References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Marlin Technology Corporation. References to our "management"
or our "management team" refer to our officers and directors, and references to
the "Sponsor" refer to Marlin Technology Holdings, LLC. The following discussion
and analysis of the Company's financial condition and results of operations
should be read in conjunction with the financial statements and the notes
thereto contained elsewhere in this Quarterly Report. 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 Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 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-Qincluding, without limitation, statements in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding the completion of the Proposed Business Combination (as defined
below), 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, including that the
conditions of the Proposed Business Combination are not satisfied. 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 Annual Report on Form
10-K filed with the U.S. Securities and Exchange Commission (the "SEC"). 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 in the Cayman Islands on September 2,
2020, formed for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with
one or more businesses or entities (a "Business Combination"). We intend to
effectuate our Business Combination using cash derived from the proceeds of the
Initial Public Offering and the sale of the Private Placement Warrants, our
shares, debt or a combination of cash, shares 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.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from September 2, 2020 (inception) through September 30,
2022, were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and identifying a target company for a
Business Combination. We do not expect to generate any operating revenues until
after the completion of our Business Combination. We generate non-operating
income in the form of interest income on investments held in the Trust Account.
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.
For the three months ended September 30, 2022, we had a net income of
$2,436,597, which consists of change in fair value of warrant liabilities of
$826,134 and interest earned on investments held in Trust Account of $1,884,309,
offset by formation and operational costs of $273,846.
For the nine months ended September 30, 2022, we had a net income of
$14,597,865, which consists of change in fair value of warrant liabilities of
$12,805,067 and interest earned on investments held in Trust Account of
$2,684,228, offset by formation and operational costs of $891,430.
For the three months ended September 30, 2021, we had a net income of
$6,529,522, which consists of change in fair value of warrant liabilities of
$7,848,267 and interest earned on investments held in Trust Account of $43,936,
offset by formation and operational costs of $1,362,681.
For the nine months ended September 30, 2021, we had a net income of
$11,107,473, which consists of change in fair value of warrant liabilities of
$14,250,800 and interest earned on investments held in Trust Account of
$130,861, offset by formation and operational costs of $3,274,188.
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Liquidity and Capital Resources
On January 15, 2021, we consummated the Initial Public Offering of 41,400,000
Units at $10.00 per Unit, generating gross proceeds of $414,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 6,853,333 Private Placement Warrants at a price of $1.50 per Private
Placement Warrant in a private placement to the Sponsor, generating gross
proceeds of $10,280,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Units, a total of $414,000,000 was placed in
the Trust Account. We incurred $23,348,557 in Initial Public Offering related
costs, including $8,280,000 of underwriting fees, $14,490,000 of deferred
underwriting fees and $578,557 of other offering costs.
For the nine months ended September 30, 2022, cash used in operating activities
was $434,541. Net income of $14,597,865 was affected by interest earned on
investments held in Trust Account of $2,684,228 and change in fair value of
Warrants of $12,805,067. Changes in operating assets and liabilities provided
$456,889 of cash for operating activities.
For the nine months ended September 30, 2021, cash used in operating activities
was $1,635,370. Net income of $11,107,473 was affected by interest earned on
investments held in Trust Account of $130,861, change in fair value of warrants
of $14,250,800 and transaction costs incurred in connection with the Initial
Public Offering of $1,172,873. Changes in operating assets and liabilities
provided $465,945 of cash for operating activities.
As of September 30, 2022, we had cash and investments held in the Trust Account
of $416,851,895 (including $2,851,895 of interest income) consisting primarily
of U.S. Treasury Bills with a maturity of 185 days or less. We may withdraw
interest from the Trust Account to pay taxes, if any. 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 income taxes payable),
to complete our Business Combination. To the extent that our share capital 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 September 30, 2022, we had cash of $5,290. 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 a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor, or certain of our officers
and directors or their affiliates 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 Working Capital Loans may be
convertible into Warrants of the post-Business Combination entity at a price of
$1.50 per Warrant. The Warrants would be identical to the Private Placement
Warrants.
On November 10, 2021, the Company issued an unsecured promissory note (the
"Working Capital Note") to the Sponsor, pursuant to which the Company may borrow
up to an aggregate principal amount of $1,500,000. The Working Capital Note does
not bear interest and is repayable in full upon consummation of the Company's
initial Business Combination. If the Company does not complete a Business
Combination, the Working Capital Note shall not be repaid and all amounts owed
under it will be forgiven. The Working Capital Note is subject to customary
events of default, the occurrence of which automatically trigger the unpaid
principal balance of the Working Capital Note and all other sums payable with
regard to the Working Capital Note becoming immediately due and payable. On
March 29, 2022, the Company amended and restated the Working Capital Note to
remove the ability of the Sponsor to convert all or a portion of such Working
Capital Loans into Warrants of the post-Business Combination entity at a price
of $1.50 per Warrant. As of September 30, 2022 and December 31, 2021, the
outstanding balance was $688,689 and $254,148, respectively.
If our estimate 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. Moreover, 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.
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Going Concern
In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standard Board's Accounting Standards
Codification Subtopic 205-40, "Presentation of Financial Statements - Going
Concern," management has determined that the liquidity condition and date for
mandatory liquidation and dissolution raise substantial doubt about the
Company's ability to continue as a going concern through January 15, 2023, the
scheduled liquidation date of the Company if it does not complete a Business
Combination prior to such date. The Company intends to complete a Business
Combination before the mandatory liquidation date. However, there can be no
assurance that the Company will be able to consummate any Business Combination
by January 15, 2023. In addition, the Company may need to raise additional
capital through loans or additional investments from its Sponsor, shareholders,
officers, directors or third parties. The Company's officers, directors and
Sponsor may, but are not obligated to, loan the Company funds, from time to time
or at any time, in whatever amount they deem reasonable in their sole
discretion, to meet the Company's working capital needs. Accordingly, the
Company may not be able to obtain additional financing. If the Company is unable
to raise additional capital, the Company may be required to take additional
measures to conserve liquidity, which could include, but not necessarily be
limited to, curtailing operations, suspending the pursuit of a potential
transaction, and reducing overhead expenses. The Company cannot provide any
assurance that new financing will be available to it on commercially acceptable
terms, if at all. These conditions raise substantial doubt about the Company's
ability to continue as a going concern through the liquidation date of
January 15, 2023. These financial statements do not include any adjustments
relating to the recovery of the recorded assets or the classification of the
liabilities that might be necessary should the Company be unable to continue as
a going concern.
If the Company is unable to raise additional capital, it may be required to take
additional measures to conserve liquidity, which could include, but not
necessarily be limited to, suspending the pursuit of a Business Combination. The
Company cannot provide any assurance that new financing will be available to it
on commercially acceptable terms, if at all.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 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, other than an agreement to pay an
affiliate of the Sponsor a monthly fee of $10,000 for office space, secretarial
and administrative services. We began incurring these fees on January 15, 2021,
and will continue to incur these fees monthly until the earlier of the
completion of the Business Combination and our liquidation. For the three and
nine months ended September 30, 2022, the Company incurred $30,000 and $90,000
in fees for these services, respectively. For the three and nine months ended
September 30, 2021, the Company incurred $30,000 and $90,000, respectively, in
fees for these services, respectively. As of September 30, 2022 and December 31,
2021, there were $210,000 and $120,000, respectively of fees for these services
included in accounts payable and accrued expenses in the accompanying condensed
balance sheets.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or
$14,490,000 in the aggregate. The deferred fee will become payable to the
underwriters from the amounts held in the Trust Account solely in the event that
we complete a Business Combination, subject to the terms of the underwriting
agreement.
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Critical Accounting Policies
The preparation of condensed 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:
Warrant Liabilities
We account for the Warrants in accordance with the guidance contained in
ASC 815-40 under which the Warrants do not meet the criteria for equity
treatment and must be recorded as liabilities. Accordingly, we classify the
Warrants as liabilities at their fair value and adjust the Warrants to fair
value at each reporting period. This liability is subject to re-measurement at
each balance sheet date until exercised, and any change in fair value is
recognized in our unaudited condensed statements of operations. The Private
Warrants and the Public Warrants for periods where no observable traded price
was available are valued using a lattice model, specifically a binomial lattice
model. For periods subsequent to the detachment of the Public Warrants from the
Units, the Public Warrant quoted market price was used as the fair value as of
each relevant date.
Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Ordinary shares subject to mandatory
redemption are classified as a liability instrument and measured at fair value.
Conditionally redeemable ordinary shares (including ordinary shares that feature
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) are classified as temporary equity. At all other times, ordinary shares
are classified as shareholders' equity. Our ordinary shares feature certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, ordinary shares subject
to possible redemption are presented at redemption value as temporary equity,
outside of the shareholders' deficit section of our condensed balance sheets.
Net Income Per Ordinary Share
Net income per ordinary share is computed by dividing net income by the weighted
average number of ordinary shares outstanding during the period. Accretion
associated with the redeemable shares of Class A ordinary shares is excluded
from earnings per share as the redemption value approximates fair value.
Recent Accounting Standards
The Company's management does not believe that any recently issued, but not yet
effective, accounting standards if currently adopted would have a material
effect on the accompanying condensed financial statements.
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