The following discussion and analysis of financial condition and results of
operations should be read together in conjunction with our interim consolidated
financial statements and notes thereto presented in this Quarterly Report on
Form 10-Q (this "Quarterly Report"), as well as our audited financial statements
and notes thereto included in our Annual Report on Form 10-K for the year ended
Cautionary Statement Regarding Forward-Looking Statements
Some of the statements contained in this Quarterly Report may constitute "forward-looking statements" for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report may include, but are not limited to, for example, statements about:
? our being a blank check company with no operating history and no revenues;
? our ability to select an appropriate target business or businesses;
? our ability to complete our initial business combination;
? our expectations around the performance of a prospective target business or
businesses;
? our success in retaining or recruiting, or changes required in, our officers,
key employees or directors following our initial business combination;
our officers and directors allocating their time to other businesses and
? potentially having conflicts of interest with our business or in approving our
initial business combination;
actual and potential conflicts of interest relating to Kimbell Royalty
?
management team are involved;
? our potential ability to obtain additional financing to complete our initial
business combination including from our sponsor, KRP or other third parties;
? our pool of prospective target businesses, including the location and industry
of such target businesses;
our ability to consummate an initial business combination due to the
uncertainty resulting from the COVID-19 pandemic, the ongoing conflict between
?
actions, natural disasters or a significant outbreak of other infectious
diseases);
? the ability of our officers and directors to generate a number of potential
business combination opportunities;
? our public securities' potential liquidity and trading;
? the lack of a market for our securities;
? the use of proceeds not held in the trust account ("Trust Account") or
available to us from interest income on the Trust Account balance;
? the Trust Account not being subject to claims of third parties; or
? our financial performance.
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The forward-looking statements contained in this Quarterly Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading "Risk Factors" in our 2021 Form 10-K. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements.
Overview
We are a blank check company incorporated in
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure 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 for the three and nine months ended
For the three and nine months ended
Liquidity and Capital Resources
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account, which
interest shall be net of taxes payable and excluding deferred underwriting
commissions, to complete our initial business combination. We may withdraw
interest from the Trust Account to pay taxes, if any. To the extent that our
share capital or debt is used, in whole or in part, as consideration to complete
an initial 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
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 an initial business combination.
The Company believes it has sufficient liquidity to operate its business through the Combination Period. In the event additional resources are needed to fund working capital deficiencies or finance transaction costs in connection with an initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may loan us funds as may be required. If we complete an initial business combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that an initial 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. Upon completion of a business
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combination, up to
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial 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 initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt in connection with such initial business combination.
We have until
Off-Balance Sheet Financing Arrangements
As of
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay KRP and
certain of its subsidiaries a total of
The underwriter is entitled to a deferred fee of
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in
Stock Compensation Expense
The Company accounts for stock-based compensation expense in accordance with ASC 718, "Compensation-Stock Compensation" ("ASC 718"). Under ASC 718, stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date and recognized over the requisite service period. To the extent a stock-based award is subject to a performance condition, the amount of expense recorded in a given period, if any, reflects an assessment of the probability of achieving such performance condition, with compensation recognized once the event is deemed probable to occur. The fair value of equity awards has been estimated using a market approach. Forfeitures are recognized as incurred.
The Class B common stock and the Class B units of Opco were granted subject to a
performance condition, namely the occurrence of a business combination. This
market condition is considered in determining the grant date fair value of these
instruments using a closed form barrier option model. Compensation expense
related to the Class B common stock and Class B units of Opco is recognized only
when the performance condition is probable of occurrence, or more specifically
when a business combination is consummated. Therefore, no stock-based
compensation expense has been recognized during the three and nine months ended
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Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
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