The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this annual report. Certain
information contained in the discussion and analysis set forth below includes
forward-looking statements. Our actual results may differ materially from those
anticipated in these forward-looking statements as a result of many factors,
including those set forth under "Special Note Regarding Forward-Looking
Statements," "Item 1A. Risk Factors" and elsewhere in this annual report.
Overview
We are a blank check company formed under the laws of the State of Delaware on
December 16, 2020 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or other similar Business
Combination with one or more businesses. We intend to effectuate our Business
Combination using cash from the proceeds of the Initial Public Offering and the
sale of the Private Placement Warrants, 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.
Recent Developments
Our amended and restated certificate of incorporation initially provided that we
had until March 8, 2023 to consummate our initial business combination. On March
7, 2023, we obtained an extension of that expiry date to December 8, 2023. In
connection with such extension and as required by the Company's charter, each
holder of Class A common stock who was not affiliated with the Company was
afforded the opportunity to cause the Company to redeem such holder's shares of
Class A common stock at a per share price, payable in cash, equal to the
aggregate amount then on deposit in the trust account, including interest (net
of permitted withdrawals and up to $100,000 of interest to pay dissolution
expenses), divided by the number of then outstanding public shares, which
redemption will completely extinguish public stockholders' rights as
stockholders (including the right to receive further liquidating distributions,
if any), subject to applicable law. The holders of 35,463,019 shares of our
Class A common stock elected to have their shares redeemed. As a result,
4,536,981 shares of our Class A common stock remain outstanding on March 8, 2023
and the balance in our trust account has been reduced to $46,066,466 as of such
date.
51
Results of Operations
We have not generated any revenues to date. Our only activities from December
16, 2020 (inception) through December 31, 2022 were organizational activities,
those necessary to prepare for the Initial Public Offering, described below, and
the search for a target company for a Business Combination (including our
proposed business combination with Syniverse Corporation which was terminated by
mutual agreement of the parties on February 9, 2022). We do not expect to
generate any revenues until after the completion of our Business Combination. We
expect to generate non-operating income in the form of interest income on
marketable securities held after the Initial Public Offering. 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 and
expenses relating to the sourcing and consummation our initial business
combination.
For the year ended December 31, 2022, we had a net income of $33,429,280, which
consists of change in fair value of warrant liabilities of $25,469,581, reversal
of previously recorded terminated merger costs of $5,400,000, unrealized gain on
investments of $5,328,058, offset by formation and operating costs of $1,861,953
and provision for income taxes of $906,406.
For the year ended December 31, 2021, we had a net loss of $1,992,106 which
consists of operating costs of $953,247, costs of the terminated business
combination of $6,372,702 and offset by other income of $5,333,844.
Through December 31, 2022, our efforts have been limited to organizational
activities, activities relating to identifying and evaluating prospective
acquisition candidates (including activities relating to the terminated merger
agreement with Syniverse Corporation) and activities relating to general
corporate matters. We have not generated any revenues from operations, other
than interest income on the proceeds held in the Trust Account. As of December
31, 2022 and 2021, $404,097,322 and $400,034,264 was held in the Trust Account,
respectively. We had cash outside of trust of $124,855 and $987,254 at December
31, 2022 and 2021, respectively and we had $1,431,683 and $6,325,424 of accounts
payable and accrued expenses as of December 31, 2022 and 2021. Approximately
$400,000 and $5,917,029, respectively, of such liabilities at December 31, 2022
and 2021 relate to the terminated business combination, of which $5,400,000 of
the December 31, 2021 balance was waived by the vendor in February 2022.
Except for the withdrawal of interest to pay our taxes and up to $100,000 to pay
dissolution expenses, if any, our amended and restated certificate of
incorporation (the "Charter") provides that none of the funds held in trust will
be released from the Trust Account until the earliest of (i) the completion of
an initial business combination; (ii) the redemption of any of the shares of
Class A common stock included in the units sold in the Public Offering (the
"Units") properly submitted in connection with a stockholder vote to amend the
Charter to modify the substance or timing of the Company's obligation to redeem
100% of the common stock included in the Units being sold in the Public Offering
if the Company does not complete an initial business combination within 18
months from the closing of the Public Offering or with respect to any other
material provisions relating to stockholders' rights or pre-initial business
combination activity or (iii) the redemption of 100% of the shares of Class A
common stock included in the Units sold in the Public Offering if we are unable
to complete a business combination within such 18 month period. Through December
31, 2022, we have not withdrawn any funds from interest earned on the trust
proceeds. Other than the deferred underwriting discounts and commissions, no
amounts are payable to the underwriters of the Public Offering in the event of a
business combination.
Liquidity and Capital Resources
On March 8, 2021, we consummated the Initial Public Offering of 40,000,000 Units
at a price of $10.00 per Unit, generating gross proceeds of $400,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 7,500,000 Private Placement Warrants at a price of $1.50 per Private
Placement Warrant in a private placement to our Sponsor, generating gross
proceeds of $11,250,000. On April 19, 2021, the overallotment option provided to
our underwriter expired without being exercised.
Following the Initial Public Offering, a total of $400,000,000 was placed in the
Trust Account and we had $1,530,000 of cash held outside of the Trust Account,
after payment of costs related to the Initial Public Offering, and available for
working capital purposes. We incurred $22,706,154 in transaction costs,
including $8,000,000 of underwriting fees, $14,000,000 of deferred underwriting
fees and $706,154 of other offering costs.
52
For the year ended December 31, 2022, cash used in operating activities was
$2,103,611. Net income of $33,429,280 was primarily comprised of change in fair
value of warrant liability of $25,469,581, unrealized gain on marketable
securities held in Trust Account of $5,328,058 and accrued terminated merger
transaction costs waived of $5,400,000. Changes in operating assets and
liabilities provided $664,748 of cash for operating activities.
For the year ended December 31, 2021, cash used in operating activities was
$1,621,591. Net loss of $1,992,106 was primarily comprised of change in fair
value of warrant liability of $5,687,995, unrealized gain on marketable
securities held in Trust Account of $34,264, excess fair value of private
placement warrants over consideration paid of $529,653, change in fair value of
overallotment option of $1,406,950 and transaction costs allocable to liability
instruments - warrants and over-allotment liabilities of $1,265,712. Changes in
operating assets and liabilities provided $5,704,359 of cash for operating
activities.
In February of 2022, a vendor waived payment of $5,400,000 of the accrued
transaction costs. This reversal is included in the statement of operations.
As of December 31, 2022, we had cash and marketable securities held in the Trust
Account of approximately $404,097,322. We intend to use substantially all of the
funds held in the Trust Account, including any amounts representing interest
earned on the Trust Account to complete our Business Combination. We may
withdraw interest to pay franchise and income taxes. During the period ended
December 31, 2022, we withdraw $1,265,000 interest earned on the Trust Account.
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 December 31, 2022, we had cash of $124,855 outside of the Trust Account.
The Company believes it is likely that it will be required to obtain additional
funding in order to continue its operations for the next 12 months. If a
business combination transaction does not occur, management believes that a
substantial portion of such fees will not be required to be paid or will be
substantially reduced.
Additionally, related parties have paid certain offering and operating costs as
needed. As of December 31, 2022, the Company owed $40,000 to the related parties
on account of unreimbursed expenses incurred in connection with the sourcing of
its initial Business Combination and the transactions contemplated by the Merger
Agreement.
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,
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, an affiliate of the
Sponsor, or our officers and directors 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 warrants,
at a price of $1.50 per warrant at the option of the lender. The warrants would
be identical to the Private Placement Warrants, including as to exercise price,
exercisability and exercise period. The terms of such loans by our officers and
directors, if any, have not been determined and no written agreements exist with
respect to such loans. The loans would be repaid upon consummation of a Business
Combination, without interest.
Further, our sponsor, officers and directors or their respective affiliates may,
but are not obligated to, loan us funds as may be required (the "Working Capital
Loans"). If we complete a business combination, we would repay the Working
Capital Loans. In the event that a business combination does not close, we may
use a portion of proceeds held outside the Trust Account to repay the Working
Capital Loans, but no proceeds held in the Trust Account would be used to repay
the Working Capital Loans. Such Working Capital Loans would be evidenced by
promissory notes. The notes would either be repaid upon consummation of a
business combination, without interest, or, at the lender's discretion,
converted upon consummation of a business combination into additional Private
Warrants at a price of $1.50 per Private Warrant. As of December 31, 2022 and
2021, no Working Capital Loans have been issued.
53
Going Concern
As a result of the expenses incurred in connection with the proposed transaction
with Syniverse Corporation prior to its termination and other operating
expenses, we anticipate that we may need to raise additional funds in order to
meet the expenditures required for operating our business, pay our existing
liabilities and pay for the costs of identifying a target business, undertaking
in depth due diligence and negotiation a Business Combination. Additionally, 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. 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.
In connection with the Company's assessment of going concern considerations in
accordance with FASB's Accounting Standards Codification Subtopic 205-40,
"Presentation of Financial Statements-Going Concern," management has determined
that if the Company is unable to raise additional funds to alleviate liquidity
needs, obtain approval for an extension of the deadline or complete a Business
Combination by December 8, 2023, then the Company will cease all operations
except for the purpose of liquidating. The Company intends to complete a
Business Combination before the mandatory liquidation date or obtain approval
for an extension, however, it is uncertain whether the Company will be able to
do so. If a Business Combination is not consummated by this date and an
extension not requested by the Sponsor, there will be a mandatory liquidation
and subsequent dissolution of the Company. Management has determined that the
liquidity condition and the mandatory liquidation, should a Business Combination
not occur and an extension is not requested by the Sponsor, and potential
subsequent dissolution raises substantial doubt about the Company's ability to
continue as a going concern. No adjustments have been made to the carrying
amounts of assets or liabilities should the Company be required to liquidate
after December 8, 2023.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 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 issued at our
initial public offering, or $14,000,000 in the aggregate. The deferred fee will
be waived by the underwriters in the event that we do not complete a Business
Combination, subject to the terms of the underwriting agreement.
54
Critical Accounting Policies
The preparation of 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:
Class A Common Stock Subject to Possible Redemption
We account for our shares of Class A common stock subject to possible redemption
in accordance with the guidance in Accounting Standards Codification ("ASC")
Topic 480 "Distinguishing Liabilities from Equity." Shares of Class A common
stock subject to mandatory redemption is classified as a liability instrument
and is 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, the
Class A common stock subject to possible redemption is presented as temporary
equity, outside of the stockholders' deficit section of our balance sheets.
Net Income (Loss) per Common Share
Our Company's statement of operations includes a presentation of income (loss)
per share for common shares subject to possible redemption in a manner similar
to the two-class method of income (loss) per share. Net income (loss) per common
share, basic and diluted, for Common stock subject to possible redemption is
calculated by dividing the proportionate share of income or loss on marketable
securities held by the Trust Account, net of applicable franchise and income
taxes, by the weighted average number of Common stock subject to possible
redemption outstanding since original issuance.
Net income (loss) per share, basic and diluted, for non-redeemable common stock
is calculated by dividing the net income (loss), adjusted for income or loss on
marketable securities attributable to Common stock subject to possible
redemption, by the weighted average number of non-redeemable common stock
outstanding for the period.
Non-redeemable common stock includes Founder Shares and non-redeemable shares of
common stock as these shares do not have any redemption features. Non-redeemable
common stock participates in the income or loss on marketable securities based
on non-redeemable shares' proportionate interest.
Warrant Liabilities
The Company's Warrants meet the definition of a derivative and are recorded as
derivative liabilities on the Balance Sheet and measured at fair value. At each
reporting date, changes in the fair value are recognized in the statement of
operations in the period of change.
55
Recently Adopted Accounting Standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 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)" ("ASU 2020-06") to simplify accounting
for certain financial instruments. ASU 2020-06 eliminates the current models
that require separation of beneficial conversion and cash conversion features
from convertible instruments and simplifies the derivative scope exception
guidance pertaining to equity classification of contracts in an entity's own
equity. The new standard also introduces additional disclosures for convertible
debt and freestanding instruments that are indexed to and settled in an entity's
own equity. ASU 2020-06 amends the diluted earnings per share guidance,
including the requirement to use the if converted method for all convertible
instruments. ASU 2020-06 is effective January 1, 2024 and should be applied on a
full or modified retrospective basis, with early adoption permitted beginning on
January 1, 2021. We have adopted ASU 2020-06 effective January 1, 2022. The
adoption of ASU 2020- 06 does not have an impact on our financial statements.
Management does not believe that any recently issued, but not effective,
accounting standards, if currently adopted, would have a material effect on our
financial statements.
© Edgar Online, source Glimpses
M3 BRIG 