References to "we," "us," "our" or the "Company" are to
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Some statements contained in this Quarterly Report on Form 10-Q are forward-looking statements in nature. Our forward-looking statements include, but are not limited to, statements regarding our or our management team's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the following risks, uncertainties and other factors: • our ability to complete our Initial Business Combination, particularly in light of disruption that may result from limitations imposed by the COVID-19 outbreak; • our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our Initial Business Combination; • our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our Initial Business Combination, as a result of which they would then receive expense reimbursements; • our potential ability to obtain additional financing to complete our Initial Business combination; • our pool of prospective target businesses; • the ability of our officers and directors to generate a number of potential acquisition opportunities; • our public securities' potential liquidity and trading; • the lack of market for our securities; • the use of proceeds not held in the trust account or available to us from interest income on the Trust Account balance; • the Trust Account not being subject to claims of third parties; • our financial performance following the Initial Public Offering; or • the other risks and uncertainties discussed in "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q.
The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause
17
--------------------------------------------------------------------------------
Table of Contents actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section entitled "Risk Factors" in our prospectus filed with theSEC onOctober 15, 2021 . Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Overview We are a blank check company incorporated as aDelaware 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. Our entire activity for the period fromFebruary 10, 2021 (inception) throughSeptember 30, 2021 relates to our formation and the initial public offering (the " Initial Public Offering "), described below, and since the closing of the Initial Public Offering, the search for a prospective acquisition target for our Initial Business Combination. We have selectedDecember 31 as our fiscal year end. Our Sponsor isBlack Mountain Sponsor, LLC , aDelaware limited liability company (the " Sponsor "). The registration statement for the Initial Public Offering was declared effective onOctober 13, 2021 . OnOctober 18, 2021 , we consummated the Initial Public Offering of 24,000,000 units (the " Units "). Each Unit consists of one share of Class A common stock of the Company, par value$0.0001 per share (the " Class A Common Stock "), and three quarters of one warrant of the Company (the " Public Warrants "), with each whole Public Warrant entitling the holder thereof to purchase one share of Class A Common Stock for$11.50 per share. The Units were sold at a price of$10.00 per Unit, generating gross proceeds to the Company of$240,000,000 . In connection with the Initial Public Offering, the underwriters were granted an option to purchase up to an additional 3,600,000 Units to cover over-allotments, if any. OnOctober 21, 2021 , the underwriters fully exercised its over-allotment option and, onOctober 22, 2021 , the underwriters purchased 3,600,000 Units (the " Over-allotment Units ") at a price of$10.00 per unit, generating net proceeds to the Company of$36,000,000 . OnOctober 18, 2021 , simultaneously with the closing of the Initial Public Offering and pursuant to the Private Placement Warrants Purchase Agreement, datedOctober 13, 2021 , by and between the Company and the Sponsor (the " Private Warrant Purchase Agreement "), we completed the private sale (the " Private Placement ") of 11,600,000 warrants (the " Private Placement Warrants ") at a purchase price of$1.00 per Private Placement Warrant to the Sponsor, generating gross proceeds of$11,600,000 . OnOctober 22, 2021 , simultaneously with the sale of the Over-allotment Units, we completed a private placement with the Sponsor for an additional 1,440,000 warrants at a price of$1.00 per warrant (the " Additional Private Placement Warrants " and, together with the Public Warrants and the Private Placement Warrants, the " Warrants "), generating gross proceeds to the Company of$1,440,000 . A total of$281,520,000 , comprised of$270,480,000 of the net proceeds from the Initial Public Offering (including the Over-allotment Units) and$11,040,000 of the proceeds of the sale of the Private Placement Warrants (including the Additional Private Placement Warrants) has been deposited in aU.S. -based trust account (" Trust Account ") maintained byContinental Stock Transfer & Trust Company , acting as trustee. As indicated in the accompanying condensed financial statements, atSeptember 30, 2021 , we had$10,033 in cash. We expect to incur significant costs in the pursuit of our Initial Business Combination plans. We cannot assure you that we will identify any suitable target candidates or, if identified, that we will be able to complete the acquisition of such candidates on favorable terms or at all. Results of Operations We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to effectuate the Initial Public Offering. We will not generate any operating revenues until after completion of our Initial Business Combination. We will generate non-operating revenue in the form of interest income on cash and cash equivalents. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements included in our prospectus filed with theSEC onOctober 15, 2021 . We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as expenses as we conduct due diligence on prospective Initial Business Combination candidates. 18
--------------------------------------------------------------------------------
Table of Contents For the period fromFebruary 10, 2021 (inception) throughSeptember 30, 2021 , we had a net loss of$1,142 , which consisted of$1,142 in formation costs. For the quarter endedSeptember 30, 2021 , we had a net loss of$298 , which consisted of$298 in formation costs. Liquidity and Capital Resources As ofSeptember 30, 2021 , we had$10,033 in cash and a working capital deficit of$509,967 . Our liquidity needs up toSeptember 30, 2021 had been satisfied through a payment of$25,000 in offering costs by the Sponsor in exchange for the Founder Shares, and borrowings under the promissory note of$195,000 . The promissory note was fully repaid onOctober 20, 2021 from the proceeds of the IPO. Subsequent to the period covered by this quarterly report on Form 10-Q (the "Quarterly Report"), we consummated our IPO and Private Placement. Of the net proceeds from the IPO and associated Private Placements,$281,520,000 of cash was placed in the Trust Account and$1,960,476 of cash was held outside of the Trust Account and is available for working capital purposes. In order to finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of the Sponsor or certain of our officers and directors may, but are not obligated to, provide Working Capital Loans. As ofSeptember 30, 2021 , there were no amounts outstanding under any Working Capital Loans. 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. 19
--------------------------------------------------------------------------------
Table of Contents Related Party Transactions Founder Shares OnFebruary 10, 2021 , our Sponsor acquired 5,750,000 founder shares in exchange for a capital contribution of$25,000 . Prior to the initial investment in the Company of$25,000 by our Sponsor, the Company had no assets, tangible or intangible. The per share purchase price of the Founder Shares was determined by dividing the amount of cash contributed to the Company by the aggregate number of Founder Shares issued. In October, we effected a dividend of 1,150,000 of our Founder Shares, which resulted in our Sponsor owning 6,900,000 Founder Shares. In connection with our Initial Public Offering, our Sponsor forfeited a total of 90,000 Founder Shares, and 30,000 Founder Shares were then issued to each of the independent directors,Mel G. Riggs ,Charles W. Yates andStephen Straty , at their original purchase price. The holders of the Founder Shares agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (i) 180 days after the completion of the Initial Business Combination or (ii) subsequent to the Initial Business Combination, the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company's stockholders having the right to exchange their shares of common stock for cash, securities or other property. Registration Rights The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of working capital loans (and any shares of Class A common stock issuable upon the exercise of the private placement warrants or warrants that may be issued upon conversion of working capital loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement, requiring us to register such securities for resale (in the case of the Founder Shares, only after conversion to our Class A common stock). The holders of at least$25 million in value of these securities are entitled to demand that we file a registration statement covering such securities and to require us to effect up to an aggregate of three underwritten offerings of such securities. In addition, the holders have certain "piggy-back" registration rights with respect to registration statements filed subsequent to our completion of our Initial Business Combination. Related Party Working Capital Loan In addition, in order to finance transaction costs in connection with an Initial Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company's officers and directors may, but are not obligated to, loan the Company funds on a non-interest bearing basis as may be required (" Working Capital Loans "). If the Company completes an Initial Business Combination, the Company will repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that the Initial Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of the Initial Business Combination or, at the lender's discretion, up to$1.5 million of such Working Capital Loans may be convertible into warrants of the post-Initial Business Combination entity at a price of$1.00 per warrant. Such warrants would be identical to the Private Placement Warrants. To date, the Company had no borrowings under the Working Capital Loans. Related Party Promissory Note OnFebruary 10, 2021 , the Sponsor agreed to loan the Company an aggregate of up to$250,000 to cover expenses related to the Proposed Public Offering pursuant to an unsecured promissory note (the "Note"). This Note is non-interest bearing and payable upon the earlier of (i) the date that is 180 days following the date of the Note and (ii) the closing date of the IPO. As ofSeptember 30, 2021 , there was$195,000 outstanding under the Note. The Note was fully repaid onOctober 20, 2021 from the proceeds of the IPO. 20
--------------------------------------------------------------------------------
Table of Contents Administrative Support Agreement Beginning onOctober 14, 2021 , the Company has agreed to pay an affiliate of the Sponsor a total of$10,000 per month for office space, utilities and secretarial and administrative support. Critical Accounting Policies and Estimates The preparation of unaudited condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted inthe 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 expenses during the period reported. Actual results could materially differ from those estimates. We have identified the following critical accounting estimates effecting our financial statements: Class A Common Stock Subject to Possible Redemption As a result of the right of stockholders to redeem their Public Shares in connection with a tender offer for shares or an Initial Business Combination, all such Public Shares are recorded at redemption amount and classified as temporary equity upon the completion of the IPO, in accordance with FASB ASC 480, "Distinguishing Liabilities from Equity." Net Income (Loss) per Share Net income (loss) per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. We apply the two-class method in calculating earnings per share. Adjustment associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value. Off-Balance Sheet Arrangements As ofSeptember 30, 2021 , we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K. Contractual Obligations As ofSeptember 30, 2021 , we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities. Beginning onOctober 14, 2021 , the Company has agreed to pay an affiliate of the Sponsor a total of$10,000 per month for office space, utilities and secretarial and administrative support. Upon completion of the Initial Business Combination or the Company's liquidation, the Company will cease paying these monthly fees. As ofSeptember 30, 2021 , we did not have any accrued administrative support. The underwriters of the Initial Public Offering were entitled to underwriting discounts and commissions of 5.5%, of which 2% ($5,520,000 ) was paid at the closing of the Initial Public Offering and 3.5% ($9,660,000 ) was deferred. The deferred underwriting discounts and commissions will become payable to the underwriters upon the consummation of the Initial Business Combination and will be paid from the amounts held in the Trust Account. The underwriters are not entitled to any interest accrued on the deferred underwriting discounts and commissions. 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 21
--------------------------------------------------------------------------------
Table of Contents company" and under the JOBS Act will be 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, our unaudited condensed 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, (a) provide an auditor's attestation report on our system of internal controls over financial reporting pursuant to Section 404 of the JOBS Act, (b) 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, (c) comply with any requirement that may be adopted by the Public Company Accounting and Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the unaudited condensed financial statements (auditor discussion and analysis) and (d) 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 closing of the Initial Public Offering or until we are no longer an "emerging growth company," whichever is earlier.
© Edgar Online, source