Cautionary Note Regarding Forward-Looking Statements

All statements other than statements of historical fact included in this Report including, without limitation, statements in this section regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward- looking statements. When used in this Report, words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Report.





Recent Developments

On November 21, 2022, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Ariel Merger Sub I, Inc., a Delaware corporation and direct, wholly-owned subsidiary of Acquiror, Ariel Merger Sub II, LLC, a Delaware limited liability company and direct, wholly-owned subsidiary of Acquiror, and Hyperloop Transportation Technologies, Inc., a Delaware corporation. On February 3, 2023, by mutual agreement, the parties entered into a termination agreement to terminate the Merger Agreement.

On March 3, 2023, the Company's stockholders approved the Extension extending the date by which the Company must consummate its initial business combination from March 12, 2023 to December 12, 2023 (or such earlier date as determined by the board of directors). If the Company's initial business combination is not completed by the end of the Combination Period, then the Company's existence will terminate, and the Company will distribute the amounts in the trust account as provided in the Company's amended and restated certificate of incorporation. In connection with the Extension, the Company's stockholders holding 30,525,396 public shares exercised their right to redeem such shares for a pro rata portion of the funds in the trust account. As a result, $310.0 million (approximately $10.16 per share) was removed from the trust account to pay such holders.

Results of Operations and Known Trends or Future Events

We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities, those necessary to prepare for our IPO and identifying a target company for our initial business combination. We do not expect to generate any operating revenues until after completion of our initial business combination. We generate non-operating income in the form of interest income on cash and cash equivalents 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 expenses as we conduct due diligence on prospective business combination candidates.

For the year ended December 31, 2022, we had net income of $9,524,605. We incurred $3,208,926 of formation and operating costs and a provision for income tax of $813,958. We had investment income of $4,966,164 from investments held in the trust account and change in the fair value of our warrants that generated $8,581,325 in income.

For the year ended December 31, 2021, we had net income of $7,832,573. We incurred $948,969 of formation and operating costs, consisting mostly of general and administrative expenses. We had investment income of $28,004 from investments held in the trust account. For the year ended December 31, 2021, the change in fair value of warrants was a decrease in the liability generating $13,884,940 of income. We recognized a loss on the sale of private placement warrants of $4,376,708, resulting from the initial fair value of the private placement warrants exceeding the cash received during the private placement. We also recognized $754,694 of offering costs that were originally recorded against stockholders' equity (deficit) to expenses that were related to the issuance of the warrants.





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Liquidity and Capital Resources

As of December 31, 2022, we had approximately $0.2 million in our operating bank account and working capital of approximately $130,000, excluding taxes. All remaining cash held in the trust account is generally unavailable for our use, prior to an initial business combination, and is restricted for use either in a business combination or to redeem common stock. As of December 31, 2022, $381,036 of the funds in the trust account were withdrawn to pay taxes.

Through December 31, 2022, our liquidity needs were satisfied through receipt of $25,000 from the sale of the founder shares, advances from the sponsor in an aggregate amount of $12,500 and the remaining net proceeds from the IPO and the sale of the private placement warrants.

The $154,312 outside of the trust account as of December 31, 2022 will not be sufficient to allow us to operate for at least the next 12 months from the issuance of the consolidated financial statements, assuming that a business combination is not consummated during that time. Until consummation of our business combination, we will be using the funds not held in the trust account, and any additional working capital loans from the sponsor, our officers and directors, or their respective affiliates, for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business combination.

We will need to raise additional funds in order to meet the expenditures required for operating our business. If our estimates of the costs of undertaking in-depth due diligence and negotiating an initial business combination is less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to the business combination. Moreover, we may need to raise additional capital through loans from our sponsor, officers, directors, or third parties. None of the sponsor, officers or directors is under any obligation to advance funds to, or to invest in, us. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of our business plan, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all. The sponsor has indicated that it will provide financial support to the Company to satisfy all working capital obligations as needed.

In connection with the Company's assessment of going concern considerations in accordance with Financial Accounting Standards Board Accounting Standard Codification ("ASC") Topic 205-40, "Presentation of Financial Statements - Going Concern," management has determined that the liquidity condition, the mandatory liquidation date and subsequent dissolution raises substantial doubt about the Company's ability to continue as a going concern. If the Company is unable to complete a business combination by December 12, 2023, the Company will cease all operations except for the purpose of liquidating. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after December 12, 2023. The Company intends to complete a business combination before the mandatory liquidation date.





Critical Accounting Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the SEC requires the Company's management to make critical accounting estimates that have had or are reasonably likely to have a material impact on the financial condition or results of operations of the Company.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these consolidated financial statements is the determination of the fair value of the warrant liabilities. Such estimates may be subject to change as more current information becomes available and accordingly, the actual results could differ significantly from those estimates.





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Derivative Warrant Liabilities

We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC Topic 480, "Distinguishing Liabilities from Equity," and ASC Topic 815-15, "Derivatives and Hedging" ("ASC 815-40"). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.

We issued an aggregate of 13,000,000 warrants in connection with our IPO and private placement, which are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company's consolidated statements of operations. The fair value of warrants issued by the Company in connection with the private placement has been estimated using the Black-Scholes option pricing model at each measurement date. The Company updated the public warrants measurement as of December 31, 2022, and the private placement warrants are now valued using the value of the public warrants.

Off-Balance Sheet Arrangements

As of December 31, 2022 and December 31, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Factors That May Adversely Affect Our Results of Operations

Our results of operations and our ability to complete an initial business combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in Ukraine. We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial business combination.

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