Overview
We are a blank check company incorporated 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. We have not selected any business combination target. We
intend to effectuate our initial business combination using cash from the
proceeds of our IPO and the sale of the private placement warrants and forward
purchase units, our shares, debt or a combination of cash, shares and debt.
The issuance of additional shares of our common stock or preferred stock in a
business combination:
may significantly dilute the equity interest of investors in our IPO, which
? dilution would increase if the anti-dilution provisions in the Class B common
stock resulting in the issuance of shares of Class A common stock on a greater
than one-to-one basis upon conversion of the Class B common stock;
? may subordinate the rights of holders of common stock if shares of preferred
stock are issued with rights senior to those afforded our common stock;
could cause a change of control if a substantial number of shares of our common
? stock is issued, which could result in the resignation or removal of our
present directors and officers;
may have the effect of delaying or preventing a change of control of us by
? diluting the stock ownership or voting rights of a person seeking to obtain
control of us;
? may adversely affect prevailing market prices for our units, Class A common
stock and/or warrants; and
? may not result in adjustment to the exercise price of our warrants.
Similarly, if we issue debt or otherwise incur significant indebtedness, it
could result in:
? default and foreclosure on our assets if our operating revenues after an
initial business combination are insufficient to repay our debt obligations;
acceleration of our obligations to repay the indebtedness even if we make all
? principal and interest payments when due if we breach certain covenants that
require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
? our immediate payment of all principal and accrued interest, if any, if the
debt is payable on demand;
our inability to obtain necessary additional financing if the debt contains
? covenants restricting our ability to obtain such financing while the debt is
outstanding;
? our inability to pay dividends on our common stock;
using a substantial portion of our cash flow to pay principal and interest on
? our debt, which will reduce the funds available for dividends on our common
stock, expenses, capital expenditures, acquisitions and other general corporate
purposes;
? limitations on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate;
? increased vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital
? expenditures, acquisitions, debt service requirements, execution of our
strategy and other purposes and other disadvantages compared to our competitors
who have less debt.
RESULTS OF OPERATIONS AND KNOWN TRENDS OR FUTURE EVENTS
As of June 30, 2022, the Company had not commenced any operations. All activity
for the period from March 15, 2021 (inception) through June 30, 2022 relates to
the Company's formation and initial public offering ("Initial Public Offering").
The Company will not generate any operating revenues until after the completion
of its initial Business Combination, at the earliest. The Company will generate
non-operating income in the form of interest income from the proceeds derived
from the Initial Public Offering.
For the three months ended June 30, 2022, we had a net loss of $279,124 which
consists of operating expenses of $399,270 offset by interest income on
marketable securities held in trust account of $120,146. For the three months
ended June 30, 2021, we had a net loss of $112,620, which consists of formation
costs.
For the six months ended June 30, 2022, we had a net loss of $745,439 which
consists of operating expenses of $896,049 offset by interest income on
marketable securities held in trust account of $150,610. For the period from
March 15, 2021 (inception) through June 30, 2021, we had a net loss of $117,620,
which consists of formation costs.
LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN
Our liquidity needs have been satisfied prior to the completion of our IPO
through receipt of $25,000 from the sale of the founder shares to our sponsor
and the borrowing of $300,000 under a non-interest bearing unsecured promissory
note prior to the IPO. On October 25, 2021 this obligation was exchanged for a
non-interest bearing Working Capital Loan of $300,000 due upon the earlier of
(i) the date on which a Business Combination is consummated, or (ii) April 25,
2023. The Working Capital Loan may be converted upon completion of a Business
Combination into warrants at a price of $1.00 per warrant. Such warrants would
be identical to the Private Placement Warrants. In the event that a Business
Combination does not close, the Company 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.
On October 25, 2021, we consummated the Initial Public Offering of 23,000,000
Units at a price of $10.00 per Unit, which includes the exercise by the
underwriters of the over-allotment option to purchase an additional 3,000,000
Units, generating gross proceeds of $230,000,000. Simultaneously with the
closing of the Initial Public Offering, the Company consummated the private sale
(the "Private Placement") of an aggregate of 11,700,000 warrants (the "Private
Placement Warrants") to the Sponsor at a purchase price of $1.00 per Private
Placement Warrant, generating gross proceeds to the Company in the amount of
$11,700,000.
Following the Initial Public Offering, the exercise of the over-allotment option
by the underwriters' and the sale of the Private Placement Warrants, a total of
$234,600,000 was placed in the trust account and we had $2,500,000 of cash held
outside of the trust account, after payment of costs related to the Initial
Public Offering, and available for working capital purposes. As of December 31,
2021, we had cash of $896,517 held outside of the trust account. The Company
incurred transaction costs amounted to $22,726,465 consisting of $4,600,000 of
underwriting fees paid in cash, $8,050,000 of deferred underwriting fees
payable, $9,200,000 funded to the trust account and $876,465 of costs related to
the Initial Public Offering.
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As of June 30, 2022, we had cash and marketable securities held in the trust
account of $234,760,296. We intend to use substantially all of the funds held in
the trust account, including any amounts representing interest earned on the
trust account (which interest shall be net of taxes payable and excluding
deferred underwriting commissions) plus the proceeds from the sale of the
forward purchase units to complete our initial business combination. We may
withdraw interest to pay taxes, if any. Delaware franchise tax is based on our
authorized shares or on our assumed par and non-par capital, whichever yields a
lower result. Under the authorized shares method, each share is taxed at a
graduated rate based on the number of authorized shares with a maximum aggregate
tax of $200,000 per year. Under the assumed par value capital method, Delaware
taxes each $1,000,000 of assumed par value capital at the rate of $350; where
assumed par value would be (1) our total gross assets following our IPO, divided
by (2) our total issued shares of common stock following our IPO, multiplied by
(3) the number of our authorized shares following our IPO. Based on the number
of shares of our common stock authorized and outstanding and our estimated total
gross proceeds after the completion of our IPO, our annual franchise tax
obligation is expected to be capped at the maximum amount of annual franchise
taxes payable by us as a Delaware corporation of $200,000. Our annual income tax
obligations will depend on the amount of interest and other income earned on the
amounts held in the trust account. We expect the interest earned on the amount
in the trust account will be sufficient to pay our taxes. We expect the only
taxes payable by us out of the funds in the trust account will be income and
franchise taxes, if any. To the extent that shares of our common 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.
For the six months ended June 30, 2022, cash used in operating activities was
$511,119. The net loss of $745,439 was affected by interest earned on
investments held in the trust account of $150,610 operating costs paid by
related parties of $172,500 and changes in operating assets and liabilities
provided $212,430 of cash for operating activities.
For the period from March 15, 2021 (inception) through June 30, 2022, cash used
in operating activities was $0. The net loss of $117,620 was affected by
operating costs paid by related parties of $112,620 and changes in operating
assets and liabilities provided $5,000 of cash for operating activities.
As of June 30, 2022, we have available to us $385,398 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, plants 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, to pay general and
administrative expenses and to pay taxes to the extent the interest earned on
the trust account is not sufficient to pay our taxes.
The Company has incurred and expects to continue to incur significant costs in
pursuit of its acquisition plans and while the Company believes it has
sufficient access to additional sources of capital, if necessary, there is no
current commitment on the part of any financing source to provide additional
capital and no assurances can be provided that such additional capital will
ultimately be available. In addition, the Company currently has less than 12
months from the date these condensed financial statements were issued to
complete a Business Combination and if the Company is unsuccessful in
consummating an Initial Business Combination, it is required to liquidate and
dissolve. In connection with the Company's assessment of going concern
considerations in accordance with Accounting Standards Update ("ASU") 2014-15,
"Disclosures of Uncertainties about an Entity's Ability to Continue as a Going
Concern," management has determined that these factors raise substantial doubt
about its ability to continue as a going concern. The condensed financial
statements do not include any adjustments that might result from the outcome of
this uncertainty. As is customary for a special purpose acquisition company, if
the Company is not able to consummate a Business Combination during the
Combination Period, it will cease all operations and redeem the Public Shares.
Management plans to continue its efforts to consummate a Business Combination
during the Combination Period.
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In order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial business combination, our sponsor or an
affiliate of our sponsor or certain of our directors and officers 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. Otherwise, such loans may be repaid only out
of funds held outside the trust account. 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 to repay such loaned amounts. On October 25, 2021,
we exchanged a $300,000 non-interest bearing unsecured promissory note for a
non-interest-bearing Working Capital Loan of $300,000 due upon the earlier of
(i) the date on which a Business Combination is consummated, or (ii) April 25,
2023. Up to $1,500,000 of such working capital 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 issued to our
sponsor. The terms of such loans, if any, will be subject to the approval of our
audit committee. We do not expect to seek loans from parties other than our
sponsor or an affiliate of our sponsor 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.
We do not believe we will need to raise additional funds following our IPO in
order to meet the expenditures required for operating our business. However, if
our estimates 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 completion of our initial business
combination, in which case we may issue additional securities or incur debt in
connection with such business combination. There is no assurance that the
Company's plans to raise additional capital (to the extent ultimately necessary)
or to consummate a Business Combination will be successful or successful within
the Combination Period.
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