The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited
consolidated financial statements and the notes related thereto which are
included in "Item 8. Financial Statements and Supplementary Data" of this
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 "Cautionary Note
Regarding Forward-Looking Statements and Risk Factor Summary," "Item 1A. Risk
Factors" and elsewhere in this Report.
Overview
We are a blank check company incorporated in Delaware on July 28, 2020 for the
purpose of effecting an initial 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.
The registration statement for our initial public offering was declared
effective on January 14, 2021. On January 20, 2021, we consummated our initial
public offering of 14,950,000 units (including 1,950,000 units issued to the
underwriters pursuant to the exercise in full of the over-allotment option
granted to the underwriters) at $10.00 per unit, generating gross proceeds of
$149.5 million, and incurring offering costs of approximately $8.8 million,
inclusive of $5.2 million in deferred underwriting commissions.
Simultaneously with the closing of the initial public offering, we consummated
the private placement of 7,057,000 warrants at a price of $1.00 per warrant to
the sponsor, generating gross proceeds of approximately $7.1 million.
Upon the closing of the initial public offering and sale of the private
placement warrants on January 20, 2021, $151.7 million ($10.15 per unit, which
does not take into account contributions to the trust account by the Sponsor in
connection with our charter extension amendments) of the net proceeds of the
sales of the units in the initial public offering and the private placement
warrants were placed in the trust account. The trust account is located in the
United States with Continental acting as trustee, and was invested only in U.S.
"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, which invest only in direct U.S. government treasury
obligations, as determined by the Company, until the earlier of: (i) the
completion of an initial business combination and (ii) the distribution of the
trust account as described below. On January 19, 2023, we liquidated the U.S.
government treasury obligations or money market funds held in the trust account.
The funds in the trust account will be maintained in cash in an interest-bearing
demand deposit account at a bank until the earlier of consummation of our
initial business combination and our liquidation. Interest on such deposit
account is currently approximately 2.5 - 3.0% per annum, but such deposit
account carries a variable rate, and we cannot assure you that such rate will
not decrease or increase significantly.
On January 19, 2023, we held the Extension Meeting to, in part, amend our
charter to extend the date by which we have to consummate a business combination
from January 20, 2023 to April 20, 2023 (or up to January 20, 2024, if extended
at the request of our sponsor). In connection with the extension vote,
11,049,283 public shares of our common stock were redeemed for an aggregate
redemption amount of approximately $114,017,035.26. After the satisfaction of
such redemptions, the balance in our trust account was approximately
$40,251,316.60.
If we have not completed an initial business combination by the Termination
Date, 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, including
interest earned on the funds held in the trust account and not previously
released to us to pay its 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 stockholders' rights as
stockholders (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 stockholders and our board of
directors, liquidate and dissolve, subject in each case to our obligations under
Delaware law to provide for claims of creditors and the requirements of other
applicable law.
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through December 31, 2022 were organizational activities,
those necessary to prepare for our 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, at the earliest. We generate non-operating income in the form of
interest income on marketable securities 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 year ended December 31, 2022, we had a net income of approximately $7.4
million which included a gain from the change in fair value of warrant
liabilities of $6.8 million and interest earned on trust account of $2.2
million, offset by loss from operations of approximately $1.3 million and
provision for income tax of $0.4 million.
For the year ended December 31, 2021, we had a net income of approximately $4.6
million which included a gain from the change in fair value of warrant
liabilities of $7.5 million and interest earned on trust account of $32,632,
offset by loss from operations of approximately $2.6 million and offering cost
expense allocated to warrants of $438,287.
Factors That May Adversely Affect our Results of Operations
Our results of operations and our ability to complete an initial Business
Combination may be adversely affected by various factors that could cause
economic uncertainty and volatility in the financial markets, many of which are
beyond our control. Our business could be impacted by, among other things,
downturns in the financial markets or in economic conditions, increases in oil
prices, inflation, increases in interest rates, supply chain disruptions,
declines in consumer confidence and spending, the ongoing effects of the
COVID-19 pandemic, including resurgences and the emergence of new variants, and
geopolitical instability, such as the military conflict in Ukraine. We cannot at
this time fully predict the likelihood of one or more of the above events, their
duration or magnitude or the extent to which they may negatively impact our
business and our ability to complete and initial Business Combination.
Liquidity and Going Concern
As of December 31, 2022 and 2021, we had $985 and $194,034 in our operating bank
account, respectively, and working capital deficit of $2,845,643 and $1,251,072,
respectively.
The Company's liquidity needs up to our Initial Public Offering had been
satisfied through a capital contribution from the sponsor of $25,000 for the
founder shares and the loan under an unsecured promissory note from the sponsor
for $145,000. The outstanding balance on the promissory note from the sponsor
was paid in full from the initial public offering proceeds on February 26,
2021. Subsequent to the consummation of the initial public offering, our
liquidity needs had been satisfied through the net proceeds from the
consummation of the sale of the private placement warrants not held in the trust
account and advances from our Sponsor. In addition, in order to finance
transaction costs in connection with an initial 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.
On December 14, 2021, we issued the 2021 Note in the principal amount of up to
$1,500,000 to our sponsor. The 2021 Note was issued in connection with advances
the Sponsor has made, and may make in the future, to the Company for working
capital expenses. If we complete a business combination, we will repay the 2021
Note out of the proceeds of the trust account released to us. Otherwise, the
2021 Note will 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
the working capital held outside the trust account to repay the 2021 Note but no
proceeds from the trust account will be used to repay the 2021 Note. At the
election of the sponsor, all or a portion of the unpaid principal amount of the
2021 Note may be converted into warrants of the Company at a price of $1.00 per
warrant (the "Conversion Warrants"). The Conversion Warrants and their
underlying securities are entitled to the registration rights set forth in the
2021 Note. As of December 31, 2022 and 2021, there was $1,500,000 and $1,000,000
outstanding under the 2021 Note, respectively.
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On July 20, 2022, we issued an unsecured promissory note in the principal amount
of up to $747,500 (the "2022 Note") to our sponsor. The 2022 Note does not bear
interest and matures upon closing of OCA's initial business combination. In the
event that we do not consummate an initial business combination, the 2022 Note
will be repaid only from funds held outside of the trust account or will be
forfeited, eliminated or otherwise forgiven. As of December 31, 2022, there was
$747,500 outstanding under the 2022 Note.
On January 19, 2023, we issued an unsecured promissory note in the principal
amount of $1,080,000 (the "Extension Note") to our sponsor. The Extension Note
does not bear interest and matures upon closing of OCA's initial business
combination. In the event that we do not consummate an initial business
combination, the Extension Note will be repaid only from funds held outside of
the trust account or will be forfeited, eliminated or otherwise forgiven.
Based on the foregoing, management believes that the Company will have
sufficient working capital and borrowing capacity to meet its needs through the
earlier of the consummation of an initial business combination or one year from
this filing. Over this time period, we will be using these funds held outside of
the trust account for paying existing accounts payable, identifying and
evaluating prospective initial business combination candidates, performing due
diligence on prospective target businesses, paying for travel expenditures,
selecting the target business to merge with or acquire, and structuring,
negotiating and consummating the initial business combination.
In connection with the Company's assessment of going concern considerations in
accordance with FASB's Accounting Standards Update ("ASU") Topic 2014-15,
"Disclosures of Uncertainties about an Entity's Ability to Continue as a Going
Concern," the Company has until April 20, 2023 to consummate an initial business
combination. It is uncertain that the Company will be able to consummate an
initial business combination by this time. If an initial 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 mandatory
liquidation, should an initial 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 April 20, 2023 (or up to
January 20, 2024, if extended at the request of the Company's sponsor). The
Company intends to complete an initial business combination before the mandatory
liquidation date.
Contractual Obligations
We did not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities,
other than deferred underwriting fees of $5,232,500, $1,500,000 outstanding
under the 2021 Note and $278,780 of amounts due to our Sponsor at December 31,
2022.
Critical Accounting Estimates
This management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with US GAAP. The preparation of these financial statements requires
us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses and the disclosure of contingent assets and
liabilities in our financial statements. On an ongoing basis, we evaluate our
estimates and judgments, including those related to fair value of financial
instruments and accrued expenses. We base our estimates on historical
experience, known trends and events and various other factors that we believe to
be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
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Warrants Liability
We evaluated the warrants in accordance with Financial Accounting Standard
Board's ("FASB") Accounting Standards Codification ("ASC") Topic 815-40,
"Derivatives and Hedging - Contracts in Entity's Own Equity" ("ASC 815-40") and
concluded that a provision in the Warrant Agreement, dated January 14, 2021, by
and between the Company and Continental, as warrant agent, related to certain
tender or exchange offers as well as provisions that provided for potential
changes to the settlement amounts dependent upon the characteristics of the
holder of the warrant, precludes the warrants from being accounted for as
components of equity. As the warrants meet the definition of a "derivative" as
contemplated in ASC 815-40 and are not eligible for an exception from derivative
accounting, the warrants are recorded as derivative liabilities on the Balance
Sheets in the accompanying financial statements and measured at fair value at
inception (on the date of the initial public offering) and at each reporting
date in accordance with ASC Topic 820, "Fair Value Measurement", with changes in
fair value recognized in the Statements of Operations in the accompanying
financial statements in the period of change.
Working Capital Loan
We have elected the fair value option to account for our Working Capital Loan
with our Sponsor. As a result of applying the fair value option of the
conversion feature, we record each draw at fair value with a gain or loss
recognized at issuance, and subsequent changes in fair value are recorded as
change in the fair value of Working Capital Loan on the statement of operations.
The fair value of the conversion feature is based on prices or valuation
techniques that require inputs that are both unobservable and significant to the
overall fair value measurement. These inputs reflect management's and, if
applicable, an independent third-party valuation firm's own assumption about the
assumptions a market participant would use in pricing the asset or liability.
Off-Balance Sheet Arrangements
As of December 31, 2022 we
did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii)
of Regulation S-K.
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