The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our audited financial statements
and the notes related 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. Our actual
results may differ materially from those anticipated in these forward-looking
statements as a result of many factors, including those set forth under
"Cautionary Note Regarding Forward-Looking Statements," "Item 1A. Risk Factors"
and elsewhere in this report.
Overview
We are a blank check company formed under the laws of the State of Delaware on
December 15, 2020 for the purpose of entering into a merger, capital stock
exchange, asset acquisition, stock purchase, recapitalization, reorganization or
other similar business combination with one or more businesses or entities,
which we refer to as our initial business combination. We intend to effectuate
our initial business combination using cash derived from the proceeds of our
initial public offering, including the partial exercise of the underwriters'
over-allotment option, and the private placements of the private placement
warrants, our capital stock, debt or a combination of cash, stock 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 our initial
business combination will be successful.
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities for the year ended December 31, 2021 were organizational
activities, those necessary to prepare for our initial public offering,
described below, and, subsequent to our initial public offering, identifying a
target company for our initial business combination. We do not expect to
generate any operating revenues until after the completion of our initial
business combination, at the earliest. We generate non-operating income in the
form of interest income on marketable securities 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 in connection with searching for, and completing, an initial business
combination.
For the year ended December 31, 2021, we had a net loss of $682,065, which
consists of formation and operating costs of $556,006, stock-based compensation
expense of $143,327, offset by interest on marketable securities held in the
trust account of $14,751, an unrealized gain on marketable securities held in
the trust account of $2,498 and interest income earned on our bank account of
$19.
Liquidity and Capital Resources
Until the consummation of our initial public offering, our only source of
liquidity was an initial purchase of founder shares by our sponsor and loans
from our sponsor.
On October 13, 2021, we consummated our initial public offering of 15,000,000
units, at $10.00 per unit, generating total gross proceeds of $150,000,000.
Simultaneously with the consummation of our initial public offering, we
consummated the private placement of an aggregate of 6,200,000 private placement
warrants to our sponsor and Stifel Venture at a price of $1.00 per private
placement warrant, generating total gross proceeds of $6,200,000
On October 19, 2021, the underwriters of our initial public offering notified us
of their exercise of the over-allotment option in part and concurrent forfeiture
of the remaining portion of such option. As such, on October 22, 2021, the
underwriters purchased 1,500,000 additional units at $10.00 per additional unit
upon the closing of the partial exercise of the over-allotment option,
generating total gross proceeds of $15,000,000. Simultaneously with the closing
of the partial exercise of the over-allotment option, we consummated the private
placement of an aggregate of 375,000 additional private placement warrants to
our sponsor and Stifel Venture at $1.00 per additional private placement
warrant, generating total gross proceeds of $375,000.
Of the aggregate 16,500,000 units sold in our initial public offering,
14,857,500 units were purchased by our anchor investors. In connection with the
closing of our initial public offering, each anchor investor acquired from our
sponsor an indirect economic interest in certain founder shares (937,500 founder
shares in the aggregate) at a purchase price of $0.10 per share. Our sponsor has
agreed to distribute such founder shares to the anchor investors pro rata based
on their indirect ownership interest in such founder shares after the completion
of our initial business combination.
Following our initial public offering, including the partial exercise of the
over-allotment option, and the private placements, a total of $166,650,000 was
placed in the trust account. We incurred $15,892,398 in initial public offering
related costs, consisting of $2,475,000 of underwriting fees, $6,600,000 of
deferred underwriting fees, $541,773 of other offering costs, and $6,275,625 for
the fair value of the founder shares attributable to the anchor investors.
For the year ended December 31, 2021, cash used in operating activities was
$826,598. Net loss of $682,065 was affected by stock-based compensation expense
of $143,327, interest earned on marketable securities held in the trust account
of $14,751 and an unrealized gain on marketable securities held in the trust
account of $2,498. Changes in operating assets and liabilities used $270,611 of
cash for operating activities.
As of December 31, 2021, we had cash and marketable securities held in the trust
account of $166,667,249 (including approximately $17,000 of interest income and
unrealized gains) consisting of U.S. Treasury Bills with a maturity of 185 days
or less. Interest income on the balance in the trust account may be used by us
to pay taxes. Through December 31, 2021, we have not withdrawn any interest
earned from the trust account.
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
deferred underwriting commissions and taxes payable), to complete our initial
business combination. To the extent that our capital stock or debt is used, in
whole or in part, as consideration to complete our 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.
As of December 31, 2021, we had cash of $1,106,629 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, and structure, negotiate and complete our initial business
combination.
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In order to fund working capital deficiencies or finance transaction costs in
connection with our initial business combination, our sponsor or our officers,
directors or their affiliates may, but are not obligated to, loan us funds as
may be required. If we complete our initial business combination, we would repay
such loaned amounts. In the event that our initial business combination does not
close, such loaned amounts would be forgiven. Up to $1,500,000 of such working
capital loans may be convertible into warrants of the post-combination entity at
a price of $1.00 per warrant. 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 an initial 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 initial business combination. Moreover, we may need to
obtain additional financing either to complete our initial business combination
or because we become obligated to redeem a significant number of our public
shares upon completion of our initial 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 initial
business combination. If we do not complete our initial 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
initial business combination, if cash on hand is insufficient, we may need to
obtain additional financing in order to meet our obligations.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of December 31, 2021.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or other long-term
liabilities, other than an agreement to pay our sponsor a monthly fee of $25,000
for general and administrative services, including office space, utilities and
administrative support. We began incurring these fees on October 7, 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 of our initial public offering are entitled to a deferred fee
of $0.40 per unit sold in our initial public offering, or $6,600,000 in the
aggregate. Subject to the terms of the underwriting agreement, the deferred fee
(i) will become payable to the underwriters from the amounts held in the trust
account solely in the event that we complete our initial business combination
and (ii) will be waived by the underwriters in the event that we do not complete
our initial business combination.
Critical Accounting Policies and Estimates
The preparation of 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 period reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Shares of Class A common stock
subject to mandatory redemption are classified as a liability instrument and are
measured at fair value. Conditionally redeemable shares of Class A common stock
(including Class A common stock 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, shares of Class A common stock are classified as
stockholders' equity. Our Class A common stock features certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, Class A common stock subject
to possible redemption is presented at redemption value as temporary equity,
outside of the stockholders' deficit section of our balance sheet.
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Share-Based Payment Arrangements
We measure and recognize compensation expense for all share-based payments on
their estimated fair values measured as of the grant date. These costs are
recognized as an expense in the statement of operations upon vesting, once the
applicable performance conditions are met, with an offsetting increase to
additional paid-in capital. Forfeitures are recognized as they occur.
Net Loss per Common Share
Net loss per common share of common stock is computed by dividing net loss by
the weighted average number of common shares issued and outstanding during the
period. Subsequent measurement of the redeemable shares of Class A common stock
is excluded from loss per ordinary share as the redemption value approximates
fair value. We calculate our earnings per share to allocate net loss pro rata to
shares of Class A and Class B common stock. This presentation contemplates a
business combination as the most likely outcome, in which case, both classes of
common stock share pro rata in the loss of our company.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board 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, with early adoption permitted beginning on January 1, 2021.
We adopted ASU 2020-06 effective January 1, 2021. The adoption of ASU 2020-06
did not have an impact on our financial statements.
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 financial statements.
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