References to "we", "us", "our" or the "company" are to Juniper II Corp., except
where the context requires otherwise.. You should read the following discussion
and analysis of our financial condition and results of operations in conjunction
with our condensed financial statements and related notes included in Part II,
Item 8 of this Report. This discussion and other parts of this Report contain
forward-looking statements that involve risks and uncertainties, such as
statements of our plans, objectives, expectations and intentions. Our actual
results could differ materially from those discussed in these forward-looking
statements. See "Cautionary Note Regarding Forward-Looking Statements." Factors
that could cause or contribute to such differences include, but are not limited
to, those discussed in Part I, Item 1A of this Report.
Overview
We are a blank check company incorporated in Delaware on December 30, 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 that we have not yet identified. We are an emerging growth company
and, as such, we are subject to all of the risks associated with emerging growth
companies. Our sponsor is Juniper II Management, LLC, a Delaware limited
liability company and an affiliate of certain of our officers, directors and
advisors.
Our registration statement for our initial public offering was declared
effective on November 3, 2021. On November 8, 2021, we consummated the initial
public offering of 29,900,000 units, including 3,900,000 units to cover
over-allotments, at $10.00 per unit, generating gross proceeds of
$299.0 million, and incurring offering costs of approximately $17.3 million, of
which approximately $10.5 million and approximately $560,000 was for deferred
underwriting commissions and offering costs allocated to derivative warrant
liabilities, respectively.
Simultaneously with the closing of the initial public offering, we consummated
the private placement (the "private placement") of 14,960,000 private placement
warrants to our sponsor, each private placement warrant exercisable to purchase
one share of Class A common stock at $11.50 per share, at a price of $1.00 per
private placement warrant, generating gross proceeds of approximately
$15.0 million.
Upon the closing of the initial public offering and the private placement,
approximately $305.0 million ($10.20 per unit) of net proceeds, including the
net proceeds of the initial public offering and certain of the proceeds of the
private placement, was placed in the trust account, located in the United States
and invested only in U.S. government securities, within the meaning set forth in
Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or
less or in any open-ended investment company that holds itself out as a money
market fund selected by the company meeting the conditions of Rule 2a-7 of the
Investment Company Act, as determined by the company, until the earlier of:
(i) the completion of a business combination and (ii) the distribution of the
trust account, as described below. Except with respect to interest earned on the
funds held in the trust account that may be released to us to pay our taxes, if
any, the funds held in the trust account will not be released until the earliest
to occur of: (a) the completion of our initial business combination; (b) the
redemption of any public shares properly tendered in connection with a
stockholder vote to amend our amended and restated certificate of incorporation
(i) to modify the substance or timing of our obligation to allow redemption in
connection with our initial business combination or to redeem 100% of our public
shares if we do not complete our initial business combination within 18 months
from the closing of the initial public offering (or 24 months, if we extend the
period of time to consummate a business combination) or (ii) with respect to any
other provisions relating to the rights of holders of our Class A common stock;
and (c) the redemption of all of our public shares if we have not completed our
initial business combination within 18 months (or 24 months, if extended) from
the closing of the initial public offering, subject to applicable law. Based on
current interest rates, we expect that interest income earned on the trust
account (if any) will be sufficient to pay our income and franchise taxes.
56
--------------------------------------------------------------------------------
Table of Contents
If we are unable to complete a business combination within 18 months from the
closing of the initial public offering, or May 8, 2023 (or 24 months, if
extended), we will (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than 10 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 and not previously
released to us to pay our tax obligations (less 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 stockholders' rights
as stockholders (including the right to receive further liquidating
distributions, if any), subject to applicable law, and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of the
company's remaining stockholders and the company's board of directors, dissolve
and liquidate, subject in each case to the company's obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable
law.
Results of Operations
Our entire activity since inception through December 31, 2022 related to our
formation, the preparation for the initial public offering, and since the
closing of the initial public offering, the search for a target for our initial
business combination. We will not be generating any operating revenues until the
closing and completion of our initial business combination, at the earliest.
For the year ended December 31, 2022, we had net income of approximately
$21.1 million, which consisted of approximately $4.6 million in interest income
from investments held in the trust account and non-operating income of
approximately $18.9 million resulting from changes in fair value of derivative
warrant liabilities, partially offset by approximately $1.1 million in general
and administrative expenses, approximately $120,000 in general and
administrative expenses-related party, approximately $209,000 in franchise tax
expense and approximately $886,000 in income tax expense.
For the year ended December 31, 2021, we had a net loss of approximately
$6.1 million which consisted of a non-operating loss of approximately
$5.2 million due to the change in fair value of derivative warrant liabilities,
a non-operating loss of approximately $560,000 for offering costs associated
with derivative warrant liabilities and operating costs of approximately
$327,000, partially offset by approximately $4,000 in income from investments
held in trust account. The operating expenses were comprised of approximately
$125,000 in general and administrative costs, approximately $20,000 in general
and administrative expenses-related party and approximately $181,000 of
franchise tax expense.
Liquidity and Capital Resources
As of December 31, 2022, we had approximately $649,000 in cash and a working
deficit of approximately $175,000.
Our liquidity needs prior to the consummation of the initial public offering
were satisfied through the payment of $25,000 from our sponsor to cover certain
offering costs in exchange for issuance of the founder shares, a loan under a
promissory note from our sponsor of $300,000 (the "Promissory Note") and
advances from related parties in the amount of approximately $13.1 million. We
fully repaid the Promissory Note balance upon closing of the initial public
offering. Subsequent from the consummation of the initial public offering, our
liquidity has been satisfied through the net proceeds from the consummation of
the initial public offering and the private placement held outside of the trust
account.
57
--------------------------------------------------------------------------------
Table of Contents
Our management has determined that we could have insufficient liquidity to meet
our anticipated obligations for at least twelve months after the financial
statements are available to be issued due to recurring operating losses and
negative cash utilized in operating activities. We may need to raise additional
capital through loans or additional investments from our sponsor, shareholders,
officers, directors or third parties as needed. Our officers, directors and
sponsor may, but are not obligated to, loan us funds, from time to time or at
any time, in whatever amount they deem reasonable in their sole discretion, to
meet our working capital needs. Accordingly, we may not be able to obtain
additional financing. We cannot provide any assurance that new financing will be
available to us or on acceptable terms, if at all. These conditions raise
substantial doubt about our ability to continue as a going concern.
In connection with our management's assessment of going concern considerations
in accordance with the FASB ASC Topic 205-40, "Presentation of Financial
Statements-Going Concern," our management has also determined that these
considerations taken together with the mandatory liquidation and subsequent
dissolution raise substantial doubt about our ability to continue as a going
concern one year from the date that these financial statements are issued. No
adjustments have been made to the carrying amounts of assets or liabilities
should we be unable to continue as a going concern.
Related Party Transactions
Founder Shares
On January 21, 2021, our sponsor paid $25,000 on behalf of us to cover certain
offering costs in exchange for issuance of 8,625,000 shares of Class B common
stock. On February 4, 2021, we effected a forward stock split that increased the
number of founder shares held by our sponsor from 8,625,000 to 11,500,000. On
July 12, 2021, our sponsor surrendered, for no consideration, an aggregate of
5,031,250 founder shares, which we canceled, resulting in an aggregate of
6,468,750 founder shares outstanding. Immediately prior to the consummation of
the initial public offering, we effected a stock dividend with respect to our
Class B common stock, resulting in an aggregate of 7,475,000 shares of Class B
common stock outstanding. The founder shares included an aggregate of up 975,000
shares subject to forfeiture by our sponsor to the extent that the underwriters'
option to purchase additional units was not exercised in full or in part, so
that our initial stockholders would own, on an as-converted basis, 20% of our
issued and outstanding shares after the initial public offering. The
underwriters exercised their over-allotment option in full on November 8, 2021;
thus, these 975,000 founder shares were no longer subject to forfeiture.
In March and April 2021, our sponsor transferred 35,000 founder shares to each
of our independent directors and to Darius Adamczyk, one of our advisors. The
transfer of the founder shares is in the scope of FASB ASC Topic 718,
"Compensation-Stock Compensation" ("ASC 718"). Under ASC 718, stock-based
compensation associated with equity-classified awards is measured at fair value
upon the grant date. The founders shares were granted subject to a performance
condition (i.e., the occurrence of a business combination). Compensation expense
related to the founders shares is recognized only when the performance condition
is probable of occurrence under the applicable accounting literature in this
circumstance. As of December 31, 2021, we determined that a business combination
was not considered probable, and, therefore, no stock-based compensation expense
has been recognized. Stock-based compensation would be recognized at the date a
business combination is considered probable (i.e., upon consummation of a
business combination) in an amount equal to the number of founders shares that
ultimately vest multiplied times the grant date fair value per share (unless
subsequently modified).
Our sponsor agreed, subject to limited exceptions, not to transfer, assign or
sell any of our founder shares until the earlier to occur of: (A) one year after
the completion of a business combination or (B) subsequent to a business
combination, (x) if the closing price of the Class A common stock equals or
exceeds $12.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading days within
any 30-trading day period commencing at least 150 days after a business
combination, or (y) the date on which we complete a liquidation, merger, capital
stock exchange or other similar transaction that results in all of our
stockholders having the right to exchange their shares of common stock for cash,
securities or other property.
58
--------------------------------------------------------------------------------
Table of Contents
Private Placement Warrants
Simultaneously with the closing of the initial public offering, we consummated
the private placement of 14,960,000 private placement warrants, at a price of
$1.00 per private placement warrant to our sponsor, generating proceeds of
approximately $15.0 million.
Each private placement warrant will be exercisable to purchase one share of
Class A common stock at a price of $11.50 per share. A portion of the proceeds
from the private placement warrants was added to the proceeds from the initial
public offering held in the trust account. If we do not complete a business
combination within 18 months (or 24 months, if extended) from the closing of the
initial public offering, or May 8, 2023 (or November 8, 2023, if extended), the
proceeds of the sale of the private placement warrants will be used to fund the
redemption of the public shares (subject to the requirements of applicable law),
and the private placement warrants will expire worthless. There will be no
redemption rights or liquidating distributions from the trust account with
respect to the private placement warrants.
Related Party Loans
Our sponsor agreed to loan us an aggregate of up to $300,000 to cover expenses
related to the initial public offering pursuant to a promissory note dated
January 21, 2021, which was later amended on September 30, 2021. The Promissory
Note was non-interest bearing and payable upon the completion of the initial
public offering. We fully borrowed $300,000 under the Promissory Note. In
addition, we received additional advances from related parties of approximately
$13.1 million to cover for certain offering costs and pre-payment for private
placement warrants. We fully repaid the Promissory Note and the advances as of
the consummation of the initial public offering.
In addition, in order to finance transaction costs in connection with a 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 a business combination, we would repay the working
capital loans out of the proceeds of the trust account released to us.
Otherwise, the working capital loans would be repaid only out of funds held
outside the trust account. In the event that a business combination does not
close, we may use a portion of proceeds held outside the trust account to repay
the working capital loans but no proceeds held in the trust account would be
used to repay the working capital loans. The working capital loans would either
be repaid upon consummation of a business combination, without interest, or, at
the lender's discretion, up to $1.5 million 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. Except for the foregoing, the terms of such working capital loans, if
any, have not been determined and no written agreements exist with respect to
such loans.
If we anticipate that we may not be able to consummate the initial business
combination within 18 months from the closing of the initial public offering, we
may, but are not obligated to, extend the period of time to consummate a
business combination by an additional six months (for a total of 24 months to
complete an initial business combination). In connection with such extension,
our sponsor or affiliates or designees may loan us the required funds to deposit
into the trust account an amount of $0.10 per public share, or approximately
$3.0 million in the aggregate. Any such payments would be made in the form of a
loan (the "extension loans"). The extension loans will be non-interest bearing
and payable upon the consummation of the initial business combination. If we
complete our initial business combination, we would be obligated to repay such
extension loans. Except for the foregoing, the terms of such extension loans, if
any, have not been determined and no written agreements exist with respect to
such loans.
59
--------------------------------------------------------------------------------
Table of Contents
Commitments and Contingencies
Registration Rights
The holders of the founder shares, private placement warrants and warrants that
may be issued upon conversion of working capital loans (and any shares of
Class A common stock issuable upon the exercise of the private placement
warrants and warrants that may be issued upon conversion of working capital
loans and upon conversion of the founder shares) are entitled to registration
rights pursuant to a registration rights agreement signed upon the effective
date of initial public offering, requiring us to register such securities for
resale (in the case of the founder shares, only after conversion to Class A
common stock). The holders of the majority of these securities will be entitled
to make up to three demands, excluding short form demands, that we register such
securities. In addition, the holders have certain "piggy-back" registration
rights with respect to registration statements filed subsequent to the
completion of a business combination and rights to require us to register for
resale such securities pursuant to Rule 415 under the Securities Act. We will
bear the expenses incurred in connection with the filing of any such
registration statements.
Underwriting Agreement
We granted the underwriters of our initial public offering a 45-day option from
the date of initial public offering to purchase up to 3,900,000 additional units
at the initial public offering price less the underwriting discounts and
commissions. The underwriters exercised such over-allotment option in full on
November 8, 2021.
The underwriters were entitled to a cash underwriting discount of $0.20 per
unit, approximately $6.0 million in the aggregate, paid upon the closing of the
initial public offering. In addition, the underwriters are entitled to a
deferred fee of $0.35 per unit, or approximately $10.5 million 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
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 GAAP. The preparation of our 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:
Investments Held in the Trust Account
Our portfolio of investments is comprised of U.S. government securities, within
the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a
maturity of 185 days or less, or investments in money market funds that invest
in U.S. government securities and generally have a readily determinable fair
value, or a combination thereof. When our investments held in the trust account
are comprised of U.S. government securities, the investments are classified as
trading securities. When our investments held in the trust account are comprised
of money market funds, the investments are recognized at fair value. Trading
securities and investments in money market funds are presented on the balance
sheets at fair value at the end of each reporting period. Gains and losses
resulting from the change in fair value of these securities is included in
income from investments held in the trust account in the accompanying statements
of operations. The estimated fair values of investments held in the trust
account are determined using available market information.
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 FASB ASC Topic 480, "Distinguishing Liabilities
from Equity" ("ASC 480"). Shares of Class A common stock subject to mandatory
redemption (if any) are classified as liability instruments and are measured at
fair value. Conditionally redeemable shares of Class A common stock (including
shares of Class A common stock that feature 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) are classified as temporary
equity. At all other times, shares of Class
60
--------------------------------------------------------------------------------
Table of Contents
A common stock are classified as stockholders' equity. Our shares of Class A
common stock feature certain redemption rights that are considered to be outside
of our control and subject to the occurrence of uncertain future events.
Accordingly, as of December 31, 2022 and 2021, 29,900,000 shares of Class A
common stock subject to possible redemption were presented as temporary equity,
outside of the stockholders' equity section of the accompanying balance sheets.
Under ASC 480, we have elected to recognize changes in the redemption value
immediately as they occur and adjust the carrying value of the security to equal
the redemption value at the end of the reporting period. This method would view
the end of the reporting period as if it were also the redemption date of the
security. Effective with the closing of the initial public offering, the company
recognized the accretion from initial book value to redemption amount, which
resulted in charges against additional paid-in capital (to the extent available)
and accumulated deficit.
Net Income (Loss) Per Share of Common Stock
We have 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 period. We have not considered the effect of the warrants
sold in the initial public offering and private placement to purchase an
aggregate of 29,910,000 shares of our Class A common stock in the calculation of
diluted loss per share, since such warrants are not yet exercisable. Accretion
associated with the redeemable Class A common stock is excluded from earnings
per share as the redemption value approximates fair value.
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to ASC 480
and ASC 815, "Derivatives and Hedging" ("ASC 815"). The classification of
derivative instruments, including whether such instruments should be recorded as
liabilities or as equity, is re-assessed at the end of each reporting period.
The warrants issued to investors in our initial public offering and the private
placement warrants are recognized as derivative liabilities in accordance with
ASC 815. Accordingly, we recognize the warrant instruments as liabilities at
fair value and adjust the instruments to fair value at each reporting period.
The difference between the fair market value of the private placement warrants
and the initial purchase consideration thereof is recorded as compensation
expense. The liabilities are 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 fair value of the public warrants and private
placement warrants were initially and subsequently measured at fair value using
a Black Scholes model. Beginning as of December 22, 2021, the fair value of the
public warrants has been measured based on the listed market price of such
public warrants. The private placement warrants are measured at fair value using
a Black Scholes model at December 31, 2022 and 2021.
Recent Adopted Accounting Standards
In August 2020, the FASB issued Accounting Standards Update ("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," which
simplifies accounting for convertible instruments by removing major separation
models required under current GAAP. The ASU also removes certain settlement
conditions that are required for equity-linked contracts to qualify for the
derivative scope exception and it also simplifies the diluted earnings per share
calculation in certain areas. We early adopted the ASU on January 1, 2021 using
a modified retrospective method for transition. Adoption of the ASU did not
impact our financial position, results of operations or cash flows.
61
--------------------------------------------------------------------------------
Table of Contents
Recent Accounting Pronouncements
Our management does not believe that any recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.
Off-Balance Sheet Arrangements
As of December 31, 2022, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
JOBS Act
The JOBS Act contains provisions that, among other things, relax certain
reporting requirements for qualifying public companies. We qualify as an
"emerging growth company" and under the JOBS Act are allowed to comply with new
or revised accounting pronouncements based on the effective date for private
(not publicly traded) companies. We are electing to delay the adoption of new or
revised accounting standards, and as a result, we may not comply with new or
revised accounting standards on the relevant dates on which adoption of such
standards is required for non-emerging growth companies. As a result, the
financial statements may not be comparable to companies that comply with new or
revised accounting pronouncements as of public company effective dates.
Additionally, we have elected to rely on the other reduced reporting
requirements provided by the JOBS Act. Subject to certain conditions set forth
in the JOBS Act, as an "emerging growth company," we may not be required to,
among other things, (i) provide an auditor's attestation report on our system of
internal control over financial reporting pursuant to Section 404 (an
"Attestation Report"), (ii) provide all of the compensation disclosure that may
be required of non-emerging growth public companies under the Dodd-Frank Wall
Street Reform and Consumer Protection Act, (iii) comply with any requirement
that may be adopted by the PCAOB regarding mandatory audit firm rotation or a
supplement to the auditor's report providing additional information about the
audit and the financial statements (auditor discussion and analysis) and
(iv) disclose certain executive compensation related items such as the
correlation between executive compensation and performance and comparisons of
the Chief Executive Officer's compensation to median employee compensation.
These exemptions will apply for a period of five years following the completion
of our initial public offering or until we are no longer an "emerging growth
company," whichever is earlier.
62
--------------------------------------------------------------------------------
Table of Contents
© Edgar Online, source Glimpses