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
March 9, 2021, 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 Public Offering and the sale of
the Private Placement Warrants, 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.
On March 17, 2023, we announced that we entered into a non-binding letter of
intent ("LOI") for a potential business combination with a private company in
the urban mobility sector. No assurances can be made that we will successfully
negotiate and enter into a definitive agreement for a business combination or
that we will be successful in completing the business combination.
On March 24, 2023 our stockholders voted to amend our amended and restated
certificate of incorporation (the "Certificate of Incorporation") to extend the
date (the "Termination Date") by which we have to consummate a Business
Combination (the "Charter Extension") from March 28, 2023 (the "Original
Termination Date") to June 28, 2023 (the "Charter Extension Date") and to allow
the Company, without another stockholder vote, to elect to extend the
Termination Date to consummate a Business Combination on a monthly basis up to
nine times by an additional one month each time after the Charter Extension
Date, by resolution of our board of directors (the "Board"), if requested by the
Sponsor, and upon five days' advance notice prior to the applicable Termination
Date, until March 28, 2024 (each, an "Additional Charter Extension Date") or a
total of up to twelve months after the Original Termination Date, unless the
closing of a business combination shall have occurred prior thereto (the
"Extension Amendment Proposal"). For each monthly extension of the Charter
Extension Date we will deposit $160,000 into the Trust Account.
In connection with the vote of our stockholders on March 24, 2023 to extend our
Termination Date, the holders of 17,404,506 Class A common stock of the Company
properly exercised their right to redeem their shares for an aggregate price of
approximately $10.48 per share, for an aggregate redemption amount of
approximately $182,460,110. After the satisfaction of such redemptions, the
balance in our trust account was approximately $58,660,352 (including interest
not previously released to the Company but net of expected franchise and income
taxes payable).
Liquidity and Capital Resources
As of December 31, 2022, we had $1,151,319 in cash and a working capital deficit
of $1,067,277 (excluding income and Delaware franchise taxes).
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In order to finance transaction costs in connection with a Business Combination
or any extension of the deadline by which the Company must consummate its
initial Business Combination or liquidate, the Sponsor or an affiliate of the
Sponsor or certain of the Company's officers and directors may, but are not
obligated to, provide the Company Working Capital Loans. On December 28, 2022,
the Company issued a convertible promissory note to the Sponsor for $2,300,000.
If the Company completes an initial Business Combination, the Company would
repay such loaned amounts out of the proceeds of the Trust Account released to
the Company. Otherwise, such loans would be repaid only out of funds held
outside the Trust Account. In the event that the initial Business Combination
does not close, the Company 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 to repay such loaned amounts. Up to $1,500,000 of
such loans may be convertible into warrants, at a price of $1.00 per warrant at
the option of the lender. The warrants would be identical to the Private
Placement Warrants, including as to exercise price, exercisability, and exercise
period. As of December 31, 2022, there was $2,300,000 outstanding under the
Working Capital Loans.
In December 2022, the Company's board of directors approved the extension of
time to consummate its initial Business Combination by three months until
March 28, 2023, as permitted under the Company's Charter with the deposit of
$2,300,000 ($0.10 per share) into the Trust Account.
On March 24, 2023, the Company held an Extension Meeting to, in part, amend its
charter to extend its Termination Date from the Original Termination Date to the
Charter Extension Date and to allow the Company, without another stockholder
vote, to elect to extend the Termination Date to consummate a Business
Combination on a monthly basis up to nine times by an additional one month each
time after the Charter Extension Date, by resolution of our Board, if requested
by the Sponsor, and upon five days' advance notice prior to the applicable
Termination Date, until March 28, 2024 (each, an "Additional Charter Extension
Date") or a total of up to twelve months after the Original Termination Date,
unless the closing of a business combination shall have occurred prior thereto.
For each monthly extension of the Charter Extension Date we will deposit
$160,000 into the Trust Account. In connection with that vote, the holders of
17,404,506 Class A common stock of the Company properly exercised their right to
redeem their shares for an aggregate price of approximately $10.48 per share,
for an aggregate redemption amount of approximately $182,460,110. After the
satisfaction of such redemptions, the balance in the Company's trust account was
approximately $58,660,352 (including interest not previously released to the
Company but net of expected franchise and income taxes payable).
It is uncertain that we will be able to consummate an initial business
combination within 12 months from the issuance date of these financial
statements or obtain additional working capital loans from the sponsor. If an
initial business combination is not consummated by the required date, there will
be a mandatory liquidation and subsequent dissolution. In the event of a
dissolution, we anticipate a shortfall of liquidity. Our anticipated shortfall
of sufficient liquidity to meet our current and future estimated financial
obligations raises substantial doubt about our ability to continue as a going
concern for a period of time within one year after the date that the
accompanying financial statements are issued. We plan to address this
uncertainty through working capital loans and through consummation of our
initial business combination. There is no assurance that working capital loans
will be available to us or that our plans to consummate an initial business
combination will be successful.
Risks and Uncertainties
Management is currently evaluating the impact of the COVID-19 pandemic and has
concluded that while it is reasonably possible that the virus could have a
negative effect on the Company's financial position, results of its operations,
and/or search for a target company, the specific impact is not readily
determinable as of the date of these financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Various social and political circumstances in the U.S. and around the world
(including wars and other forms of conflict, rising trade tensions between the
United States and China, and other uncertainties regarding actual
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and potential shifts in the U.S. and foreign trade, economic and other policies
with other countries, terrorist acts, security operations and catastrophic
events such as fires, floods, earthquakes, tornadoes, hurricanes and global
health epidemics), may also contribute to increased market volatility and
economic uncertainties or deterioration in the U.S. and worldwide. Specifically,
the conflict between Russia and Ukraine and resulting market volatility could
adversely affect the Company's ability to complete a Business Combination. In
response to the conflict between Russia and Ukraine, the U.S. and other
countries have imposed sanctions or other restrictive actions against Russia.
Any of the above factors, including sanctions, export controls, tariffs, trade
wars and other governmental actions, could have a material adverse effect on the
Company's ability to complete a Business Combination and the value of the
Company's securities.
In addition, we depend on a variety of U.S. and multi-national financial
institutions to provide us with banking services. The default or failure of one
or more of the financial institutions that we rely on may adversely affect our
business and financial condition, including our ability to successfully
consummate a business combination.
We maintain the majority of our cash and cash equivalents in accounts with major
U.S. and multi-national financial institutions, and our deposits at certain of
these institutions exceed insured limits. Market conditions can impact the
viability of these institutions. In the event of the failure of any of the
financial institutions where we maintain our cash and cash equivalents, there
can be no assurance that we would be able to access uninsured funds in a timely
manner or at all. Any inability to access or delay in accessing these funds
could adversely affect our liquidity, business and financial condition.
Inflation Reduction Act of 2022
On August 16, 2022, the Inflation Reduction Act of 2022 (the "IR Act") was
signed into law. The IR Act provides for, among other things, a new U.S. federal
1% excise tax on certain repurchases (including redemptions and economically
similar transactions) of stock by publicly traded U.S. corporations on or after
January 1, 2023. Because we are a Delaware corporation and our securities are
trading on NYSE, we are a "covered corporation" within the meaning of the IR
Act. The excise tax is imposed on the repurchasing corporation itself, not its
stockholders from which shares are repurchased (although it may reduce the
amount of cash distributable in a current or subsequent redemption). The amount
of the excise tax is generally 1% of the fair market value of the shares
repurchased, determined at the time of the repurchase. Corporations are
permitted to net the fair market value of certain new stock issuances by such
corporation against the fair market value of stock repurchases (or deemed
repurchases) during the same taxable year to reduce or eliminate the amount of
excise tax that would otherwise apply. In addition, certain exceptions apply to
the excise tax. The U.S. Department of the Treasury (the "Treasury") has
authority to provide regulations and other guidance to carry out, and prevent
the abuse or avoidance of, the excise tax.
On December 27, 2022, the Treasury published Notice 2023-2 as interim guidance
until the publication of forthcoming proposed regulations on the excise tax.
Nevertheless, it remains uncertain whether, and/or to what extent, the excise
tax could apply to redemptions of our stock, including any redemptions in
connection with a business combination, or in the event we do not consummate a
business combination.
Because the application of the excise tax is not entirely clear, any share
redemption or other share repurchase may be subject to the excise tax. Whether
and to what extent we would be subject to the excise tax will depend on a number
of factors, including (i) whether the redemption is treated as a repurchase of
stock for purposes of the excise tax, (ii) the fair market value of the
redemptions treated as repurchases in connection with a business combination,
(iii) the structure of a business combination and whether any such transaction
closes, (iv) the nature and amount of any private investment in public equity
("PIPE") or other equity issuances in connection with a business combination (or
otherwise issued not in connection with a business combination but issued within
the same taxable year of a business combination), (v) whether we consummate a
business combination, and (vi) the content of regulations and other guidance
issued by the Treasury. Because the excise tax would be payable by us and not by
the redeeming holder, the mechanics of any required payment of the excise tax
have not been determined. The foregoing could reduce the cash available to
complete a business combination and inhibit our ability to complete a business
combination.
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Results of Operations
As of December 31, 2022, we had not commenced any operations. All activity for
the period from March 9, 2021, (inception) through December 31, 2022, relates to
our formation and the Public Offering, and, since the closing of the Public
Offering, a search for a Business Combination candidate. We have neither engaged
in any operations nor generated any revenues to date. We will not generate any
operating revenues until after the completion of our initial Business
Combination, at the earliest. We will generate non-operating income in the form
of interest income on cash and cash equivalents from the proceeds derived from
the Public Offering. 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 year ended December 31, 2022, we had net income of $11,578,910, which
consisted of bank interest income amounting to $5,918, interest income earned on
investments held in the Trust Account amounting to $3,378,342 and change in the
fair value of warrant liability of $10,672,000 partially offset by operating
costs amounting to $1,830,438.
For the period from March 9, 2021 (inception) to December 31, 2021, we had net
income of $5,167,792, which consisted of formation and operating costs amounting
to $376,682 and $505,566 of offering expenses related to warrants offset by bank
interest income amounting to $22 interest income earned on cash held in Trust
Account amounting to $18,018 and change in fair value of warrant liability of
$6,032,000.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities.
Administrative Services Agreement
Commencing on the date that our securities were first listed on the NYSE, we
agreed to pay our sponsor $10,000 per month for office space, utilities and
secretarial and administrative support services. Upon the earlier of the
completion of the initial business combination or our liquidation, we will cease
paying such monthly fees. For the year ended December 31, 2022, $120,000 was
incurred for the administrative service fee. At December 31, 2021, $30,667 was
incurred for the administrative service fee.
Registration Rights
The holders of the (i) Founder Shares, which were issued in a private placement
prior to the closing of the Public Offering, (ii) Private Placement Warrants,
which were issued in a private placement simultaneously with the closing of the
Public Offering and the shares of Class A common stock underlying such Private
Placement Warrants and (iii) Private Placement Warrants that may be issued upon
conversion of working capital loans will have registration rights to require the
Company to register a sale of any of the Company's securities held by them
pursuant to a registration rights agreement signed on the effective date of the
Public Offering. The holders of these securities are entitled to make up to
three demands, excluding short form demands, that the Company registers such
securities. In addition, the holders have certain "piggy-back" registration
rights with respect to registration statements filed subsequent to the Company's
completion of the initial business combination. The Company will bear the
expenses incurred in connection with the filing of any such registration
statements.
Underwriting Agreement
The underwriters were paid a cash underwriting discount of two percent (2%) of
the gross proceeds of the Public Offering (including the exercise of the
over-allotment option), or $4,600,000. Additionally, the underwriters will be
entitled to a deferred underwriting discount of 3.5% or $8,050,000 of the gross
proceeds of the Public Offering (including the exercise of the over-allotment
option), held in the Trust Account upon the completion of the Company's initial
business combination subject to the terms of the underwriting agreement.
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Critical Accounting Policies and Estimates
We describe our significant accounting policies in Note 2 - Significant
Accounting Policies, of the Notes to Financial Statements included in this
report. Our audited financial statements have been prepared in accordance with
GAAP. Certain of our accounting policies require that the Company's management
apply significant judgments in defining the appropriate assumptions integral to
financial estimates. On an ongoing basis, the Company's management reviews the
accounting policies, assumptions, estimates and judgments to ensure that our
financial statements are presented fairly and in accordance with GAAP. Judgments
are based on historical experience, terms of existing contracts, industry trends
and information available from outside sources, as appropriate. However, by
their nature, judgments are subject to an inherent degree of uncertainty, and,
therefore, actual results could differ from our estimates.
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