References to the "Company," "RXR Acquisition Corp.," "RXR," "our," "us" or "we"
refer to RXR Acquisition Corp. The following discussion and analysis of the
Company's financial condition and results of operations should be read in
conjunction with the unaudited interim 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 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. Factors that might cause or contribute to
such a discrepancy include, but are not limited to, those described in our other
SEC filings.
Overview
We are a blank check company incorporated in Delaware on January 5, 2021. We
were formed for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with
one or more businesses (the "Business Combination"). We are an emerging growth
company and, as such, we are subject to all of the risks associated with
emerging growth companies. Our sponsor is RXR Acquisition Sponsor LLC, a
Delaware limited liability company ("Sponsor").
The registration statement for our Initial Public Offering was declared
effective on March 3, 2021.
On March 8, 2021, we consummated our Initial Public Offering of 30,000,000 units
(the "Units" and, with respect to the shares of Class A common stock included in
the Units being offered, the "Public Shares"), at $10.00 per Unit, generating
gross proceeds of $300.0 million, and incurring offering costs of approximately
$17.1 million, of which $10.5 million was for deferred underwriting commissions.
We granted the underwriter a 45-day option to purchase up to an additional
4,500,000 Units at the Initial Public Offering price to cover over-allotments,
if any. The underwriters exercised the over-allotment option in full on
March 16, 2021, purchasing an additional 4,500,000 Units (the "Over-Allotment
Units"), generating gross proceeds of $45.0 million. We incurred additional
offering costs of approximately $2.5 million, of which approximately
$1.6 million was for deferred underwriting commissions.
Each Unit consists of one share of Class A common stock and one-fifth of one
redeemable warrant (each redeemable warrant, a "Public Warrant"). Each Public
Warrant entitles the holder to purchase one share of Class A common stock at a
price of $11.50 per share, subject to adjustment. Such shares of Class A common
stock and Public Warrants may trade as separate financial instruments.
Simultaneous with the closing of the Initial Public Offering, we consummated the
private placement ("Private Placement") of 5,333,333 warrants (each, a "Private
Placement Warrant" and collectively, the "Private Placement Warrants") at a
price of $1.50 per Private Placement Warrant to the Sponsor, generating proceeds
of $8.0 million. Simultaneous with the closing of the sale of Over-Allotment
Units, we consummated the second closing of the Private Placement, resulting in
the purchase of an aggregate of an additional 600,000 Private Placement Warrants
by our Sponsor, generating gross proceeds to the Company of approximately
$900,000.
Upon the closing of the Initial Public Offering, the sale of Over-Allotment
Units and the Private Placement, $345.0 million ($10.00 per Unit) of net
proceeds of the Initial Public Offering, the Sale of Over-Allotment Units and
the Private Placement were placed in a trust account ("Trust Account") located
in the United States with Continental Stock Transfer & Trust Company acting as
trustee, and invested only in U.S. "government securities," within the
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meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as
amended (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 a Business Combination and (ii) the distribution of the
Trust Account as described below.
Our management has broad discretion with respect to the specific application of
the net proceeds of the Initial Public Offering and the sale of Private
Placement Warrants, although substantially all of the net proceeds are intended
to be applied generally toward consummating a Business Combination. There is no
assurance that we will be able to complete a Business Combination successfully.
We must complete one or more initial Business Combinations having an aggregate
fair market value of at least 80% of the net assets held in the Trust Account
(excluding the deferred underwriting commissions and taxes payable on the income
earned on the Trust Account) at the time of the agreement to enter into the
initial Business Combination. However, we only intend to complete a Business
Combination if the post-transaction company owns or acquires 50% or more of the
issued and outstanding voting securities of the target or otherwise acquires a
controlling interest in the target sufficient for it not to be required to
register as an investment company under the Investment Company Act.
If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or March 8, 2023 (the "Combination
Period"), and our stockholders have not amended the Certificate of Incorporation
to extend such 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 Stockholders' rights as stockholders
(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 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.
Liquidity and Going Concern
As of September 30, 2022, we had approximately $93,000 in our operating bank
account, and working capital of approximately $215,000 (not taking into account
franchise tax obligations of $501,000 that may be paid using investment income
earned in the Trust Account)
Our liquidity needs prior to the consummation of the Initial Public Offering
were satisfied through the payment of $25,000 from our Sponsor to purchase
Founder Shares (as defined below), and loan proceeds from our Sponsor of
$150,000 under a promissory note. We repaid the promissory note in full on March
8, 2021. After closing the Initial Public Offering, our liquidity needs have
been satisfied through the net proceeds from the consummation of the Initial
Public Offering, the sale of Over-Allotment Units and the Private Placement held
outside of the Trust Account, and from borrowings under a promissory note with
our Sponsor. As of September 30, 2022, the company borrowed $450,000 from the
sponsor under the Post-IPO Promissory Note for working capital purposes. The
borrowings are reflected as Note payable-related party on the Consolidated
Balance Sheets and are accounted for at fair value.
In connection with the Company's assessment of going concern considerations in
accordance with the Financial Accounting Standards Board's ("FASB") Accounting
Standards Codification ("ASC") Topic 205-40, "Presentation of Financial
Statements-Going Concern," management has evaluated the Company's liquidity and
financial condition and determined that it may not be sufficient to meet the
Company's obligation over the period of twelve months from the issuance date of
the financial statements. The Company's sponsor has agreed to provide support to
enable the Company to continue its operations and meet its potential obligations
over a period of one year from the issuance of these financial statements.
Management believes current working capital, and the support from its Sponsor,
provides sufficient capital to sustain operations for a reasonable period of
time, which is considered to be one year from the issuance date of these
financial statements and therefore substantial doubt has been alleviated.
Management continues to evaluate the impact of macroeconomic and socioeconomic
events (including increased benchmark interest rates, inflation impacts, and
continuing effects from the COVID-19 pandemic) and has concluded that while it
is reasonably possible that such events could have a negative effect on our
financial position, results of our operations and/or search for a target
company, the specific impact is not readily determinable as of the date of the
condensed financial statements. The condensed financial statements do not
include any adjustments that might result from the outcome of such
uncertainties.
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In February 2022, the Russian Federation and Belarus commenced a military action
with the country of Ukraine. As a result of this action, various nations,
including the United States, have instituted economic sanctions against the
Russian Federation and Belarus. Further, the impact of this action and related
sanctions on the world economy are not determinable as of the date of these
condensed financial statements.
On August 16, 2022, the Inflation Reduction Act of 2022 (the "IR Act") was
signed into federal law. The IR Act provides for, among other things, a new U.S.
federal 1% excise tax on certain repurchases of stock by publicly traded U.S.
domestic corporations and certain U.S. domestic subsidiaries of publicly traded
foreign corporations occurring on or after January 1, 2023. The excise tax is
imposed on the repurchasing corporation itself, not its shareholders from which
shares are repurchased. The amount of the excise tax is generally 1% of the fair
market value of the shares repurchased at the time of the repurchase. However,
for purposes of calculating the excise tax, repurchasing corporations are
permitted to net the fair market value of certain new stock issuances against
the fair market value of stock repurchases during the same taxable year. In
addition, certain exceptions apply to the excise tax. The U.S. Department of the
Treasury (the "Treasury") has been given authority to provide regulations and
other guidance to carry out and prevent the abuse or avoidance of the excise
tax. Any share redemption or other share repurchase that occurs after December
31, 2022, in connection with a Business Combination, extension vote or
otherwise, may be subject to the excise tax. Whether and to what extent we would
be subject to the excise tax in connection with a Business Combination,
extension vote or otherwise will depend on a number of factors, including (i)
the fair market value of the redemptions and repurchases in connection with the
Business Combination, extension or otherwise, (ii) the structure of a Business
Combination, (iii) the nature and amount of any "PIPE" or other equity issuances
in connection with a Business Combination (or otherwise issued not in connection
with a Business Combination but issued within the same taxable year of a
Business Combination) and (iv) the content of regulations and other guidance
from the Treasury. The mechanics of any required payment of the excise tax have
not been determined. The foregoing uncertainties could cause a reduction in the
cash available on hand to complete a Business Combination and may impact our
ability to successfully complete a Business Combination.
Results of Operations
Our entire activity since inception up to September 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 will not be generating any operating revenues until the
closing and completion of our initial Business Combination.
For the three months ended September 30, 2022, we had net income of
approximately $2.6 million, which consisted of a non-operating gain resulting
from changes in fair value of derivative warrant liabilities of approximately
$1.6 million and approximately $1.6 million of income from investments held in
the Trust Account, partially offset by income tax expense of approximately
$400,000 and a loss from operations of approximately $227,000 comprised of
approximately $147,000 general and administrative expenses, approximately
$30,000 in general and administrative expenses to a related party and
approximately $50,000 of franchise tax expenses.
For the three months ended September 30, 2021, we had net income of
approximately $3.2 million, which consisted of a non-operating gain resulting
from a change in fair value of derivative warrant liabilities of approximately
$3.6 million and approximately $6,000 of income from investments held in the
Trust Account, partially offset by a loss from operations of approximately
$433,000 comprised of approximately $353,000 general and administrative
expenses, approximately $30,000 in general and administrative expenses to a
related party and approximately $50,000 of franchise tax expenses.
For the nine months ended September 30, 2022, we had net income of approximately
$9.5 million, which consisted of a non-operating gain resulting from changes in
fair value of derivative warrant liabilities of approximately $8.6 million and
approximately $2.0 million of income from investments held in the Trust Account,
partially offset by income tax expense of approximately $452,000 and a loss from
operations of approximately $701,000 comprised of approximately $494,000 general
and administrative expenses, approximately $90,000 in general and administrative
expenses to a related party and approximately $117,000 of franchise tax
expenses.
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For the period from January 5, 2021 (inception) through September 30, 2021, we
had net income of approximately $2.7 million, which consisted of a non-operating
gain resulting from a change in fair value of derivative warrant liabilities of
approximately $4.0 million and approximately $14,000 of income from investments
held in the Trust Account, partially offset by a loss from operations of
approximately $923,000 comprised of approximately $706,000 general and
administrative expenses, approximately $69,000 in general and administrative
expenses to a related party and approximately $147,000 of franchise tax expense,
and a non-operating loss of approximately $424,000 for offering costs associated
with derivative warrant liabilities.
Contractual Obligations
Administrative Services Agreement
Commencing on the date that our securities were first listed on Nasdaq through
the earlier of consummation of the initial Business Combination and our
liquidation, we agreed to pay an affiliate of the Sponsor a total of $10,000 per
month for office space, administrative and support services.
The Sponsor, officers and directors, 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 to the Sponsor, our
directors, our officers or any of their affiliates.
We incurred approximately $30,000 and $30,000 in related party general and
administrative expenses in the accompanying condensed statements of operations
for the three months ended September 30, 2022 and 2021. We incurred
approximately $90,000 and $69,000 in related party general and administrative
expenses in the accompanying condensed statements of operations for the nine
months ended September 30, 2022 and 2021.
Underwriting Agreement
We granted the underwriters a 45-day option from the date of the final
prospectus relating to the Initial Public Offering to purchase up to 4,500,000
additional Units to cover over-allotments, if any, at the Initial Public
Offering price, less underwriting discounts and commissions. The underwriters
exercised the over-allotment option in full and on March 16, 2021, purchasing an
additional 4,500,000 Units.
The underwriters are entitled to an underwriting discount of $0.20 per Unit, or
$6.9 million in the aggregate, paid upon the closing of the Initial Public
Offering and sale of Over-Allotment Units. An additional fee of $0.35 per Unit,
or approximately $12.1 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.
Critical Accounting Policies
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 on Form 10-Q. Certain of our accounting policies
are considered critical, as these policies are the most important to the
depiction of our condensed 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 21, 2022. There have been no significant changes in the application of
our critical accounting policies during the nine months ended September 30,
2022.
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Recent Accounting Pronouncements
See Note 2 to the unaudited condensed financial statements included in Part I,
Item 1 of this Quarterly Report on Form 10-Q for a discussion of recent
accounting pronouncements.
Off-Balance Sheet Arrangements
As of September 30, 2022, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
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 condensed 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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