References to the "Company," "our," "us" or "we" refer to Williams Rowland
Acquisition Corp. 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.
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (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 other
U.S. Securities and Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated as a Delaware corporation on March 10,
2021. We were incorporated for the purpose of effecting a Business Combination.
As of December 31, 2021, we have not yet commenced operations. All activity for
the period from March 10, 2021 (inception) through December 31, 2021 relates to
our formation and the initial public offering (the "Initial Public Offering"),
which is described below. We will not 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 from the proceeds
held in the Trust Account. We have selected December 31 as our fiscal year end.
Our Sponsors are Williams Rowland Sponsor LLC, a Delaware limited liability
company and Wrac, Ltd, a Guernsey company. The registration statement for our
Initial Public Offering was declared effective on July 26, 2021. On July 29,
2021, we consummated the Initial Public Offering of 20,000,000 units (the
"Units" and, with respect to the shares of Common Stock included in the Units
offered, the "Public Shares"), at $10.00 per Unit, generating gross proceeds of
$200 million. On August 5, 2021, the underwriter fully exercised its option and
purchased 3,000,000 additional Units, generating gross proceeds of $30 million
(the "Over-Allotment").
Simultaneously with the closing of the Initial Public Offering, we consummated
the Private Placement of 9,900,000 Private Placement Warrants, at a price of
$1.00 per Private Placement Warrant to the Sponsor, generating proceeds of
approximately $9.9 million. Concurrent with the consummation of the
Over-Allotment on August 5, 2021, the Sponsors purchased 1,200,000 additional
Private Placement Warrants, generating proceeds of $1,200,000 in the Second
Private Placement.
Transaction costs of the IPO and subsequent Over-Allotment exercise amounted to
$16,074,841, comprised of $4,600,000 of underwriting discount, $8,050,000 of
deferred underwriting discount, $2,772,169 of fair value of shares transferred
to Anchor Investors, and $652,672 of other offering costs.
Upon the closing of the Initial Public Offering and the Private Placement on
July 29, 2021, and the Over-Allotment and Second Private Placement on August 5,
2021, approximately $234.6 million ($10.20 per Unit) of the net proceeds of the
Initial Public Offering and the Private Placement was placed in a Trust Account
with Continental Stock Transfer & Trust Company acting as trustee and invested
in United States "government securities" within the meaning of Section 2(a)(16)
of the Investment Company Act of 1940, as amended, (the "Investment Company
Act")having a maturity of 185 days or less or in money market funds meeting
certain conditions under Rule 2a-7 promulgated under Investment Company Act,
which invest only in direct U.S. government treasury obligations, as determined
by us, until the earlier of: (i) the completion of a Business Combination and
(ii) the distribution of the Trust Account as described below.
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Our management has broad discretion with respect to the specific application of
the net proceeds of its Initial Public Offering and the sale of Private
Placement Warrants, although substantially all of the net proceeds are intended
to be applied generally toward consummating a Business Combination.
If we are unable to complete a Business Combination within 18 months from the
closing of the Initial Public Offering, or January 29, 2023 (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 (less taxes payable and
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 Shareholder's rights as shareholders (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 the remaining
shareholders and the board of directors, liquidate and dissolve, subject, in the
case of clauses (ii) and (iii), our obligation under requirements of applicable
law.
Liquidity and Going Concern
As of December 31, 2021, we had $613,068 in our operating bank account and
working capital of $309,265.
Our liquidity needs up to December 31, 2021 had been satisfied through a capital
contribution from the Sponsors of $25,000 (see Notes to the Financial
Statements) for the founder shares and the loan under an unsecured promissory
note.
We anticipate that the $613,068 outside of the Trust Account as of December 31,
2021, might not be sufficient to allow us to operate until January 29, 2023, the
Combination Period, assuming that a Business Combination is not consummated
during that time. Until consummation of our Business Combination, we will be
using the funds not held in the Trust Account, and any additional Working
Capital Loans from the initial stockholders, our officers and directors, or
their respective affiliates, for identifying and evaluating prospective
acquisition candidates, performing business due diligence on prospective target
businesses, traveling to and from the offices, plants or similar locations of
prospective target businesses, reviewing corporate documents and material
agreements of prospective target businesses, selecting the target business to
acquire and structuring, negotiating and consummating the business combination.
On September 7, 2021, we executed a promissory note to the Sponsors for an
amount of $500,000 (the "Promissory Note"). The Promissory Note is not interest
bearing and is repayable at the earlier of the date of when we consummate a
Business Combination with another entity, the date on which we determine to
liquidate or December 31, 2023. At the option of the Sponsors, in lieu of cash
payment of the principal, the Sponsors may receive warrants to purchase Common
Stock. As of December 31, 2021, we had borrowed $125,000 under the Promissory
Note, which remained outstanding.
We can raise additional capital through Working Capital Loans from the initial
stockholders, our officers, directors, or their respective affiliates, or
through loans from third parties. None of the Sponsors, officers or directors
are under any obligation, except as described above, to advance funds to, or to
invest in, us. 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 us on commercially acceptable terms, if
at all. These conditions raise substantial doubt about our ability to continue
as a going concern for a reasonable period of time, which is considered to be
one year from the issuance date of the financial statements.
We have until January 29, 2023 to consummate a Business Combination. It is
uncertain that we will be able consummate a Business Combination within the
Combination Period. If a Business Combination is not consummated within the
Combination Period, there will be a mandatory liquidation and subsequent
dissolution. In connection with our assessment of going concern considerations
in accordance with the authoritative guidance FASB Accounting Standards Update
("ASU") Topic 2014-15, "Disclosure of Uncertainties About an Entity's Ability to
Continue as a Going Concern", management has determined that the liquidity
condition, mandatory liquidation, and subsequent dissolution, should we be
unable to complete a Business Combination, raises substantial doubt about our
ability to continue as a going concern. No adjustments have been made to the
carrying amounts of assets and liabilities should we be required to liquidate
after January 29, 2023.
Results of Operations
All of our activity from March 10, 2021 (inception) through December 31, 2021,
was in preparation for an Initial Public Offering, and since our Initial Public
Offering, our activity has been limited to the search for a prospective initial
Business Combination. We will not generate any operating revenues until the
closing and completion of our initial Business Combination.
For the period from March 10, 2021 (inception) through December 31, 2021, we had
a loss of $707,333, which consisted solely of formation and operating costs of
$753,959, offset by trust interest income of $46,626.
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Contractual Obligations
Underwriting Agreement
The underwriter is entitled to $0.35 per unit, or approximately $7.0 million in
the aggregate, which will be payable to the underwriter for deferred
underwriting commissions. The deferred fee will become payable to the
underwriter from the amounts held in the Trust Account solely in the event that
that we complete a Business Combination, subject to the terms of the
underwriting agreement.
In connection with the consummation of the Over-Allotment on August 5, 2021, the
underwriter was paid an additional fee of $600,000 upon closing of the
Over-Allotment and approximately $1.05 million in deferred underwriting
commissions.
Administrative Support Agreement
We agreed to pay the Sponsor a total of $10,000 per month, commencing on the
date of listing on the NYSE, for office space, utilities, secretarial and
administrative support services provided to members of the management team. Upon
completion of the initial Business Combination or our liquidation, we will cease
paying these monthly fees.
Critical Accounting Policies and Estimates
This management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with U.S. GAAP. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and the disclosure of contingent
assets and liabilities in our financial statements. On an ongoing basis, we
evaluate our estimates and judgments, including those related to fair value of
financial instruments and accrued expenses. We base our estimates on historical
experience, known trends and events and various other factors that we believe to
be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. We have identified the
following as our critical accounting policies:
Offering costs associated with the Initial Public Offering
The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff
Accounting Bulletin ("SAB") Topic 5A-"Expenses of Offering". Offering costs
consist of legal, accounting, underwriting, fair value of founder shares
transferred to Anchor Investors, and other costs incurred through the balance
sheet date that are related to the IPO. Offering costs amounted to $16,074,841,
for the Initial Public Offering and subsequent over-allotment. Total amount of
Offering costs is allocated between redeemable shares and Public Warrants based
on their relative fair values.
Net Loss Per Share
The Company complies with the accounting and disclosure requirements of FASB ASC
Topic 260, "Earnings Per Share." The Company applies the two-class method in
calculating earnings per share. The contractual formula utilized to calculate
the redemption amount approximates fair value. Changes in fair value are not
considered a dividend of the purposes of the numerator in the earnings per share
calculation. Net loss per share of common stock is computed by dividing the pro
rata net loss between the shares of redeemable common stock and the shares of
non-redeemable common stock by the weighted average number of shares of common
stock outstanding for each of the periods. The calculation of diluted income per
share does not consider the effect of the warrants issued in connection with the
IPO since the exercise of the warrants is contingent upon the occurrence of
future events and the inclusion of such warrants would be anti-dilutive.
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board ("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, 2024 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on January
1, 2021. The Company deferred application of ASU 2020-06 and is currently
assessing the impact, if any, that ASU 2020-06 would have on its financial
position, results of operations or cash flows.
Off-Balance Sheet Arrangements
As of December 31, 2021, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments
or contractual obligations.
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