References in this Quarterly Report on Form10-Q(the "Quarterly Report") to "we,"
"us" or the "Company" refer to Marblegate Acquisition Corp. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to Marblegate Acquisition LLC. 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, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (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 Quarterly Report
Form10-Q including, without limitation, statements in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding the completion of a Business Combination (as defined below), 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 a
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
("Initial Public Offering") and Annual Report on Form10-K 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 formed under the laws of the State of Delaware on
December 10, 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 (the "Business Combination"). 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, 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 December 10, 2020 (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 established for the benefit of our public stockholders the "Trust
Account" with Continental Stock Transfer & Trust Company acting as trustee. 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 and
other expenses in connection with searching for and completing a Business
Combination.
For the three months ended September 30, 2022, we had net income of $899,841,
which consists of interest income on marketable securities held in the Trust
Account of $840,083, an unrealized gain on marketable securities held in the
Trust Account of $518,419 and change in fair value of warrant liabilities of
$68,250, offset by operating and formation costs of $247,674 and provision for
income taxes of $279,237.
For the nine months ended September 30, 2022, we had net income of $897,962,
which consists of interest income on marketable securities held in the Trust
Account of $1,664,415 and change in fair value of warrant liabilities of
$241,150, offset by operating and formation costs of $725,539, an unrealized
loss on marketable securities held in the Trust Account of $2,827 and provision
for income taxes of $279,237.
For the three months and nine months ended September 30, 2021, we had a net loss
of $1,594, which was comprised of franchise taxes and insurance expense.
Liquidity and Capital Resources
On October 5, 2021, we consummated the Initial Public Offering of 30,000,000
units, generating gross proceeds of $300,000,000. Simultaneously with the
closing of the Initial Public Offering, we consummated the sale of 910,000
private placement units at a price of $10.00 per private placement unit in a
private placement to the sponsor and Cantor Fitzgerald & Co., the representative
of the underwriters of our Initial Public Offering, generating gross proceeds of
$9,100,000.
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Following the Initial Public Offering and the private placement, a total of
$301,500,000 was placed in the Trust Account. We incurred $42,630,587 in Initial
Public Offering related costs, including $6,000,000 of underwriting fees,
$15,000,000 of deferred underwriting fees, net of reimbursement, $1,015,137 of
other offering costs including $509,600 for the fair value of the private
warrants included in the private placement units, and $505,537 of offering
costs, and $20,615,450 for the fair value of the founder shares attributable to
certain anchor investors.
For the nine months ended September 30, 2022, cash used in operating activities
was $545,142. Net income of $897,962 was affected by interest earned on
marketable securities held in the Trust Account of $1,664,415, unrealized loss
in marketable securities held in the Trust Account of $2,827 and change in fair
value of warrant liabilities of $241,150. Changes in operating assets and
liabilities provided $459,634 of cash from operating activities.
For the nine months ended September 30, 2021, cash used in operating activities
was $1,238. Net loss of $1,594 was affected by changes in operating assets and
liabilities which provided $356 of cash from operating activities.
As of September 30, 2022, we had marketable securities held in the Trust Account
of $303,180,516 (including approximately $1,680,516 of interest income, net of
unrealized losses) consisting of U.S. Treasury bills with a maturity of 185 days
or less. Interest income on the balance in the Trust Account may be used by us
to pay taxes. Through September 30, 2022, we have not withdrawn any interest
earned from the Trust Account.
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 commissions and 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 $35,018. 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, members of the sponsor, or
certain of our officers, 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. Up to $1,500,000 of such loans
may be convertible into units, at a price of $10.00 per unit at the option of
the lender. The units would be identical to the private placement units. On
June 30, 2022, the Company issued a promissory note to a member of the Sponsor
for a Working Capital Loan for which the Company may borrow up to the principal
sum of $600,000. On July 1, 2022, the Company borrowed $200,000 under the
promissory note for the Working Capital Loan. As of September 30, 2022 and
December 31, 2021, there were $200,000 and $0 outstanding balances under the
Working Capital Loans.
We expect to incur significant costs in pursuit of our acquisition plans. We
will likely need to raise additional capital through loans or additional
investments from our sponsor, stockholders, officers, directors, or third
parties. Our officers, directors and the 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. In
instances of working capital deficits, the Sponsor has agreed to fund cash
shortfalls up to $600,000. Accordingly, we may not be able to obtain additional
financing. If we are unable to raise additional capital, we may be required to
take additional measures to conserve liquidity, which could include, but not
necessarily be limited to, curtailing operations, suspending the pursuit of a
potential transaction, and reducing overhead expenses. We cannot provide any
assurance that new financing will be available to us on commercially acceptable
terms, if at all. If the Company is unable to complete the Business Combination
because it does not have sufficient funds available, the Company will be forced
to cease operations and liquidate the Trust Account. 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," the Company has until January 5, 2023, to consummate a
Business Combination. 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 and an extension has not been requested by the Sponsor
and approved by the Company's stockholders, there will be a mandatory
liquidation and subsequent dissolution of the Company. Management has determined
that the liquidity issue and the mandatory liquidation raise substantial doubt
about the Company's ability to continue as a going concern. The accompanying
financial statements do not include any adjustments relating to the recovery of
the recorded assets or the classification of the liabilities that might be
necessary should the Company be required to liquidate after January 5, 2023. The
Company intends to continue to search for and seek to complete a Business
Combination before the mandatory liquidation date. The Company is within 12
months of its mandatory liquidation date as of the time of filing of this
Quarterly Report on Form 10-Q. On November 9, 2022, the Company filed a
definitive proxy statement to extend the Combination Period until July 5, 2023,
or such earlier date as determined by the Company's board of directors.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 2022 or December 31, 2021. 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 obligations, capital lease obligations,
operating lease obligations or long-term liabilities, other than an agreement to
pay the sponsor a total of $10,000 per month for secretarial and administrative
support. We began incurring these fees on September 30, 2021 and will continue
to incur these fees monthly until the earlier of the completion of the Business
Combination or our liquidation.
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The underwriters are entitled to a deferred fee of 5.0% of the gross proceeds of
the initial 30,000,000 units sold in the Initial Public Offering, or
$15,000,000. The deferred fee will be paid in cash upon the closing of a
Business Combination from the amounts held in the Trust Account, subject to the
terms of the underwriting agreement. Such fee will be waived by the underwriters
in the event that we do not complete a Business Combination.
Critical Accounting Policies
The preparation of condensed 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 Liabilities
We account for the warrants issued in connection with our Initial Public
Offering in accordance with the guidance contained in Accounting Standards
Codification ("ASC") 815-40-15-7D 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 the Private Placement Warrants
are exercised or expire, and any change in fair value will be recognized in our
statements of operations.
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." Class A common stock subject to mandatory redemption is classified
as a liability instrument and is measured at fair value. Conditionally
redeemable Class A common stock (including Class A common stock that features
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, Class A 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, Class A common
stock subject to possible redemption is presented at redemption value as
temporary equity, outside of the stockholders' deficit section of our balance
sheets.
Net Income (Loss) Per Common Share
Net income (loss) per common stock is computed by dividing net income (loss) by
the weighted average number of shares of common stock outstanding for the
period. The Company applies the two-class method in calculating earnings per
share. Accretion associated with the redeemable shares of Class A common stock
is excluded from earnings per share as the redemption value approximates fair
value.
Recent Accounting Standards
In August 2020, the FASB issued 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 ("ASU 2020-06"), 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 simplifies the diluted earnings per share calculation in
certain areas. We adopted ASU 2020-06 effective on June 30, 2021. Adoption of
the ASU 2020-06 did not have an impact on our financial position, results of
operations or cash flows.
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 condensed financial statements.
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