The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto, which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
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 "Special Note Regarding Forward-Looking
Statements," "Item 1A. Risk Factors" and elsewhere in this Annual Report on Form
10-K.
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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.
If we have not completed a Business Combination by August 12, 2023, 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.
We expect 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.
Recent Developments
The Company's board of directors believed that there was not going to be
sufficient time before the February 9, 2023 deadline to complete a business
combination, and that it is in the best interest of the Company's stockholders
to extend the date by which the Company has to consummate a business combination
in order that the Company's stockholders have the opportunity to participate in
any future investment. Therefore, on November 4, 2022, the Company filed a
preliminary proxy statement and on January 6, 2023, a definitive proxy
statement, both in connection with a special stockholders meeting (the
"Extension Meeting") to approve an amendment (the "Extension Amendment") to the
Amended and Restated Certificate of Incorporation of the Company to extend the
date by which the Company must (i) consummate a Business Combination (ii) cease
its operations if it fails to complete such Business Combination, and
(iii) redeem or repurchase 100% of the Company's Class A common stock included
as part of the units sold in the Initial Public Offering from February 4, 2023
to August 12, 2023. On February 1, 2023, the Company held the Extension Meeting
where the requisite stockholders of the Company approved the Extension
Amendment. The Company filed the Extension Amendment with the Secretary of State
of the State of Delaware on February 2, 2023.
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In connection with the votes to approve the Extension Amendment, 29,446,012
shares of common stock of the Company were tendered for redemption at a
per-share price of $10.125. The Class A common stock was redeemed 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 Trust Account deposits (net of
franchise and income taxes payable), divided by the number of then outstanding
Class A common stock.
The funds in the Trust Account have, since our Initial Public Offering, been
held only in U.S. government treasury obligations with a maturity of 185 days or
less or in money market funds investing solely in U.S. government treasury
obligations and meeting certain conditions under Rule 2a-7 under the Investment
Company Act. However, to mitigate the risk of being deemed to be an unregistered
investment company (including under the subjective test of Section 3(a)(1)(A) of
the Investment Company Act) and thus subject to regulation under the Investment
Company Act, the Company has instructed Continental Stock Transfer & Trust
Company, the trustee with respect to the Trust Account to liquidate the U.S.
government treasury obligations or money market funds held in the Trust Account
and thereafter to maintain the funds in the a bank demand deposit account until
the earlier of consummation of the initial business combination or liquidation
of the Company.
On October 11, 2022, Barclays Capital Inc. ("Barclays") notified the Company
that, subject to certain conditions, Barclays waives its entitlement to the
payment of its portion of any deferred compensation in connection with its role
as underwriter in the Initial Public Offering.
Results of Operations
For the year ended December 31, 2022, we had a net income of approximately
$15.1 million, which included a gain from the change in fair value of warrant
liabilities of $13.8 million and interest income on marketable securities of
$4.4 million, offset by loss from operations of $2.3 million and a provision for
income tax of $0.85 million.
For the year ended December 31, 2021, we had a net income of approximately
$10.5 million, which included a gain from the change in fair value of warrant
liabilities of $15.1 million, offset by a loss from operations of $1.7 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 December 31, 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.
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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 year ended December 31, 2022, net cash used in operating activities was
approximately $1.7 million, and net cash provided by financing activities was
approximately 1 million.
For the year ended December 31, 2021, net cash used in operating activities was
approximately $1.6 million, net cash used in investing activities was
approximately $316.3 million, and net cash provided by financing activities was
approximately $318.8 million.
At December 31, 2022, we had cash held in the Trust Account of $320,678,313. 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) 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.
At December 31, 2022, we had cash of $318,932 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. On August 23, 2022, the Company entered into a $500,000 promissory
note agreement with the Sponsor. The note is payable upon the consummation of
initial business combination or convertible into warrants at a price of $1.00 at
the Sponsor's discretion. The note provides up to $500,000 in funds to be drawn
against it. The note does not accrue interest. At December 31, 2022, $500,000
was outstanding from this Convertible Note. On December 21, 2022, the Company
entered into a $550,000 promissory note (the "Convertible Note") agreement with
the Sponsor. The Convertible Note is payable upon the consummation of initial
business combination or convertible into warrants at a price of $1.00 at the
Sponsor's discretion. The Convertible Note provides up to $550,000 in funds to
be drawn against it. The Convertible Note does not accrue interest. At
December 31, 2022, $550,000 was outstanding from this Convertible Note. At
December 31, 2022 and 2021, other than the Convertible Note described above,
there was no outstanding balance on the Working Capital Loans.
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 August 12, 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 August 12, 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 August 12, 2023.
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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 Policies
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.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
financial statements.
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