References in this Quarterly Report on Form 10-Q (the "Quarterly Report") to
"we," "us," "our" or the "Company" refer to Onyx Acquisition Co. I. References
to our "management" or our "management team" refer to our officers and
directors, and references to the "Sponsor" refer to Onyx Acquisition Sponsor Co.
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.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (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 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. Words such as "anticipate," "believe," "continue,"
"could," "estimate," "expect," "intends," "may," "might," "plan," "possible,"
"potential," "predict," "project," "should," "would" and variations thereof 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 including, but 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
Quarterly Report could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. 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 Securities and Exchange
Commission (the "SEC") on April 5, 2022. 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 as a Cayman Islands exempted company
on February 2, 2021 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 are an early
stage and emerging growth company and, as such, we are subject to all of the
risks associated with early stage and emerging growth companies.
The registration statement for our initial public offering (the "IPO") was
declared effective on November 2, 2021 (the "Effective Date"). On November 5,
2021, we consummated our IPO of 26,450,000 units (the "Units"), which includes
the exercise of the underwriters' option to purchase up to an additional
3,450,000 Units at the IPO price to cover over-allotments. Each Unit consists of
one Class A ordinary share (the "Class A ordinary shares" and, shares thereof
sold in the IPO, the "Public Shares") and one-half of one public warrant (the
"Public Warrants"), each whole Public Warrant entitling the holder thereof to
purchase one Class A ordinary share at an exercise price of $11.50 per share,
subject to adjustment. The Units were sold at an offering price of $10.00 per
Unit, generating gross proceeds of $264,500,000.
Simultaneous with the consummation of the IPO and the issuance and sale of the
Units, we consummated the private placement of 12,190,000 private placement
warrants (the "Private Placement Warrants") (including 690,000 Private Placement
Warrants purchased in connection with the exercise of the underwriter's
over-allotment option) at a price of $1.00 per Private Placement Warrant,
generating total proceeds of $12,190,000. The Private Placement Warrants, which
were purchased by the sponsor and BTIG, LLC ("BTIG"), are identical to the
Public Warrants, except that if held by the Sponsor or BTIG or their permitted
transferees, they are, subject to certain limited exceptions, subject to
transfer restrictions until 30 days following the consummation of our initial
Business Combination. Additionally, the Private Placement Warrants held by BTIG
are subject to the lock-up and registration rights limitations imposed by
Financial Industry Regulatory Authority Rule 5110 and may not be exercised after
five years from November 2, 2021.
Upon the closing of our IPO and the private placement, $269,790,000 has been
placed in a trust account (the "Trust Account"), representing the redemption
value of the Class A ordinary shares sold in the initial public offering, at
their redemption value of $10.20 per share.
If we are unable to consummate an initial Business Combination within 15 months
from the closing of our IPO (the "Combination Period"), then 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 the Company to
pay income taxes, if any (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 liquidation 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 the case of clauses (ii) and
(iii), to the Company's obligations under Cayman Islands law to provide for
claims of creditors and in all cases subject to the requirements of other
applicable law. There will be no redemption rights or liquidating distributions
with respect to the warrants, which will expire worthless if the Company fails
to complete its initial Business Combination within the Combination Period.
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Results of Operations
As of September 30, 2022, we have not commenced any operations. All activity for
the period from February 2, 2021 (inception) through September 30, 2022, relates
to our formation and IPO, and, since the completion of our IPO, searching for a
target to consummate an initial Business Combination. We will not generate any
operating revenues until after the completion of our initial Business
Combination, at the earliest. We will generate non-operating income in the form
of interest income from the proceeds derived from our IPO and placed in the
Trust Account.
For the three months ended September 30, 2022, we had a net income of
$1,072,278, which consisted of interest earned on cash and marketable securities
held in the Trust Account of $1,308,366 offset by formation and operating costs
of $236,088.
For the nine months ended September 30, 2022, we had a net income of $931,585,
which consisted of interest earned on cash and marketable securities held in the
Trust Account of $1,438,705 offset by formation and operating costs of $507,120.
For the three months ended September 30, 2021, no formation and operating costs
were incurred, thus, $0 net loss during the period.
For the period from February 2, 2021 (inception) through September 30, 2021, we
had a net loss of $3,880, which consisted of formation and operating costs.
Liquidity, Capital Resources and Going Concern
For the nine months ended September 30, 2022, cash used in operating activities
was $315,620. Net income of $931,585 was affected by interest earned on
marketable securities held in the Trust Account of $1,438,705. Changes in
operating assets and liabilities provided $191,500 of cash for operating
activities.
As of September 30, 2022, we had cash outside our Trust Account of $466,089,
available for working capital needs. All remaining cash was held in the Trust
Account and is generally unavailable for our use, prior to an initial Business
Combination.
The Company's liquidity needs up to November 5, 2021 had been satisfied through
a payment from the Sponsor of $25,000 for the founder shares to cover certain
offering costs and a loan under an unsecured promissory note from the Sponsor of
$104,808, which was paid in full on November 18, 2021. In addition, in order to
finance transaction costs in connection with a Business Combination, the
Sponsor, initial shareholders, officers, directors or their affiliates may, but
are not obligated to, provide the company Working Capital Loans (as defined
below). As of September 30, 2022, there were no amounts outstanding under any
Working Capital Loans.
In order to fund working capital deficiencies or 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,
loan us funds as may be required ("Working Capital Loans"). If we complete a
Business Combination, we may repay such Working Capital Loans out of the
proceeds of the Trust Account released to us. 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 Working Capital Loans, 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, at a price of $1.00
per warrant, at the option of the lender. The warrants would be identical to the
Private Placement Warrants.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, 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. 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.
However, the Company is within 12 months of its mandatory liquidation as of the
time of filing this Quarterly Report. In connection with the Company's
assessment of going concern considerations in accordance with Accounting
Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about an
Entity's Ability to Continue as a Going Concern," the mandatory liquidation
raises substantial doubt about the Company's ability to continue as a going
concern until the earlier of the consummation of the Business Combination or the
date the Company is required to liquidate, February 5, 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.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 2022.
17
Contractual Obligations
As of September 30, 2022, we did not have any long-term debt, capital or
operating lease obligations.
The underwriters are entitled to deferred underwriting commissions of $0.40 per
Unit on the 23,000,000 Units issued and $0.60 on the 3,450,000 overallotment
Units for a total of $11,270,000. The deferred fee will become payable to the
underwriters from the amounts held in the Trust Account solely in the event that
the Company completes an initial Business Combination, subject to the terms of
the underwriting agreement entered into in connection with the IPO.
Critical Accounting Estimates and Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States 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 as our critical accounting policies:
Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary share subject to possible
redemption in accordance with the guidance in Accounting Standards Codification
("ASC") Topic 480 "Distinguishing Liabilities from Equity." Class A ordinary
share subject to mandatory redemption (if any) are classified as a liability
instrument and are measured at fair value. Conditionally redeemable ordinary
share (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 the Company's control) are classified as
temporary equity. At all other times, ordinary shares are classified as
shareholders' equity. The Company's ordinary shares feature certain redemption
rights that are considered to be outside of the Company's control and subject to
the occurrence of uncertain future events. Accordingly, as of September 30, 2022
and December 31, 2021, 26,450,000 shares of Class A ordinary share subject to
possible redemption are presented at redemption value as temporary equity,
outside of the shareholders' equity section of the Company's balance sheets.
Net Loss Per Ordinary Share
We have two classes of shares, which are referred to as Class A ordinary shares
and Class B ordinary shares. Earnings and losses are shared pro rata between the
two classes of shares. The potential ordinary shares for outstanding warrants to
purchase our shares were excluded from diluted earnings per share for the period
from February 2, 2021 (inception) through September 30, 2022 because the
warrants are contingently exercisable, and the contingencies have not yet been
met. As a result, diluted net loss per ordinary share is the same as basic net
loss per ordinary share for the periods.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not effective,
accounting standards, if currently adopted, would have a material effect on the
company's financial statements.
JOBS Act
On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 ("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" 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, our
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 independent registered public accounting firm'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 Public Company Accounting Oversight Board
regarding mandatory audit firm rotation or a supplement to the report of
independent registered public accounting firm 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 chief executive officer'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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