References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to byNordic Acquisition Corporation. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to Water by Nordic AB. 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" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act
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 Form 10-Q
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
completion of the Business Combination, 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, including that the conditions of the Business
Combination are not satisfied. 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 final prospectus for its Initial Public Offering and in the Company's
Form 10-K for the year ended December 31, 2021 filed with the U.S. Securities
and Exchange Commission (the "SEC"). The Company's securities filings can be
accessed on the EDGAR section of the SEC'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 a Delaware corporation and formed
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 are not presently engaged in, and we will not engage
in, any operations until we consummate our Business Combination. We intend to
effectuate our Business Combination using cash from the proceeds of our initial
public offering, the private placement of the private shares, the private
placement of the forward purchase shares, the proceeds of the sale of our shares
in connection with our Business Combination (pursuant to forward purchase
agreements or backstop agreements we may enter into following the closing of our
initial public offering or otherwise), shares issued to the owners of the
target, debt issued to bank or other lenders or the owners of the target, or a
combination of the foregoing. We have not selected any specific Business
Combination target.
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The issuance of additional shares in connection with a Business Combination to
the owners of the target or other investors, including the forward purchase
shares:
? may significantly dilute the equity interest of our public stockholders, which
dilution would increase if the anti-dilution provisions in the Class B common
stock resulted in the issuance of shares of Class A common stock on a greater
than one-to-one basis upon conversion of the Class B common stock;
? may subordinate the rights of holders of our common stock if preferred stock
is issued with rights senior to those afforded our common stock;
? could cause a change in control if a substantial number of shares of our
common stock is issued, which may affect, among other things, our ability to
use our net operating loss carry forwards, if any, and could result in the
resignation or removal of our present officers and directors;
? may have the effect of delaying or preventing a change of control of us by
diluting the stock ownership or voting rights of a person seeking to obtain
control of us; and
? may adversely affect prevailing market prices for our Class A common stock
and/or warrants.
Similarly, if we issue debt securities or otherwise incur significant debt to
bank or other lenders or the owners of a target, it could result in:
? default and foreclosure on our assets if our operating revenues after a
Business Combination are insufficient to repay our debt obligations;
? acceleration of our obligations to repay the indebtedness even if we make all
principal and interest payments when due if we breach certain covenants that
require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
? our immediate payment of all principal and accrued interest, if any, if the
debt security is payable on demand;
? our inability to obtain necessary additional financing if the debt security
contains covenants restricting our ability to obtain such financing while the
debt security is outstanding;
? our inability to pay dividends on our common stock;
? using a substantial portion of our cash flow to pay principal and interest on
our debt, which will reduce the funds available for dividends on our common
stock if declared, our ability to pay expenses, make capital expenditures and
acquisitions, and fund other general corporate purposes;
? limitations on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate;
? increased vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation;
? limitations on our ability to borrow additional amounts for expenses, capital
expenditures, acquisitions, debt service requirements, and execution of our
strategy; and
? other disadvantages compared to our competitors who have less debt.
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from December 27, 2019 (inception) through September 30,
2022 were organizational activities, those necessary to prepare for 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 three months ended September 30, 2022, we had a net income of $325,663,
which consisted of earnings on cash and investments in the Trust Account of
$688,201 partially offset by operating costs of $228,207 and federal income
taxes of $134,331.
For the nine months ended September 30, 2022, we had a net loss of $128,652
which consisted of formation and operating costs of $798,476 and federal income
taxes of $135,484 partially offset by interest earned on investments held in
Trust Account and cash of $805,308.
For the three months ended September 30, 2021, we had net loss of 0.
For the nine months ended September 30, 2021, we had net loss of $54,923 which
consisted of formation and operating costs.
Liquidity, Capital Resources and Going Concern
On February 11, 2022, we completed our Initial Public Offering of 15,000,000
Units at $10.00 per Unit, generating gross proceeds of $150,000,000.
Simultaneously with the closing of the Initial Public Offering, we completed the
sale of 8,500,000 Private Shares at a price of $10.00 per Private Share in a
private placement to the Sponsor, generating gross proceeds of $8,500,000.
On February 18, 2022, in connection with the underwriters' exercise of their
over-allotment option in full, we consummated the sale of an additional
2,250,000 Units at a price of $10.00 per Unit, generating an additional
$22,500,000 of gross proceeds. In addition, we also consummated the sale of an
additional 90,000 Private Shares at a price of $10.00 per Private Share,
generating an additional $900,000 of gross proceeds.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Units, a total of $175,950,000 was placed in
the Trust Account. We incurred $16,724,021 in Initial Public Offering related
costs, with $16,343,583 reported in temporary equity and $380,438 in equity.
For the nine months ended September 30, 2022, cash used in operating activities
was $749,261. Net loss of $128,652 was affected by interest earned investments
in the Trust Account of $803,548. Changes in operating assets and liabilities
generated $182,939 of cash for operating activities.
For the nine months ended September 30, 2021 cash provided by operating
activities was $0. Net loss of $54,923 was offset by changes in operating assets
and liabilities that provided $54,923 of cash for operating activities.
As of September 30, 2022, we had marketable securities held in the Trust Account
of $176,743,888 consisting of money market funds which are invested primarily in
U.S. Treasury securities. Interest income on the balance in the Trust Account
may be used by us to pay taxes. Through September 30, 2022, we have withdrawn
$9,660 of interest earned on the Trust Account for the payment of franchise or
income taxes.
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 September 30, 2022, we had cash of $1,027,333 held outside the Trust
Account. We intend to use the funds held outside the Trust Account primarily for
(i) legal, due diligence, travel and other expenses related to identifying,
negotiating and completing a Business Combination, (ii) legal and accounting
fees related to regulatory reporting requirements, (iii) administrative
expenses, and (iv) working capital used for miscellaneous expenses and reserves.
We believe that our cash held outside of the Trust Account, together with
interest earned on the Trust Account and available for withdrawal to pay taxes,
will be sufficient to fund our cash needs through the earlier of completion of
the Company's Business Combination or the mandatory liquidation of the Company
if it fails to complete a Business Combination by May 2023 (or August 2023 if
the Company exercises its right to make an additional deposit to the Trust
Account to extend the deadline for completion of its Business Combination).
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.
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In order to fund any working capital deficiencies or finance transaction costs
in connection with a Business Combination, the Sponsor, or certain of our
officers and directors or their affiliates may, but are not obligated to, loan
us funds as may be required. If we complete a Business Combination, we will
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 the Working Capital Loans
may be converted upon completion of a Business Combination into shares of the
Class A common stock at a price of $10.00 per share, at the option of the
lender.
In connection with the Company's 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 the Company be unable to complete
a Business Combination, raises substantial doubt about the Company's ability to
continue as a going concern. The Company has until May 2023 to consummate a
Business Combination (or August 2023 if extended (discussed above)). It is
uncertain that the Company will be able to consummate a Business Combination by
this time. If a Business Combination is not consummated by this date, 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 May 2023.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 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.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement pay the Sponsor a
total of $10,000 per month for administrative support services. We began
incurring these fees on February 8, 2022 and will continue to incur these fees
monthly until the earlier of the completion of the Business Combination and our
liquidation.
The underwriters are entitled to a deferred underwriting discount of 3.5% of the
gross proceeds of the IPO and exercise of the over-allotment option, or
$6,037,500, upon the completion of the Company's Business Combination.
Critical Accounting Policies
We describe our significant accounting policies in Note 2 - Summary of
Significant Accounting Policies, of the Notes to Financial Statements included
in this report. Our audited financial statements have been prepared in
accordance with U.S. GAAP. Certain of our accounting policies require that the
Company's management apply significant judgments in defining the appropriate
assumptions integral to financial estimates. On an ongoing basis, the Company's
management reviews the accounting policies, assumptions, estimates and judgments
to ensure that our financial statements are presented fairly and in accordance
with U.S. GAAP. Judgments are based on historical experience, terms of existing
contracts, industry trends and information available from outside sources, as
appropriate. However, by their nature, judgments are subject to an inherent
degree of uncertainty, and, therefore, actual results could differ from our
estimates.
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