The following discussion should be read in conjunction with the Company's
condensed financial statements and the related notes included elsewhere in this
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022
(this "Form 10-Q"), as well as Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A") included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on
March 31, 2022 (the Company's "Form 10-K"). 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 Form 10-Q includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of 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 Form 10-Q
including 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 Form 10-K. 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, incorporated as a Cayman Islands exempted company
for the purpose of effecting a merger, share exchange, asset acquisition, share
purchase, reorganization or similar business combination with one or more
businesses. Lazard Ltd, an affiliate of our Sponsor, intends to use resources
across its international financial advisory and asset management businesses to
source and evaluate attractive, high growth private companies. Although we are
not limited to a particular industry or geographic region in our identification
and acquisition of a target company, we believe the growth-oriented subsectors
of the healthcare, technology, energy transition, financial and consumer sectors
present particularly attractive investment opportunities.
At September 30, 2022 we had cash of $263,037 and cash equivalents held in a
Trust Account of $578,594,683, current liabilities of $6,280,844, deferred
underwriting commission payable of $20,125,000 and warrants for the purchase of
Class A ordinary shares of $1,025,000. 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 an initial Business Combination will be successful.
Results of Operations
For the three months ended September 30, 2022, we had net income of $6,646,711,
which consisted of a change in the fair value of warrants exercisable for Class
A ordinary shares of $4,280,000 and interest income of $2,785,173 earned on
funds held in the Trust Account. This income was partially offset by general and
administrative fees of $418,462. Interest earned on the Trust Account is
restricted to the redemption or liquidation of Class A ordinary shares and
cannot be used for the Company's business activities.
For the three months ended September 30, 2021, we had a net income of
$5,928,183, which consisted of a change in the fair value of warrants
exercisable for Class A ordinary shares of $6,405,000 and $9,989 of interest
earned on funds held in the Trust Account. These revenues were offset by general
and administrative expenses of $486,806. Interest earned on the Trust Account is
restricted to the redemption or liquidation of Class A ordinary
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shares and cannot be used for the Company's business activities. Our business
activities for the three months ended September 30, 2022 and 2021 primarily
related to identifying and evaluating prospective acquisition targets for an
initial Business Combination.
For the nine months ended September 30, 2022, we had a net income of
$19,229,898, which consisted of a change in the fair value of warrants
exercisable for Class A ordinary shares of $16,990,000 and interest income of
$3,561,431 earned on funds held in the Trust Account. These revenues were offset
by general and administrative expenses of $1,321,533. Interest earned on the
Trust Account is restricted to the redemption or liquidation of Class A ordinary
shares and cannot be used for the Company's business activities. Our business
activities for the nine months ended September 30, 2022 primarily related to
identifying and evaluating prospective acquisition targets for an initial
Business Combination.
For the nine months ended September 30, 2021, we had a net income of $3,553,486,
which consisted of a change in the fair value of warrants exercisable for Class
A ordinary shares of $5,560,000 and $21,845 of interest earned on funds held in
the Trust Account. These revenues were offset by general and administrative fees
of $1,313,865 and offering costs that were expensed of $714,494 related to the
closing of our Initial Public Offering. Interest earned on the Trust Account is
restricted to the redemption or liquidation of Class A ordinary shares and
cannot be used for the Company's business activities. Our business activities
for the nine months ended September 30, 2021 primarily related to completing our
Initial Public Offering, and since the offering, our activity has been limited
to identifying and evaluating prospective acquisition targets for an initial
Business Combination.
We do not expect to generate any operating revenues until after the completion
of our initial Business Combination. We expect to continue to generate
non-operating income in the form of interest income on cash equivalents held in
the Trust Account. We expect to incur increased expenses as a result of being a
public company (for legal, financial reporting, accounting and auditing
compliance), as well as for due diligence costs.
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 (less
taxes payable and deferred underwriting commissions), to complete our initial
Business Combination. We may withdraw interest income to pay taxes, if any. Any
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
In order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial Business Combination, the Sponsor has, as of
March 30, 2022 amended the working capital loan to increase the borrowing limit
from $2,000,000 to $5,000,000 to be provided to us to fund our expenses relating
to investigating and selecting a target business and other working capital
requirements prior to our initial Business Combination. If we complete our
initial Business Combination, we may repay such loaned amounts out of the
proceeds of the Trust Account released to us. In the event that our 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.
Up to $2,000,000 of the working capital loan may be converted into warrants of
the post-Business Combination entity at a price of $1.50 per warrant at the
option of the lender. The warrants would be identical to the Private Placement
Warrants.
In addition, the Sponsor or an affiliate of the Sponsor may, but is not
obligated to, loan us additional funds as may be required. Except for the
foregoing, the terms of such additional loans have not been determined and no
written agreements exist with respect to such loans. Prior to the completion of
our initial Business Combination, we do not expect to seek loans from parties
other than our Sponsor or its affiliates as we do not believe third parties will
be willing to loan such funds and provide a waiver against any and all rights to
seek access to funds in our Trust Account.
We may need to obtain additional financing to complete our initial Business
Combination, either because the transaction requires more cash than is available
from the proceeds held in the Trust Account, or because we become obligated to
redeem a significant number of our public shares upon completion of the Business
Combination, in
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which case we may issue additional securities or incur debt in connection with
such Business Combination. If we have not consummated our initial Business
Combination within the required time period because we do not have sufficient
funds available to us, we would be forced to cease operations and liquidate the
Trust Account.
Going Concern Assessment
As of September 30, 2022, the Company had cash of $263,037 and $2,280,844 of
accrued expenses. The Company forecasts additional expenses through February 12,
2023 (the final date to complete a business combination) totaling $292,700 and
$100,000 of interest income. The Company's total forecasted cash outflows
through February 12, 2023, net of $100,000 interest income for liquidation
costs, totals $2,473,544, which leaves the company with a forecasted cash
shortfall of $2,210,507. As of September 30, 2022, the Company does not have
sufficient liquidity to meet its anticipated obligations during the period
beginning with the date of issuance of these financial statements through the
end of the Combination Period. The Company cannot assure you that its plans to
raise capital or to complete a Business Combination will be successful. These
factors, among others, raise substantial doubt about our ability to continue as
a going concern.
Off-balance Sheet Financing Arrangements
We have no obligations, assets or liabilities which would be
considered off-balance sheet arrangements. 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 entered into any non-financial agreements involving assets.
Contractual Obligations
At September 30, 2022, we did not have any long-term debt, capital lease
obligations, operating lease obligations or long-term liabilities. On February
10, 2021, we entered into an administrative support agreement pursuant to which
we have agreed to pay an affiliate of the Sponsor a total of $20,000 per month
for office space, administrative and support services. Upon the earlier of the
completion of the Initial Business Combination and the Company's liquidation, we
will cease paying these monthly fees.
The underwriter of the Initial Public Offering received a cash underwriting
discount of $0.20 per Unit, or $11,500,000 in the aggregate, upon the closing of
the Initial Public Offering. In addition, the underwriter is entitled to
deferred commissions of $0.35 per Unit, or $20,125,000 in the aggregate. The
deferred underwriting commissions will be paid to the underwriter solely in the
event that the Company completes a Business Combination within the time
required, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States 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 condensed financial statements, and expenses during the periods
reported. Actual results could materially differ from those estimates. We have
identified the following as our critical accounting policies:
Net Income Per Ordinary Share
We comply with accounting and disclosure requirements of ASC Topic 260, Earnings
Per Share. Net income per share of ordinary shares is computed by dividing net
income by the weighted average number of common shares outstanding during the
period. We apply the two-class method in calculating earnings per share.
Adjustments associated with the redeemable shares of Class A ordinary shares
under ASC Topic 480-S993 are excluded from
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earnings per share as the redemption value approximates fair value and we elect
to reflect changes in redemption value immediately as they occur through
Additional-Paid-In-Capital.
As of September 30, 2022 and September 30, 2021, we had outstanding warrants to
purchase of up to 20,500,000 shares of Class A ordinary shares. The weighted
average of these shares was excluded from the calculation of diluted net income
per share of ordinary shares since the exercise of the warrants is contingent
upon the occurrence of future events. As of September 30, 2022 and September 30,
2021, we did not have any dilutive securities or other contracts that could,
potentially, be exercised or converted into shares of ordinary shares and then
share in our earnings. As a result, diluted income per common share is the same
as basic income per common share for the period.
Warrants
Under ASC Topic 815, we have classified issued warrants as liabilities
remeasured at fair value, with changes in fair value each period reported to
earnings.
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible
redemption in accordance with the guidance in ASC 480. Accordingly, Class A
ordinary shares subject to possible redemption are presented as temporary
equity, outside of the shareholders' deficit section of the Company's balance
sheets. The Class A ordinary shares subject to possible redemption included in
temporary equity at September 30, 2022 and December 31, 2021, represent 100% of
the outstanding Class A ordinary shares.
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LAZARD GROWTH ACQUISITION CORP. I 
