References in this quarterly report on Form 10-Q (this "Quarterly Report") to
"we," "us" or the "Company" refer to Aurora Technology Acquisition Corp.
References to our "management" or our "management team" refer to our officers
and directors, and references to the "Sponsor" refer to ATAC Sponsor LLC. 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 Quarterly 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" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act'), 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 registration statement and prospectus for the IPO (as defined below)
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 Cayman Islands exempted company incorporated on August 6, 2021 for the
purpose of effecting a merger, share exchange, asset acquisition, stock
purchase, recapitalization, reorganization or other similar business combination
with one or more target businesses. While we may pursue an initial business
combination target in any business, industry or geographical location, we intend
to focus our search on targets founded by Asian or Asian American entrepreneurs
who are building a global enterprise supported by forward thinking vision and
innovative technology in predictable growth businesses with substantial revenue
potential in frontier technologies including but not limited to artificial
intelligence, blockchain, quantum computing, and electric vehicles. We intend to
effectuate our initial business combination using cash from the proceeds of the
IPO (as defined below) and the private placement of Private Placement Warrants
(as defined below), our capital stock, debt or a combination of cash, stock and
debt.
On February 9, 2022, we consummated our initial public offering (the "IPO") of
20,200,000 of our units (the "Units") which includes the partial exercise of the
underwriters' over-allotment option. Each Unit consisted of one Class A ordinary
share, one redeemable warrant entitling the holder to purchase one-half of one
Class A ordinary share at a purchase price of $11.50 per whole share (the
"Public Warrants"), and one right to acquire one-tenth (1/10) of one Class A
ordinary share. The Units were sold at an offering price of $10.00 per Unit,
generating gross proceeds of $202,000,000.
On March 17, 2022, we announced that the holders of the Units may elect to
separately trade the Class A ordinary shares, Public Warrants and rights
included in the Units, commencing on March 21, 2022. Any Units not separated
continue to trade on the Nasdaq Stock Market LLC ("Nasdaq") under the symbol
"ATAKU." Any underlying Class A Ordinary Shares, Public Warrants and Rights that
are separated trade on the Nasdaq under the symbols "ATAK," "ATAKW" and "ATAKR,"
respectively.
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At September 30, 2022, we had cash of $257,120, prepaids of $432,070, and cash
held in a Trust Account of $205,175,816, current liabilities of $155,734,
deferred underwriting commission payable of $7,070,000 and $533,000 of warrant
liabilities. Further, we expect to continue to incur significant costs in the
pursuit of our acquisition plans.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from August 6, 2021 (inception) through September 30, 2022
were organizational activities, those necessary to prepare for the IPO,
described below, and after the IPO, identifying a target company for our initial
business combination. We do not expect to generate any operating revenues until
after the completion of our initial business combination. We generate
non-operating income in the form of interest income on marketable securities
held in the Trust Account (as defined below). 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 three months ended September 30, 2022, we had net income of $1,154,845,
which consists of formation and operating expenses of $219,330, offset by a gain
of $471,500 for the change in fair value of the warrant liability and a gain of
$902,675 for dividend income on marketable securities held in the Trust Account.
For the nine months ended September 30, 2022, we had net income of $5,451,402,
which consists of formation and operating expenses of $1,210,401, offset by a
gain of $5,247,547 for the change in fair value of the warrant liability, a gain
of $258,440 on the extinguishment of the over-allotment option liability, and a
gain of $1,155,816 for dividend income on marketable securities held in the
Trust Account.
Liquidity and Capital Resources
On February 9, 2022, we consummated our IPO of 20,200,000 of Units, which
includes the partial exercise of the underwriters' over-allotment option. Each
Unit consists of one Class A ordinary share, one Public Warrant entitling the
holder to purchase one-half of one Class A ordinary share at a purchase price of
$11.50 per whole share, and one right to acquire one-tenth (1/10) of one Class A
ordinary share. The Units were sold at an offering price of $10.00 per Unit,
generating gross proceeds of $202,000,000.
Simultaneously with the consummation of the IPO, we consummated the private
placement ("Private Placement") of 6,470,000 warrants (the "Private Placement
Warrants") at a price of $1.00 per Private Placement Warrant, generating gross
proceeds of $6,470,000. The Private Placement Warrants were sold to the Sponsor.
The Private Placement Warrants are identical to the Public Warrants sold in the
IPO as part of the Units, except that the Private Warrants are non-redeemable
and may be exercised on a cashless basis, in each case so long as they continue
to be held by the Sponsor or its permitted transferees.
Following the closing of the IPO and the private placement of Private Placement
Warrants, an aggregate amount of $204,020,000 has been placed in the trust
account (the "Trust Account") established in connection with the IPO.
Transaction costs amounted to $29,192,787 consisting of $2,525,000 of
underwriting fees, $7,070,000 of deferred underwriting fees, over-allotment
option liability of $258,440, $3,030,000 for issuance of representative shares,
$15,596,420 fair value of rights underlying the Units, and $712,927 of actual
offering costs. In addition, $1,468,333 of cash was held outside of the Trust
Account, which is available for the payment of offering costs and for working
capital purposes. As a result of the underwriters' partial exercise of the
over-allotment option, 50,000 Class B ordinary shares are no longer subject to
forfeiture.
As of September 30, 2022, we had marketable securities held in the Trust Account
of $205,175,816 consisting of money market funds which invest U.S. Treasury
securities. Interest income on the balance in the Trust Account may be used by
us to pay taxes. Through September 30, 2022, we have not withdrawn any interest
earned on the Trust Account.
For the nine months ended September 30, 2022, net cash used in operating
activities was $1,044,450. Net income of $5,451,402 was affected by offering
costs allocation of $516,746, a change in the fair value of our warrant
liability of $5,247,547, dividend income on marketable securities held in Trust
Account of $1,155,816, gain on extinguishment of the over-allotment liability of
$258,440, an increase in prepaid assets of $432,070, offset by an increase in
accounts payable and accrued expenses of $81,275.
For the nine months ended September 30, 2022, net cash used in investing
activities was $204,020,000 for our investment in the Trust Account.
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For the nine months ended September 30, 2022, net provided by financing
activities was $205,256,197 primarily from the sale of the Units and Private
Placement Warrants in the amount of $205,945,000. This was offset by the
$242,801 repayment of a related party promissory note, and payment of offering
costs of $446,002.
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 initial business combination. To the
extent that our capital stock or debt is used, in whole or in part, as
consideration to complete our initial 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 September 30, 2022, we had cash of $257,120 outside 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, 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 our initial business combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with initial 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 initial business combination, we
would repay such loaned amounts. 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 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 private placement warrant at a price of $1.00 per
private placement warrant, at the option of the lender. The private placement
warrants would be identical to the Private Placement Warrants.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating the initial business combination are less than the actual amount
necessary to do so, we may have insufficient funds available to operate our
business prior to our initial business combination. Moreover, we may need to
obtain additional financing either to complete our initial business combination
or because we become obligated to redeem a significant number of our Public
Shares upon consummation of our initial business combination, in which case we
may issue additional securities or incur debt in connection with such initial
business combination. Subject to compliance with applicable securities laws, we
would only complete such financing simultaneously with the completion of our
initial business combination. If we are unable to complete our initial business
combination because we do not have sufficient funds available to us, we will be
forced to cease operations and liquidate the Trust Account. In addition,
following our initial business combination, if cash on hand is insufficient, we
may need to obtain additional financing in order to meet our obligations. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 2022. 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.
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 monthly fee of $10,000 for office space, utilities and secretarial and
administrative support. We began incurring these fees on February 9, 2022 and
will continue to incur these fees monthly until the earlier of the completion of
the initial business combination and our liquidation.
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The underwriter of the IPO is entitled to a deferred discount of $0.35 per Unit,
or $7,070,000 in the aggregate. The deferred discount will become payable to the
underwriter 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 condensed 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 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:
Warrant Liabilities
We account for the warrants underlying the Units and the private placement
warrants in accordance with the guidance contained in ASC 815 under which the
public warrants and the private placement warrants do not meet the criteria for
equity treatment and must be recorded as liabilities. Under ASC 815-40, the
public warrants and the private placement warrants are not indexed to our
ordinary shares in the manner contemplated by ASC 815-40 because the holder of
the instrument is not an input into the pricing of a fixed-for-fixed option on
equity shares. Accordingly, we classify the public warrants and the private
placement warrants as liabilities at their fair value and adjust the public
warrants and the private placement warrants to fair value at each reporting
period. These liabilities are subject to re-measurement at each balance sheet
date until exercised, and any change in fair value is recognized in our
statement of operations. Subsequent to our initial public offering, the public
warrant value is based on the public trading value. The Company utilized the
Black Scholes Merton simulation model to value the private placement warrants as
of September 30, 2022.
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible
redemption in accordance with the guidance in Accounting Standards Codification
("ASC") Topic 480. Class A ordinary shares subject to mandatory redemption is
classified as a liability instrument and is measured at fair value.
Conditionally redeemable ordinary shares (including ordinary shares 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,
Class A ordinary shares are classified as shareholders' equity. Our Class A
ordinary shares feature certain redemption rights that are considered to be
outside of the Company's control and subject to occurrence of uncertain future
events. Accordingly, at September 30, 2022, Class A ordinary shares subject to
possible redemption is presented at redemption value as temporary equity,
outside of the shareholders' equity section of the Company's balance sheet.
Net Income (Loss) per Ordinary Share
Net loss per share is computed by dividing net loss by the weighted average
number of ordinary shares outstanding during the period. Ordinary shares subject
to possible redemption at September 30, 2022, which are not currently redeemable
and are not redeemable at fair value, have been excluded from the calculation of
basic net loss per ordinary share since such shares, if redeemed, only
participate in their pro rata share of the trust account earnings. The Company
has not considered the effect of the warrants sold in the initial public
offering and the private placement to purchase an aggregate of 6,470,000 private
placement warrants in the calculation of diluted loss per share, since the
exercise of the warrants is contingent upon the occurrence of future events and
the inclusion of such warrants would be anti-dilutive. As a result, diluted net
loss per ordinary share is the same as basic net loss per ordinary share for the
periods presented.
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The Company's statement of operations includes a presentation of net income
(loss) per ordinary share subject to possible redemption and allocates the net
income (loss) into the two classes of shares in calculating net earnings (loss)
per ordinary share, basic and diluted. For redeemable Class A ordinary shares,
net earnings (loss) per ordinary share is calculated by dividing the net loss by
the weighted average number of Class A ordinary shares subject to possible
redemption outstanding since original issuance. For non-redeemable Class A
ordinary shares, net income per share is calculated by dividing the net income
by the weighted average number of non-redeemable Class A ordinary shares
outstanding for the period. Nonredeemable Class A ordinary shares include the
representative shares issued to Maxim at the closing of the initial public
offering. For non-redeemable Class B ordinary shares, net earnings (loss) per
share is calculated by dividing the net loss by the weighted average number of
nonredeemable Class B ordinary shares outstanding for the period. Non-redeemable
Class B ordinary shares include the founder shares as these shares do not have
any redemption features and do not participate in the income earned on the trust
account.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board 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 smaller
reporting companies for fiscal years beginning after December 15, 2023 including
interim periods within those fiscal years. We are currently assessing the
impact, if any, that ASU 2020-06 would have on our financial position, results
of operations or cash flows.
Our management does not believe that there are any other recently issued, but
not yet effective, accounting standards, if currently adopted, would have a
material effect on our balance sheet.
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