References to the "company," "our," "us" or "we" refer to Onyx Acquisition Co.
I. 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 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 as a Cayman Islands exempted company
on February 2, 2021 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 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.
The registration statement for our initial public offering was declared
effective on November 2, 2021 (the "Effective Date"). On November 5, 2021, we
consummated our initial public offering of 26,450,000 Units, which includes the
exercise of the underwriter's option to purchase up to an additional 3,450,000
Units at the initial public offering price to cover over-allotments. Each Unit
consists of one Class A ordinary share and one-half of one public warrant, each
whole public warrant entitling the holder thereof to purchase one Class A
ordinary share at an exercise price of $11.50 per share, subject to adjustment.
The Units were sold at an offering price of $10.00 per Unit, generating gross
proceeds of $264,500,000.
Simultaneous with the consummation of the initial public offering and the
issuance and sale of the Units, we consummated the private placement of
12,190,000 private placement warrants (including 690,000 private placement
warrants purchased in connection with the exercise of the underwriter's
over-allotment option) at a price of $1.00 per private placement warrant,
generating total proceeds of $12,190,000. The private placement warrants, which
were purchased by the sponsor and BTIG, LLC ("BTIG"), are identical to the
public warrants, except that if held by the sponsor or BTIG or their permitted
transferees, they are, subject to certain limited exceptions, subject to
transfer restrictions until 30 days following the consummation of our initial
business combination. Additionally, the private placement warrants held by BTIG
are subject to the lock-up and registration rights limitations imposed by FINRA
Rule 5110 and may not be exercised after five years from November 2, 2021.
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Upon the closing of our initial public offering and the private placement,
$269,790,000 has been placed in a trust account, representing the redemption
value of the Class A ordinary shares sold in the initial public offering, at
their redemption value of $10.20 per share.
If we are unable to consummate an initial business combination within 15 months
from the closing of our initial public offering (the "Combination Period"), the
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 and not previously released to the
company to pay income taxes, if any (less 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 company's obligations under Cayman Islands law to provide for
claims of creditors and in all cases subject to the requirements of other
applicable law. There will be no redemption rights or liquidating distributions
with respect to the warrants, which will expire worthless if the company fails
to complete its initial business combination within the Combination Period.
Results of Operations
As of December 31, 2021, we have not commenced any operations. All activity for
the period from February 2, 2021 (inception) through December 31, 2021, relates
to our formation and initial public offering, and, since the completion of our
initial public offering, searching for a target to consummate an initial
business combination. We will not generate any operating revenues until after
the completion of our initial business combination, at the earliest. We will
generate non-operating income in the form of interest income from the proceeds
derived from our initial public offering and placed in the trust account.
For the period from February 2, 2021 (Inception) through December 31, 2021, we
had a net loss of $527,807, which consisted entirely of operating costs.
Liquidity and Capital Resources
As of December 31, 2021, we had cash outside our trust account of $781,709,
available for working capital needs. All remaining cash was held in the trust
account and is generally unavailable for our use, prior to an initial business
combination.
The company's liquidity needs up to November 5, 2021 had been satisfied through
a payment from the sponsor of $25,000 for the founder shares to cover certain
offering costs and the loan under an unsecured promissory note from the sponsor
of $104,808, which was paid in full on November 18, 2021. In addition, in order
to finance transaction costs in connection with a business combination, the
sponsor, initial shareholders, officers, directors or their affiliates may, but
are not obligated to, provide the company Working Capital Loans (as defined
below). As of December 31, 2021, there were no amounts outstanding under any
Working Capital Loans.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our Sponsor or an affiliate of our
Sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required ("Working Capital Loans"). If we complete a
Business Combination, we may repay such Working Capital Loans out of the
proceeds of the Trust Account released to us. In the event that a Business
Combination does not close, we may use a portion of the working capital held
outside the Trust Account to repay such Working Capital Loans, but no proceeds
from our Trust Account would be used for such repayment. Up to $1,500,000 of
such Working Capital Loans may be convertible into warrants, at a price of $1.00
per warrant, at the option of the lender. The warrants would be identical to the
private placement warrants.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a business combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our business combination. Moreover, we may need to obtain additional
financing either to complete our business combination or because we become
obligated to redeem a significant number of our public shares upon consummation
of our business combination, in which case we may issue additional securities or
incur debt in connection with such business combination. Subject to compliance
with applicable securities laws, we would only complete such financing
simultaneously with the completion of our business combination. If we are unable
to complete our business combination because we do not have sufficient funds
available to us, we will be forced to cease operations and liquidate the trust
account. In addition, following our business combination, if cash on hand is
insufficient, we may need to obtain additional financing in order to meet our
obligations.
However, the Company is within 12 months of its mandatory liquidation as of the
time of filing this 10K. In connection with the Company's assessment of going
concern considerations in accordance with Accounting Standards Update ("ASU")
2014-15, "Disclosures of Uncertainties about an Entity's Ability to Continue as
a Going Concern," the mandatory liquidation raises substantial doubt about the
Company's ability to continue as a going concern until the earlier of the
consummation of the Business Combination or the date the Company is required to
liquidate, February 5, 2023.
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.
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Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2021.
Contractual Obligations
As of December 31, 2021, we did not have any long-term debt, capital or
operating lease obligations.
The underwriters are entitled to deferred underwriting commissions of $0.04 per
unit on the 23,000,000 units issued and $0.06 on the 3,450,000 overallotment
units for a total of $11,270,000. The deferred fee will become payable to the
underwriters from the amounts held in the trust account solely in the event that
the company completes an initial business combination, subject to the terms of
the underwriting agreement for the offering.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States 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 as our critical accounting policies:
Ordinary Shares Subject to Possible Redemption
The company accounts for its Class A ordinary share subject to possible
redemption in accordance with the guidance in Accounting Standards Codification
("ASC") Topic 480 "Distinguishing Liabilities from Equity." Class A ordinary
share subject to mandatory redemption (if any) are classified as a liability
instrument and are measured at fair value. Conditionally redeemable ordinary
share (including ordinary share 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 share are classified as
stockholders' equity. The company's 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, as of December 31, 2021,
26,450,000 shares of Class A ordinary share subject to possible redemption are
presented at redemption value as temporary equity, outside of the stockholders'
equity section of the company's balance sheet.
Net Loss Per Ordinary Share
We have two classes of shares, which are referred to as Class A ordinary shares
and Class B ordinary shares. Earnings and losses are shared pro rata between the
two classes of shares. The potential ordinary shares for outstanding warrants to
purchase our shares were excluded from diluted earnings per share for the period
from February 2, 2021 (inception) through December 31, 2021 because the warrants
are contingently exercisable, and the contingencies have not yet been met. As a
result, diluted net loss per ordinary share is the same as basic net loss per
ordinary share for the periods.
Recent Accounting Pronouncements
In August 2020, FASB issued Accounting Standards Update ("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, 2022 and should be
applied on a full or modified retrospective basis. On February 2, 2021, the date
of the company's inception, the company adopted the new standard.
Management does not believe that any recently issued, but not effective,
accounting standards, if currently adopted, would have a material effect on the
company's financial statements.
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JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We will qualify as an "emerging growth company" and
under the JOBS Act will be allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As a result, our financial statements may not
be comparable to companies that comply with new or revised accounting
pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company", we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an independent registered public accounting firm'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 report of independent registered public
accounting firm 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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ONYX ACQUISITION CO. I 
