TARGET GLOBAL ACQUISITION I CORP. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
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 report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
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Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Annual Report on Form 10-K including, without limitation, statements under "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward looking statements. When used in this Annual Report on Form 10-K, words such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions, as they relate to us or our management, identify forward looking statements. Such forward looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. No assurance can be given that results in any forward-looking statement will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. The cautionary statements made in this Annual Report should be read as being applicable to all forward-looking statements whenever they appear in this Annual Report on Form 10-K. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, those detailed in our filings with theSecurities and Exchange Commission . All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.
Overview
We are a blank check company incorporated on
Our sponsor is
Simultaneously with the consummation of the IPO, we consummated the private
placement of 6,666,667 warrants (the "Private Placement Warrants") to the
Sponsor, at a price of
On
Upon the closing of the IPO on
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up to 24 months from the closing of this offering if we extend the period of time to consummate a business combination) or (B) with respect to any other material provisions relating to shareholders' rights or pre-initial Business Combination activity. The proceeds deposited in the Trust Account could become subject to the claims of the Company's creditors, if any, which could have priority over the claims of the Company's public shareholders.
Our amended and restated memorandum and articles of association provides that we
will have only 18 months from the closing of the Public Offering (or up to 24
months from the closing of this offering if we extend the period of time to
consummate a Business Combination, subject to the Sponsor depositing additional
funds in the Trust Account) (the "Combination Period") to consummate the initial
Business Combination. If we have not consummated an initial Business Combination
within Combination Period, 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 our income taxes, if any (less up to
Results of Operations
Our entire activity from inception up to
For the period from
Liquidity and Capital Resources
As of
Our liquidity needs up to
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 us Working Capital Loans. As
of
Based on the foregoing, management believes that we will have sufficient working capital and borrowing capacity to meet our needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, we will be using these funds 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 Business Combination.
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Table of Contents Related Party Transactions Founder Shares
On
The Sponsor has agreed to certain transfer restrictions and performance conditionality on its Founder Shares:
• 50% of the Founder Shares and any Class A ordinary shares issuable upon
conversion thereof held by the Sponsor shall not be transferred, assigned
or sold except to certain permitted transferees until the completion of
the initial Business combination;
• 25% of the Founder Shares and any Class A ordinary shares issuable upon
conversion thereof held by the Sponsor shall not be transferred, assigned
or sold except to certain permitted transferees unless and until the last
sale price of the ordinary shares equals or exceeds $11.50 per share (as
adjusted for share subdivisions, share consolidations, share
capitalizations, rights issuances, reorganizations, recapitalizations and
the like) for any 20 trading days within any
30-trading
day period commencing at least 150 days after the initial Business
Combination; and
• 25% of the Founder Shares and any Class A ordinary shares issuable upon
conversion thereof held by the Sponsor shall not be transferred, assigned
or sold except to certain permitted transferees unless and until the last
sale price of the ordinary shares equals or exceeds $13.00 per share (as
adjusted for share subdivisions, share consolidations, share
capitalizations, rights issuances, reorganizations, recapitalizations and
the like) for any 20 trading days within any
30-trading
day period commencing at least 150 days after the initial Business
Combination.
Promissory Note -
OnFebruary 19, 2021 , the Sponsor agreed, under a promissory note, to loan us up to$500,000 to be used for a portion of the expenses of the IPO. Any loans under the promissory note are non-interest bearing, unsecured and are due at the earlier ofDecember 31, 2021 or the closing of the IPO. Any loans under the promissory note will be repaid upon the closing of the IPO out of the$1,000,000 of offering proceeds that has been allocated to the payment of offering expenses. As ofDecember 31, 2021 , we had$42,156 in borrowings under the promissory note.
Working Capital Loans
In addition, in order to finance transaction costs in connection with an intended Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, loan us funds as may be required ("Working Capital Loans") on a non-interest basis. If we complete the initial Business Combination, we would repay the Working Capital Loans.
In the event that the initial Business Combination does not close, we may use a
portion of the working capital held outside the Trust Account to repay the
Working Capital Loans but no proceeds from the Trust Account would be used to
repay the Working Capital Loans. Up to
Related Party Extension Loans
We may extend the period of time to consummate a Business Combination by up to
two additional three-month periods (for a total of 24 months to complete a
Business Combination). In order to extend the time available for us to
consummate a Business Combination, the Sponsor or its affiliates or designees
must deposit into the trust account, for each additional three-month period,
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payments would be made in the form of a non-interest bearing, unsecured promissory note. Such notes would either be paid upon consummation of a Business Combination, or, at the relevant insider's discretion, converted upon consummation of a Business Combination into additional Private Placement Warrants at a price of$1.50 per Private Warrant. The Sponsor and its affiliates or designees are not obligated to fund the trust account to extend the time for us to complete a Business Combination.
Administrative Service Fee
Commencing on the date of the IPO, we will pay the Sponsor
Contractual Obligations
We have an agreement to pay the Sponsor a total of up to
Registration Rights
The holders of the (i) Founder Shares, which were issued in a private placement prior to the closing of the IPO, (ii) Private Placement Warrants which will be issued in a private placement simultaneously with the closing of the IPO and the Class A ordinary shares underlying such Private Placement Warrants and (iii) Private Placement Warrants and warrants that may be issued upon conversion of working capital loans will have registration rights to require us to register a sale of any of our securities held by them and any other securities of us acquired by them prior to the consummation of the initial Business Combination pursuant to a registration rights agreement to be signed prior to or on the effective date of the IPO. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain "piggy-back" registration rights with respect to registration statements filed subsequent to our completion of the initial Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
Forward Purchase Agreements
On
The forward purchase agreements also provide that the FPA Purchaser will be entitled to certain registration rights with respect to our forward purchase shares. The FPA Purchaser's commitment to purchase securities pursuant to the forward purchase agreements is intended to provide us with a minimum funding level for our initial Business Combination. The proceeds from the sale of the forward purchase shares, if any, may be used as part of the consideration to the sellers in the initial Business Combination, expenses in connection with our initial Business Combination or for working capital in the post-transaction company. Subject to the conditions in the forward purchase agreements, the purchase of the forward purchase shares will be a binding obligation of the FPA Purchaser, regardless of whether any shares of Class A ordinary shares are redeemed by our public shareholders in connection with our initial Business Combination.
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Underwriting Agreement
The underwriters are entitled to a deferred fee of
Critical Accounting Policies and Estimates
Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from Equity." Ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and measured at fair value. Conditionally redeemable ordinary shares (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 our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders' equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, 21,489,658 Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders' equity section of our balance sheet.
We recognize changes in redemption value immediately as they occur and adjusts the carrying value of Class A ordinary shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid in capital and accumulated deficit.
Net Loss Per Share
Net loss per share is computed by dividing net loss by the weighted average
number of ordinary shares outstanding during the period, excluding ordinary
shares subject to forfeiture by the Sponsor. Weighted average shares were
reduced for the effect of an aggregate of 750,000 ordinary shares that are
subject to forfeiture if the over-allotment option is not exercised by the
underwriters. At
Share-Based Compensation
We adopted ASC Topic 718, Compensation - Stock Compensation, guidance to account for our share-based compensation. It defines a fair value-based method of accounting for an employee share option or similar equity instrument. We recognize all forms of share-based payments, including share option grants, warrants and restricted share grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest. Share-based payments, excluding restricted shares, are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. Share-based compensation expenses are included in costs and operating expenses depending on the nature of the services provided in the consolidated statement of operations.
Recent Accounting Pronouncements
InAugust 2020 , the FASB issued Accounting Standards Update ("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) ("ASU 2020-06") to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from 57
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convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity's own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity's own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effectiveJanuary 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning onJanuary 1, 2021 . We are currently assessing the impact, if any, that ASU 2020-06 would have on our financial position, results of operations or cash flows.
We do not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our financial statement.
Off-Balance
Sheet Arrangements and Contractual Obligations
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial agreements involving assets. 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 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 of the Sarbaes-Oxley-Act, (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 our chief executive officer's compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our IPO or until we are no longer an "emerging growth company," whichever is earlier.
Factors That May 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 the
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