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 "Special Note Regarding Forward-Looking
Statements," "Item 1A. Risk Factors" and elsewhere in this Annual Report on Form
10-K
Overview
We are a blank check company formed under the laws of the State of Delaware on
October 5, 2020 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 intend to effectuate our Business
Combination using cash from the proceeds of the Initial Public Offering and the
sale of the Private Placement Units, Sponsor 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.
Results of Operations
We have neither engaged in any operations (other than searching for a Business
Combination after our Initial Public Offering) nor generated any revenues to
date. Our only activities from October 5, 2020 (inception) through December 31,
2021 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 year ended December 31, 2021, we had a net income of $11,717,478, which
consists of interest income on marketable securities held in the Trust Account
of $52,218, and a change in the fair value of the warrant liabilities of
$13,832,000, offset by general and administrative expenses of $2,166,740.
For the period from October 5, 2020, (inception) through December 31, 2020, we
had a net loss of $9,269,956, which consists of operating and formation costs of
$97,659, change in the fair value of warrant liabilities of $8,375,750, and
transaction costs associated with warrant liabilities of $804,576, offset by
interest earned on held in the Trust Account of $8,029.
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Liquidity and Capital Resources
On December 11, 2020, we consummated the Initial Public Offering of 28,750,000
Units, at $10.00 per Unit, generating gross proceeds of $287,500,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 8,075,000 Sponsor Warrants at a price of $1.00 per Sponsor Warrant
in a private placement to our sponsor, generating gross proceeds of $8,075,000.
In addition, simultaneously with the consummation of the Initial Public
Offering, we consummated a private placement of 2,500,000 Private Placement
Units at a price of $10.00 per Private Placement Unit, generating gross proceeds
of $25,000,000.
For the year ended December 31, 2021, cash used in operating activities was
$894,481. Net income of $11,717,478 was affected by a change in the fair value
of the warrant liabilities of $13,832,000 and interest earned on marketable
securities held in the Trust Account of $52,218. Changes in operating assets and
liabilities provided $1,272,259 of cash for operating activities.
For the period from October 5, 2020 (inception) through December 31, 2020,
cash used in operating activities was $655,743. Net loss of $9,269,956 was
affected by the change in fair value of the warrant liabilities of $8,375,750,
transaction costs allocable to warrants of $804,576, interest earned on
investments held in the Trust Account of $8,029 and changes in operating assets
and liabilities, which used $558,084 of cash from operating activities.
As of December 31, 2021, we had $312,514,788 in cash held in the Trust
Account (including approximately $52,000 of interest income) consisting of U.S.
Treasury Bills and Money Market. 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, 2021, we had cash of $339,570. 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.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our sponsor or an affiliate of our
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 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. We have issued our sponsor a
promissory note for up to $2,000,000 in working capital loans, of which we have
drawn down $666,697 as of March 18, 2022. Up to $2,000,000 of such working
capital loans are convertible into warrants of the post-Business Combination
entity at a price of $1.00 per warrant. The warrants would be identical to the
Sponsor 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.
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Going Concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, if the Company is unable to raise additional funds to
alleviate liquidity needs as well as complete a Business Combination by the
close of business on December 11, 2022, then the Company will cease all
operations except for the purpose of liquidating. This date for mandatory
liquidation and subsequent dissolution raises substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
Contractual Obligations
The underwriters are entitled to a deferred fee of $0.35 per Unit, or
$10,062,500 in the aggregate. The deferred fee will become payable to the
underwriters 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:
Warrant Liability
We account for the Warrants in accordance with the guidance contained in ASC
815-40 under which the Warrants do not meet the criteria for equity treatment
and must be recorded as liabilities. Accordingly, we classify the Warrants as
liabilities at their fair value and adjust the Warrants to fair value at each
reporting period. This liability is subject to re-measurement at each balance
sheet date until exercised, and any change in fair value is recognized in our
statements of operations. The Public Warrants for periods where no observable
traded price was available were valued using a Monte Carlo simulation, and the
Private Warrants were valued using a Black-Scholes Model. For periods subsequent
to the detachment of the Public Warrants from the Units, the Public Warrant
quoted market price was used as the fair value as of each relevant date.
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." Shares of 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 feature redemption rights that is 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 stockholders' equity. Our Public Class A
common stock features certain redemption rights that are considered to be
outside of our control and subject to occurrence of uncertain future events.
Accordingly, shares of Public Class A common stock subject to possible
redemption are presented as temporary equity, outside of the stockholders'
deficit section of our balance sheets.
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Net Income (Loss) per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC
Topic 260, "Earnings Per Share". The Company has two classes of shares, which
are referred to as Class A common stock and Class B common stock. Income and
losses are shared pro rata between the two classes of shares. Net income (loss)
per common share is calculated by dividing the net income (loss) by the weighted
average shares of common stock outstanding for the respective periods
Recent Accounting Standards
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, 2022 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on January
1, 2021. We adopted ASU 2020-06 effective January 1, 2021. The adoption of ASU
2020-06 did not have an impact on our financial statements.
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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