References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Enterprise 4.0 Technology Acquisition Corp. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to ENT4.0 Technology Sponsor, LLC. 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 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
All statements other than statements of historical fact included in this Report
including, without limitation, statements under this "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding our financial position, business strategy and the plans and objectives
of management for future operations, are forward- looking statements. When used
in this Report, words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to us or our management,
identify forward-looking statements. Such forward-looking statements are based
on the beliefs of management, as well as assumptions made by, and information
currently available to, the Company's management. Actual results could differ
materially from those contemplated by the forward-looking statements as a result
of certain factors detailed in our filings with the SEC. All subsequent written
or oral forward-looking statements attributable to us or persons acting on our
behalf are qualified in their entirety by this paragraph.
The following discussion and analysis of our 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.
Overview
We are a blank check company incorporated in the Cayman Islands on May 3, 2021
formed for the purpose of effecting a merger, amalgamation, share exchange,
asset acquisition, share purchase, reorganization or other similar Business
Combination with one or more businesses (a "Business Combination"). We intend to
effectuate our initial Business Combination using cash derived from the proceeds
of the initial public offering and the sale of the placement warrants, our
shares, debt or a combination of cash, shares and debt. We are not limited to a
particular industry or sector for purposes of completing a Business Combination
although it intends to focus its search within the technology industry along the
trendlines set by a new wave of cloud native companies that combine artificial
intelligence, intelligent automation and proprietary access to data to deliver
actionable insights for enterprise businesses. We are an early stage and
emerging growth company and, as such, we are subject to all of the risks
associated with early stage and emerging growth companies.
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 operating revenues
to date. Our only activities from inception through September 30, 2022 were
organizational activities and those necessary to prepare for the initial public
offering, described below, and following the initial public offering,
identifying a target company for a Business Combination. We do not expect to
generate any operating revenues until after the completion of our initial
Business Combination. We expect to generate non-operating income in the form of
interest income on marketable securities held after the initial public offering.
We expect that we will 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 in connection with searching for, and
completing, a Business Combination.
For the three months ended September 30, 2022, we had a net income of
$1,168,910, which consisted of interest earned on investment held in the Trust
Account of $1,349,618, offset by operating expense of $180,708.
For the nine months ended September 30, 2022, we had a net income of $1,328,977
which consisted of interest earned on investment held in the Trust Account of
$1,930,925, offset by operating expenses of $601,948.
For the three months ended September 30, 2021, we had a $6,642 net loss.
For the period from May 3, 2021 (inception) through September 30, 2021, we had a
$6,642 net loss.
Liquidity and Capital Resources
On October 21, 2021, the Company consummated the initial public offering of
30,000,000 Units, including 3,900,000 units issued pursuant to the partial
exercise of the underwriters' over-allotment option. Each unit consists of one
Class A ordinary share of the Company, par value $0.0001 per share (a "public
share"), and one-half of one redeemable warrant of the Company ("warrant"), with
each whole warrant entitling the holder thereof to purchase one Class A ordinary
share of the Company for $11.50 per share. The units were sold at a price of
$10.00 per unit, generating gross proceeds of $300,000,000. Simultaneously with
the closing of the initial public offering, we consummated the sale of 700,000
placement units (the "placement units") at a price of $10.00 per placement unit
in a private placement to Sponsor, generating gross proceeds of $7,000,000.
Following the initial public offering and the sale of the placement units and
the loan from the Sponsor to the Company of $6,220,000 (the "Sponsor Loan") as
of the closing date of the initial public offering, a total of $306,000,000 was
placed in the Trust Account. We incurred transaction costs of $17,078,457,
consisting of $5,220,000 of underwriting fees, and $11,280,000 of deferred
underwriting fees and $578,457 of other offering costs.
For the nine months ended September 30, 2022, net cash used in operating
activities was $359,364. Net income of $1,328,977 was affected by interest
earned on marketable securities of $1,930,925. Changes in operating assets and
liabilities provided $242,584 of cash from operating activities.
For the period from May 3, 2021 (inception) through September 30, 2021, net cash
used in operating activities was $9,842. Net loss of $6,642 was affected by
changes in operating assets and liabilities which used $3,200 of cash in
operating activities.
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At September 30, 2022, we had cash and marketable securities held in the Trust
Account of $307,948,085. We intend to use substantially all of the funds held in
the Trust Account, including any amounts representing interest earned on the
Trust Account, which interest shall be net of taxes payable and excluding
deferred underwriting commissions, to complete our initial Business Combination.
We may withdraw interest from the Trust Account to pay taxes, if any. To the
extent that our share capital or debt is used, in whole or in part, as
consideration to complete a 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.
At September 30, 2022, we had cash of $278,202 held outside of 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, structure, negotiate and complete a Business Combination.
To finance transaction costs in connection with a Business Combination, the
Sponsor or an affiliate of the Sponsor or certain of the Company's directors and
officers may, but are not obligated to, loan the Company funds as may be
required ("Working Capital Loans"). If the Company completes a 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.
If a 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. The Working Capital Loans would either be repaid upon consummation of a
Business Combination, without interest, or, at the lender's discretion, up to
$1,500,000 of such Working Capital Loans may be convertible into units of the
post-Business Combination entity at a price of $10.00 per Unit. The Units would
be identical to the placement units. 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.
Going Concern
The Company will need to raise additional capital through loans or additional
investments from its Sponsor, shareholders, officers, directors, or third
parties. The Company's officers, directors and Sponsor may, but are not
obligated to, loan the Company funds, from time to time or at any time, in
whatever amount they deem reasonable in their sole discretion, to meet the
Company's working capital needs. Accordingly, the Company may not be able to
obtain additional financing. If the Company is unable to raise additional
capital, it 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. The Company cannot provide any assurance that new financing will be
available to it on commercially acceptable terms, if at all. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern through April 21, 2023, the date that the Company will be required to
cease all operations, except for the purpose of winding up, if a Business
Combination is not consummated. These unaudited condensed 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 the
Company be unable to continue as a going concern.
Off-Condensed balance Sheet Financing Arrangements
We have no obligations, assets or liabilities that would be considered
off-condensed 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-condensed balance sheet arrangements. We have not entered into any
off-condensed 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 our Sponsor
monthly fee of $12,500 for office space, administrative and support services. We
began incurring these fees on October 19, 2021 and will continue to incur these
fees monthly until the earlier of the completion of the Business Combination and
our liquidation.
The underwriters were entitled to a cash underwriting discount of $0.20 per
unit, or $5,220,000 in the aggregate, which was paid upon the closing of the
initial public offering. In addition, the underwriters are entitled to a
deferred fee of (i) $0.35 per unit of the gross proceeds of the initial
26,100,000 units sold in the initial public offering, or $9,135,000, and (ii)
$0.55 per unit of the gross proceeds from the units sold pursuant to the
over-allotment option, or $2,145,000. The deferred fee will become payable to
the underwriters from the amounts held in the Trust Account if and only if the
Company completes a Business Combination, subject to the terms of the
underwriting agreement.
Concurrent with the closing of the initial public offering, the Sponsor loaned
the Company $6,220,000 to be deposited into the Trust Account and to be used to
fund the redemption of public shares (as necessary). The Sponsor Loan is
non-interest bearing and will be repaid or converted into units at a conversion
price of $10.00 per unit, at the discretion of the Sponsor at any time up until
the consummation of a Business Combination. If the Company does not consummate a
Business Combination, the Company will not repay the Sponsor Loan and its
proceeds will be distributed to the public shareholders.
Critical Accounting Policies
The preparation of unaudited condensed financial statements and related
disclosures in conformity with GAAP 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 unaudited
condensed financial statements, and income and expenses during the periods
reported. Actual results could materially differ from those estimates. We have
not identified any critical accounting policies.
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Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible redemption in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." 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 our control) are classified as temporary equity. At all other times,
ordinary shares are classified as shareholders' equity. Our Class A ordinary
shares feature certain redemption rights that are considered to be outside of
our control and subject to occurrence of uncertain future events. Accordingly,
Class A ordinary shares subject to possible redemption are presented as
temporary equity, outside of the shareholders' deficit section of our condensed
balance sheets.
Net Income (Loss) per Ordinary Share
Net income (loss) per ordinary share is computed by dividing net income (loss)
by the weighted average number of ordinary share outstanding for the period. The
Company applies the two-class method in calculating earnings per share.
Accretion associated with the redeemable Class A ordinary shares are excluded
from earnings per share as the redemption value approximates fair value.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in
Entity's Own Equity (Subtopic 815-40) to simplify certain financial instruments.
ASU 2020-06 eliminates the current models that require separation of beneficial
conversion and cash conversion features from convertible instruments and
simplifies the derivative scope exception guidance pertaining to equity
classification of contracts in an entity's own equity. The new standard also
introduces additional disclosures for convertible debt and freestanding
instruments that are indexed to and settled in an entity's own equity. ASU
2020-06 amends the diluted earnings per share guidance, including the
requirement to use the if-converted method for all convertible instruments. ASU
2020-06 is for fiscal years beginning after December 15, 2021 and should be
applied on a full or modified retrospective basis. Early adoption is permitted,
but no earlier than fiscal years beginning after December 15, 2020, including
interim periods within those fiscal years. Management continues to evaluate the
impact of adopting ASU 2020-06.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our unaudited condensed financial statements.
Factors That May Adversely Affect our Results of Operations
Our results of operations and our ability to complete a Business Combination may
be adversely affected by various factors that could cause economic uncertainty
and volatility in the financial markets, many of which are beyond our control.
Our business could be impacted by, among other things, downturns in the
financial markets or in economic conditions, increases in oil prices, inflation,
increases in interest rates, supply chain disruptions, declines in consumer
confidence and spending, the ongoing effects of the COVID-19 pandemic, including
resurgences and the emergence of new variants, and geopolitical instability,
such as the military conflict in the Ukraine. We cannot at this time fully
predict the likelihood of one or more of the above events, their duration or
magnitude or the extent to which they may negatively impact our business and our
ability to complete a Business Combination.
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ENTERPRISE 4.0 TECHNOLOGY ACQUISITION CORP. 
