References to the "Company," "our," "us" or "we" refer to Duddell Street
Acquisition Corp. The following discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the unaudited condensed 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. You should read the following discussion and analysis of our
financial condition and results of operations in conjunction with our unaudited
condensed financial statements and related notes included in Part I, Item 1 of
this Quarterly Report. This discussion and other parts of this report contain
forward-looking statements that involve risks and uncertainties, such as
statements of our plans, objectives, expectations and intentions. Our actual
results could differ materially from those discussed in these forward-looking
statements. See "Cautionary Note Regarding Forward-Looking Statements." Factors
that could cause or contribute to such differences include, but are not limited
to, those discussed in Part I, Item 1A "Risk Factors" of our Annual Report on
Form 10-K.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). We have based these forward-looking statements on our current
expectations and projections about future events. These forward-looking
statements are subject to known and unknown risks, uncertainties and assumptions
about us that may cause our actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Such statements include, but are not limited
to, possible business combinations and the financing thereof, and related
matters, as well as all other statements other than statements of historical
fact included in this Form 10-Q. Factors that might cause or contribute to such
a discrepancy include, but are not limited to, those described in our other
Securities and Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company
on August 28, 2020. We were incorporated for the purpose of effecting a merger,
share exchange, asset acquisition, share purchase, reorganization or similar
business combination with one or more businesses ("Business Combination"). We
are an emerging growth company and, as such, are subject to all of the risks
associated with emerging growth companies.
Our sponsor is Duddell Street Holdings Limited, a Cayman Islands exempted
company ("Sponsor"). The registration statement for our Initial Public Offering
was declared effective on October 28, 2020. On November 2, 2020, we consummated
our Initial Public Offering of 17,500,000 units (the "Units" and, with respect
to the Class A ordinary shares included in the Units being offered, the "Public
Shares"), at $10.00 per Unit, generating gross proceeds of $175.0 million, and
incurring offering costs of approximately $10.1 million, inclusive of
approximately $6.1 million in deferred underwriting commissions. The
underwriters were granted a 45-day option from the date of the final prospectus
relating to the Initial Public Offering to purchase up to 2,625,000 additional
Units to cover over-allotments, if any, at $10.00 per Unit. On November 30,
2020, in connection with the expiration of the underwriter's over-allotment
option, our sponsor surrendered 656,250 founder shares for no consideration.
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Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 5,500,000 warrants, at a price of
$1.00 per private placement warrant with our Sponsor (the "Private Placement
Warrants"), generating gross proceeds of $5.5 million. On October 18, 2021, we
entered into an agreement with our Sponsor whereby our Sponsor agreed to
purchase an additional 1,500,000 Private Placement Warrants for aggregate
proceeds of $1.5 million, with each warrant entitling the holder to purchase one
Class A ordinary share at an exercise price of $11.50 per share.
Upon the closing of the Initial Public Offering and the Private Placement,
$175.0 million ($10.00 per Unit) of the net proceeds of the sale of the Units in
the Initial Public Offering and the Private Placement were placed in a trust
account ("Trust Account") with Continental Stock Transfer & Trust Company acting
as trustee and invested in United States "government securities" within the
meaning of Section 2(a)(16) of 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 us, until the earlier of:
(i) the completion of a Business Combination and (ii) the distribution of the
Trust Account as described below.
We intend to complete our initial business combination using cash from the
proceeds of the Initial Public Offering and the Private Placement of the Private
Placement Warrants, our capital shares, debt or a combination of cash, stock and
debt. The issuance of additional shares of our ordinary shares in a business
combination:
may significantly dilute the equity interest of investors in this offering,
? which dilution would increase if the anti-dilution provisions in the Class B
ordinary shares resulted in the issuance of Class A shares on a greater than
one-to-one basis upon conversion of the Class B ordinary shares;
may subordinate the rights of holders of our Class A ordinary shares if
? preference shares are issued with rights senior to those afforded our Class A
ordinary shares;
could cause a change in control if a substantial number of shares of our Class
? A ordinary shares are issued, which may affect, among other things, our ability
to use our net operating loss carry forwards, if any, and could result in the
resignation or removal of our present officers and directors;
may have the effect of delaying or preventing a change of control of us by
? diluting the share ownership or voting rights of a person seeking to obtain
control of us; and
? may adversely affect prevailing market prices for our Class A ordinary shares
and/or warrants.
Similarly, if we issue debt securities or otherwise incur significant debt to
bank or other lenders or owners of a target, it could result in:
? default and foreclosure on our assets if our operating revenues after an
initial business combination are insufficient to repay our debt obligations;
acceleration of our obligations to repay the indebtedness even if we make all
? principal and interest payments when due if we breach certain covenants that
require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
? our immediate payment of all principal and accrued interest, if any, if the
debt security is payable on demand;
our inability to obtain necessary additional financing if the debt security
? contains covenants restricting our ability to obtain such financing while the
debt security is outstanding;
? our inability to pay dividends on our Class A ordinary shares;
using a substantial portion of our cash flow to pay principal and interest on
? our debt, which will reduce the funds available for dividends on our Class A
ordinary shares if declared, our ability to pay expenses, make capital
expenditures and acquisitions, and fund other general corporate purposes;
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? limitations on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate;
? increased vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation;
limitations on our ability to borrow additional amounts for expenses, capital
? expenditures, acquisitions, debt service requirements, and execution of our
strategy; and
? other purposes and other disadvantages compared to our competitors who have
less debt.
Our amended and restated memorandum and articles of association provide that we
have only 24 months from the closing of our initial public offering, or until
November 2, 2022 (the "Combination Period") to complete our initial business
combination. If we do not complete our initial business combination within such
24-month 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 (less
taxes payable and 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 Shareholders' rights as shareholders (including the
right to receive further liquidation distributions, if any) and (iii) as
promptly as reasonably possible following such redemption, subject to the
approval of the remaining shareholders and the board of directors, liquidate and
dissolve, subject in the case of clauses (ii) and (iii), to the obligations
under Cayman Islands law to provide for claims of creditors and in all cases
subject to the other requirements of applicable law.
Proposed Business Combination
On November 7, 2021, we entered into an Agreement and Plan of Merger (as it may
be amended, supplemented or otherwise modified from time to time, the "Business
Combination Agreement"), by and among the Company, Grassroots Merger Sub, Inc.,
a Delaware corporation ("Merger Sub"), and FiscalNote Holdings, Inc., a Delaware
corporation ("FiscalNote").
The Business Combination Agreement provides for, among other things, the
following transactions on the closing date: (i) the Company will domesticate as
a Delaware corporation ("Newco", such transaction, the "Domestication") and, in
connection with the Domestication, (A) each then issued and outstanding Class A
ordinary share of the Company will convert automatically into one share of Class
A common stock of Newco (the "Newco Class A Common Stock"), (B) each then issued
and outstanding Class B ordinary share of the Company will convert automatically
into one share of Newco Class A Common Stock, and (C) each then issued and
outstanding common warrant of the Company will convert automatically into one
warrant to purchase one share of Newco Class A Common Stock; and (ii) at least
one day after the Domestication, Merger Sub will merge with and into FiscalNote,
with FiscalNote as the surviving company in the merger and, after giving effect
to such merger, continuing as a wholly owned subsidiary of Newco (the "Merger").
The Domestication, the Merger and the other transactions contemplated by the
Business Combination Agreement are hereinafter referred to as the "Proposed
Business Combination." The time at which the Merger becomes effective is
hereinafter referred to as the "Effective Time."
In connection with the Proposed Business Combination, Newco will adopt a dual
class stock structure pursuant to which (i) all stockholders of Newco, other
than the existing holders of FiscalNote Class B common stock, will hold shares
of Newco Class A Common Stock, which will have one vote per share, and (ii) the
existing holders of FiscalNote Class B common stock will hold shares of Class B
common stock of Newco (the "Newco Class B Common Stock"), which will have 25
votes per share. The Newco Class B Common Stock will be subject to conversion to
Newco Class A Common Stock upon any transfers of Newco Class B Common Stock
(except for certain permitted transfers) and subject to certain other customary
terms and conditions.
The Proposed Business Combination is expected to close in the second quarter of
2022, following the receipt of the required approval by the Company's and
FiscalNote's shareholders and the fulfillment of other customary closing
conditions.
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In accordance with the terms and subject to the conditions of the Business
Combination Agreement (i) each share of FiscalNote Class A common stock (other
than dissenting shares) will be canceled and converted into the right to receive
the applicable portion of the merger consideration comprised of Newco Class A
Common Stock, in an amount determined by dividing the quotient of (A) the sum of
$1 billion plus the aggregate exercise price payable with respect to vested
FiscalNote options and FiscalNote warrants, divided by (B) the total number of
issued and outstanding FiscalNote shares, taking into account the total number
of shares issued or issuable as a result of any exercise or conversion of all
FiscalNote equity securities outstanding immediately prior to the Effective Time
(whether issued prior to, at or after the Effective Time), by $10.00 (the
"Exchange Ratio"), in accordance with the Business Combination Agreement, (ii)
each share of FiscalNote Class B common stock (other than dissenting shares)
will be canceled and converted into the right to receive the applicable portion
of the merger consideration comprised of Newco Class B Common Stock, as
determined pursuant to the Exchange Ratio, (iii) all of the subordinated
convertible promissory notes issued by FiscalNote that are outstanding and
unconverted immediately prior to the Effective Time will be automatically
assumed and converted into a convertible note issued by Newco with a right of
conversion into shares of Newco Class A Common Stock, (iv) all of the warrants
to purchase FiscalNote Class A common stock or FiscalNote preferred stock
outstanding and unexercised or unconverted, as applicable, immediately prior to
the Effective Time will be deemed automatically exercised or converted into the
right to receive a number of shares of Newco Class A common stock determined in
accordance with the Business Combination Agreement, (v) all options to purchase
Class A common stock of FiscalNote, vested or unvested, will convert into stock
options to purchase shares of Newco Class A Common Stock determined in
accordance with the Exchange Ratio, (vi) vested restricted stock units to
acquire shares of Class A common stock of FiscalNote will be automatically
deemed settled and converted into the right to receive that number of shares of
Newco Class A Common Stock determined in the Business Combination Agreement, and
(vii) all of the unvested restricted stock units to acquire shares of Class A
common stock of FiscalNote outstanding immediately prior to the Effective Time
will be automatically assumed and converted into restricted stock units relating
to shares of Newco Class A Common Stock, subject to substantially the same terms
and conditions as were applicable immediately before the Effective Time.
In addition, the Business Combination Agreement contemplates that the holders of
common stock, warrants, options and RSUs of FiscalNote outstanding immediately
prior to the Effective Time will be entitled to receive earnout consideration in
the form of shares of Newco Class A Common Stock and/or restricted stock units
of Newco upon occurrence of certain triggering events after the Effective Time
as determined in the Business Combination Agreement.
Sponsor Agreement
Concurrently with the execution of the Business Combination Agreement, the
Company, the Sponsor, FiscalNote and certain other persons party thereto entered
into a sponsor letter agreement (the "Sponsor Agreement"), pursuant to which the
Sponsor has agreed, among other things, to (i) not redeem any ordinary shares in
the Company owned by it in connection with the Business Combination, (ii) vote
in favor of the Business Combination Agreement and the transactions contemplated
thereby (including the Merger) and (iii) waive any adjustment to the conversion
ratio set forth in the Company's amended and restated memorandum and articles of
association with respect to the Class B ordinary shares of the Company held by
the Sponsor, in each case, on the terms and subject to the conditions set forth
in the Sponsor Agreement.
In addition, the Sponsor has agreed that (i) all equity interests of Newco held
by the Sponsor immediately after the Effective Time (the "Restricted
Securities") will be subject to a lockup of 180 days from the Effective Time and
(ii) 50% of each type of the Restricted Securities held by the Sponsor will be
subject to a lockup during the period from the date that is 180 days following
after the Effective Time and ending on the first anniversary of the Effective
Time, in each case, except to the Permitted Transferees as defined in the
Sponsor Agreement.
PIPE Financing (Private Placement)
In connection with the signing of the Business Combination Agreement, the
Company entered into subscription agreements (the "Subscription Agreements")
with certain investors, including affiliates of Sponsor (the "PIPE Investors").
Pursuant to the Subscription Agreements, the PIPE Investors agreed to subscribe
for and purchase, and the Company agreed to issue and sell to such investors, on
the closing date of, and immediately prior to (but subject to), the Merger, an
aggregate of 10,000,000 shares of Newco Class A Common Stock for a purchase
price of $10.00 per share, for aggregate gross proceeds of $100,000,000 (the
"PIPE Financing"). In connection with the execution of the First Amendment to
the Business Combination Agreement and the Debt Commitment Letter (as defined in
"Note 11 - Subsequent Events"), the parties to the Subscription Agreements
agreed to terminate such Subscription Agreements and the transactions
contemplated thereby.
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Voting and Support Agreements
Concurrently with the execution of the Business Combination Agreement, certain
stockholders of FiscalNote (collectively, the "Voting Stockholders") entered
into a voting and support agreement (collectively, the "Support Agreements")
with the Company and FiscalNote, pursuant to which each Voting Stockholder has
agreed to, among other things, (i) vote in favor of the Business Combination
Agreement and the transactions contemplated thereby, (ii) a lockup of all equity
interests of Newco held by such Voting Stockholder immediately after the
Effective Time for a period of 180 days from the Effective Time (or 12 months,
in the case of the Company's co-founders), and (iii) be bound by certain other
covenants and agreements related to the Business Combination. The Voting
Stockholders hold sufficient shares of FiscalNote to cause the approval of the
Business Combination on behalf of FiscalNote.
Registration Rights Agreement
At the closing of the Business Combination, Newco, the Sponsor, the Backstop
Purchasers (as defined below) and certain other holders of Newco Class A Common
Stock will enter into an amended and restated registration rights agreement (the
"Amended and Restated Registration Rights Agreement") pursuant to which, among
other matters, certain stockholders of the Company and FiscalNote will be
granted certain customary demand and "piggy-back" registration rights with
respect to their respective shares of Newco Class A Common Stock.
Backstop Agreement
In connection with the signing of the Business Combination Agreement, the
Company and certain affiliates of the Sponsor (the "Backstop Purchasers")
entered into a backstop agreement (the "Backstop Agreement") whereby the
Backstop Purchasers have agreed, subject to the other terms and conditions
included therein, at the BPS Closing (as defined in the Backstop Agreement), to
subscribe for Newco Class A Common Stock in order to fund any redemptions by
shareholders of the Company in connection with the Business Combination, in an
amount of up to $175,000,000 (the "Sponsor Backstop"). On May 9, 2022, in
connection with the execution of the Amendment, the Company and the Backstop
Purchasers entered into an Amendment to the Backstop Agreement (the "Backstop
Amendment"). Pursuant to the Backstop Amendment, the Company has agreed to a
bonus issuance to each Backstop Purchaser of 0.57 shares of Newco Class A Common
Stock for each Backstop Purchase Share immediately prior to the effective time
of the Merger.
Amendment to the Business Combination Agreement, the PIPE Financing and the
Backstop Agreement
On May 9, 2022, the Company, FiscalNote and Merger Sub entered into a First
Amendment to the Business Combination Agreement (the "Amendment"). Pursuant to
the Amendment, the parties thereto agreed to (i) an additional triggering event
(the volume-weighted average price of the Newco Class A Common Stock for certain
trading periods post-Closing reaching $10.50) for issuing an additional tranche
of earnout consideration pursuant to the Business Combination Agreement, (ii) an
extension of the Termination Date (as defined in the Business Combination
Agreement) to August 7, 2022 and (iii) a bonus issuance of 0.57 shares of Newco
Class A Common Stock to the holders of the Company's Class A ordinary shares
that do not elect to redeem their shares for each share of Newco Class A Common
Stock received by such holders in the Domestication and to the Backstop
Purchasers for each Backstop Purchase Share pursuant to the Backstop Amendment.
In addition, certain provisions of the Business Combination Agreement were
amended to reflect the transactions contemplated by FiscalNote's execution of a
debt commitment letter, the termination of the Subscription Agreements and the
removal of the PIPE Financing.
On May 9, 2022, the parties to the Subscription Agreements (as described in Note
1) agreed to terminate such agreements and the transactions contemplated
thereby.
On May 9, 2022, in connection with the execution of the Amendment, the Company
and the Backstop Purchasers (as defined in Note 1) entered into an Amendment to
the Backstop Agreement (the "Backstop Amendment"). Pursuant to the Backstop
Amendment, the Company has agreed to a bonus issuance to each Backstop Purchaser
of 0.57 shares of Newco Class A Common Stock for each Backstop Purchase Share
immediately prior to the effective time of the Merger.
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Liquidity and Going Concern
Our liquidity needs through March 31, 2022 have been satisfied through a payment
of $25,000 from our Sponsor to cover certain expenses on our behalf in exchange
for the issuance of the founder shares (as defined below), a loan under a
promissory note with our Sponsor of approximately $176,000 (the "Note"), and the
net proceeds from the consummation of the Initial Public Offering and the
Private Placement of $2.0 million. On October 18, 2021, we entered into a
warrant purchase agreement with our Sponsor whereby our Sponsor agreed to
purchase an additional 1,500,000 Private Placement Warrants for aggregate
proceeds to the Company of $1.5 million. In addition, in order to finance
transaction costs in connection with a Business Combination, the Sponsor,
members of the Company's founding team or any of their affiliates may, but are
not obligated to, provide the Company Working Capital Loans. As of March 31,
2022, there were no amounts outstanding under any Working Capital Loans.
In connection with our assessment of going concern considerations in accordance
with FASB ASC Topic 205-40, "Presentation of Financial Statements - Going
Concern," we have until November 2, 2022 to consummate a Business Combination.
It is uncertain that we will be able to consummate a Business Combination by
this time. If a Business Combination is not consummated by this date, there will
be a mandatory liquidation and subsequent dissolution of the Company. Management
has determined that the liquidity condition and mandatory liquidation, should a
Business Combination not occur, and potential subsequent dissolution raises
substantial doubt about our ability to continue as a going concern. No
adjustments have been made to the carrying amounts of assets or liabilities
should we be required to liquidate after November 2, 2022.
Over this time period, we will be using funds not held in the Trust account for
paying existing accounts payable, performing due diligence on prospective target
businesses, paying for travel expenditures, and structuring, negotiating and
consummating the Business Combination.
We continue to evaluate the impact of the COVID-19 pandemic and have concluded
that the specific impact is not readily determinable as of the date of the
balance sheet. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Results of Operations
Our entire activity since inception up to March 31, 2022 has been related to our
formation, Initial Public Offering, which was consummated on November 2, 2020,
and since the Initial Public Offering, our activity has been limited to the
search for and due diligence on a prospective target for an initial Business
Combination. We will not be generating any operating revenues until the closing
and completion of our initial Business Combination. We generate non-operating
income in the form of interest income on cash and cash equivalents. 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 for due
diligence expenses.
For the three months ended March 31, 2022, we had a net income of approximately
$7.2 million, which consisted approximately $23,000 in interest income from
investments held in the trust account, non-operating income of approximately
$9.1 million resulting from changes in fair value of derivative warrant
liabilities, partially offset by approximately $1.9 million in general and
administrative expenses.
For the three months ended March 31 2021, we had net income of approximately
$3.5 million, which consisted of non-operating income of approximately $3.7
million resulting from changes in fair value of derivative warrant liabilities
and approximately $46,000 in interest income earned on the Trust Account,
partially offset by approximately $250,000 in general and administrative
expenses.
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Related Party Transactions
Founder Shares
On August 31, 2020, our Initial Shareholders paid an aggregate of $25,000 for
certain expenses on our behalf in exchange for the issuance of 5,031,250 Class B
ordinary shares (the "founder shares"). Our Sponsor transferred 25,000 of the
founder shares to each of Marc Holtzman and Bradford Allen and 300,000 of the
founder shares to Peter Lee Coker Jr., the three independent directors at that
time. These 350,000 shares will not be subject to forfeiture in the event the
underwriters' over-allotment option is not exercised. The Sponsor agreed to
surrender for no consideration up to 656,250 founder shares, on a pro rata
basis, to the extent that the option to purchase additional units was not
exercised in full by the underwriters. The forfeiture was adjusted to the extent
that the option to purchase additional units is not exercised in full by the
underwriters so that the founder shares will represent 20% of our issued and
outstanding shares after the Initial Public Offering. On November 27, 2020, the
over-allotment option expired and 656,250 founder shares were surrendered for no
consideration. In addition, on May 24, 2021, Mr. Coker resigned and as a result
forfeited all of his 300,000 founder shares that the sponsor had previously
transferred to him and assigned and transferred such founder shares to the
sponsor for no consideration in connection with his resignation.
Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement of 5,500,000 warrants, at a price of $1.00 per Private
Placement Warrant with our Sponsor, generating gross proceeds of $5.5 million.
On October 18, 2021, we entered into a warrant purchase agreement with our
Sponsor whereby our Sponsor agreed to purchase an additional 1,500,000 Private
Placement Warrants for aggregate proceeds to the Company of $1.5 million.
Due To Related Party
As of March 31, 2022, we had a payable of $0.3 million due to an affiliate of
our Sponsor, resulting from the affiliate paying certain costs on our behalf.
Related Party Loans
On August 28, 2020, our Sponsor agreed to loan us up to $250,000 to be used for
the payment of costs related to the Initial Public Offering pursuant to a
promissory note (the "Note"). The Note was non-interest bearing, unsecured and
due upon the closing of the Initial Public Offering. As of December 31, 2020, we
owed approximately $176,000 under the Note. We repaid the Note on March 31,
2021.
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Working Capital Loans
In order to finance transaction costs in connection with a Business Combination,
our Sponsor, members of our founding team or any of their affiliates may, but
are not obligated to, loan us funds as may be required ("Working Capital
Loans"). If we complete a Business Combination, we would repay the Working
Capital Loans out of the proceeds of the Trust Account released to us.
Otherwise, the Working Capital Loans would be repaid only out of funds held
outside the Trust Account. In the event that a Business Combination does not
close, we 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. The Working Capital Loans would either
be repaid upon consummation of a Business Combination, without interest, or, at
the lender's discretion, up to $1.5 million of such Working Capital Loans may be
convertible into warrants of the post Business Combination entity at a price of
$1.00 per warrant. The warrants would be identical to the private placement
warrants. 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. As of March 31, 2022 and December 31, 2021, we had no borrowings
under the Working Capital Loans.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities.
The underwriters are entitled to deferred underwriting commissions of $0.35 per
unit, or approximately $6.1 million in the aggregate, which 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
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses. A summary of our significant accounting policies is
included in Note 2 to our unaudited condensed financial statements in Part I,
Item 1 of this Quarterly Report. Certain of our accounting policies are
considered critical, as these policies are the most important to the depiction
of our financial statements and require significant, difficult or complex
judgments, often employing the use of estimates about the effects of matters
that are inherently uncertain. Such policies are summarized in the Management's
Discussion and Analysis of Financial Condition and Results of Operations section
in our 2021 Annual Report on Form 10-K filed with the SEC on April 14, 2022.
There have been no significant changes in the application of our critical
accounting policies during the three months ended March 31, 2022.
Recent Accounting Pronouncements
See Note 2 to the unaudited condensed financial statements included in Part I,
Item 1 of this Quarterly Report for a discussion of recent accounting
pronouncements.
Off-Balance Sheet Arrangements and Contractual Obligations
As of March 31, 2022, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments
or contractual obligations.
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.
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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, (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 the CEO's compensation to median
employee compensation. These exemptions will apply for a period of five years
following the completion of our Initial Public Offering or until we are no
longer an "emerging growth company," whichever is earlier.
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