References to the "Company," "our," "us" or "we" refer to Stratim Cloud
Acquisition Corp. The following discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the 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. 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 "Cautionary Note
Regarding Forward-Looking Statements and Risk Factor Summary," "Item 1A. Risk
Factors" and elsewhere in this Annual Report on Form 10-K.
Overview
We are a blank check company formed under the laws of the State of Delaware on
July 29, 2020 for the purpose of entering into a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or 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.
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from July 29, 2020 (inception) through December 31, 2021
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. 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 year ended December 31, 2021, we had a net income of $9,636,139, which
consists of change in fair value of warrant liability of $11,246,666, interest
earned on marketable securities held in Trust Account of $14,433, offset by
transaction costs related to warrants of $688,515, and operating costs of
$936,445.
For the period from July 29, 2020 (inception) through December 31, 2020, we had
a net loss of $1,000, which consisted of operating and formation costs.
Liquidity and Capital Resources
On March 16, 2021, we consummated the Initial Public Offering of 25,000,000
Units at $10.00 per unit, generating gross proceeds of $250,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 4,666,667 Private Placement Warrants at a price of $1.50 per Private
Placement Warrant in a private placement to the Sponsor, generating gross
proceeds of $7,000,000.
Following the Initial Public Offering and the sale of the Private Units, a total
of $250,000,000 was placed in the Trust Account. We incurred $14,326,696 in
Initial Public Offering related costs, including $5,000,000 of underwriting
fees, $8,750,000 of deferred underwriting fees and $576,696 of other offering
costs.
For the year ended December 31, 2021, cash used in operating activities was
$628,059. Net income of $9,636,139 was affected by a change in fair value of
warrant liabilities of $11,246,666, transaction costs incurred in connection
with warrant liabilities of $688,515, and interest earned on marketable
securities held in Trust Account of $14,433. Changes in operating assets and
liabilities used $308,386 of cash for operating activities.
For the period from July 29, 2020 (inception) through December 31, 2020, cash
used in operating activities was $0. Net loss of $1,000 was affected by changes
in operating assets and liabilities used $1,000 of cash for operating
activities.
As of December 31, 2021, we had marketable securities held in the Trust Account
of $250,014,433. Interest income on the balance in the Trust Account may be used
by us to pay taxes. Through December 31, 2021, 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 income 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 December 31, 2021, the Company had $952,749 in its operating bank account,
and working capital of $657,796. The Company's liquidity needs prior to the
Company's Initial Public Offering and Private Placement had been satisfied
through a capital contribution from the Sponsor in the amount of $25,000 (see
Note 4) for the founder shares, and an unsecured promissory note from the
Sponsor of $300,000 (see Note 5). The Company fully repaid the promissory note
to the Sponsor on January 15, 2021. Subsequent to the consummation of the
Initial Public Offering and Private Placement, the Company's liquidity needs
have been satisfied through the proceeds from the consummation of the Private
Placement not held in the Trust Account. In addition, in order to finance
transaction costs in connection with a Business Combination, the Company's
Sponsor, or an affiliate of the Sponsor, or certain Company's officers and
directors may, but are not obligated to, provide the Company with Working
Capital Loans (see Note 5).
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Based on the foregoing, management believes that the Company will have
sufficient working capital and borrowing capacity to meet its needs through the
earlier of the consummation of a Business Combination or one year from this
filing. Over this time period, the Company will be using the working capital for
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.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor, or certain of our officers
and 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 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.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business for the next twelve months.
Off-Balance Sheet Financing 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 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, other than an agreement to pay the Sponsor
a monthly fee of $10,000 for office space, utilities, administrative and support
services. We began incurring these fees on March 11, 2021 and will continue to
incur these fees monthly until the earlier of the completion of the Business
Combination and our liquidation.
The underwriters are entitled to a deferred fee of $0.35 per share, or
$8,750,000 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
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. We have identified the following critical accounting policies:
Offering Costs associated with the Initial Public Offering
The Company complies with the requirements of the ASC340-10-S99-1 and SEC Staff
Accounting Bulletin ("SAB") Topic 5A - "Expenses of Offering". Offering costs
consist principally of professional and registration fees incurred through the
balance sheet date. Offering costs are allocated to the separable financial
instruments issued in the IPO based on a relative fair value basis compared to
total proceeds received. Offering costs associated with warrant liabilities is
expensed, and offering costs associated with the Class A common stock are
charged to the shareholders' equity. Accordingly, as of December 31, 2021,
offering costs in the aggregate of $14,326,696 have been charged to
shareholders' equity and $233,334 of offering costs associated with warrant and
forward purchase unit issuance cost has been expensed on the Company's statement
of operations.
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Warrant Liabilities
We account for the Warrants in accordance with the guidance contained in ASC
815-40 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 exercised, and any change in fair value is recognized in the
statements of operations. The Private Warrants and the Public Warrants for
periods where no observable traded price was available are valued using a
Modified Black-Scholes Option Pricing Model. For periods subsequent to the
detachment of the Public Warrants from the Units, the Public Warrant quoted
market price will be used as the fair value as of each relevant date.
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Class A common stock subject to
mandatory redemption is classified as a liability instrument and 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, Class A common stock
subject to possible redemption is presented at redemption value as temporary
equity, outside of the stockholders' equity section of our balance sheets.
Net Income Per Common Share
We apply the two-class method in calculating earnings per share. Net income
(loss) per common share, basic and diluted for Class A common stock subject to
possible redemption is calculated by dividing the interest income earned on the
Trust Account, net of applicable taxes, if any, by the weighted average number
of shares of Class A common stock subject to possible redemption outstanding for
the period. Net income (loss) per common share, basic and diluted, for
non-redeemable common stock is calculated by dividing net loss less income
attributable to Class A common stock subject to possible redemption, by the
weighted average number of shares of non-redeemable common stock outstanding for
the period presented.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board ("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, 2024 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on January
1, 2021. We adopted ASU 2020-06 effective January 1, 2021. The adoption of ASU
2020-06 did not have an impact on our financial statements.
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 financial statements.
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