Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Report,
including, without limitation, statements in this section 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 our management, as well as assumptions made by, and information
currently available to, our 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.
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The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the financial statements and the
notes thereto contained elsewhere in this Report.
Overview
We are a blank check company incorporated in the Cayman Islands on May 3, 2021
formed for the purpose of effecting an initial business combination. We intend
to effectuate our initial business combination using cash derived from the
proceeds of our initial public offering and the sale of the placement units, 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 an initial business
combination, although we are focusing our 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 an initial
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 December 31, 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 an 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 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, an initial business combination.
For the year ended December 31, 2022, we had a net income of $3,737,355, which
consisted of interest earned on investment held in the trust account of
$4,519,538, offset by operating expenses of $782,183.
For the period from May 3, 2021 (inception) through December 31, 2021, we had a
net loss of $253,198, which consisted of interest earned on investment held in
the trust account of $17,160, offset by operating expenses of $270,358.
Liquidity and Capital Resources
On October 21, 2021, we consummated our 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 public share and
one-half of one redeemable warrant, with each whole warrant entitling the holder
thereof to purchase one Class A ordinary share 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 at a price of $10.00 per
placement unit in a private placement to our sponsor and the representatives,
generating gross proceeds of $7,000,000.
Following the initial public offering and the sale of the placement units and
the sponsor loan to the Company of $6,220,000 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 year ended December 31, 2022, net cash used in operating activities was
$530,805. Net income of $3,737,355 was affected by interest earned on marketable
securities of $4,519,538. Changes in operating assets and liabilities provided
$251,378 of cash from operating activities.
For the period from May 3, 2021 (inception) through December 31, 2021, net cash
used in operating activities was $835,777. Net loss of $253,198 was affected by
interest earned on marketable securities of $17,160. Changes in operating assets
and liabilities used $565,419 of cash from operating activities.
At December 31, 2022, we had cash and marketable securities held in the Trust
Account of $310,536,698. 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 an 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.
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At December 31, 2022, we had cash of $135,721 held outside of the trust account.
We have used and will continue 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 an initial
business combination.
To finance transaction costs in connection with an initial business combination,
our sponsor or an affiliate of our sponsor or certain of the Company's directors
and officers may, but are not obligated to, loan the Company funds as may be
required. 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. If an 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. The
working capital loans would either be repaid upon consummation of an initial
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
We will need to raise additional capital through loans or additional investments
from our sponsor, shareholders, officers, directors, or third parties. Our
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, we may not be able to obtain additional financing. If we are unable
to raise additional capital, we may be required to take additional measures to
conserve liquidity, which could include, but not necessarily be limited to,
curtailing operations, suspending the pursuit of a potential transaction and
reducing overhead expenses. We cannot provide any assurance that new financing
will be available to us on commercially acceptable terms, if at all. These
conditions 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 an initial
business combination is not consummated. These 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-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities that would be considered
off-balance sheet arrangements as of December 31, 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 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 our initial 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 our
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 our 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 an initial business combination, subject to the terms of the
underwriting agreement.
Concurrent with the closing of our initial public offering, our sponsor loaned
the Company $6,220,000 to be deposited into the trust account and 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 our sponsor at any time up until the
consummation of an initial business combination. If the Company does not
consummate an initial business combination, the Company will not repay the
sponsor loan and its proceeds will be distributed to the public shareholders.
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Critical Accounting Policies
The preparation of 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 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 estimates.
Factors That May Adversely Affect our Results of Operations
Our results of operations and our ability to complete an initial 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 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 initial business combination.
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ENTERPRISE 4.0 TECHNOLOGY ACQUISITION CORP. 
