References to the "Company," "our," "us" or "we" refer to Sustainable
Development Acquisition I Corp. 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.
Special 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. Words such as
"expect," "believe," "anticipate," "intend," "estimate," "seek" and variations
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 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 for the year ended
December 31, 2021 filed with the U.S. Securities and Exchange Commission (the
"SEC"). 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 Delaware public benefit
corporation and formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses. We intend to effectuate our initial
business combination using cash from the proceeds of our Initial Public Offering
and the private placement of the private placement warrants, the proceeds of the
sale of our shares in connection with our initial business combination (pursuant
to forward purchase agreements or backstop agreements we may enter into
following the consummation of our Initial Public Offering or otherwise), shares
issued to the owners of the target, debt issued to banks or other lenders or the
owners of the target, or a combination of the foregoing.
The registration statement for our IPO was declared effective on February 4,
2021. On February 9, 2021, we consummated the IPO of 31,625,000 units (including
4,125,000 units issued to the Underwriters pursuant to the exercise in full of
the over-allotment option granted to the Underwriters) ("Units" and, with
respect to the Class A common stock included in the Units being offered, the
"Public Shares"), at $10.00 per Unit, generating gross proceeds of $316.3
million, and incurring offering costs of approximately $17.4 million, inclusive
of $10.6 million in deferred underwriting commissions.
Simultaneously with the closing of the IPO, we consummated the private placement
("Private Placement") of 9,325,000 warrants at a price of $1.00 per warrant
("Private Placement Warrants" and, together with the warrants included in the
Units, the "Warrants") to the Sponsor, generating gross proceeds of
approximately $9.3 million.
Upon the closing of the IPO and the Private Placement on February 9, 2021,
$316.3 million ($10.00 per Unit) of the net proceeds of the sale of the Units in
the IPO 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 meaning of 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.
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If we have not completed a Business Combination within 24 months from the
closing of the IPO, 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.
Results of Operations
For the three months ended June 30, 2022, we had a net income of approximately
$5.4 million, which included a loss from operations of $0.5 million, a provision
for income tax of $0.01 million and a gain from the change in fair value of
warrant liabilities of $5.5 million.
For the six months ended June 30, 2022, we had a net income of approximately
$12.4 million, which included a loss from operations of $0.8 million, a
provision for income tax of $0.01 million and a gain from the change in fair
value of warrant liabilities of $12.8 million.
For the three months ended June 30, 2021, we had a net loss of approximately
$8.5 million, which included a loss from the change in fair value of warrant
liabilities of $8.1 million, offset by a loss from operations of $0.4 million.
For the six months ended June 30, 2021, we had a net income of approximately
$0.8 million, which included a gain from the change in fair value of warrant
liabilities of $4.3 million, offset by a loss from operations of $0.5 million,
offering cost expense allocated to warrants of $1.0 million, and expense for
excess in fair value over cash received for private placement warrants of $1.9
million.
Our business activities from inception to June 30, 2022 consisted primarily of
our formation and completing our IPO, and since the offering, our activity has
been limited to identifying and evaluating prospective acquisition targets for a
Business Combination.
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, our only source of
liquidity was an initial purchase of Class B common stock by our Sponsor and
advances from our Sponsor.
On February 9, 2021, we consummated our Initial Public Offering of 31,625,000
units (the "Units"), including 4,125,000 Units sold pursuant to the full
exercise of the underwriters' option to purchase additional Units. Each Unit
consists of one share of Class A common stock, $0.0001 par value per share (the
"Class A Common Stock"), and one-half of one redeemable warrant (the "Public
Warrants"), each whole Public Warrant entitling the holder thereof to purchase
one share of Class A Common Stock 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 $316,250,000 (before underwriting discounts
and commissions and offering expenses). Simultaneously with the closing of the
Initial Public Offering, we consummated the sale of 9,325,000 Private Placement
Warrants at a price of $1.00 per Private Placement Warrant in a private
placement to our stockholders, generating gross proceeds of $9,325,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Placement Warrants, a total of $316,250,000
was placed in the Trust Account, and we had approximately $3.2 million of cash
held outside of the Trust Account and working capital of approximately $2.6
million. We incurred approximately $17.4 million in transaction costs, including
$10.6 million of deferred underwriting fees that will be paid to the
underwriters from the amounts held in the Trust Account solely in the event the
Company completes its initial Business Combination.
For the six months ended June 30, 2022, net cash used in operating activities
was approximately $0.8 million.
For the six months ended June 30, 2021, net cash used in operating activities
was approximately $1.3 million.
At June 30, 2022, we had cash held in the Trust Account of $316,618,130. We
intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account (less
taxes payable (if applicable) and deferred underwriting commissions) and the
proceeds from the sale of the forward purchase shares to complete our Business
Combination. To the extent that our shares or debt is used, in whole or in part,
as consideration to complete our Business Combination, the remaining proceeds
held in the Trust Account will be used as working capital to finance the
operations of the post-Business Combination entity, make other acquisitions and
pursue our growth strategies.
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At June 30, 2022, we had cash of $222,014 held outside of the Trust Account. We
intend to use the funds held outside the Trust Account primarily to identify and
evaluate target businesses, perform business due diligence on prospective target
businesses, travel to and from the offices, properties or similar locations of
prospective target businesses or their representatives or owners, review
corporate documents and material agreements of prospective target businesses,
and structure, negotiate and complete a Business Combination.
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. If we complete a Business Combination, we
would repay such loaned amounts. 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 loaned amounts but no proceeds from our Trust Account
would be used for such repayment. Up to $2,000,000 of such loans may be
convertible into warrants, at the price of $1.00 per warrant at the option of
the lender.
Going Concern
In connection with our assessment of going concern considerations in accordance
with Financial Accounting Standards Board's Accounting Standards Codification
Topic 205-40, "Presentation of Financial Statements - Going Concern," we have
until February 9, 2023, to consummate an initial business combination. It is
uncertain that we will be able to consummate an initial business combination by
this time. If an initial business combination is not consummated by this date,
there will be a mandatory liquidation and subsequent dissolution of the Company.
Additionally, it is uncertain that we will have sufficient liquidity to fund the
working capital needs of the Company through February 9, 2023 or through twelve
months from the issuance of this report. We have determined that the liquidity
condition and mandatory liquidation, should an initial business combination not
occur, 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 February 9, 2023.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities. The underwriters are entitled to a
deferred fee of $0.35 per share, or $10,631,250 in the aggregate. 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 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 U.S. 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.
Except as set forth below, there have been no significant changes in our
critical accounting policies as discussed in our Annual Report on Form 10-K for
the year ended December 31, 2021.
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Recent Accounting Standards
In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other
Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own
Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts
in an Entity's Own Equity ("ASU 2020-06"), which simplifies accounting for
convertible instruments by removing major separation models required under
current GAAP. The ASU also removes certain settlement conditions that are
required for equity-linked contracts to qualify for scope exception, and it
simplifies the diluted earnings per share calculation in certain areas. The
Company adopted ASU 2020-06 at January 1, 2021. Adoption of the ASU did not
impact the Company's financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.
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