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. When used in this Form 10-K, words such as
"anticipate," "believe," "estimate," "expect," "intend" and similar expressions,
as they relate to us or the Company's management, identify forward-looking
statements. Such forward-looking statements are based on the beliefs of
management, as well as assumptions made by, and information currently available
to, the Company's management. Actual results could differ materially from those
contemplated by the forward-looking statements as a result of certain factors
detailed in our filings with the SEC. 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.
We are an early-stage blank check company incorporated in February 2021 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 completed our IPO on
November 19, 2021. We intend to effectuate our initial business combination
using cash from the proceeds of the IPO and the sale of the private placement
warrants, our capital stock, debt or a combination of cash, stock and debt.
Since completing our IPO, we have reviewed, and continue to review, a number of
opportunities to enter into an initial business combination with an operating
business, but we are not able to determine at this time whether we will complete
an initial business combination with any of the target businesses that we have
reviewed or with any other target business. We presently have no revenue, have
had losses since inception from incurring formation costs and have had no
operations other than the active solicitation of a target business with which to
complete an initial business combination. We expect to continue to incur
significant costs in the pursuit of our acquisition plans. We cannot assure you
that our plans to raise capital or to complete our initial business combination
will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through December 31, 2021 were organizational activities,
those necessary to prepare for the IPO, described below, and, after our IPO,
identifying a target company for an initial business combination. We do not
expect to generate any operating revenues until after the completion of our
initial 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.
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For the period from February 19, 2021 (inception) through December 31, 2021, we
had net loss of $242,520, which consisted of operating costs of $255,131, offset
by an unrealized gain on marketable securities held in the trust account of
$12,611.
Liquidity and Capital Resources
On November 19, 2021, we consummated the IPO of 25,875,000 units, which includes
the full exercise by the underwriter of the over-allotment option of 3,375,000
units, at $10.00 per unit, generating gross proceeds of $258,750,000.
Simultaneously with the closing of the IPO, we completed the sale of private
placement warrants to purchase an aggregate of 12,350,000 shares of Class A
common stock at $11.50 per share to our sponsor, the anchor investor and the
underwriter at a purchase price of $1.00 per private placement warrant,
generating gross proceeds of $12,350,000.
Following the IPO, the exercise of the underwriter's over-allotment option and
the sale of the private placement warrants, a total of $263,925,000 was placed
in the trust account. We incurred an aggregate of $15,030,508 in transaction
costs; $14,231,250 of underwriting fees, of which $5,175,000 was paid and
$9,056,250 was deferred and $799,258 of other offering costs.
For the year ended December 31, 2021, cash used in operating activities was
$900,492. Net loss of $242,520 and an unrealized gain on marketable securities
of $12,611. Changes in operating assets and liabilities used $900,492 of cash
from operating activities.
As of December 31, 2021, we had cash and marketable securities held in the trust
account of $263,947,234. 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 fees and income taxes payable), to
complete our initial business combination. To the extent that our capital stock
or debt is used, in whole or in part, as consideration to complete our initial
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 $325,250 of cash held outside of the trust
account. 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 an initial business
combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with an intended 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 of the post business
combination entity, 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.
We may have to raise additional funds in order to meet the expenditures required
for operating our business. If our estimates 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, we may
have insufficient funds available to operate our business prior to our initial
business combination. Moreover, we may need to obtain additional financing
either to complete our initial business combination either because the
transaction requires more cash than is available from the proceeds held in our
trust account or because we become obligated to redeem a significant number of
our public shares upon completion of our initial business combination, in which
case we may issue additional securities or incur debt in connection with such
initial business combination, which may include a specified future issuance.
Subject to compliance with applicable securities laws, we would only complete
such financing simultaneously with the completion of our business combination.
If we do not 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. In addition, following our initial business
combination, if cash on hand is insufficient, we may need to obtain additional
financing in order to meet our obligations.
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The Company will need to raise additional capital through loans or additional
investments from its Sponsor, shareholders, officers, directors, or third
parties. The Company's officers, directors and Sponsor 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. Accordingly, the Company may not be able to
obtain additional financing.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2021. We do not participate in
transactions that create relationships with 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 to pay affiliate
of our sponsor a monthly fee of $15,000 for office space, utilities and
secretarial and administrative and support. We began incurring these fees on
consummation of the IPO and will continue to incur these fees monthly until the
earlier of the completion of our initial business combination and our
liquidation.
The underwriter is entitled to a deferred fee of $0.35 per unit sold in the IPO,
or $9,056,250 in the aggregate. The deferred fee will be waived by the
underwriter in the event that the Company does not complete an initial business
combination, subject to the terms of the underwriting agreement with respect to
the Company's IPO.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity
with U.S. GAAP 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 and
estimates:
Class A Common StockSubject 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." 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
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 stockholders' equity. Our 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, our Class A common stock
subject to possible redemption is presented as temporary equity, outside of the
stockholders' equity section of our balance sheets. The Company recognizes
changes in redemption value immediately as they occur and adjusts the carrying
value of redeemable Class A common stock to equal the redemption value at the
end of each reporting period. Increases or decreases in the carrying amount of
redeemable Class A common stock are affected by charges against additional paid
in capital and accumulated deficit.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on the Company's financial statements.
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Net Loss per Common Share
Net loss per share is computed by dividing net loss by the weighted average
number of shares of common stock outstanding during the period, excluding shares
of common stock subject to forfeiture by the Sponsor. The calculation of diluted
loss per share does not consider the effect of the warrants issued in connection
with the IPO and warrants issued in the Private Placement since the exercise of
these warrants are contingent upon the occurrence of future events. For the
period from February 19, 2021 (inception) through December 31, 2021, the Company
did not have any dilutive securities and/or other contracts that could,
potentially, be exercised or converted into shares of common stock and then
share in the earnings of the Company. As a result, diluted loss per share is the
same as basic loss per share for the period presented.
Recent Accounting Standards
In August 2020, the FASB issued Accounting Standard 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 U.S. GAAP. The ASU 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. The Company adopted ASU 2020-06 on January 1,
2021, with no impact upon adoption. Management does not believe that any other
recently issued, but not yet effective, accounting pronouncements, if currently
adopted, would have a material effect on the Company's financial statements.
The Company has reviewed other recent accounting pronouncements and concluded
that they are either not applicable to the Company, or no material effect is
expected on the financial statement as a result of future adoption.
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