The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our unaudited financial
statements and the notes related thereto which are included in "Item 1.
Financial Statements" of this Quarterly Report on Form 10Q.
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this
Quarterly Report on Form 10Q including, without limitation, statements under
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. When used in this Quarterly Report on Form 10Q,
words such as "anticipate," "believe," "estimate," "expect," "intend" and
similar expressions, as they relate to us or the Company's management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of management, as well as assumptions made by, and information currently
available to, the Company's 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 the Company's
behalf are qualified in their entirety by this paragraph.
Overview
We are a blank check company incorporated on January 19, 2021 as a Delaware
corporation and formed for the purpose of effecting a Business Combination with
one or more target businesses. We completed our Public Offering on January 14,
2022.
We presently have no revenue, have had losses since inception from incurring
formation costs and have had no operations other than the active solicitation of
a target business with which to complete a business combination.
Results of Operations
For the three months ended March 31, 2022, the Company had a net loss of
($2,022,320) of which ($1,033,333) is a non-cash loss related to the change in
fair value of the warrant liability. Our business activities during the quarter
mainly consisted of identifying and evaluating prospective acquisition
candidates for a Business Combination. We believe that we have sufficient funds
available to complete our efforts to effect a Business Combination with an
operating business by January 14, 2024. However, if our estimates 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.
As indicated in the accompanying unaudited financial statements, at March 31,
2022, the Company had $361,261 in cash and deferred offering costs of
$18,375,000. Further, we expect to continue to incur significant costs in the
pursuit of our acquisition plans. We cannot assure you that our plans to
complete our Business Combination will be successful.
Liquidity and Capital Resources
On July 8, 2021, the Sponsor purchased 15,093,750 shares of Class F Common
Stock, par value $0.0001 per share, of the Company (the "Founder Shares") for
$25,000, or approximately $0.002 per share. On January 11, 2022, the Sponsor
transferred 25,000 Founder Shares to each of the independent directors at their
original purchase price. On February 28, 2021, the Sponsor forfeited 1,968,750
Founder Shares following the expiration of the unexercised portion of
underwriters' over-allotment option, so that the Founder Shares held by the
Initial Stockholders would represent 20% of the outstanding shares of common
stock. The Founder Shares will automatically convert into shares of Class A
Common Stock at the time of the Business Combination on a one-for-one basis,
subject to adjustment as described in the Company's certificate of
incorporation.
On January 14, 2022, the Company consummated its Public Offering of 52,500,000
Units at a price of $10.00 per Unit, generating gross proceeds of $525,000,000.
On the IPO Closing Date, we completed the private
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sale of an aggregate of 8,333,333 Private Placement Warrants, each exercisable
to purchase one share of Class A Common Stock at $11.50 per share, to our
Sponsor, at a price of $1.50 per Private Placement Warrant, generating gross
proceeds, before expenses, of $12,500,000. After deducting the underwriting
discounts and commissions (excluding the Deferred Discount, which amount will be
payable upon consummation of the Business Combination, if consummated) and the
estimated offering expenses, the total net proceeds from our Public Offering and
the sale of the Private Placement Warrants were $527,000,000, of which
$525,000,000 (or $10.00 per share sold in the Public Offering) was placed in the
Trust Account. The amount of proceeds not deposited in the Trust Account was
$2,000,000 at the closing of our Public Offering. Interest earned on the funds
held in the Trust Account may be released to us to fund our Regulatory
Withdrawals, for a maximum of 24 months and/or additional amounts necessary to
pay our franchise and income taxes.
On July 8, 2021, the Company borrowed $300,000 by the issuance of an unsecured
promissory note from the Sponsor for $300,000 to cover expenses related to the
Public Offering. This Note was non-interest bearing and payable on the earlier
of January 31, 2023 or the completion of the Public Offering. The Note was
repaid upon completion of the Public Offering. This facility is no longer
available.
On February 7, 2022, the Sponsor made available to the Company a loan of up to
$4,000,000 pursuant to a promissory note issued by the Company to the Sponsor.
The proceeds from the note will be used for ongoing operational expenses and
certain other expenses in connection with the Business Combination. The note is
unsecured, non-interest bearing and matures on the earlier of: (i) January 31,
2023 or (ii) the date on which the Company consummates the Business Combination.
As of March 31, 2022, the amount advanced by Sponsor to the Company was
$600,000.
As of March 31, 2022 and December 31, 2021, the Company had cash held outside of
the Trust Account of approximately $361,261 and $147,160, respectively, which is
available to fund our working capital requirements. Additionally, interest
earned on the funds held in the Trust Account may be released to us to fund our
Regulatory Withdrawals, subject to an annual limit of $900,000, for a maximum of
24 months and/or additional amounts necessary to pay our franchise and income
taxes.
At March 31, 2022 and December 31, 2021, the Company had current liabilities of
$18,301,911 and $465,816 and a working capital deficit of ($16,229,185) and
($318,656), respectively, the balances of which are primarily related to
warrants we have recorded as liabilities as described in Notes 2 and 3. Other
amounts are related to accrued expenses owed to professionals, consultants,
advisors and others who are working on seeking a Business Combination as
described in Note 1. Such work is continuing after March 31, 2022 and amounts
are continuing to accrue. Additionally, the warrant liability will not impact
the Company's liquidity until a Business Combination has been consummated, as
they do not require cash settlement until such event has occurred.
We intend to use substantially all of the funds held in the Trust Account,
including interest (which interest shall be net of Regulatory Withdrawals and
taxes payable) to consummate our Business Combination. Moreover, we may need to
obtain additional financing either to complete a Business Combination or because
we become obligated to redeem a significant number of shares of our Class A
Common Stock upon completion of a Business Combination. Subject to compliance
with applicable securities laws, we would only complete such financing
simultaneously with the completion of our Business Combination. If we are unable
to complete our Business Combination because we do not have sufficient funds
available to us, we will be forced to cease operations and liquidate the Trust
Account. In addition, following our Business Combination, if cash on hand is
insufficient, we may need to obtain additional financing in order to meet our
obligations. To the extent that our capital stock or debt is used, in whole or
in part, as consideration to consummate our Business Combination, the remaining
proceeds held in our Trust Account, if any, will be used as working capital to
finance the operations of the target business or businesses, make other
acquisitions and pursue our growth strategy. Following the closing of a Business
Combination, we do not expect there to be remaining proceeds in our Trust
Account.
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As of March 31, 2022 and December 31, 2021, we did not have any long-term debt
obligations, capital lease obligations, operating lease obligations, purchase
obligations or long-term liabilities. In connection with the Public Offering, we
entered into an administrative services agreement to pay monthly recurring
expenses of $20,000 to an affiliate of the Sponsor for office space, utilities
and secretarial support. The administrative services agreement terminates upon
the earlier of the completion of a Business Combination or the liquidation of
the Company.
The underwriters are entitled to underwriting discounts and commissions of 5.5%
($28,875,000), of which 2.0% ($10,500,000) was paid upon close of the Public
Offering, and 3.5% ($18,375,000) was deferred. The Deferred Discount will become
payable to the underwriters from the amounts held in the Trust Account solely in
the event that the Company completes a Business Combination, subject to the
terms of the underwriting agreement. The underwriters are not entitled to any
interest accrued on the Deferred Discount.
Recently Issued Accounting Pronouncements Not Yet Adopted
Management does not believe that any recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material effect on
the Company's financial statements based on current operations of the
Company. The impact of any recently issued accounting standards will be
re-evaluated on a regular basis or if a Business Combination is completed where
the impact could be material.
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