References to the "Company," "our," "us" or "we" refer to Noble Rock Acquisition
Corporation. The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with the
unaudited condensed financial statements and the notes thereto contained
elsewhere in this report. Certain information contained in the discussion and
analysis set forth below includes forward-looking statements that involve risks
and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). We have based these forward-looking statements on our current
expectations and projections about future events. These forward-looking
statements are subject to known and unknown risks, uncertainties and assumptions
about us that may cause our actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Such statements include, but are not limited
to, possible business combinations and the financing thereof, and related
matters, as well as all other statements other than statements of historical
fact included in this Form 10-Q. Factors that might cause or contribute to such
a discrepancy include, but are not limited to, those described in our other
Securities and Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company
on November 4, 2020. We were incorporated for the purpose of effecting a merger,
share exchange, asset acquisition, share purchase, reorganization or similar
business combination with one or more businesses that we have not yet identified
("Business Combination").
Our sponsor is Noble Rock Sponsor LLC, a Cayman Island limited liability company
(the "Sponsor"). The registration statement for our Initial Public Offering was
declared effective on February 1, 2021. On February 4, 2021, we consummated the
Initial Public Offering of 24,150,000 units (the "Units" and, with respect to
the Class A ordinary shares included in the Units being offered, the "Public
Shares"), which includes 3,150,000 additional Units to cover over-allotments
(the "Over-Allotment Units"), at $10.00 per Unit, generating gross proceeds of
$241.5 million, and incurring offering costs of approximately $14.4 million, net
of reimbursement from the underwriter. Of these offering costs, approximately
$9.1 million and approximately $320,000 was for deferred underwriting
commissions and deferred legal fees, respectively.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 4,553,334 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants"),
at a price of $1.50 per Private Placement Warrant with our Sponsor, generating
gross proceeds of approximately $6.8 million.
Upon the closing of the Initial Public Offering and the Private Placement,
$241.5 million ($10.00 per Unit) of the net proceeds of the Initial Public
Offering and certain of the proceeds of the Private Placement were placed in a
trust account ("Trust Account") with Continental Stock Transfer & Trust Company
acting as trustee and invested in United States "government securities" within
the meaning of Section 2(a)(16) of the Investment Company Act having a maturity
of 185 days or less or in money market funds meeting certain conditions under
Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended, or
the Investment Company Act, which invest only in direct U.S. government treasury
obligations, as determined by us, until the earlier of: (i) the completion of a
Business Combination and (ii) the distribution of the Trust Account as described
below.
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We intend to complete our initial Business Combination using cash from the
proceeds of the Initial Public Offering and the Private Placement of the Private
Placement Warrants, our capital stock, debt or a combination of cash, stock and
debt. The issuance of additional shares of our stock in a business combination:
? may significantly dilute the equity interest of investors in this offering,
which dilution would increase if the anti-dilution provisions in the Class B
ordinary shares resulted in the issuance of Class A shares on a greater than
one-to-one basis upon conversion of the Class B ordinary shares;
? may subordinate the rights of holders of our ordinary shares if preferred stock
is issued with rights senior to those afforded our ordinary shares;
? could cause a change in control if a substantial number of shares of our
ordinary shares is 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 stock 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
and/or warrants.
Similarly, if we issue debt securities or otherwise incur significant debt to
bank or other lenders or 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 security is payable on demand;
? our inability to obtain necessary additional financing if the debt security
contains covenants restricting our ability to obtain such financing while the
debt security is outstanding;
? our inability to pay dividends on our ordinary shares;
? 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 ordinary
shares if declared, our ability to pay expenses, make capital expenditures and
acquisitions, and fund 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;
? limitations on our ability to borrow additional amounts for expenses, capital
expenditures, acquisitions, debt service requirements, and execution of our
strategy; and
? other purposes and other disadvantages compared to our competitors who have
less debt.
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If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or February 4, 2023, (the "Combination
Period"), we will (1) cease all operations except for the purpose of winding up;
(2) as promptly as reasonably possible but not more than 10 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, including
interest (less up to $100,000 of interest to pay dissolution expenses and which
interest shall be net of taxes payable), divided by the number of then issued
and outstanding Public Shares, which redemption will completely extinguish
Public Shareholders' rights as shareholders (including the right to receive
further liquidating distributions, if any); and (3) 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 under Cayman Islands law to provide for claims of
creditors and the requirements of other applicable law.
Results of Operations
Our entire activity since November 4, 2020 (inception) through June 30, 2022
related to our formation, the preparation for the Initial Public Offering, and
since the closing of the Initial Public Offering, the search for a prospective
initial Business Combination. We have neither engaged in any operations nor
generated any revenues to date. We will not generate any operating revenues
until after completion of our initial Business Combination. We generate
non-operating income in the form of income from 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), and we expect to incur
increased expenses for our search for an initial Business Combination including
due diligence expenses.
For the three months ended June 30, 2022, we had net income of approximately
$1.7 million, which consisted of $1.7 million for a change in the fair value of
derivative warrant liabilities, approximately $320,000 of income from
investments held in the Trust Account, offset by approximately $320,000 of
general and administrative expenses.
For the three months ended June 30, 2021, we had net income of approximately
$4.3 million, which consisted of $4.6 million for change in fair value of
derivative warrant liabilities, approximately $9,000 of income from investments
held in Trust Account, offset by approximately $288,000 of general and
administrative expenses.
For the six months ended June 30, 2022, we had net income of approximately $5.6
million, which consisted of $5.9 million for a change in the fair value of
derivative warrant liabilities, approximately $343,000 of income from
investments held in the Trust Account, offset by approximately $621,000 of
general and administrative expenses.
For the six months ended June 30, 2021, we had net income of approximately $6.5
million, which consisted of $7.8 million for change in fair value of derivative
warrant liabilities, approximately $18,000 of income from investments held in
Trust Account, offset by approximately $769,000 of financing costs and
approximately $500,000 of general and administrative expenses.
Liquidity and Going Concern
As of June 30, 2022, we had approximately $406,000 cash in our operating bank
account and working capital of approximately $539,000.
Through June 30, 2022, our liquidity needs had been satisfied through a payment
of $25,000 from our Sponsor to cover for certain expenses in exchange for the
issuance of the Founder Shares and the loan of $45,000 from our Sponsor pursuant
to the Note. Subsequent to the closing of the Initial Public Offering and
Private Placement, the proceeds from the Private Placement not held in the Trust
Account will be used to satisfy our liquidity. Including amounts borrowed
subsequent to December 31, 2020, we borrowed a total of approximately $195,000
through the Note and we repaid the Note in full on February 5, 2021. In
addition, in order to finance transaction costs in connection with a Business
Combination, our Sponsor or an affiliate of our Sponsor, or certain of our
officers and directors may, but are not obligated to, provide us Working Capital
Loans. As of June 30, 2022 and December 31, 2021, there was outstanding Working
Capital Loans.
In connection with our assessment of going concern considerations in accordance
with FASB ASC Topic 205-40, "Presentation of Financial Statements - Going
Concern," we have until February 4, 2023 to consummate a Business Combination.
It is uncertain that we will be able to consummate a Business Combination by
this time. If a Business Combination is not consummated by this date, there will
be a mandatory liquidation and subsequent dissolution of the Company. Management
has determined that the mandatory liquidation, should a Business Combination not
occur, and potential subsequent dissolution raises substantial doubt about our
ability to continue as a going concern. No adjustments have been made to the
carrying amounts of assets or liabilities should we be required to liquidate
after February 4, 2023.
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Related Party Transactions
Founder Shares
On November 11, 2020, the initial shareholders paid an aggregate of $25,000 for
certain expenses on our behalf in exchange for issuance of 5,750,000 Class B
ordinary shares (the "Founder Shares"). On February 1, 2021, we declared a stock
dividend with respect to the Class B ordinary shares such that 0.05 Class B
ordinary shares were issued for each share of Class B ordinary shares, resulting
in an aggregate of 6,037,500 Class B ordinary shares outstanding. The initial
shareholders agreed to forfeit up to an aggregate of 787,500 Founder Shares, on
a pro rata basis, to the extent that the option to purchase additional units was
not exercised in full by the underwriters, so that the Founder Shares would
represent 20% of our issued and outstanding shares after the Initial Public
Offering. On February 4, 2021, the underwriter fully exercised its
over-allotment option; thus, these 787,500 Founder Shares were no longer subject
to forfeiture.
The Initial Shareholders agreed not to transfer, assign or sell any of their
Founder Shares until the earlier to occur of (A) one year after the completion
of the initial Business Combination or (ii) the date following the completion of
the initial Business Combination on which we complete a liquidation, merger,
share exchange or other similar transaction that results in all of the
shareholders having the right to exchange their ordinary shares for cash,
securities or other property. Notwithstanding the foregoing, if the closing
price of Class A ordinary shares equals or exceeds $12.00 per share (as adjusted
for share sub-divisions, share capitalizations, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading
day period commencing at least 150 days after the initial Business Combination,
the Founder Shares will be released from the lockup.
Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, we consummated
the Private Placement of 4,553,334 Private Placement Warrants, at a price of
$1.50 per Private Placement Warrant with our Sponsor, generating gross proceeds
of approximately $6.8 million.
Each whole Private Placement Warrant is exercisable for one whole share of Class
A ordinary shares at a price of $11.50 per share. A portion of the proceeds from
the sale of the Private Placement Warrants to our Sponsor was added to the
proceeds from the Initial Public Offering held in the Trust Account. If we do
not complete a Business Combination within the Combination Period, the Private
Placement Warrants will expire worthless. The Private Placement Warrants will be
non-redeemable for cash and exercisable on a cashless basis so long as they are
held by our Sponsor or its permitted transferees.
Our Sponsor and our officers and directors agreed, subject to limited
exceptions, not to transfer, assign or sell any of their Private Placement
Warrants until 30 days after the completion of the initial Business Combination.
Related Party Loans
On November 11, 2020, our Sponsor agreed to loan us up to $300,000 to be used
for the payment of costs related to the Initial Public Offering pursuant to a
promissory note (the "Note"). The Note was non-interest bearing, unsecured and
due upon the closing of the Initial Public Offering. As of December 31, 2020, we
borrowed $45,000 under the Note. As of February 4, 2021, we had a cumulative
borrowing of $195,000. We repaid the Note in full on February 5, 2021.
In addition, in order to finance transaction costs in connection with a Business
Combination, our Sponsor, members of our founding team or any of their
affiliates may, but are not obligated to, loan us funds as may be required
("Working Capital Loans"). If we complete a Business Combination, we will repay
the Working Capital Loans out of the proceeds of the Trust Account released to
us. Otherwise, the Working Capital Loans would be repaid only out of funds held
outside the Trust Account. 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. The Working Capital Loans would either
be repaid upon consummation of a Business Combination, without interest, or, at
the lenders' discretion, up to $1.5 million 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. Except for the foregoing, the terms of such Working Capital Loans, if
any, have not been determined and no written agreements exist with respect to
such loans. As of June 30, 2022 and December 31, 2021, we had no outstanding
Working Capital Loans.
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Administrative Support Agreement
Commencing on the date that our securities were first listed on Nasdaq through
the earlier of consummation of the initial Business Combination and the
liquidation, we agreed to pay our Sponsor a total of $30,000 per month for
office space, administrative, financial and support services. For the three
months ended June 30, 2022 and 2021, the Company incurred expenses under this
agreement of $90,000 included as general and administrative expenses on the
accompanying condensed statements of operations. For the six months ended June
30, 2022 and 2021, the Company incurred expenses under this agreement of
$180,000 and $150,000, respectively, included as general and administrative
expenses on the accompanying condensed statements of operations. As of June 30,
2022 and December 31, 2021, there were no amounts payable for these services.
In addition, our Sponsor, directors and officers, or any of their respective
affiliates, will be reimbursed for any out-of-pocket expenses incurred in
connection with activities on our behalf such as identifying potential target
businesses and performing due diligence on suitable Business Combinations. Our
audit committee will review on a quarterly basis all payments that were made by
us to our Sponsor, directors, officers or any of their affiliates. As of June
30, 2022, there were no amounts payable for these services.
Contractual Obligations
Registration Rights
The initial shareholders and holders of the Private Placement Warrants are
entitled to registration rights pursuant to a registration rights agreement. The
initial shareholders and holders of the Private Placement Warrants 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 have "piggy-back" registration rights to include their securities in
other registration statements filed by us. We will bear the expenses incurred in
connection with the filing of any such registration statements.
Underwriting Agreement
We granted the underwriters a 45-day option from the date of the prospectus to
purchase up to 3,150,000 additional Units at the Initial Public Offering price
less the underwriting discounts and commissions. On February 4, 2021, the
underwriter fully exercised its over-allotment option.
The underwriters were entitled to an underwriting discount of $0.20 per unit, or
approximately $4.8 million in the aggregate, paid upon the closing of the
Initial Public Offering. In addition, $0.375 per unit, or approximately $9.1
million in the aggregate will be payable to the underwriters for deferred
underwriting commissions. 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. In addition, the underwriters paid to us an amount equal to 0.25% of
the offering gross proceeds, or $603,750 in the aggregate to reimburse certain
expenses in connection with the Initial Public Offering.
Deferred Legal Fees
We engaged a legal counsel firm for legal advisory services, and the firm agreed
to defer their fees in excess of $250,000 ("Deferred Legal Fees"). The deferred
fee will become payable in the event that we complete a Business Combination. As
of June 30, 2022 and December 31, 2021, we recorded $717,000 and $605,000 in
deferred legal fees, respectively.
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Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America ("GAAP") requires management
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses. A summary of our significant accounting
policies is included in Note 2 to our condensed financial statements in Part I,
Item 1 of this Quarterly Report. Certain of our accounting policies are
considered critical, as these policies are the most important to the depiction
of our financial statements and require significant, difficult or complex
judgments, often employing the use of estimates about the effects of matters
that are inherently uncertain. Such policies are summarized in the Management's
Discussion and Analysis of Financial Condition and Results of Operations section
in our 2021 Annual Report on Form 10-K filed with the SEC on March 11, 2022.
There have been no significant changes in the application of our critical
accounting policies during the six months ended June 30, 2022.
We believe that our critical accounting policies and estimates have a higher
degree of inherent uncertainty and require our most significant judgments. In
addition, had we used to estimate different from any of these, our condensed
financial statements could have been materially different from those presented.
There were no changes in our critical accounting policies and estimates during
the six months ended June 30, 2022 from those set forth in "Critical Accounting
Estimates" in our December 31, 2021 Annual Report on Form 10-K filed with the
SEC on March 11, 2022.
Recent Accounting Pronouncements
See Note 2 to the unaudited condensed financial statements included in Part I,
Item 1 of this Quarterly Report for a discussion of recent accounting
pronouncements.
Off-Balance Sheet Arrangements and Contractual Obligations
As of June 30, 2022, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments
or contractual obligations.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" under
the JOBS Act and are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We elected 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, our condensed financial
statements may not be comparable to companies that comply with new or revised
accounting pronouncements as of public company effective dates.
As an "emerging growth company", we are not 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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