BOA ACQU References in this report (the "Quarterly Report") to "we," "us" or the "Company" refer toBOA Acquisition Corp. References to our "management" or our "management team" refer to our officers and directors, references to the "Sponsor" refer to Bet onAmerica LLC . 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 Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek" and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company's 2021 Form 10-K filed with theU.S. Securities and Exchange Commission (the "SEC"). The Company's securities filings can be accessed on the EDGAR section of theSEC's website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated as aDelaware corporation onOctober 26, 2021 . Our business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this Quarterly Report as our initial business combination. OnFebruary 26, 2021 , we consummated an initial public offering.
Recent Developments
Proposed Business Combination
Under the Business Combination Agreement, immediately prior to the Effective Time, (a) each outstanding series A voting ordinary share of$0.01 each in the capital of Selina, outstanding series B voting ordinary share of$0.01 each in the capital of Selina, and outstanding series C voting ordinary share of$0.01 each in the capital of Selina (each, a "Selina Preferred Share") shall become and be redesignated as a Selina Ordinary Share in accordance with the governing documents of Selina (the "Selina Preferred Share Redesignation"); (b) Selina's convertible loan notes, the put and call options, the term loan, the 2018 warrant instruments, and the 2020 warrant instrument (collectively, the "Selina Convertible Instruments") may be converted into Selina Ordinary Shares in accordance with the terms of the Selina Convertible Instruments and the terms of the Business Combination Agreement (the "Selina Convertible Instrument Conversion"); and (c) immediately following the Selina Preferred Share Redesignation and the Selina Convertible Instrument Conversion, Selina shall effect a share subdivision, whereby each Selina Ordinary Share will be subdivided into such number of Selina Ordinary Shares calculated in accordance with Section 2.1(c) of the Business Combination Agreement to cause the value of the outstanding Selina Ordinary Shares immediately prior to the Effective Time to equal$10.00 per share (the "Share Subdivision" and, together with the Selina Preferred Share Redesignation and the Selina Convertible Instrument Conversion, the "Capital Restructuring"). In addition, immediately prior to the Effective Time, (i) each issued and outstanding share of our Class B common stock, will be automatically converted into one (1) share of our Class A common stock in accordance with the terms of our Charter (such conversion, the "ClassB Conversion "), (ii) in accordance with and as required by the Charter, we will provide an opportunity for our stockholders 22 Table of Contents to redeem all or a portion of their outstanding shares of Class A common stock as set forth therein (the "Stockholder Redemption") and (iii) each issued and outstanding Unit will be automatically separated and the holder thereof will be deemed to hold one share of Class A common stock and one-third of one Public Warrant (the "Unit Separation"). Pursuant to the Business Combination Agreement, after giving effect to the Capital Restructuring, the ClassB Conversion , Stockholder Redemption, and the Unit Separation, at the Effective Time, (i) each issued and outstanding share of our Class A common stock will automatically be converted into the right of the holder thereof to receive one (1) Selina Ordinary Share and (ii) each Warrant outstanding immediately prior to the Effective Time will automatically and irrevocably be assumed by and assigned to Selina and converted into a corresponding warrant to purchase a Selina Ordinary Share (each, a "Selina Warrant"). Concurrently with and following the execution of the Business Combination Agreement, the Company, Selina, and thePIPE Investors entered into a series of subscription agreements (collectively, the "Subscription Agreements"), which provide for thePIPE Investment , and (ii) Bet onAmerica Holdings LLC , an affiliate of our Sponsor in its capacity as one of thePIPE Investors , agreed to a conditional backstop obligation for an additional commitment to purchase up to an aggregate of 1,500,000 Selina Ordinary Shares at a price per share of$10.00 in the event that the cash proceeds condition in the Business Combination Agreement is not satisfied at Closing. The closing of thePIPE Investment is conditioned upon the consummation of the Business Combination. Consummation of the transactions contemplated by the Business Combination Agreement are subject to customary conditions of the respective parties, including receipt of approval from our stockholders and Selina's shareholders for consummation of the transactions and certain other actions related thereto by our stockholders.
Other than as specifically discussed, this Quarterly Report does not assume the closing of the transactions contemplated by the Business Combination Agreement.
Note Subscription Agreements, Indenture and Amended and Restated Warrant Agreement
In connection with the Business Combination, onApril 22, 2022 , Selina entered into convertible note subscription agreements (the "Note Subscription Agreements") with certain institutional investors (the "Investors"), pursuant to which Selina agreed to issue and sell, in private placements expected to close concurrently with the closing of the Business Combination,$147,500,000 aggregate principal amount of unsecured convertible notes (the "Notes") for an aggregate purchase price equal to 80.00% of the principal amount of the Notes ("Purchase Price"). The Notes will mature four years after their issuance. As additional consideration for the Purchase Price, the Note Subscription Agreements provide that each Investor will receive a warrant to purchase a number of Selina Ordinary Shares equal to approximately one-third of the number of Selina Ordinary Shares into which the principal amount of such Investor's Note converts (the "Investor Warrants"). The Investor Warrants will be issued pursuant to the terms of an Amended and Restated Warrant Agreement, to be entered into by the Company, Selina andContinental Stock Transfer & Trust Company concurrently with the closing of the Business Combination (the "A/R Warrant Agreement"). The Investor Warrants have an exercise price of$11.50 per share, subject to adjustment and are identical to our Public Warrants in all other material respects, except (i) the Investor Warrants are not subject to redemption and (ii) a holder of an Investor Warrant may exercise such Investor Warrant on a cashless basis under the circumstances described in the A/R Warrant Agreement. Upon transfer of the Investor Warrant, such Investor Warrant will thereafter be redeemable by Selina and the holder of the Investor Warrant may no longer exercise such Investor Warrant on a cashless basis.
Sponsor Letter Agreement
In connection with the execution of the Subscription Agreements, certain Investors who subscribed for over$4,000,000 in principal amount of Notes also entered into letter agreements (the "Sponsor Agreements") with the Sponsor, pursuant to which the Sponsor agreed to transfer, at the closing of the Business Combination, shares of our Class B common stock owned by the Sponsor (or Selina Ordinary Shares exchange therefor) to such Investors (the "Sponsor Shares"). The number of Sponsor Shares to be transferred to such Investors was determined by multiplying an Investor's aggregate principal investment in the Notes by a percent ranging from 2.5% to 7.5% based on the principal amount of the Notes for which such Investor subscribed. The Sponsor Shares will be transferred from the 25% sponsor share pool established pursuant to the Sponsor Letter Agreement that was entered into by the Company, the Sponsor, and Selina in connection with the execution of the of the Business Combination Agreement. 23 Table of Contents Results of Operations We have neither engaged in any operations nor generated any revenues to date. All activity from our inception through the date of our Public Offering,February 26, 2021 , was in preparation for our Public Offering. Since our Public Offering, our activity has been limited to the evaluation of Business Combination candidates. We do not expect to generate any operating revenues until the closing and completion of our Business Combination. We expect to generate non-operating income in the form of interest income on marketable securities held after the Initial Public Offering. We 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.
Comparison of the three months ended
For the three months endedJune 30, 2022 , we had a net income of$1,536,557 , which was primarily due to a gain from the change in fair value of the derivative warrant liabilities of$1,566,583 , income tax expense of$9,130 and interest earned on marketable securities held in Trust Account of$313,919 . This was partially offset by$284,817 in operating costs and$50,000 of franchise tax expense.
For the three months ended
Comparison of the six months ended
For the six months endedJune 30, 2022 , we had a net income of$4,981,336 , which was primarily due to a gain from the change in fair value of the derivative warrant liabilities of$5,473,241 , income tax expense of$9,130 and interest earned on marketable securities held in Trust Account of$317,317 . This was partially offset by$700,107 in operating costs and$100,000 of franchise tax expense. For the six months endedJune 30, 2021 , we had a net income of$1,089,679 , which was primarily due to a gain from the change in fair value of the derivative warrant liabilities of$1,846,825 . This was partially offset by$438,197 of issuance costs attributed to the warrant liability,$222,422 in operating costs, and$100,000 of franchise tax expense. As described in Note 2, Summary of Significant Accounting Policies, in "Part 1. Financial Information - Item 1. Financial Statements," we account for the Warrants issued in connection with our Public Offering and Private Placement as derivative instruments which were initially recorded at their fair value. These derivative instruments are subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized in our statements of operations.
Liquidity and Capital Resources
As of
As ofJune 30, 2022 , we had cash and marketable securities in the Trust Account of$230,329,107 . 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) to complete our initial Business Combination.
Material cash requirements
As of
The underwriters are entitled to deferred fee of 3.5% of the gross proceeds of the Public Offering, or$8,050,000 . The deferred fee 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. 24 Table of Contents Sources of cash
Prior to the completion of the Public Offering, our liquidity needs were
satisfied through receipt of
OnFebruary 26, 2021 , we consummated the Public Offering of 23,000,000 Units at a price of$10.00 per unit generating net proceeds of$217,111,865 . Transaction costs were$12,888,135 , including$4,600,000 of underwriting fees,$8,050,000 of deferred underwriting fees and$238,135 of other offering costs in connection with the Public Offering. Simultaneously with the closing of the Public Offering, we consummated the sale of 6,575,000 Private Placement Warrants to our Sponsor at a price of$1.00 per warrant, generating gross proceeds of$6,575,000 . Following the closing of the Public Offering and the sale of the Private Placement Warrants, a total of$230,000,000 was placed in a Trust Account and following the payment of certain transaction expenses. Uses of cash Six Months Ended June 30, 2022 2021 Change Net cash used in operating activities$ (750,142) $ (643,337) $ (106,805) Net cash used in investing activities $ -$ (230,000,000) $ 230,000,000 Net cash provided by financing activities $ - $
231,736,865
For the six months endedJune 30, 2022 , cash used in operating activities was$750,142 . Net income of$4,981,336 was impacted by the non-cash changes in fair value of the derivative warrant liability of$5,473,241 , as well as the interest earned on marketable securities held in Trust Account of$317,317 . Additionally, changes in operating assets and liabilities used$59,080 of cash used in operating activities. For the six months endedJune 30, 2021 , cash used in operating activities was$643,337 . Net income of$1,089,679 was adjusted for the interest earned on marketable securities held in Trust Account of$3,473 , the issuance costs attributed to the warrant liabilities of$438,197 , and the non-cash change in fair value of the derivative warrant liabilities of$1,846,825 . Additionally, changes in operating assets and liabilities provided$320,915 of cash used in operating activities. In order to fund working capital deficiencies and/or finance transaction costs in connection with an initial 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. If we complete our initial Business Combination, we would repay such loaned amounts. In the event that our initial 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 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, including as to exercise price, exercisability and exercise period. As ofJune 30, 2022 andDecember 31, 2021 , the Company had$10,434 and$760,576 in cash not held in the Trust Account and available for working capital purposes, respectively. The Company believes it may need to raise additional funds in order to meet the expenditures required for operating the business. If the Company's 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, the Company may have insufficient funds available to operate the business prior to the initial Business Combination. Moreover, the Company may need to obtain additional financing either to complete the initial Business Combination or to redeem a significant number of our public shares upon completion of the initial Business Combination, in which case the Company may issue additional securities or incur debt in connection with such initial Business Combination. If the Company is unable to complete the Business Combination because it does not have sufficient funds available, the Company will be forced to cease operations and liquidate the Trust Account. In connection with the Company's assessment of going concern considerations in accordance withFinancial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") Topic 205-40, Presentation of Financial Statements-Going Concern, the Company has untilFebruary 26, 2023 , to consummate an initial business combination. It is uncertain that the Company will be able to consummate an initial business combination by this time. If an initial business combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Additionally, the Company may not have sufficient liquidity to fund the working capital needs of the Company through one year from the issuance of these financial statements. 25
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Management has determined that the liquidity condition and mandatory liquidation and potential subsequent dissolution raises substantial doubt about the Company's ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate afterFebruary 26, 2023 . The Company's sponsor, officers and directors may, but are not obligated to, loan the Company funds from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company's working capital needs.
Critical Accounting Policies
Our management makes a number of significant estimates, assumptions and judgments in the preparation of our financial statements. See Note 2, Summary of Significant Accounting Policies, in "Part I. Financial Information - Item 1. Financial Statements" for a discussion of the estimates and judgments necessary in our accounting for derivative warrant liabilities, common stock subject to possible redemption, and net income (loss) per common share. Any new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements have been included in the notes to our condensed financial statements contained in this Quarterly Report on Form 10-Q. The application of our critical accounting policies may require management to make judgments and estimates about the amounts reflected in the condensed financial statements. Management uses historical experience and all available information to make these estimates and judgments. Different amounts could be reported using different assumptions and estimates.
Recent Accounting Pronouncements
Please refer to Note 2, Summary of Significant Accounting Policies, in "Part 1. Financial Information - Item 1. Financial Statements" for a discussion of recent accounting pronouncements and their anticipated effect on our business.
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