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 formed under the laws of the State of Delaware on
August 11, 2020 for the purpose of entering into a merger, share exchange, asset
acquisition, stock purchase, recapitalization, reorganization or other similar
business combination with one or more businesses or entities (the "Business
Combination"). We intend to effectuate our Business Combination using cash from
the proceeds of the Initial Public Offering and the sale of the Private
Placement Units, our capital stock, debt or a combination of cash, stock and
debt.
We expect to continue 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.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from August 11, 2020 (inception) through December 31, 2021
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and identifying a target company for a
Business Combination. We do not expect to generate any operating revenues until
after the completion of our Business Combination. We generate
non-operating
income in the form of interest income on marketable securities held in the Trust
Account. We incur expenses as a result of being a public company (for legal,
financial reporting, accounting and auditing compliance), as well as for due
diligence expenses.
For the year ended December 31, 2021, we had a net loss of $1,632,762, which
consists of formation and operational costs of $1,655,964, transaction costs
associated with the Initial Public Offering of $17,428 and change in fair value
of warrant liability of $154,565, offset by interest income from the bank of
$10, change in fair value of overallotment liability of $134,105, interest
earned on marketable securities held in the Trust Account of $61,080.
For the period from August 11, 2020 (inception) through December 31, 2020, we
had a net loss of $627, which consists of formation and operational costs.
Liquidity and Capital Resources
On February 8, 2021, we consummated the Initial Public Offering of 15,000,000
Units at $10.00 per Unit, generating gross proceeds of $150,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 430,000 Private Placement Unit a price of $10.00 per Private
Placement Unit in a private placement to the Sponsor generating gross proceeds
of $4,300,000.
On February 18, 2021, in connection with the underwriters' exercise of their
over-allotment option in full, we consummated the sale of an additional
2,250,000 Units at a price of $10.00 per Unit, generating total gross proceeds
of $22,500,000. In addition, we also consummated the sale of an additional
45,000 Private Units at $10.00 per Private Unit, generating total gross proceeds
of $450,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Units, a total of $172,500,000 was placed in
the Trust Account. We incurred $3,916,059 in Initial Public Offering related
costs, including $3,450,000 of underwriting fees and $466,059 of other costs.
For the year ended December 31, 2021, cash used in operating activities was
$1,541,075. Net loss of $1,632,762 was affected by interest earned on marketable
securities held in the Trust Account of $61,080, change in fair value of warrant
liability of $154,565, change in fair value of overallotment liability of
$134,105 and transaction costs associated with the Initial Public Offering of
$17,428. Changes in operating assets and liabilities provided $114,879 of cash
for operating activities.
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For the period from August 11, 2020 (inception) through December 31, 2020, cash
used in operating activities was $177. Net loss of $627 was affected by changes
in operating assets and liabilities which provided $450 of cash for operating
activities.
As of December 31, 2021, we had marketable securities held in the Trust Account
of $172,561,080 (including $61,080 of interest income) consisting of money
market funds, which primarily invest in U.S. Treasury Bills with a maturity of
185 days or less. Interest income on the balance in the Trust Account may be
used by us to pay taxes. Through December 31, 2021, we have not withdrawn any
interest earned from the Trust Account.
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
income taxes payable), to complete our Business Combination. To the extent that
our capital stock 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 target
business or businesses, make other acquisitions and pursue our growth
strategies.
As of December 31, 2021, we had cash of $67,689. 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, plants 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, the Sponsor, or certain of our officers
and directors or their affiliates 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 $1,500,000 of such loans may be convertible into units at
a price of $10.00 per unit, at the option of the lender. The units would be
identical to the Private Units.
For the year ended December 31, 2021, we determined that there was substantial
doubt about our ability to continue as a going concern through one year from the
date of the December 31, 2021 report. We will need to raise additional capital
through loans or additional investments from our Sponsor, officers or directors.
Our Sponsor, officers or directors may, but are not obligated to, loan us funds,
from time to time or at any time, in whatever amount they deem reasonable in
their sole discretion, to meet our working capital needs. Accordingly, we may
not be able to obtain additional financing. If we are unable to raise additional
capital, we may be required to take additional measures to conserve liquidity,
which could include, but not necessarily be limited to, curtailing operations,
suspending the pursuit of a potential transaction, and reducing overhead
expenses. We cannot provide any assurance that new financing will be available
to us on commercially acceptable terms, if at all. These conditions resulted in
the conclusion that there is substantial doubt about our ability to continue as
a going concern through February 8, 2023, the date that we will be required to
cease all operations, except for the purpose of winding up, if a Business
Combination is not consummated. Our consolidated 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 we be unable to
continue as a going concern.
Off-Balance
Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance
sheet arrangements as of December 31, 2021. 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 purchased any
non-financial
assets.
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Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay the Sponsor
a total of up to $10,000 per month for office space, utilities and secretarial
support services. We began incurring these fees on February 3, 2021 and will
continue to incur these fees monthly until the earlier of the completion of the
Business Combination and our liquidation.
We engaged EarlyBirdCapital, the representative of the underwriters in the
Initial Public Offering, as an advisor in connection with our Business
Combination to assist in holding meetings with our stockholders to discuss the
potential Business Combination and the target business' attributes, introduce,
introduce us to potential investors that are interested in purchasing our
securities in connection with our initial Business Combination, assist in
obtaining stockholder approval for the Business Combination and assist with
press releases and public filings in connection with the Business Combination.
We will pay EarlyBirdCapital a cash fee for such services upon the consummation
of our initial Business Combination in an amount equal to 3.5% of the gross
proceeds of the Initial Public Offering, or $6,037,500 (exclusive of any
applicable finder's fees which might become payable).
Critical Accounting Policies
The preparation of consolidated financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America 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 consolidated financial statements, and income and
expenses during the periods reported. Actual results could materially differ
from those estimates. We have identified the following critical accounting
policies:
Convertible Instruments
The Company accounts for its promissory notes that feature conversion options in
accordance with ASC No. 815,
Derivatives and Hedging Activities
(
"ASC No.
815"
). ASC No. 815 requires companies to bifurcate conversion options from their
host instruments and account for them as freestanding derivative financial
instruments according to certain criteria. The criteria includes circumstances
in which (a) the economic characteristics and risks of the embedded derivative
instrument are not clearly and closely related to the economic characteristics
and risks of the host contract, (b) a promissory note that embodies both the
embedded derivative instrument and the host contract is not
re-measured
at fair value under otherwise applicable GAAP with changes in fair value
reported in earnings as they occur and (c) a separate instrument with the same
terms as the embedded derivative instrument would be considered a derivative
instrument.
Warrant Liabilities
We account for the Private Warrants in accordance with the guidance contained in
ASC
815-40
under which the Private Warrants do not meet the criteria for equity treatment
and must be recorded as liabilities. Accordingly, we classify the Private
Warrants as liabilities at their fair value and adjust the Private Warrants to
fair value at each reporting period. This liability is subject to
re-measurement
at each balance sheet date until exercised, and any change in fair value is
recognized in our consolidated statements of operations. The Private Warrants
are valued using binomial lattice model.
Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Shares of common stock subject to
mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable common stock (including common stock that
features redemption rights that is either within the control of the holder or
subject to redemption upon the occurrence of uncertain events not solely within
the Company's control) is classified as temporary equity. At all other times,
common stock is classified as stockholders' equity. The Company's common stock
features certain redemption rights that are considered to be outside of the
Company's control and subject to occurrence of uncertain future events.
Accordingly, as of December 31, 2021, common stock subject to possible
redemption is presented at redemption value as temporary equity, outside of the
stockholders' equity section of our consolidated balance sheet.
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Net Income (Loss) Per Common Share
Net income (loss) per common share is computed by dividing net income (loss) by
the weighted average number of common shares outstanding for the periods. Net
income (loss) per common share is calculated by dividing net income (loss) by
the weighted average number of shares of common stock outstanding for the
respective periods. Accretion associated with the redeemable shares of common
stock is excluded from income (loss) per common share as the redemption value
approximates fair value.
Recent Accounting Standards
In August 2020, the FASB issued ASU No.
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. ASU
2020-06
removes certain settlement conditions that are required for equity contracts to
qualify for the derivative scope exception and it also simplifies the diluted
earnings per share calculation in certain areas. ASU
2020-06
is effective for fiscal years beginning after December 15, 2023, including
interim periods within those fiscal years, with early adoption permitted. We are
currently assessing the impact, if any, that
ASU2020-06
would have on our 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 the accompanying financial statements.
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