SPINDLETOP HEALTH ACQUISITION CORP. References to the "Company," "
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our otherSEC filings.
Overview
We are a newly organized blank check company incorporated on
Our sponsor isSpindletop Health Sponsor Group, LLC , aDelaware limited liability company (the "Sponsor"). The registration statement for our initial public offering was declared effective onNovember 3, 2021 . OnNovember 8, 2021 , we consummated the IPO of 23,000,000 units (the "Units") including 3,000,000 Units as part of the underwriters' over-allotment option. Each Unit consists of one share of our Class A common stock, par value$0.0001 per share ("Class A common stock"), and one-half of one of our redeemable warrants ("Public Warrant"), with each whole Public Warrant entitling the holder thereof to purchase one share of Class A common stock for$11.50 per share, subject to adjustment. The Units were sold at a price of$10.00 per Unit, generating gross proceeds to us of$230,000,000 .
Simultaneously with the closing of the IPO, we completed the private sale of an
aggregate of 12,600,000 warrants (the "Private Placement Warrants"), including
1,200,000 Private Placement Warrants related to the underwriters' fully
exercising their over-allotment option, at a purchase price of
Upon the closing of the IPO,$10.20 per Unit sold in the IPO is held in a "Trust Account" and may only be invested inU.S. "government securities", within the meaning of Section 2(a)(16) of the Investment Company Act, having a maturity of 185 days or less or in money market funds meeting certain conditions of Rule 2a-7 promulgated under the Investment Company Act, which invest only in directU.S. government treasury obligations. Except with respect to interest earned on the funds held in the Trust Account that may be released to us to pay its tax obligations, the proceeds from the IPO and the sale of the Private Placement Warrants will not be released from the Trust Account until the earliest to occur of: (a) the completion of our initial Business Combination, (b) the redemption of any shares of our Class A common stock sold in the IPO (the "public shares") properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to provide for the redemption of the public shares in connection with the initial Business Combination or to redeem 100% of our public shares if it does not complete its initial Business Combination within 15 months from the closing of the IPO or (ii) with respect to any other material provisions relating to stockholders' rights or pre-initial Business Combination activity, and (c) the redemption of our public shares if we are unable to complete the initial Business Combination within 15 months from the closing of the IPO, subject to applicable law. The proceeds deposited in the Trust Account could become subject to the claims of our creditors which would have priority over the claims of our public stockholders. 18
--------------------------------------------------------------------------------
Table of Contents
We will have 15 months from the closing of the IPO to complete an initial Business Combination (the "Combination Period") (or extended (a) to 18 months if we have filed (i) a Form 8-K including a definitive merger or acquisition agreement or (ii) a proxy statement, registration statement or similar filing for an initial business combination but have not completed the initial business combination within such 15-month period or (b) two instances by an additional three months each instance for a total of up to 18 months or 21 months, respectively, by depositing into the trust account for each three month extension in an amount of$0.10 per unit). However, if we are unable to complete its initial Business Combination within the Combination Period, 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 us to pay its taxes (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 stockholders' rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and board of directors, liquidate and dissolve, subject in each case to our obligations underDelaware law to provide for claims of creditors and the requirements of other applicable law.
Results of Operations
As ofMarch 31, 2022 , we had not commenced any operations. All activity for the period fromFebruary 17, 2021 (inception) throughMarch 31, 2022 , relates to our formation and the Initial Public Offering and since the closing of the IPO, the search for a prospective initial Business Combination. We have neither engaged in any operations nor generated any revenues to date. 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 on cash and cash equivalents from the proceeds derived from the Initial Public Offering. We expect to 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.
For the three months ended
For the period from
Liquidity, Capital Resources and Going Concern
As of
Our liquidity needs up to
On
We anticipate that the
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 estimates of the costs of undertaking in-depth due diligence and negotiating the Business Combination is less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to the Business Combination. Moreover, we will need to raise additional capital through loans from our Sponsor, officers, directors, or third parties. None of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest in, the Company. 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 our business plan, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.
In connection with our assessment of going concern considerations in accordance
with Financial Accounting Standard Board's Accounting Standards Update ("ASU")
2014-15,
"Disclosures of Uncertainties about an Entity's Ability to Continue as a Going
Concern," management has determined that the mandatory liquidation and
subsequent dissolution, should we be unable to complete a Business Combination,
raises substantial doubt about the Company's ability to continue as a going
concern. We have until February 8, 2023 (or up to August 8, 2023 if extended as
described above) to consummate a Business Combination. Our amended and restated
certificate of incorporation provides that we must complete our initial business
combination within 15 months from the closing of our Initial Public Offering (or
extended (a) to 18 months if we have filed (i) a Form
8-K
including a definitive merger or acquisition agreement or (ii) a proxy
statement, registration statement or similar filing for an initial business
combination but have not completed the initial business combination within such
15-month
period or (b) two instances by an additional three months each instance for a
total of up to 18 months or 21 months, respectively, by depositing into the
trust account for each three month extension in an amount of $0.10 per unit). It
is uncertain that the Company will be able to consummate a Business Combination
by this time or if the Company has the financial resources to extend the
mandatory liquidation date beyond February 8, 2023 by depositing into the Trust
Account for each three-month extension an amount of $0.10 per unit. If a
Business Combination is not consummated or the mandatory liquidation date is not
extended by February 8, 2023 , there will be a mandatory liquidation and
subsequent dissolution. No adjustments have been made to the carrying amounts of
assets or liabilities should the Company be required to liquidate after
February 8, 2023 .
19--------------------------------------------------------------------------------
Table of Contents
Contractual Obligations
Other than the administrative services agreement and deferred underwriting commission, we do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.
Administrative Services Agreement
Commencing on the date that our securities are first listed on Nasdaq, we agreed
to pay the Sponsor
Registration Rights
The holders of the founder shares, Private Placement Warrants, and warrants that may be issued upon conversion of Working Capital Loans will have registration rights to require us to register a sale of any of its securities held by them pursuant to a registration rights agreement to be signed prior to or on the effective date of the IPO. These holders will be entitled to make up to three demands, excluding short form registration demands, that we register such securities for sale under the Securities Act. In addition, these holders will have "piggy-back" registration rights to include their securities in other registration statements filed by us.
Underwriter Agreement
We granted the underwriters a 45-day option to purchase up to 3,000,000 additional Units to cover any over-allotments at the IPO price less the underwriting discounts and commissions. At the time of the IPO, the underwriters fully exercised their over-allotment option.
On
The underwriters are entitled to deferred underwriting commissions of
20--------------------------------------------------------------------------------
Table of Contents
Critical Accounting Policies and Estimates
The preparation of the financial statement in conformity with US GAAP requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Warrant Liability
The Company accounts for the 24,100,000 warrants issued in connection with the IPO and Private Placement in accordance with the guidance contained in FASB ASC 815 "Derivatives and Hedging" whereby under that provision the warrants do not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the Company classifies the warrant instruments as a liability at fair value and adjusts the instruments to fair value at each reporting period. This liability will be re-measured at each balance sheet date until the warrants are exercised or expire, and any change in fair value will be recognized in the Company's statements of operations. The fair value of warrants will be estimated using an internal valuation model. The valuation model will utilize inputs such as assumed share prices, volatility, discount factors and other assumptions and may not be reflective of the price at which they can be settled. Such warrant classification is also subject to re-evaluation at each reporting period. Deferred Offering Costs We comply with the requirements of the ASC340-10-S99-1andSEC Staff Accounting Bulletin ("SAB") Topic 5A- "Expenses of Offering". Deferred offering costs consist principally of professional and registration fees incurred through the balance sheet date that are directly related to the Public Offering. Offering costs are charged to temporary equity or the statement of operations based on the relative value of the Warrants to the proceeds received from the Units sold upon the completion of the IPO. Accordingly, onNovember 8, 2021 , offering costs totaling$13,423,194 (consisting of$4,600,000 of underwriting fees,$8,050,000 of deferred underwriting fees and$773,194 of other offering costs) were recognized with$580,637 which were allocated to the Public and Private Warrants, included in accumulated deficit and$12,842,557 included in temporary equity.
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." Class A common stock subject to
mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable common stock (including common stock that
features redemption rights that are either within the control of the holder or
subject to redemption upon the occurrence of uncertain events not solely within
our control) is classified in temporary equity. At all other times, common stock
is classified as stockholders' equity. Our Class A common stock feature certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, at
Net Income Per Common Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260, "Earnings Per Share". Net income (loss) per common stock is computed by dividing net income (loss) by the weighted average number of common stock outstanding for the period. Remeasurement adjustments associated with the redeemable shares of common stock is excluded from earnings per share as the redemption value approximates fair value.
We have two classes of shares, which are referred to as Class A common stock and Class B common stock. Earnings and losses are shared pro rata between the two classes of shares. We have not considered the effect of the warrants sold in the Initial Public Offering and the Private Placement to purchase an aggregate of 24,100,000 of our Class A common stock in the calculation of diluted loss per share, since their exercise is contingent upon future events. As a result, diluted net income per common share is the same as basic net income per common share.
21--------------------------------------------------------------------------------
Table of Contents
Recent Accounting Pronouncements
InAugust 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 effectiveJanuary 1, 2022 and should be applied on a full or modified retrospective basis. OnFebruary 17, 2021 , the date of the Company's inception, the Company adopted the new standard.
The Company's management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company's financial statements.
Off-Balance
Sheet Arrangements
As ofMarch 31, 2022 , we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Inflation
We do not believe that inflation had a material impact on our business, revenues or operating results during the period presented.
© Edgar Online, source
