References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Jack Creek Investment Corp. References to our "management" or
our "management team" refer to our officers and directors, and references to the
"Sponsor" refer to JCIC 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 and Section 21E of 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
Form10-Qincluding, without limitation, statements in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding the completion of the Proposed Business Combination (as defined
below), 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, including that the
conditions of the Proposed Business Combination are not satisfied. 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 annual report on
Form10-Kfiled 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
Jack Creek Investment Corp. (the "Company") is a blank check company
incorporated as a Cayman Islands exempted company on August 18, 2020. The
Company was incorporated for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses or entities (a "Business Combination").
We intend to effectuate our Business Combination using cash derived from the
proceeds of the Initial Public Offering and the sale of 9,400,000 Private
Placement Warrants, our shares, debt or a combination of cash, shares and debt.
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 revenues to date.
Our only activities through September 30, 2022 were organizational activities,
those necessary to prepare for the Initial Public Offering, described below, and
identifying a target company for a Business Combination. We do not expect to
generate any operating revenues until after the completion of our Business
Combination. We generate non-operating income in the form of interest income on
investments held in the Trust Account. 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 a net loss of $6,263,057,
which consists of operating and formation costs of $3,191,243, a change in fair
value of warrant liabilities of $4,797,000, a change in fair value of
convertible note of $72,900, offset by interest income on investments held in
the Trust Account of $1,798,086.
For the nine months ended September 30, 2022, we had a net income of $3,834,467,
which consists of the change in fair value of warrant liabilities of $7,456,670,
change in fair value of convertible note of $130,900, interest income on
investments held in the Trust Account of $2,060,045, offset by operating and
formation costs of $5,813,148.
For the three months ended September 30, 2021, we had a net income of
$4,919,098, which consists of the change in fair value of warrants of $5,338,716
and interest income on marketable securities held in the Trust Account of $4,440
offset by operating and formation costs of $424,058.
For the nine months ended September 30, 2021, we had a net income of
$13,619,973, which consists of the change in fair value of warrants of
$20,542,100 and interest income on marketable securities held in the Trust
Account of $61,806, offset by operating and formation costs of $3,035,933 and
the loss on initial issuance of private warrants of $3,948,000. The operating
costs included $1,360,701 of offering costs related to the warrant liabilities.
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Pending Business Combination
On August 3, 2022, we entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Wildfire New PubCo, Inc., a Delaware corporation and our
direct, wholly owned subsidiary ("New PubCo"), Wildfire Merger Sub I, Inc., a
Delaware corporation and direct, wholly owned subsidiary of New PubCo ("Wildfire
Merger Sub I"), Wildfire Merger Sub II, Inc., a Delaware corporation and direct,
wholly owned subsidiary of New PubCo ("Wildfire Merger Sub II"), Wildfire Merger
Sub III, LLC, a Delaware limited liability company and direct, wholly owned
subsidiary of New PubCo ("Wildfire Merger Sub III"), Wildfire GP Sub IV, LLC, a
Delaware limited liability company and direct, wholly owned subsidiary of New
PubCo ("Wildfire GP Sub IV" and together with Wildfire Merger Sub I, Wildfire
Merger Sub II and Wildfire Merger Sub III, the "Merger Subs"), BTOF (Grannus
Feeder)-NQ L.P., a Delaware limited partnership ("Blocker"), and Bridger
Aerospace Group Holdings, LLC, a Delaware limited liability company ("Bridger").
Pursuant to the Merger Agreement, the parties thereto will enter into a business
combination transaction (the "Business Combination" and together with the other
transactions contemplated by the Merger Agreement, the "Transactions"), pursuant
to which, among other things, (i) Wildfire Merger Sub I will merge with and into
Blocker (the "First Merger"), with Blocker as the surviving entity of the First
Merger, upon which Wildfire GP Sub IV will become general partner of such
surviving entity, (ii) Wildfire Merger Sub II will merge with and into the
Company (the "Second Merger"), with the Company as the surviving company of the
Second Merger, and (iii) Wildfire Merger Sub III will merge with and into
Bridger (the "Third Merger" and together with First Merger and Second Merger,
the "Mergers"), with Bridger as the surviving company of the Third Merger.
Following the Mergers, each of Blocker, the Company, and Bridger will be a
subsidiary of New PubCo, and New PubCo will become a publicly traded company. At
the closing of the Transactions ("Closing"), New PubCo will change its name to
Bridger Aerospace Group Holdings, Inc., and its common stock is expected to list
on the NASDAQ Capital Market under the ticker symbol "BAER." The Transactions
reflect an implied pro forma enterprise value for Bridger of $869 million.
Founded in 2014 and led by current Chief Executive Officer and former Navy SEAL
Tim Sheehy, Bridger is a mission-driven company focused on addressing the
year-round threat of economic and environmental damage caused by wildfires.
Through its effective, modern and purposefully designed fleet of aircraft,
Bridger provides its federal agency and state government client base with a
comprehensive range of aerial firefighting solutions. Bridger operates a large
and sophisticated fleet of firefighting aircraft, which includes "Super
Scoopers" (CL-415EAF), air attack and logistical support aircraft (Next
Generation Daher Kodiaks, Pilatus PC-12s, DeHavilland Twin Otter and legacy Twin
Commanders), and UAVs (Unmanned Aerial Vehicles). Bridger also offers FireTRAC,
an innovative, proprietary data gathering, aerial surveillance and reporting
platform that complements its fleet of firefighting assets.
Consummation of the Transactions is subject to customary conditions,
representations, warranties and covenants in the Merger Agreement, including,
among others, approval by shareholders of the Company, the effectiveness of a
registration statement on Form S-4 (the "Form S-4") to be filed with the SEC in
connection with the Transactions, and other customary closing conditions. The
Business Combination is expected to close in the fourth quarter of 2022.
In connection with the execution of the Merger Agreement, the Company and the
Sponsor, and each of their officers and directors, and New PubCo, entered into a
Sponsor Agreement, pursuant to which, among other things, the Sponsor (i) agreed
to the forfeiture of certain of its Class B ordinary shares of the Company in
the event shareholder redemptions in connection with the Transactions exceed
specified levels, (ii) agreed to subject 20% of its Class B ordinary shares of
the Company (after taking into account any such forfeitures) to a
performance-based vesting schedule, upon the terms and subject to the conditions
set forth therein and (iii) agreed not to transfer any ordinary shares or
warrants of the Company until the earlier of the Closing and termination of the
Merger Agreement in accordance with its terms.
The Merger Agreement and related agreements are further described in the Current
Report on Form 8-K filed by the Company on August 4, 2022.
Other than as specifically discussed, this report does not assume the closing of
the Business Combination, or the Transactions contemplated by the Merger
Agreement.
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Liquidity and Capital Resources
On January 26, 2021, we consummated the Initial Public Offering of 34,500,000
Units which includes the full exercise by the underwriter of its over-allotment
option in the amount of 4,500,000 Units, at $10.00 per Unit, generating gross
proceeds of $345,000,000 which is described in Note 3. Simultaneously with the
closing of the Initial Public Offering, we consummated the sale of 9,400,000
Private Placement Warrants at a price of $1.00 per Private Placement Warrant in
a private placement to the sponsor, generating gross proceeds of $9,400,000,
which is described in Note 4.
For the nine months ended September 30, 2022, cash used in operating activities
was $837,509. Net income of $3,834,467 was affected by interest earned on
investments held in the Trust Account of $2,060,045, the change in the fair
value of the warrant liabilities of $7,456,670 and change in fair value of the
convertible note of $130,900. Changes in operating assets and liabilities
provided $4,975,639 of cash from operating activities.
For the nine months ended September 30, 2021, cash used in operating activities
was $1,592,055. Net income of $13,619,973 was affected by interest earned on
marketable securities held in the Trust Account of $61,806, the change in the
fair value of the warrant liability of $20,542,100, loss on initial issuance of
private warrants of $3,948,000 and transaction costs associated with the
warrants issued at the Initial Public Offering of $1,360,701. Changes in the
operating assets and liabilities provided $83,177 of cash for operating
activities.
As of September 30, 2022, we had marketable securities held in the Trust Account
of $347,128,616 (including approximately $2,128,616 of interest income and
realized gains) consisting of money market funds invested in U.S. Treasury Bills
with a maturity of 185 days or less. We may withdraw interest from the Trust
Account to pay taxes, if any. 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 Business
Combination. To the extent that our capital stock or debt is used, in whole or
in part, as consideration to complete our 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 $52,411. We intend to use the funds
held outside the Trust Account primarily to perform business due diligence,
travel to and from the offices, review corporate documents and material
agreements, and structure, negotiate and complete the Business Combination with
Bridger.
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay an
affiliate of the sponsor up to $10,000 per month for office space, secretarial
and administrative services. Upon completion of a Business Combination or its
liquidation, the Company will cease paying these monthly fees.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or
$12,075,000 in the aggregate. The deferred fee 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.
Going Concern
As of September 30, 2022, we had cash of $52,411 and a working capital deficit
of $6,051,114. We intend to use the funds held outside the Trust Account
primarily to perform business due diligence, travel to and from the offices,
review corporate documents and material agreements, and structure, negotiate and
complete the Business Combination with Bridger.
On February 16, 2022 the Company entered into a $1,500,000 convertible
promissory note ("Convertible Note") with the Sponsor in order to fund working
capital deficiencies or finance transaction costs in connection with a Business
Combination. The Convertible Note accrues no interest and is payable upon
completion of a Business Combination. The Convertible Note's entire or partial
balance can be converted into warrants at the discretion of the Sponsor at the
time of Business Combination. The warrants would be identical to the Private
Placement Warrants. As of September 30, 2022, the aggregate balance of the
Convertible Note is $800,000 with an available balance for withdrawal of
$700,000.
If the Business Combination is not consummated, the Company will need to raise
additional capital through loans or additional investments from its Sponsor,
stockholders, 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 one year from the date of these
financial statements if a 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.
In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standards Board ("FASB") Accounting
Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about an
Entity's Ability to Continue as a Going Concern," the Company has until
January 26, 2023 to consummate a Business Combination. It is uncertain that the
Company will be able to consummate a Business Combination by this time.
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If a Business Combination is not consummated by this date and an extension not
requested by the Sponsor, there will be a mandatory liquidation and subsequent
dissolution of the Company. Management has determined that the mandatory
liquidation, should a Business Combination not occur and an extension is not
requested by the Sponsor, and potential subsequent dissolution as well as
liquidity condition noted above raises substantial doubt about the Company's
ability to continue as a going concern. No adjustments have been made to the
carrying amounts of assets or liabilities should the Company be required to
liquidate after January 26, 2023. The Company intends to complete a Business
Combination before the mandatory liquidation date.
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 an
affiliate of the Sponsor up to $10,000 per month for office space, secretarial
and administrative services. Upon completion of a Business Combination or its
liquidation, the Company will cease paying these monthly fees.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or
$12,075,000 in the aggregate. The deferred fee 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. On July 29, 2022, J.P. Morgan Securities LLC ("J.P. Morgan") notified
the Company that, subject to certain conditions, J.P. Morgan waives its
entitlement to the payment of its portion of any deferred compensation in
connection with its role as underwriter in the Initial Public Offering.
Critical Accounting Policies
The preparation of condensed consolidated 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:
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in
accordance with the guidance in ASC Topic 480, "Distinguishing Liabilities from
Equity." Class A ordinary shares subject to mandatory redemption are classified
as a liability instrument and are measured at fair value. Conditionally
redeemable ordinary shares (including ordinary shares that feature redemption
rights that are either within the control of the holder or subject to redemption
upon the occurrence of uncertain events not solely within the Company's control)
are classified as temporary equity. At all other times, ordinary shares are
classified as shareholders' deficit. The Company's Class A ordinary shares
feature certain redemption rights that are considered to be outside of the
Company's control and subject to the occurrence of uncertain future events.
Accordingly, at September 30, 2022 and December 31, 2022, the 34,500,000 Class A
ordinary shares subject to possible redemption are presented as temporary
equity, outside of the shareholders' deficit section of the Company's condensed
consolidated balance sheets.
The Company recognizes changes in redemption value immediately as they occur and
adjusts the carrying value of redeemable ordinary shares to equal the redemption
value at the end of each reporting period. This method would view the end of the
reporting period as if it were also the redemption date for the security.
Immediately upon the closing of the Initial Public Offering, the Company
recognized the accretion from initial book value to redemption amount value. The
change in the carrying value of redeemable Class A ordinary shares resulted in
charges against additional paid-in capital and accumulated deficit.
Convertible Promissory Note
We account for the Convertible Note under ASC 815, "Derivatives and Hedging"
("ASC 815"). Under 815-15-25, an election can made be at the inception of a
financial instrument to account for the instrument under the fair value option
under ASC 825. The Company has made such election for its Convertible Note.
Using the fair value option, the Convertible Note is required to be recorded at
its initial fair value on the date of issuance, and each balance sheet date
thereafter. Changes in the estimated fair value of the Convertible Note is
recognized as a non-cash gain or loss on the condensed consolidated statements
of operations.
Warrant Liabilities
We account for the warrants in accordance with the guidance contained in ASC
815-40 under which the warrants do not meet the criteria for equity treatment
and must be recorded as liabilities. Accordingly, the Company classifies the
warrants as liabilities at their fair value and adjusts the warrants to fair
value at each reporting period. This liability is subject to re-measurement at
each balance sheet date until exercised, and any change in fair value is
recognized in our statement of operations. The Public Warrants for periods where
no observable traded price was available were valued using the Binomial Lattice
Model. For periods subsequent to the detachment of the Public Warrants from the
Units, the Public Warrant quoted market price was used as the fair value as of
each relevant date. The Private Placement Warrants were valued using the Black
Scholes Option Pricing Model as of the Initial Public Offering and based on the
observed price for Public Warrants as of September 30, 2022.
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Net (Loss) Income Per Ordinary Share
Net (loss) income per ordinary share is computed by dividing net (loss) income
by the weighted average number of ordinary shares outstanding during the period.
The Company has two classes of shares, which are referred to as Class A ordinary
shares and Class B ordinary shares. (Loss) income is allocated pro rata between
the two share classes. Accretion associated with the redeemable shares of
Class A ordinary shares is excluded from earnings per share as the redemption
value approximates fair value.
Recent Accounting Standards
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)" ("ASU 2020-06"), to simplify accounting
for 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 effective January 1, 2024 and should be applied on a
full or modified retrospective basis, with early adoption permitted beginning on
January 1, 2021. The Company is currently assessing the impact, if any, that ASU
2020-06 would have on its financial position, results of operations or cash
flows.
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 condensed consolidated financial statements.
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