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 December 16, 2020 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 March 16,
2021. As of March 31, 2022, we had not identified any Business Combination
target nor initiated any substantive discussions directly or indirectly, with
respect to identifying any Business Combination target.
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 and March 31, 2021, we had net income
of $4,504,077 and $179,433, of which $4,995,000 and $647,500 is a non-cash gain
related to the change in fair value of the warrant liability, respectively. 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 March 16, 2023.
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, we had $119,587 in cash and deferred underwriting compensation of
$9,625,000. 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 January 19, 2021, the Sponsor purchased 6,900,000 shares of Class F Common
Stock, par value $0.0001 per share, of the Company (the "Founder Shares") for
$25,000, or approximately $0.004 per share. On March 11, 2021, the Sponsor
transferred 25,000 Founder Shares to each of the independent directors at their
original purchase price. On April 30, 2021, the Sponsor forfeited 25,000 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.
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On March 16, 2021, we consummated our Public Offering of 27,500,000 Units at a
price of $10.00 per Unit, including 3,500,000 Units as a result of the
underwriters' partial exercise of its over-allotment option, generating gross
proceeds of $275,000,000. On the IPO Closing Date, we completed the private sale
of an aggregate of 3,750,000 Private Placement Warrants, each exercisable to
purchase one share of Common Stock at $11.50 per share, to our Sponsor, at a
price of $2.00 per Private Placement Warrant, generating gross proceeds, before
expenses, of $7,500,000. After deducting the underwriting discounts and
commissions (excluding the Deferred Discount, which amount will be payable upon
consummation of the Business Combination, if consummated), the total net
proceeds from our Public Offering and the sale of the Private Placement Warrants
were $277,000,000, of which $275,000,000 (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, 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.
Prior to the completion of the Public Offering, the Sponsor loaned the Company
$300,000 by the issuance of an unsecured promissory note (the "Note") issued by
the Company in favor of the Sponsor to cover expenses related to the Public
Offering. The Note was non-interest bearing and payable on the earlier of
January 31, 2022 or the completion of the Public Offering. The Note was repaid
upon completion of the Public Offering.
On April 9, 2021, 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) March 2, 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 $1,300,000.
As of March 31, 2022 and December 31, 2021, we had cash held outside of the
Trust Account of $119,587 and $222,492, 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, 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
$9,430,342 and $14,191,953 and a working capital deficit of ($8,418,788) and
($12,898,348), 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.
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.
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The underwriters are entitled to underwriting discounts and commissions of 5.5%,
of which 2.0% ($5,500,000) was paid at the IPO Closing Date, and 3.5%
($9,625,000) 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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