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 report. Certain
information contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Overview
We are a blank check company incorporated 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 (the "initial business combination"). Our Sponsor is DC
Rainier SPV LLC, a Delaware limited liability company ("Sponsor"). While we may
pursue an initial business combination target in any industry or geographic
region, we intend to focus on established, technology focused businesses that
have an aggregate enterprise value of approximately $500 million to $2.0 billion
and would benefit from access to public markets and the operational and
strategic expertise of our management team and board of directors. We will seek
to capitalize on the significant experience of our management team in
consummating an initial business combination with the ultimate goal of pursuing
attractive returns for our shareholders.
The Registration Statement for our initial public offering was declared
effective on October 4, 2021 (the "Initial Public Offering"). On October 7,
2021, we consummated the Initial Public Offering of 17,250,000 units (the
"Units") consisting of one share of common stock of the Company, par value
$0.0001 per share (the "Common Stock") and one redeemable warrant ("Warrant"),
each Warrant entitling the holder thereof to purchase three-fourths of one share
of Common Stock for $11.50 per share. The Units were sold at $10.00 per Unit
including the full exercise of the underwriters' over-allotment option,
generating gross proceeds of $172.5 million, and incurring transaction costs of
approximately $12.3 million, consisting of $6.9 million of deferred underwriting
fees, approximately $1.1 million of other offering costs, and approximately $4.3
million as a cost of the Initial Public Offering in accordance with Staff
Accounting Bulletin Topic 5A and 5T.
Simultaneously with the closing of the Initial Public Offering, the Company
completed the private sale of 596,200 Units (the "Private Placement Units") at a
purchase price of $10.00 per Private Placement Unit (the "Private Placement"),
to the Sponsor and the Company's CEO and CFO, generating gross proceeds to the
Company of approximately $6.0 million. The Private Placement Units are identical
to the Units sold in the IPO.
Approximately $176 million ($10.00 per Unit) of the net proceeds of the Initial
Public Offering and certain of the proceeds of the Private Placement was placed
in a trust account (the "Trust Account") located in the United States with
American Stock Transfer & Trust Company, 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 one hundred eighty-five (185) days or less, or
in money market funds meeting the conditions of paragraphs (d)(1), (d)(2),
(d)(3) and (d)(4) of Rule 2a-7 under the Investment Company Act, which invest
only in direct U.S. government treasury obligations, as determined by the
Company, until the earlier of: (i) the completion of our initial business
combination and (ii) the distribution of the Trust Account as otherwise
permitted under our amended and restated certificate of incorporation.
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If we are unable to complete an initial business combination within fifteen
(15) months from the closing of the Initial Public Offering, we will (i) cease
all operations except for the purpose of winding up, (ii) as promptly as
reasonably possible but not more than ten (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
franchise and income taxes (less up to $100,000 of interest to pay dissolution
expenses and net of taxes payable), 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 our
remaining stockholders and our board of directors, dissolve and liquidate,
subject in each case to our 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 up to December 31, 2021 was in preparation
for our formation, our initial public offering, and since the closing of our
initial public offering, a search for business combination candidates. We will
not generate any operating revenues until the closing and completion of our
initial business combination. We generate non-operating income in the form of
interest income on investments held in trust account. We expect to incur
increased 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 period from February 10, 2021 (inception) through December 31, 2021, we
had a net loss of approximately $234,000 which consisted of approximately
$170,000 in general and administrative expenses, related party administrative
fees of approximately $28,000, and approximately $40,000 in franchise tax
expense, partially offset by income from our investments held in the trust
account of approximately $4,000.
Liquidity and Capital Resources
As of December 31, 2021, we had $799,290 in cash and no cash equivalents.
Our liquidity needs up to the Initial Public Offering were satisfied through
receipt of a $25,000 capital contribution from our Sponsor, certain of our
executive officers and directors, and A.G.P./Alliance Global Partners (the
"Representative"), in exchange for the issuance of the founder shares, and loans
from our Sponsor and certain executive officers for an aggregate amount of
$975,000 to cover organizational expenses and expenses related to the Initial
Public Offering pursuant to a promissory note (the "Note").
On October 7, 2021, we consummated the Initial Public Offering of 17,250,000
Units, including the full exercise of the underwriters' over-allotment option,
at a price of $10.00 per Unit, generating gross proceeds of $172.5 million.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 596,200 Private Placement Units (the "Private Placement Units") at a
price of $10.00 per Private Placement Unit in a Private Placement (the "Private
Placement"), generating gross proceeds of $5,962,000.
Following the Initial Public Offering and the Private Placement, a total of
$175,950,000 was placed in the Trust Account and we had $1,494,623 of cash held
outside of the Trust Account, after payment of costs related to the Initial
Public Offering, and available for working capital purposes. We incurred
$12,333,704 in transaction costs, including $6,900,000 in deferred underwriting
fees, $1,087,360 in other offering costs related to the Initial Public Offering
and $4,346,344 as a cost of the Initial Public Offering in accordance with Staff
Accounting Bulletin Topic 5A and 5T.
We intend to use substantially all of the net proceeds of the Initial Public
Offering, including the funds held in the Trust Account, to acquire a target
business or businesses and to pay our expenses relating thereto. To the extent
that our share capital is used in whole or in part as consideration to effect
our initial business combination, the remaining proceeds held in the Trust
Account as well as any other net proceeds not expended will be used as working
capital to finance the operations of the target business. Such working capital
funds could be used in a variety of ways including continuing or expanding the
target business' operations, for strategic acquisitions and for marketing,
research and development of existing or new products. Such funds could also be
used to repay any operating expenses or finders' fees which we had incurred
prior to the completion of our initial business combination if the funds
available to us outside of the Trust Account were insufficient to cover such
expenses.
In addition, in the short term and long term, 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.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity from our sponsor or an affiliate of our sponsor
or our officers and directors to meet our needs through the earlier of the
consummation of our
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initial business combination or one year from the date of this filing. Over this
time period, we will be using these funds for paying existing accounts payable,
identifying and evaluating prospective initial business combination candidates,
performing due diligence on prospective target businesses, paying for travel
expenditures, selecting the target business to merge with or acquire, and
structuring, negotiating and consummating the Business Combination.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than as described below.
Registration Rights
The holders of the founder shares, Private Placement Units and warrants that may
be issued upon conversion of working capital loans, if any, and any shares of
common stock issuable upon the exercise of the Private Placement Warrants will
be entitled to registration rights pursuant to a registration rights agreement.
These holders will be entitled to certain demand and "piggyback" registration
rights. We will bear the expenses incurred in connection with the filing of any
such registration statements.
Underwriting Agreement and Business Combination Agreement
The Company paid an underwriting discount of $0.0333 per Unit, or $500,000 in
the aggregate, at the closing of the Initial Public Offering. An additional fee
equal to 4.0% of the gross proceeds of the Initial Public Offering, or
$6,900,000, will be payable to the Representative for services rendered in
connection with the business combination. This business combination fee will
become payable to the Representative from the amounts held in the Trust Account
solely in the event that the Company completes an initial business combination,
subject to the terms of the underwriting agreement and the business combination
agreement, each dated October 4, 2021.
Administrative Services Agreement
Commencing on the date that our securities were first listed on The Nasdaq
Global Market and continuing until the earlier of our consummation of an initial
business combination or our liquidation, we have agreed to pay an affiliate of
our Sponsor a total of $10,000 per month for office space, utilities,
secretarial support and administrative services, subject to deferral until
consummation of our initial business combination. We recorded administrative
services expenses of $28,000 for the period from February 10, 2021 (inception)
to December 31, 2021, in general and administrative expenses in connection with
the related agreement in the accompanying statement of operations.
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 expenses during the
periods reported. Actual results could materially differ from those estimates.
We have identified the following critical accounting policies:
Common stock subject to possible redemption
We account for the common stock subject to possible redemption in accordance
with the guidance in ASC 480, Distinguishing Liabilities from Equity. Common
stock subject to mandatory redemption are classified as a liability instrument
and are measured at fair value. Conditionally redeemable common stock (including
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, common stock are classified as stockholders' equity. The Company's common
stock features certain redemption rights that are considered to be outside of
our control and subject to occurrence of uncertain future events.
Risks and Uncertainties
Our management continues to evaluate the impact of the COVID-19 pandemic and has
concluded that while it is reasonably possible that the virus could have a
negative effect on our financial position, results of operations and/or search
for a target company, the specific impact is not readily determinable as of the
balance date.
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Recent Accounting Pronouncements
We do not believe that any recently issued, but not yet effective, accounting
pronouncements, if currently adopted, would have a material impact on our
financial statements except for the following:
In August 2020, the 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. The Company adopted ASU 2020-06 at inception on
February 10, 2021. The adoption of ASU 2020-06 did not have an impact on the
Company's financial statements.
Off-Balance Sheet Arrangements
As of December 31, 2021, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
Emerging Growth Company Status
On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (the "JOBS
Act") was signed into law. The JOBS Act contains provisions that, among other
things, relax certain reporting requirements for qualifying public companies. We
qualify as an "emerging growth company" under the JOBS Act and are allowed to
comply with new or revised accounting pronouncements based on the effective date
for private (not publicly traded) companies. We elected 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, our
financial statements may not be comparable to companies that comply with new or
revised accounting pronouncements as of public company effective dates.
As an "emerging growth company," we are not required to, among other things,
(i) provide an auditor's attestation report on our system of internal controls
over financial reporting, (ii) provide all of the compensation disclosure that
may be required of non-emerging growth public companies, (iii) comply with any
requirement that may be adopted by the Public Company Accounting Oversight Board
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 comparisons of the CEO's
compensation to median employee compensation. These exemptions will apply for a
period of five (5) years following the completion of our Initial Public Offering
or until we otherwise no longer qualify as an "emerging growth company."
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