The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. 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 and Risk Factor Summary," "Item 1A. Risk Factors" and
elsewhere in this Annual Report on Form 10-K.
Overview
We are a blank check company incorporated in Delaware on May 20, 2021 for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization, or similar business combination with one or more
businesses. We may pursue an initial business combination target in any industry
or sector, but given the experience of our management team, we expect to focus
on acquiring a business combination target within the financial services
industry and related sectors, including potentially the mobility sector. We
intend to effectuate our Business Combination using cash from the proceeds of
the Initial Public Offering and the sale 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 a 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 from May 20, 2021 (inception) through December 31, 2022 were
organizational activities, those necessary to consummate 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 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.
For the year ended December 31, 2022, we had a net income of $886,918 which
consists of interest income from bank of $1,848 and interest earned marketable
securities held in the Trust Account of $4,121,971, offset by operating and
formation costs of $2,050,410, compensation expense of $362,500 and provision
for income taxes of $823,991.
For the period from May 20, 2021 (inception) through December 31, 2021, we had a
net loss of $1,793 which consists of operating and formation costs.
Liquidity and Capital Resources
On January 19, 2022, we consummated our Initial Public Offering of 30,000,000
Units, which includes the partial exercise by the underwriters of its
over-allotment option in the amount of 3,900,000 Units at $10.00 per Unit,
generating gross proceeds of $300,000,000. Simultaneously with the closing of
our Initial Public Offering, we consummated the sale of 13,850,000 Private
Placement Warrants at a price of $1.00 per Private Placement Warrant in a
private placement to the Sponsor, generating gross proceeds of $13,850,000.
Transaction costs amounted to $17,204,107 consisting of $5,760,000 of
underwriting discount (net of $240,000 reimbursed by the underwriters) and
$944,107 of other offering costs. We have agreed to pay a deferred underwriting
fee to the underwriters upon the consummation of our Initial Business
Combination in an amount equal to, in the aggregate, 3.5% of the gross proceeds
of the Initial Public Offering or an aggregate of $10,500,000.
The promissory note issued in connection with unsecured loans from our Sponsor
to finance our liquidity needs through the consummation of our Initial Public
Offering was non-interest bearing and the aggregate amount of $149,539
outstanding under the promissory note as of January 19, 2022 was fully repaid on
February 22, 2022.
Following the Initial Public Offering, the partial exercise of the
over-allotment option, and the sale of Private Placement Warrants, a total of
$306,000,000 was placed in the Trust Account. We incurred $17,204,107 in Initial
Public Offering related costs, including $5,760,000 of underwriting fees and
$944,107 of other costs.
For the year ended December 31, 2022, cash used in operating activities was
$1,184,963. Net income of $886,918 was affected by interest earned on marketable
securities held in the Trust Account of $4,121,971 and compensation expenses of
$362,500. Changes in operating assets and liabilities provided $1,687,590 of
cash for operating activities.
For the period from May 20, 2021 (Inception) through December 31, 2021, we do
not have cash used in operating activities.
As of December 31, 2022, we had marketable securities held in the Trust Account
of $309,790,455 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, 2022, we have withdrawn $331,516 of 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
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 December 31, 2022, we had cash of $392,446. 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 a Business Combination.
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In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our Sponsor has committed to provide us
$1,750,000 to fund our expenses relating to investigating and selecting a target
business and other working capital requirements. In addition, our Sponsor, or
certain of our officers and directors or their affiliates may, but are not
obligated to, loan us additional funds as may be required. If we complete a
Business Combination, we would repay such loaned amounts. 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 loaned amounts 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 of the post-Business
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 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. If we are unable to
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.
Going Concern
Until the consummation of a Business Combination, we will be using the funds not
held in the Trust Account for identifying and evaluating prospective acquisition
candidates, performing due diligence on prospective target businesses, paying
for travel expenditures, selecting the target business to merge with or acquire,
and structuring, negotiating and consummating the Business Combination.
In connection with the Company's assessment of going concern considerations in
accordance with ASC Topic 205-40, "Presentation of Financial Statements-Going
Concern," the Company has until April 19, 2023, to consummate a Business
Combination. 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. Although the Company intends to
consummate a Business Combination on or before April 19, 2023, it is uncertain
that the Company will be able to consummate a Business Combination by this time.
Management has determined that the liquidity condition, coupled with the
mandatory liquidation, should a Business Combination not occur, and an extension
is not requested by the Sponsor, and potential subsequent dissolution raises
substantial doubt about the Company's ability to continue as a going concern.
The Company's plan is to complete a business combination or obtain an extension
on or prior to April 19, 2023; however, it is uncertain that the Company will be
able to consummate a Business Combination or obtain an extension by this time.
No adjustments have been made to the carrying amounts of assets or liabilities
should the Company be required to liquidate after April 19, 2023.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 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.
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Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than the following:
The underwriters were entitled to a cash underwriting discount of $0.20 per
Unit, or $6,000,000 in the aggregate, paid on the closing of the Initial Public
Offering. In addition, the underwriters are entitled to a deferred fee of $0.35
per Unit, or $10,500,000 in the aggregate. The deferred fee will become payable
to the underwriter 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.
Critical Accounting Policies
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 periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Deferred Offering Costs
We comply with the requirements of the ASC 340-10-S99-1 and SEC SAB Topic 5A -
"Expenses of Offering". Offering costs consist principally of professional and
registration fees incurred through the balance sheet date that are related to
the Initial Public Offering. Offering costs are allocated based on the relative
value of the Public and Private Warrants to the proceeds received from the
Public Shares sold in the Initial Public Offering. Offering costs allocated to
the Public Shares are charged to temporary equity and offering costs allocated
to the Public and Private Warrants are charged to stockholder's equity. As of
January 19, 2022, offering costs in the aggregate of $17,204,107, of which an
aggregate of $16,699,058 have been charged to temporary equity and an aggregate
of $505,049 have been charged to stockholders' equity (deficit).
As of December 31, 2022 and 2021, there were $0 and $361,372 of deferred
offering costs recorded in the accompanying balance sheets, respectively.
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion in accordance
with the guidance in ASC Topic 480, "Distinguishing Liabilities from Equity."
Common stock subject to mandatory redemption is classified as a liability
instrument and 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 as temporary
equity. At all other times, common stock is classified as a component of
stockholders' equity. Our common stock features certain redemption rights that
are considered to be outside of our control and subject to occurrence of
uncertain future events. Accordingly, common stock subject to possible
redemption is presented at redemption value as temporary equity outside of the
stockholders' equity section of our balance sheets.
Warrants
We account for warrants as either equity-classified or liability-classified
instruments based on an assessment of the warrant's specific terms and
applicable authoritative guidance in ASC 480 and ASC 815, "Derivatives and
Hedging". The assessment considers whether the warrants are freestanding
financial instruments pursuant to ASC 480, meet the definition of a liability
pursuant to ASC 480, and whether the warrants meet all of the requirements for
equity classification under ASC 815, including whether the warrants are indexed
to our own ordinary shares, among other conditions for equity classification.
This assessment, which requires the use of professional judgment, is conducted
at the time of warrant issuance and as of each subsequent reporting period date
while the warrants are outstanding. Based on our assessment of the guidance, our
warrants meet the criteria for equity classification and are recorded within
stockholders' equity (deficit).
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Net Loss Per Common Share
Net loss per common stock is computed by dividing net loss by the weighted
average number of common stock outstanding for the period. Accretion associated
with the redeemable shares of Series A common stock is excluded from earnings
per share as the redemption value approximates fair value.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 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): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models
required under current GAAP. ASU 2020-06 removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope
exception and it also simplifies the diluted earnings per share calculation in
certain areas. ASU 2020-06 is effective for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal years, with
early adoption permitted. We are currently assessing the impact, if any, that
ASU 2020-06 would have on our 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 financial statements.
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