References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to M3-Brigade Acquisition III Corp. 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 on Form 10-Q includes forward-looking statements. We have
based these forward-looking statements on our current expectations and
projections about future events. These forward-looking statements are subject to
known and unknown risks, uncertainties and assumptions about us that may cause
our actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"should," "could," "would," "expect," "plan," "anticipate," "believe,"
"estimate," "continue," or the negative of such terms or other similar
expressions. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described in our other SEC filings.
Overview
We are a blank check company formed under the laws of the State of Delaware on
March 25, 2021 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or other 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 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 nor generated any revenues to date.
Our only activities from March 25, 2021 (inception) through September 30, 2022
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and the search for 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 expect to generate
non-operating income in the form of interest income on marketable securities
held after the Initial Public Offering. 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 loss of $569,516,
which consists of the change in fair value of forward purchase agreement
liability of $1,325,203, operating and formation costs of $214,770 and provision
for income taxes of $472,384, offset by the gain on marketable securities (net),
dividends and interest on cash held in Trust Account of $1,442,841.
For the nine months ended September 30, 2022, we had a net loss of $1,131,348,
which consists of the change in fair value of forward purchase agreement
liability of $1,363,584, operating and formation costs of $830,571 and provision
for income taxes of $472,384, offset by the gain on marketable securities (net),
dividends and interest on cash held in Trust Account of $1,535,191.
For the period March 25, 2021 (inception) through September 30, 2021, we had a
net loss of $3,150, consisting of operating and formation costs.
Liquidity and Capital Resources
On October 26, 2021, we consummated the Initial Public Offering of 30,000,000
Units at a price of $10.00 per Unit, which includes the partial exercise by the
underwriters of the over-allotment option to purchase an additional 3,900,000
Units, generating gross proceeds of $300,000,000. Simultaneously with the
closing of the Initial Public Offering, we consummated the sale of 7,526,667
Private Placement Warrants at a price of $1.50 per Private Placement Warrant in
a private placement to our Sponsor, generating gross proceeds of $11,290,000.
Following the Initial Public Offering, the partial exercise of the
over-allotment option by the underwriters' and the sale of the Private Placement
Warrants, a total of $303,000,000 (including $3,000,000 from the proceeds of the
Private Placement Warrants) was placed in the Trust Account and we had an
initial amount of $1,524,547 of cash held outside of the Trust Account, after
payment of costs (other than $14,280,000 of deferred underwriting fees) related
to the Initial Public Offering, and available for working capital purposes. We
incurred approximately $20,634,000 in transaction costs, including $5,220,000 of
underwriting fees, $14,280,000 of deferred underwriting fees and approximately
$1,134,000 of other offering costs.
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For the nine months ended September 30, 2022, cash used in operating activities
was $421,775. Net loss for the nine months ended September 30, 2022 was
$1,131,348 and was affected by dividends and interest on cash held in Trust
Account of $1,535,191, offset by change in fair value of forward purchase
agreement liability of $1,363,584 and changes in operating assets and
liabilities, which provided $881,180 of cash from operating activities.
For the period from March 25, 2021 (inception) through September 30, 2021, the
net increase in cash was $27,000. For the period from March 25, 2021 (inception)
through September 30, 2021, cash provided from financing activities of $27,000
included an advance from affiliate of $27,000.
As of September 30, 2022, we had cash and marketable securities held in the
Trust Account of $304,471,491. We intend to use substantially all of the funds
held in the Trust Account, including any amounts representing interest earned on
the Trust Account to complete our Business Combination. We may withdraw interest
to pay franchise and income taxes. During the period ended September 30, 2022,
we withdrawn $69,000 on the Trust Account for working capital or for payment of
taxes purposes. 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 $940,585 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 a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor, an affiliate of the
Sponsor, or 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
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 such loans may be convertible into warrants,
at a price of $1.50 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. The terms of such loans by our officers and
directors, if any, have not been determined and no written agreements exist with
respect to such loans. The loans would be repaid upon consummation of a Business
Combination, without interest.
An affiliate of the Sponsor advanced $192,374 to the Company prior to the
Initial Public Offering to pay certain of the costs incurred by the Company in
connection with the Initial Public Offering. Such advances have been repaid by
the Company out of funds held outside the Trust Account.
We expect that we will need to raise additional funds in order to meet the
expenditures required for operating our business, pay our existing liabilities
and pay for the costs of identifying a target business, undertaking in-depth due
diligence and negotiating a Business Combination. Additionally, 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. Subject to compliance with applicable securities laws, we would
only complete such financing simultaneously with the completion of our Business
Combination. If we are unable to complete our 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 Business
Combination, if cash on hand is insufficient, we may need to obtain additional
financing in order to meet our obligations.
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.
The underwriters are entitled to a deferred fee of $0.45 per Unit issued at our
initial public offering and $0.65 per Unit issued upon exercise by the
underwriters of their overallotment option, or $14,280,000 in the aggregate. The
deferred fee will be waived by the underwriters in the event that we do not
complete a Business Combination, subject to the terms of the underwriting
agreement.
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Critical Accounting Estimates
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. One of the more significant accounting estimates included in these
condensed financial statements is the determination of the fair value of the
Forward Purchase Agreement. Such estimates may be subject to change as more
current information becomes available and accordingly the actual results could
differ significantly from those estimates.
Recent Accounting Standards
See Note 2 to the financial statements required by Item 1 of this Quarterly
Report on Form 10-Q.
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