, we consummated the private
placement of an aggregate of 5,100,000 private placement warrants to our sponsor
and Loop Capital at a price of $1.50 per private placement warrant, generating
total gross proceeds of $7,650,000.
Following our initial public offering and the private placement, a total of
$287,500,000 was placed in the trust account. We incurred $16,309,358 in
transaction costs, consisting of $5,750,000 in cash underwriting fees,
$10,062,500 of deferred underwriting fees and $496,858 of other offering costs.
For the year ended December 31, 2021, cash used in operating activities was
$1,598,308. Net loss of $2,163,886 was affected by change in fair value of
warrant liability of $344,667, change in fair value of convertible promissory
note - related party totaling $169,797, interest earned on marketable securities
held in the trust account of $17,214, executive compensation of $330,000 and
changes in operating assets and liabilities, which provided $767,256 of cash
from operating activities.
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As of December 31, 2021, we had marketable securities held in the trust account
of $287,517,214. We intend to use substantially all of the funds held in the
trust account, including any amounts representing interest earned on the trust
account (excluding deferred underwriting commissions), to complete our initial
business combination. We may withdraw interest to pay our taxes. To the extent
that our equity 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 December 31, 2021, we had cash held outside the trust account of $855,321.
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 our initial business combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a business combination, our sponsor or an affiliate of our
sponsor or certain of our officers and directors may loan us funds as may be
required. If we complete our initial business combination, we would repay such
loaned amounts. 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 the trust account
would be used for such repayment. Up to $1,500,000 of such loans may be
convertible into warrants identical to the private placement warrants, at a
price of $1.50 per warrant at the option of the lender.
On September 28, 2021, we issued an unsecured promissory note to our sponsor,
whereby our sponsor has agreed to loan up to $1,000,000 to us for working
capital needs. The Sponsor Working Capital Loan accrues no interest on the
unpaid principal balance. The Sponsor Working Capital Loan is due on the earlier
of (i) the date on which we consummate our initial business combination and (ii)
the date that our winding up is effective. At the discretion of our sponsor, the
Sponsor Working Capital Loan may be convertible into warrants of the
post-business combination entity at a price of $1.50 per warrant. The warrants
would be identical to the private placement warrants. As of December 31, 2021,
we had an outstanding balance of $650,000 under the Sponsor Working Capital
Loan.
To complete our initial business combination, we may need to raise additional
capital through loans or additional investments from our sponsor, our officers
or directors or third parties. Other than the Sponsor Working Capital Loan
described above, we cannot provide assurance that new financing will be
available to us on commercially acceptable terms, if at all. These conditions
raise substantial doubt about our ability to continue as a going concern through
one year from the date of the financial statements if our initial business
combination is not consummated. The financial statements do not include any
adjustments relating to the recovery of the recorded assets or classification of
the liabilities that might be necessary should we be unable to continue as a
going concern.
Moreover, we may need to obtain additional financing to complete our initial
business combination because the transaction requires more cash than is
available from the proceeds held in the trust account or because we become
obligated to redeem a significant number of our public shares upon completion of
the business combination, in which case we may issue additional securities or
incur debt in connection with such business combination. If we are unable to
complete 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.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of December 31, 2021.
Contractual Obligations
Other than the Sponsor Working Capital Loan described above, we do not have any
long-term debt obligations, capital lease obligations, operating lease
obligations, purchase obligations or other long-term liabilities. We had agreed,
commencing on January 26, 2021, to pay our sponsor a monthly fee of $15,000 for
office space and secretarial and administrative services until the earlier of
the completion of our initial business combination and our liquidation. On May
25, 2021, we agreed with our sponsor to cease such agreement. Our sponsor is
obligated to pay $30,000 per month to Mark Wiltamuth, our Chief Financial
Officer, for his services prior to the consummation of our initial business
combination until the earlier of the completion of our initial business
combination and our liquidation, subject to the terms of an agreement between
our sponsor and Mr. Wiltamuth that was entered into after the consummation of
our initial public offering.
The underwriters of our initial public offering are entitled to a deferred fee
of $0.35 per unit sold in our initial public offering, or $10,062,500 in the
aggregate. Subject to the terms of the underwriting agreement, (i) the deferred
fee was placed in the trust account and will be released to the underwriters
only upon the completion of our initial business combination and (ii) the
deferred fee will be waived by the underwriters in the event that we do not
complete our initial business combination.
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Critical Accounting Policies and Estimates
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:
Net income (loss) Per Common Stock Shares
We apply the two-class method in calculating net loss per common stock share.
The contractual formula utilized to calculate the redemption amount approximates
fair value. The Class feature to redeem at fair value means that there is
effectively only one class of stock. Changes in fair value are not considered a
dividend of the purposes of the numerator in the earnings per share calculation.
Net loss per common stock share is computed by dividing the pro rata net loss
between the Class A common stock and the Class B common stock by the weighted
average number of common stock outstanding for each of the periods. The
calculation of diluted loss per common stock does not consider the effect of the
warrants sold in our initial public offering and the private placement since the
exercise of such warrants is contingent upon the occurrence of future events and
the inclusion of such warrants would be anti-dilutive. The warrants are
exercisable for 14,683,333 shares of Class A common stock in the aggregate.
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." Class A common stock subject to mandatory redemption (if any) is
classified as a liability instrument and measured at fair value. Conditionally
redeemable Class A common stock (including common stock shares that feature
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, shares of common
stock are classified as stockholders' equity. Our common stock shares feature
certain redemption rights that are considered to be outside of our control and
subject to the occurrence of uncertain future events. Accordingly, as of
December 31, 2021, 28,750,000 shares of Class A common stock subject to possible
redemption are presented at redemption value as temporary equity, outside of the
stockholders' equity section of our balance sheet.
Public Warrants and Private Placement Warrants
We account for the public warrants and the private placement warrants issued in
connection with our initial public offering in accordance with ASC Topic 815-40,
Derivatives and Hedging, Contracts in Entity's Own Equity, under which the
warrants do not meet the criteria for equity classification and must be recorded
as liabilities. As the warrants meet the definition of a derivative as
contemplated in ASC 815, the warrants are measured at fair value at inception
and at each reporting date in accordance with ASC 820, "Fair Value Measurement",
with changes in fair value recognized in the statements of operations in the
period of change.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 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) ("ASU 2020-06") to simplify accounting for
certain financial instruments. ASU 2020-06 eliminates the current models that
require separation of beneficial conversion and cash conversion features from
convertible instruments and simplifies the derivative scope exception guidance
pertaining to equity classification of contracts in an entity's own equity. The
new standard also introduces additional disclosures for convertible debt and
freestanding instruments that are indexed to and settled in an entity's own
equity. ASU 2020-06 amends the diluted earnings per share guidance, including
the requirement to use the if-converted method for all convertible instruments.
ASU 2020-06 is effective January 1, 2022 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on January
1, 2021. We are currently assessing the impact, if any, that ASU 2020-06 would
have on our financial position, results of operations or cash flows.
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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