FORTUNE RISE ACQUISITION CORPORATION 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. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
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We are a blank check company incorporated as a
We presently have no revenue, have had losses since inception from incurring formation and operating costs and have had no operations other than identifying and evaluating suitable acquisition transaction candidates. We have relied upon the sale of our securities and loans from the Sponsor to fund our operations.
On
On
The proceeds of
Our management has broad discretion with respect to the specific application of the net proceeds of the IPO and the Private Placements, although substantially all of the net proceeds are intended to be applied generally towards consummating a business combination.
Recent Developments
On
The Class A Common Stock shares and Warrants started to trade on the Nasdaq under the symbols "FRLA" and "FRLAW", respectively. Units not separated will continue to trade on Nasdaq under the symbol "FRLAU."
As of the date of this report, we have not entered into any definitive
agreements, for the purpose of acquiring, engaging in a share exchange, share
reconstruction and amalgamation with, purchasing all or substantially all of the
assets of, entering into contractual arrangements with, or engaging in any other
similar business combination with one or more businesses or entities. We
currently have until
Results of Operations
Our entire activity from inception up to date was related to the Company's formation, the IPO and general and administrative activities. Since the IPO, our activity has been limited to the evaluation of business combination candidates, and we will not be generating any operating revenues until the closing and completion of our initial business combination. We generate non-operating income in the form of interest income on investments. We are incurring expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
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For the period from
Liquidity and Capital Resources
For the period from
Until consummation of the business combination, we will be using the funds not held in the Trust Account, and any additional funding that may be loaned to us by our Sponsor, 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.
If our estimates of the costs of undertaking in-depth due diligence and
negotiating business combination are less than the actual amount necessary to do
so, we may have insufficient funds available to operate its business prior to
the business combination and will need to raise additional capital. In this
event, our officers, directors or their affiliates may, but are not obligated
to, loan us funds as may be required. If we consummate an initial business
combination, we would repay such loaned amounts out of the proceeds of the Trust
Account released to us upon consummation of the business combination, or, at the
lender's discretion, up to
Moreover, we may need to obtain additional financing either to consummate our initial business combination or because we become obligated to redeem a significant number of our public shares upon consummation of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial business combination. 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 Financing Arraignments
We have no obligations, assets or liabilities that would be considered
off-balance sheet arrangements as of
Contractual Obligations
As of
We are obligated to pay the underwriters a deferred underwriters' discount equal
to 3.5% of the gross proceeds of the IPO and the underwriters' full exercise of
the over-allotment. The deferred underwriters' discount of
Critical Accounting Policies Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Investments held in Trust Account
At
We classify its
Warrants
We account for warrants as either equity-classified or liability-classified
instruments based on an assessment of the warrant's specific terms and
applicable authoritative guidance in
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
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 ASC Topic 480 "Distinguishing Liabilities from
Equity." Common stock subject to mandatory redemption (if any) are classified as
a liability instrument and are measured at fair value. Conditionally redeemable
Class A Common Stock (including Class A Common Stock 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) are
classified as temporary equity. At all other times, Class A Common Stock are
classified as stockholders' equity. Our public shares feature certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, as of
Fair Value of Financial Instruments
ASC Topic 820 "Fair Value Measurements and Disclosures" defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure fair value. ASC Topic 820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources independent of us. Unobservable inputs reflect our assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances.
The fair value hierarchy is categorized into three levels based on the inputs as follows:
? Level 1 - Valuations based on unadjusted quoted prices in active markets
for identical assets or liabilities that we have the ability to access.
Valuation adjustments and block discounts are not being applied. Since
valuations are based on quoted prices that are readily and regularly
available in an active market, valuation of these securities does not
entail a significant degree of judgment.
? Level 2 - Valuations based on (i) quoted prices in active markets for
similar assets and liabilities, (ii) quoted prices in markets that are not
active for identical or similar assets, (iii) inputs other than quoted
prices for the assets or liabilities, or (iv) inputs that are derived
principally from or corroborated by market through correlation or other
means.
? Level 3 - Valuations based on inputs that are unobservable and significant
to the overall fair value measurement.
The fair value of our assets and liabilities, which qualify as financial instruments under ASC Topic 820, "Fair Value Measurements and Disclosures," approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
Income Taxes
We account for income taxes under ASC 740 Income Taxes ("ASC 740"). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
We recognize accrued interest and penalties related to unrecognized tax benefits
as income tax expense. There were no unrecognized tax benefits and no amounts
accrued for interest and penalties as of
We have identified
We may be subject to potential examination by federal and state taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. Our management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
We are incorporated in the
Net Income (Loss) per Share
We comply with accounting and disclosure requirements of FASB ASC 260, Earnings Per Share. In order to determine the net income (loss) attributable to both the redeemable shares and non-redeemable shares, we first considered the undistributed income (loss) allocable to both the redeemable common stock and non-redeemable common stock and the undistributed income (loss) is calculated using the total net loss less any dividends paid. We then allocated the undistributed income (loss) ratably based on the weighted average number of shares outstanding between the redeemable and non-redeemable common stock. Any remeasurement of the accretion to redemption value of the common stock subject to possible redemption was considered to be dividends paid to the public stockholders.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
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