MELI KASZEK PIONEER CORP References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" 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 Quarterly Report
including, without limitation, 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. The words
"anticipate," "believe," "continue," "could," "estimate," "expect," "intend,"
"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.
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 discussed elsewhere in this Quarterly Report on Form
10-Q, including under Part II, Item 1A, "Risk Factors," as well as those factors
described in the section entitled "Risk Factors" of the Company's Annual Report
on Form 10-K for the year ended
Overview
We are a blank check company incorporated on
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Table of Contents Following the closing of the Initial Public Offering, a total of$287,500,000 was placed in aU.S. -based trust account (the "Trust Account"), withContinental Stock Transfer & Trust Company acting as trustee. The proceeds held in the Trust Account have been invested only inU.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, which invest only in directU.S. government treasury obligations. Except for the withdrawal of interest to pay our taxes, none of the funds held in trust will be released from the Trust Account until the earliest of (i) the completion of our initial Business Combination, (ii) the redemption of our public shares if we are unable to complete our initial Business Combination within 24 months from the closing of the Initial Public Offering, subject to applicable law, and (iii) the redemption of our public shares properly submitted in connection with a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association to modify the substance or timing of our obligation to redeem 100% of our public shares if we have not consummated an initial Business Combination within 24 months from the Initial Public Offering or with respect to any other material provisions relating to shareholders' rights or pre-initial Business Combination activity. Business Combination If we are unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering (the "Combination Period"), we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account (as defined below), including interest earned on the funds held in the Trust Account (as defined below) and not previously released to us to pay our taxes (less 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 shareholders' rights as shareholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject in each case, to our obligations underCayman Islands law to provide for claims of creditors and the requirements of other applicable law. The issuance of additional shares in connection with a Business Combination to the owners of the target or other investors: ?may significantly dilute the equity interest of investors in the Initial Public Offering; ?may subordinate the rights of holders of Class A ordinary shares if preferred shares are issued with rights senior to those afforded our Class A ordinary shares; ?could cause a change in control if a substantial number of shares of our Class A ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; ?may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and ?may adversely affect prevailing market prices for our Class A ordinary shares. Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in: ?default and foreclosure on our assets if our operating revenues after an initial Business Combination are insufficient to repay our debt obligations; ?acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; ?our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; ?our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding; ?our inability to pay dividends on our Class A ordinary shares; 16
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Table of Contents ?using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; ?limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; ?increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and ?limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. We expect 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 As ofJune 30, 2022 , we had not commenced any operations nor generated any revenues. All activity for the period endedJune 30, 2022 relates to our search for a target to consummate a Business Combination. We will not generate any operating revenues until after the completion of a Business Combination, at the earliest. We will generate non-operating income in the form of gain on investment (net), dividends and interest held in the Trust Account (as defined below). We expect to incur increased expenses, as compared to the period before our Initial Public Offering, 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 six-month period endedJune 30, 2022 , we had a net income of$51,386,516 , consisting of$739,838 of general and administrative expenses ($429,188 corresponding to insurance expenses),$417,181 of interest on marketable securities held in Trust Account and changes in the value of the Class L ordinary shares derivative liability of$51,709,173 . For the three-month period endedJune 30, 2022 , we had a net income of$15,485,130 , consisting of$317,576 of general and administrative expenses ($214,594 corresponding to insurance expenses),$388,230 of interest on marketable securities held in Trust Account and changes in the value of the Class L ordinary shares derivative liability of$15,414,476 . For the period fromMay 27, 2021 (inception) throughJune 30, 2021 , we had a net loss of$10,624 , consisting in general and administrative expenses. Liquidity and Capital Resources OnOctober 1, 2021 , we consummated our Initial Public Offering of 28,750,000 Class A ordinary shares, which includes the exercise in full of the underwriters' option to purchase an additional 3,750,000 Class A ordinary shares at$10.00 per share, generating gross proceeds of$287,500,000 . Simultaneously with the consummation of the Initial Public Offering, we consummated the sale of 975,000 Private Placement Shares, at a price of$10.00 per share, generating aggregate gross proceeds to the Company of$9,750,000 . Transaction costs of the Initial Public Offering amounted to$16,709,861 consisting of$5,750,000 of underwriting discounts and commissions,$10,062,500 of deferred underwriting discounts and commissions, and$897,361 of other offering costs. Upon closing of the Initial Public Offering, a total of$287,500,000 was placed in the Trust Account. The proceeds held in the Trust Account have been invested only inU.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, which invest only in directU.S. government treasury obligations. As ofJune 30, 2022 andDecember 31, 2021 , we had cash outside our Trust Account of$922,549 and$1,259,439 and had working capital of$1,774,744 and$2,085,395 (not taking into account any tax obligations), respectively. All remaining cash from the Initial Public Offering is held in the Trust Account and is generally unavailable for use prior to an initial Business Combination. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (excluding deferred underwriting discounts and commissions) and the proceeds from the sale of the forward purchase shares, to complete our initial Business Combination. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. We expect the interest earned on the amount in the trust account will be sufficient to pay our income taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our 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. 17
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Table of Contents We do not believe we will need to raise additional funds following the sale of the Private Placement Shares in order to meet the expenditures required for operating our business prior to our initial Business Combination. However, if our estimates 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 to complete our initial Business Combination, either because the transaction requires more cash than is available from the proceeds held in our Trust Account or because we become obligated to redeem a significant number of our public shares upon completion of the 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 initial Business Combination. If we are unable to complete our initial 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 initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. The following table presents our cash flows from operating activities for the six-month period endedJune 30, 2022 : For the period For the For the from May 27, six-month three-month 2021 period ended period ended ?(Inception) June 30, 2022 June 30, 2022 through June 30, Net cash (used in): 2021 Operating activities$ (336,890) $ (106,942) $ - Net decrease in cash$ (336,890) $ (106,942) $ - Cash used in operating activities consists of net income adjusted for certain non-cash items, and the effect of changes in working capital. Net cash used in operating activities in the six and three-month periods endedJune 30, 2022 resulted mainly from a decrease in prepaid expenses. Commitments and Contractual Obligations We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than as described below. Registration Rights The holders of the Class L ordinary shares, Private Placement Shares and private placement shares that may be issued upon conversion of working capital loans have registration rights that require us to register a sale of any of our securities held by them (in the case of the Class L ordinary shares, only after conversion to our Class A ordinary shares) pursuant to a registration rights agreement at the closing of the Initial Public Offering (the "Registration Rights Agreement"). These holders are entitled to make up to three demands, excluding short form registration demands, that we register such securities for sale under the Securities Act. In addition, these holders will have certain "piggy-back" registration rights to include such securities in other registration statements filed by us and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. Pursuant to the Forward Purchase Agreements, we agreed that we will use our commercially reasonable efforts to file within 30 calendar days after the closing of our initial Business Combination a registration statement with theSEC for a secondary offering of the forward purchase shares (as defined below) owned by our Sponsor or the forward transferees, respectively, and use our commercially reasonable efforts to cause such registration statement to be declared effective as soon as practicable after such completion. However, the Registration Rights Agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period, which occurs (i) in the case of the Class L ordinary shares, any Class A ordinary shares issuable upon conversion thereof and the forward purchase shares, until the earlier of (A) eighteen months after the completion of our initial Business Combination, or (B) subsequent to our initial Business Combination, if the last sale price of the Class A ordinary shares equals or exceeds$13.00 per share (as adjusted for share sub-divisions, share dividends, right issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial Business Combination, or (C) following the completion of our initial Business Combination, such future date on which we complete a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of our public shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property, and (ii) in the case of the private placement shares, 30 days after the completion of our initial Business Combination. We will bear the costs and expenses of filing any such registration statements. 18
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Table of Contents Administrative Services Agreement OnOctober 1, 2021 , the Company entered into an agreement that provides that, subsequent to the closing of the Initial Public Offering and continuing until the earlier of the Company's consummation of an initial Business Combination or the Company's liquidation, the Company pays the Sponsor a total of$10,000 per month for office space, secretarial, due diligence and administrative services. Forward Purchase Agreements In connection with the Initial Public Offering, we entered into the Forward Purchase Agreement with the Sponsor, pursuant to which the Sponsor committed to purchase from the Company 5,000,000 forward purchase shares (the "Forward Purchase Shares"), at a price of$10.00 per Forward Purchase Share, for an aggregate purchase price of$50,000,000 in a private placement to close substantially concurrently with the closing of an initial Business Combination. The obligations under the Forward Purchase Agreement will not depend on whether any Class A ordinary shares are redeemed by public shareholders. The Class A ordinary shares issuable pursuant to the Forward Purchase Agreement will be identical to the Class A ordinary shares sold in the Initial Public Offering, except that the Sponsor will have certain registration rights, as described herein, and the Class A ordinary shares will not be eligible for redemption in connection with an initial Business Combination. Underwriting Agreement Upon the closing of the Initial Public Offering we paid$5,750,000 (accounting for the exercise of the underwriters' over-allotment option in full) to the underwriters for underwriting discounts and commissions. Additionally, the underwriters are entitled to a deferred fee of$10,062,500 (accounting for the exercise of the underwriters' over-allotment option in full), which will be payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete an initial Business Combination, subject to the terms of the underwriting agreement. Off-Balance Sheet Financing Arrangements As ofJune 30, 2022 , we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K. Critical Accounting Policies The preparation of unaudited condensed financial statements and related disclosures in conformity with accounting principles generally accepted inthe 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 L ordinary shares The Class L ordinary shares are accounted for as a liability in accordance with Accounting Standards Codification ("ASC") 815, "Derivatives and Hedging" and presented as a derivative liability on the balance sheets. The derivative liability was measured at fair value as ofSeptember 10, 2021 and will be evaluated on a recurring basis, with changes in fair value presented within fair value of derivative liability in the statements of operations. In order to capture the market conditions associated with the Class L ordinary shares liability, the Company applied an approach that incorporated a Monte Carlo simulation, which involved random iterations of future stock-price paths over the contractual life of the Class L ordinary shares. Based on assumptions regarding potential changes in control of the Company, and the probability distribution of outcomes, the payoff to the holder was determined based on the achievement of the various market thresholds within each simulated path. The present value of the payoff in each simulated trial is calculated, and the fair value of the liability is determined by taking the average of all present values. The inputs used as ofJune 30, 2022 , were as follow: risk-free rate of 3.02%; expected term of 5.51 years; expected volatility of 3.7% and stock price of$9.90 . The inputs used as ofDecember 31, 2021 , were as follow: risk-free rate of 1.34%; expected term of 6.00 years; expected volatility of 18.0% and stock price of$11.56 . Recent Accounting Standards The Company has considered all other new accounting standards and has concluded that there are no new standards that may have a material impact on the results of operations, financial condition, or cash flows, based on the current information. 19
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Table of Contents JOBS Act The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an "emerging growth company" and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an "emerging growth company," we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor's attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO's compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an "emerging growth company," whichever is earlier.
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