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 incorporated on October 26, 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 ("Business Combination"). The
registration statement for the Company's IPO was declared effective by the U.S.
Securities and Exchange Commission (the "SEC") on February 10, 2021. On February
16, 2021, the Company consummated the IPO of 22,500,000 units (the "Units") at a
price of $10.00 per Unit, for total gross proceeds of $225,000,000. On February
24, 2021, the underwriters exercised the over-allotment option in full resulting
in the closing of the issuance and sale of an additional 3,375,000 Units (the
"Over-Allotment Units"). The issuance by the Company of the Over-Allotment Units
at a price of $10.00 per unit resulted in total gross proceeds of $33,750,000.
Each Unit consists of one shares of common stock, $0.0001 par value, and one
redeemable warrant entitling its holder to purchase one share of common stock at
a price of $11.50 per share.
Simultaneously with the closing of the IPO, the Company consummated the sale of
600,000 units (the "Private Units"), at a price of $10.00 per Private Unit. On
February 24, 2021, simultaneously with the issuance and sale of the
Over-Allotment Units, the Company consummated the sale of an additional 67,500
Private Units (the "Over-Allotment Private Units" and, together with the IPO
Private Placement, the "Private Placements"), generating gross proceeds of
$6,675,000.
Results of Operations
For the year ended December 31, 2022, we had net loss of $296,853. We incurred
$3,656,059 of formation and operating costs consisting mostly of general and
administrative expenses and business combination expenses. We also recognized a
$709,969 provision for income taxes. We had investment income of $3,730,147 on
amounts held in the trust account and also recognized a $339,028 gain from the
change in the fair value of the warrant liability.
For the year ended December 31, 2021, we had a net loss of $1,277,454. We
incurred $1,596,618 of formation and operating costs consisting mostly of
general and administrative expenses. We had investment income of $25,592 on
amounts held in the trust account and also recognized a $293,572 gain from the
change in the fair value of the warrant liability.
Proposed Business Combination
On February 8, 2023, we entered into an Amended and Restated Business
Combination Agreement (the "Amended and Restated Business Combination
Agreement") with Goal Acquisitions Nevada Corp., a Nevada corporation ("Goal
Nevada"), Digital Virgo Group, a French corporation (société par actions
simplifiée) ("Digital Virgo"), all shareholders of Digital Virgo (the "Digital
Virgo Shareholders"), and IODA S.A., in its capacity as the "DV Shareholders
Representative" (as defined in the Amended and Restated Business Combination
Agreement), which amends and restates the Business Combination Agreement, dated
as of November 17, 2022, by and among the Company, Digital Virgo, and certain
other parties in its entirety.
Concurrently with the execution of the Amended and Restated Business Combination
Agreement, the Company and Goal Nevada entered into an Agreement and Plan of
Merger (the "Merger Agreement"), pursuant to which the Company will, prior to
the Closing (as defined in the Merger Agreement), reincorporate as a Nevada
corporation by merging with and into Goal Nevada, a newly-formed wholly-owned
subsidiary of the Company, with Goal Nevada surviving the merger (the
"Reincorporation Merger").
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Pursuant to the Amended and Restated Business Combination Agreement and after
the consummation of the Reincorporation Merger, Digital Virgo will acquire all
of the outstanding shares of Goal Nevada whereby the outstanding shares of Goal
Nevada will be exchanged for shares of Digital Virgo by means of a statutory
share exchange under Nevada law (the "Exchange").
The Amended and Restated Business Combination Agreement and the Exchange, as
well as the Merger Agreement and the Reincorporation Merger, were approved by
the board of directors of the Company.
The Amended and Restated Business Combination Agreement contains customary
representations, warranties and covenants of the parties thereto. The
consummation of the transactions contemplated by the Amended and Restated
Business Combination Agreement is subject to certain conditions as further
described therein.
The Merger Agreement contains customary representations, warranties and
covenants of the parties thereto. The consummation of the proposed Merger is
subject to certain conditions as further described in the Merger Agreement.
See the Current Report on Form 8-K filed by us with the SEC on February 10, 2023
for a copy of the Amended and Restated Business Combination Agreement and the
Merger Agreement and additional information.
Extension and Redemptions
On February 7, 2023, our stockholders approved an amendment (the "Trust
Agreement Amendment") to the Investment Management Trust Agreement, dated
February 10, 2021, by and between the Company and Continental Stock Transfer &
Trust Company ("Continental") (the "Trust Agreement"), to change the date on
which Continental must commence liquidation of the amount on deposit in the
trust account (the "Trust Account") established in connection with the Company's
initial public offering from February 16, 2023 to March 18, 2023, subject to
extension by the board of directors for up to five additional thirty-day periods
(the latest of which such date is referred to as the "New Termination Date").
On February 7, 2023, our stockholders also approved an amendment (the "Charter
Amendment") to the Amended and Restated Certificate of Incorporation of the
Company (the "Charter") to (i) extend the initial period of time by which the
Company has to consummate an initial business combination to the New Termination
Date and (ii) make other administrative and technical changes in the Charter in
connection with the New Termination Date, in each case, pursuant to an amendment
in the form set forth in Annex A of the proxy statement that we filed with the
SEC on January 9, 2023. We filed the Charter Amendment with the Secretary of
State of the State of Delaware on February 8, 2023.
In connection with our stockholders' approval and implementation of the Charter
Amendment Proposal, the holders of 16,328,643 Public Shares exercised their
right to redeem their shares for cash at a redemption price of approximately
$10.13 per share, for an aggregate redemption amount of approximately
$165,489,172. Following such redemptions, 9,546,357 Public Shares remain
outstanding and we expect to have approximately $96,751,378 remaining in the
Trust Account.
See the proxy statement filed by us with the SEC on January 9, 2023 and the
Current Report on Form 8-K filed by us with the SEC on February 8, 2023 for
additional information.
Liquidity, Capital Resources and Going Concern
As of December 31, 2022, we had $10,897 in cash and a working capital deficit of
$3,943,153. In addition, in order to finance transaction costs in connection
with a Business Combination, our initial stockholders, or certain of our
officers and directors may, but are not obligated to, provide us with working
capital loans (see Note 5 of the accompanying financial statements). There are
currently no amounts outstanding under any working capital loans.
In addition, in May 2021, we received a commitment letter from the Sponsor
whereby the Sponsor committed to fund any working capital shortfalls through the
earlier of an initial Business Combination or our liquidation. The loans would
be issued as required and each loan would be evidenced by a promissory note, up
to an aggregate of $300,000. In August 2021, we received a new commitment letter
from the Sponsor to increase such loan amount up to $500,000. The loans will be
non-interest bearing, unsecured and payable upon the consummation of our initial
Business Combination or at the holder's discretion, convertible into warrants of
the Company at a price of $1.50 per warrant.
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Effective as of November 4, 2021, upon approval of the Board of Directors, we
entered into an Expense Advancement Agreement with Goal Acquisitions Sponsor,
LLC (the "Funding Party"). Pursuant to the Expense Advancement Agreement, the
Funding Party has agreed to advance to us from time to time, upon request by us,
a maximum of $1,500,000 in the aggregate, in each instance issued pursuant to
the terms of a promissory note, as may be necessary to fund our expenses
relating to the investigation and selection of a target business and other
working capital requirements prior to completion of any potential Business
Combination.
Pursuant to the terms of the Expense Advancement Agreement, if we complete a
Business Combination, we will repay all outstanding loaned amounts. No interest
accrues on the unpaid principal balance of any Promissory Note. The Funding
Party cannot seek repayment from the trust account for amounts owed under the
Expense Advancement Agreement. All loans from the Funding Party are convertible
into warrants to purchase shares of common stock (the "Conversion Warrants"), at
the option of the Funding Party. The number of Conversion Warrants granted will
be equal to the portion of the principal amount of the Promissory Note being
converted, divided by $1.50 (as adjusted for any stock dividend, stock split,
stock combination, reclassification or similar transaction related to our common
stock occurring after the date of the Expense Advancement Agreement), rounded up
to the nearest whole number of shares. The Conversion Warrants shall be
identical to those warrants that were issued in a private placement that closed
concurrently with our initial public offering. The holders of Conversion
Warrants or shares of common stock underlying the Conversion Warrants are
entitled to certain demand and piggyback registration rights pursuant to the
terms of the Expense Advancement Agreement. All previously outstanding
commitments from the Sponsor have been consolidated under the Expense
Advancement Agreement, effective November 4, 2021.
Until consummation of its Business Combination, the Company will be using the
funds not held in the trust account, and any additional Working Capital Loans
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.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our Sponsor or its affiliates may, but
are not obligated to, loan us funds as may be required. If we complete a
Business Combination, we will repay such loaned amounts. In the event that a
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 for such repayment. Up to $1,500,000 of such
working capital loans may be convertible into units of the post Business
Combination entity at a price of $10.00 per unit. The units would be identical
to the Private Units. To date, the Company had no borrowings under the working
capital loans.
We will need to raise additional capital through loans or additional investments
from the Sponsor, stockholders, officers, directors, or third parties. Our
officers, directors and the Sponsor may, but are not obligated to, loan us
funds, from time to time or at any time, in whatever amount they deem reasonable
in their sole discretion, to meet our working capital needs. Accordingly, we may
not be able to obtain additional financing. 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 a potential transaction, and reducing overhead
expenses. We cannot provide any 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 one year from
the date that our financial statements included in this Annual Report on Form
10-K are issued.
In connection with the Company's assessment of going concern considerations in
accordance with the Financial Accounting Standards Board's ("FASB's") Accounting
Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about an
Entity's Ability to Continue as a Going Concern," the Company has until August
15, 2023, assuming the Board of Directors approves all five 30-day extensions
approved by our stockholders to consummate a business combination. It is
uncertain that we will be able to consummate a business combination by this
time. If a business combination is not consummated by this date and an extension
of the period of time the Company has to complete a business combination has not
been approved by the Company's stockholders, there will be a mandatory
liquidation and subsequent dissolution of the Company. We have determined that
our insufficient capital and mandatory liquidation, should a business
combination not occur, and an extension not approved by the stockholders of the
Company, and potential subsequent dissolution raise substantial doubt about the
Company's ability to continue as a going concern one year from the date these
financial statements are issued. No adjustments have been made to the carrying
amounts of assets or liabilities should the Company be required to liquidate
after August 15, 2023. We intend to continue to complete a business combination,
including the Transaction, before the mandatory liquidation date. The Company is
within 12 months of its mandatory liquidation date as of the time of filing of
this Annual Report on Form 10-K.
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Our financial statements do not include any adjustments relating to the recovery
of the recorded assets or the classification of the liabilities that might be
necessary should the Company be unable to continue as a going concern.
Management continues to evaluate the impact of the COVID-19 pandemic and has
concluded that the specific impact is not readily determinable as of the date of
the balance sheet. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
In February 2022, the Russian Federation and Belarus commenced a military action
with the country of Ukraine. As a result of this action, various nations,
including the United States, have instituted economic sanctions against the
Russian Federation and Belarus. Further, the impact of this action and related
sanctions on the world economy are not determinable as of the date of this
Annual Report on Form 10-K and the specific impact on the Company's financial
condition, results of operations, and cash flows is also not determinable as of
the date of this Annual Report on Form 10-K.
Under the current rules and regulations of the SEC we are not deemed an
investment company for purposes of the Investment Company Act of 1940 (the
"Investment Company Act"); however, on March 30, 2022, the SEC proposed new
rules (the "Proposed Rules") relating, among other matters, to the circumstances
in which SPACs such as us could potentially be subject to the Investment Company
Act and the regulations thereunder. The Proposed Rules provide a safe harbor for
companies from the definition of "investment company" under Section 3(a)(1)(A)
of the Investment Company Act, provided that a SPAC satisfies certain criteria.
To comply with the duration limitation of the proposed safe harbor, a SPAC would
have a limited time period to announce and complete a de-SPAC transaction.
Specifically, to comply with the safe harbor, the Proposed Rules would require a
company to file a Current Report on Form 8-K announcing that it has entered into
an agreement with a target company for an initial business combination no later
than 18 months after the effective date of the SPAC's registration statement for
its initial public offering. The company would then be required to complete its
initial business combination no later than 24 months after the effective date of
such registration statement.
There is currently uncertainty concerning the applicability of the Investment
Company Act to a SPAC, including a company like ours. We did not enter into a
definitive business combination agreement within 18 months after the effective
date of our registration statement relating to our initial public offering and
there is a risk that we may not complete our initial business combination within
24 months of such date. As a result, it is possible that a claim could be made
that we have been operating as an unregistered investment company. If we were
deemed to be an investment company for purposes of the Investment Company Act,
we may be forced to abandon our efforts to complete an initial business
combination and instead be required to liquidate. If we are required to
liquidate, our investors would not be able to realize the benefits of owning
stock in a successor operating business, including the potential appreciation in
the value of our stock and warrants following such a transaction.
Currently, the funds in our trust account are held only in money market funds
investing solely in U.S. government treasury obligations and meeting certain
conditions under Rule 2a-7 under the Investment Company Act. The Investment
Company Act defines an investment company as any issuer which (i) is or holds
itself out as being engaged primarily, or proposes to engage primarily, in the
business of investing, reinvesting, or trading in securities; (ii) is engaged or
proposes to engage in the business of issuing face-amount certificates of the
installment type, or has been engaged in such business and has any such
certificate outstanding; or (iii) is engaged or proposes to engage in the
business of investing, reinvesting, owning, holding, or trading in securities,
and owns or proposes to acquire investment securities having a value exceeding
40% of the value of its total assets (exclusive of Government securities and
cash items) on an unconsolidated basis.
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The longer that the funds in the trust account are held in money market funds,
there is a greater risk that we may be considered an unregistered investment
company. In the event we are deemed an investment company under the Investment
Company Act, whether based upon our activities, the investment of our funds, or
as a result of the Proposed Rules being adopted by the SEC, we may determine
that we are required to liquidate the money market funds held in our trust
account and may thereafter hold all funds in our trust account in cash until the
earlier of consummation of our business combination or liquidation. As a result,
if we were to switch all funds to cash, we will likely receive minimal interest,
if any, on the funds held in our trust account after such time, which would
reduce the dollar amount our public stockholders would receive upon any
redemption or liquidation of our Company.
Critical Accounting Policies and Estimates
This management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with U.S. GAAP. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and the disclosure of contingent
assets and liabilities in our financial statements. On an ongoing basis, we
evaluate our estimates and judgments, including those related to fair value of
financial instruments and accrued expenses. We base our estimates on historical
experience, known trends and events and various other factors that we believe to
be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. We have identified the
following as our critical accounting policies:
Warrant Liabilities
We account for the warrants issued in connection with our initial public
offering in accordance with Accounting Standards Codification ("ASC") 815-40,
Derivatives and Hedging-Contracts in Entity's Own Equity ("ASC 815"), 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 Statement of Operations in the
period of change.
Common stock subject to possible redemption
The Company accounts for its 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 is classified as a
liability instrument and is measured at fair value. Conditionally redeemable
common stock (including common stock that features redemption rights that are
either within the control of the holder or subject to redemption upon the
occurrence of uncertain events not solely within the Company's control) is
classified as temporary equity. At all other times, common stock is classified
as stockholders' equity. The Company's common stock features certain redemption
rights that are considered to be outside of the Company's control and subject to
occurrence of uncertain future events. As of both December 31, 2022 and 2021,
25,875,000 shares of common stock subject to possible redemption are presented
at redemption value as temporary equity, outside of the stockholders' equity
section of the Company's balance sheets.
The Company recognizes changes in redemption value immediately as they occur and
adjusts the carrying value of redeemable common stock to equal the redemption
value at the end of each reporting period. Increases or decreases in the
carrying amount of redeemable common stock are affected by charges against
additional paid-in capital and accumulated deficit.
Net Loss Per Common Stock
The Company has one class of common stock. Our common stock sold in the IPO is
subject to possible redemption. The 25,875,000 shares of common stock underlying
the outstanding warrants were excluded from diluted earnings per common stock
for the year ended December 31, 2022 because the warrants are contingently
exercisable, and the contingencies have not yet been met. As a result, diluted
net loss per common share is the same as basic net loss per common share for the
periods.
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Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board issued 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 for the fiscal years beginning
after December 15, 2023 and should be applied on a full or modified
retrospective basis, with early adoption permitted beginning on January 1, 2021.
The adoption of ASU 2020-06 is not expected to have an impact 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 the Company's financial statements.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" under
the JOBS Act and are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We elected to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As a result, our financial statements may not
be comparable to companies that comply with new or revised accounting
pronouncements as of public company effective dates.
As an "emerging growth company", we are not required to, among other things, (i)
provide an auditor's attestation report on our system of internal controls over
financial reporting pursuant to Section 404, (ii) provide all of the
compensation disclosure that may be required of non-emerging growth public
companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act,
(iii) comply with any requirement that may be adopted by the PCAOB regarding
mandatory audit firm rotation or a supplement to the auditor's report providing
additional information about the audit and the financial statements (auditor
discussion and analysis), and (iv) disclose certain executive compensation
related items such as the correlation between executive compensation and
performance and comparisons of the CEO's compensation to median employee
compensation. These exemptions will apply for a period of five years following
the completion of our initial public offering or until we are no longer an
"emerging growth company," whichever is earlier.
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