References in this quarterly report on Form 10-Q, (the "Quarterly Report") to
"we," "us" or the "Company" refer to Golden Arrow Merger Corp. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to Golden Arrow Sponsor, LLC. The following
discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with the financial statements and the
notes thereto contained elsewhere in this Quarterly Report. Certain information
contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") that are not historical facts and involve risks and
uncertainties that could cause actual results to differ materially from those
expected and projected. All statements, other than statements of historical fact
included in this Quarterly Report including, without limitation, statements in
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the Company's financial position, business strategy and
the plans and objectives of management for future operations, are
forward-looking statements. Words such as "expect," "believe," "anticipate,"
"intend," "estimate," "seek" and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect
management's current beliefs, based on information currently available. A number
of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the Risk Factors section of the
Company's Annual Report on Form 10-K (the "Form 10-K") filed with the U.S.
Securities and Exchange Commission (the "SEC") on March 31, 2022. The Company's
securities filings can be accessed on the EDGAR section of the SEC's website at
www.sec.gov. Except as expressly required by applicable securities law, the
Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on
December 31, 2020 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses (the "Business Combination"). We intend
to effectuate our Business Combination using cash from the proceeds of the
Initial Public Offering (defined below) and the sale of the Private Placement
Warrants (defined below), 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.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from December 31, 2020 (inception) through June 30, 2022
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and, subsequent to the Initial Public
Offering, identifying a target company for a Business Combination. We do not
expect to generate any operating revenues until after the completion of our
Business Combination. We generate non-operating income in the form of interest
income on marketable securities held in the Trust Account (defined below). We
incur 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 three months ended June 30, 2022, we had a net income of $2,345,241,
which consisted of the change in fair value of warrant liability of $2,382,072,
change in fair value of convertible note of $71,100, interest earned on
marketable securities held in the Trust Account of $130,277, offset by formation
and operational costs of $238,208.
For the six months ended June 30, 2022, we had a net income of $6,012,200, which
consisted of the change in fair value of warrant liability of $6,174,345, change
in fair value of convertible note of $203,400, interest earned on marketable
securities held in the Trust Account of $137,367, offset by formation and
operational costs of $502,912.
For the three months ended June 30, 2021, we had a net loss of $2,254,406, which
consisted of the change in fair value of warrant liability of $2,041,667 and
formation and operational costs of $216,678, offset by interest earned on
marketable securities held in the Trust Account of $3,939.
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For the six months ended June 30, 2021, we had a net income of $1,166,315, which
consisted of the change in fair value of warrant liability of $1,936,666 and
interest earned on marketable securities held in the Trust Account of $3,939,
offset by transaction costs allocated from initial public offering of $481,824
and formation and operational costs of $292,466.
Liquidity and Capital Resources
On March 19, 2021, we consummated the Initial Public Offering of 25,000,000
Units at $10.00 per Unit, generating gross proceeds of $250,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 4,500,000 Private Placement Warrants at a price of $1.50 per Private
Placement Warrant in a private placement to the Sponsor generating gross
proceeds of $6,750,000.
Following the Initial Public Offering and the sale of the Private Placement
Warrants, a total of $250,000,000 was placed in a Trust Account (the "Trust
Account"). We incurred $14,246,969 in Initial Public Offering related costs,
including $5,000,000 of underwriting fees, $8,750,000 of deferred underwriting
fees and $496,969 of other offering costs.
On May 6, 2021, in connection with the underwriters' exercise of their
over-allotment option in full, we consummated the sale of an additional
3,750,000 Units at a price of $10.00 per Unit, generating total gross proceeds
of $37,500,000. In addition, we also consummated the sale of an additional
500,000 Private Placement Warrants at $1.50 per Private Placement Warrant,
generating gross proceeds of $750,000. A total of $37,500,000 of the net
proceeds from the sale of the additional Units and Private Placement Warrants
was placed in the Trust Account, bringing the aggregate proceeds held in the
Trust Account to $287,500,000.
For the six months ended June 30, 2022, cash used in operating activities was
$625,976. Net income of $6,012,200 was affected by change in fair value of
warrant liability of $6,174,345, change in fair value of convertible note of
$203,400, interest earned on marketable securities held in the Trust Account of
$137,367. Changes in operating assets and liabilities used $123,064 of cash for
operating activities.
For the six months ended June 30, 2021, cash used in operating activities was
$682,062. Net income of $1,166,315 was affected by changes in fair value of
warrant liability of $1,936,666, interest earned on marketable securities held
in the Trust Account of $3,939 and transaction costs related to the initial
public offering of $481,824. Changes in operating assets and liabilities used
$389,596 of cash for operating activities.
As of June 30, 2022, we held investments in the Trust Account in the amount of
$287,654,370. Interest income on the balance in the Trust Account may be used by
us to pay taxes. Through June 30, 2022, we have not withdrawn any interest
earned from the Trust Account.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account (less
income taxes payable), to complete our Business Combination. To the extent that
our capital stock or debt is used, in whole or in part, as consideration to
complete our 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.
As of June 30, 2022, we had cash of $240,636. We intend to use the funds held
outside the Trust Account 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, and structure, negotiate and
complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a business combination, the sponsor, or certain of our officers
and directors or their affiliates may, but are not obligated to, loan us funds
as may be required. If we complete a business combination, we would 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 loans may be convertible into, at the
option of the lender. The warrants would be identical to the private placement
warrants.
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On February 25, 2022, we issued a promissory note to our sponsor pursuant to
which we may borrow up to an aggregate principal amount of $500,000. The
promissory note is non-interest bearing and payable upon consummation of our
initial business combination. At our sponsor's discretion, the promissory note
may be converted into warrants of the post-business combination entity at a
price of $1.50 per warrant. The warrants would be identical to the private
placement warrants.
As of June 30, 2022, there was a $500,000 balance outstanding under the
Convertible Promissory Note. The Convertible Promissory Note was valued using
the fair value method. The fair value of the note as of June 30, 2022, was
$296,600, which resulted in a change in fair value of the convertible promissory
note of $71,100 and $203,400 for the three and six months ended June 30,2022
recorded in the condensed statements of operations.
On January 8, 2021, we issued a non-interest bearing, unsecured promissory note
to the Sponsor, pursuant to which the Company could borrow up to an aggregate
principal amount of $200,000, which was originally due on March 19, 2021. On
March 18, 2022, we amended and restated the promissory note to extend the due
date of amounts outstanding under the promissory note to the earlier of December
31, 2022 and the date of consummation of our initial business combination. As of
June 30, 2022 and December 31, 2021, there was $141,367 outstanding under the
promissory note.
If our estimate of the costs of identifying a target business, undertaking
in-depth due diligence and negotiating a 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 business combination. Moreover, we may need to
obtain additional financing either to complete our business combination or
because we become obligated to redeem a significant number of our public shares
upon consummation of our business combination, in which case we may issue
additional securities or incur debt in connection with such business
combination.
Going Concern
We have until March 19, 2023, to consummate a business combination. It is
uncertain that we will be able to consummate a business combination by this
time. If we are unable to raise additional funds to alleviate liquidity needs as
well as complete a business combination by this date, there will be a mandatory
liquidation and subsequent dissolution. Management has determined that the
liquidity condition and mandatory liquidation, should a business combination not
occur, and potential subsequent dissolution raises substantial doubt about our
ability to continue as a going concern. Management plans to consummate a
business combination prior to the mandatory liquidation date. No adjustments
have been made to the carrying amounts of assets or liabilities should we be
required to liquidate after March 19, 2023.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of June 30, 2022. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities.
The underwriters are entitled to a deferred fee of $0.35 per unit, or
$10,062,500 in the aggregate. The deferred fee will become payable to the
underwriters from the amounts held in the trust account solely in the event that
we complete a business combination, subject to the terms of the underwriting
agreement.
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Warrant Liabilities
We account for the warrants in accordance with the guidance contained in ASC
815-40-15 under which the warrants do not meet the criteria for equity treatment
and must be recorded as liabilities. Accordingly, we classify the warrants as
liabilities at their fair value and adjust the warrants to fair value at each
reporting period. This liability is subject to re-measurement at each balance
sheet date until exercised, and any change in fair value is recognized in our
statements of operations. The Private Placement Warrants and the warrants
included as part of the units in the Initial Public Offering (the "Public
Warrants" and together with the Private Placement Warrants, the "warrants") for
periods where no observable traded price was available are valued using a
lattice model, specifically a binomial lattice model incorporating the
Cox-Ross-Rubenstein methodology. For periods subsequent to the detachment of the
Public Warrants from the Units, the Public Warrant quoted market price was used
as the fair value as of each relevant date.
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Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Common stock subject to mandatory
redemption is classified as a liability instrument and 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 our
control) is classified as temporary equity. At all other times, common stock is
classified as stockholders' equity. Our common stock features certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, common stock subject to
possible redemption is presented at redemption value as temporary equity,
outside of the stockholders' deficit section of our condensed balance sheets.
Net Income (Loss) Per Common Share
Net income (loss) per common share is computed by dividing net income (loss) by
the weighted average number of common stock outstanding for the period. We have
two classes of shares which are referred to as Class A common stock and Class B
Common stock. Income is shared pro rata between the two classes of shares. Net
income (loss) per common share is calculated by dividing the net income (loss)
by the weighted average shares of common stock outstanding for the respective
period. Accretion associated with the redeemable shares of Class A common stock
is excluded from earnings per share as the redemption value approximates fair
value.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 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): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models
required under current GAAP. ASU 2020-06 removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope
exception and it also simplifies the diluted earnings per share calculation in
certain areas. ASU 2020-06 is effective for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal years, with
early adoption permitted. The impact of the adoption of ASU 2020-06 is being
assessed by the company, however no significant impact on the financial
statements is anticipated.
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
condensed financial statements.
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