References to the "Company," "Trajectory Alpha Acquisition Corp.," "our," "us"
or "we" refer to Trajectory Alpha Acquisition Corp., references to "management"
or "management team" refer to the Company's officers and directors and
references to the "Sponsor" refer to Trajectory Alpha Sponsor, LLC. The
following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the unaudited condensed
financial statements and the notes thereto contained elsewhere in this Quarterly
Report on Form 10-Q (this "Quarterly Report"). Certain information contained in
the discussion and analysis set forth below includes forward-looking statements
that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes, and oral statements made from time to time by
representatives of the Company may include, forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act and are intended to be covered by the safe
harbor created thereby. The Company has based these forward-looking statements
on management's current expectations, projections and forecasts about future
events. These forward-looking statements are subject to known and unknown risks,
uncertainties and assumptions about the Company that may cause its actual
business, financial condition, results of operations, performance and/or
achievements to be materially different from any future business, financial
condition, results of operations, performance and/or achievements expressed or
implied by these forward-looking statements. Factors that might cause or
contribute to such a discrepancy include, but are not limited to, those
described in the Company's other filings with the SEC. The words "anticipate,"
"believe," "continue," "could," "estimate," "expect," "intends," "may," "might,"
"plan," "possible," "potential," "predict," "project," "target," "goal,"
"shall," "should," "will," "would" and similar expressions may identify
forward-looking statements, but the absence of these words does not mean that a
statement is not forward-looking. In addition, any statements that refer to
expectations, projections, forecasts or other characterizations of future events
or circumstances, including any underlying assumptions, are forward-looking
statements.
Overview
We are a blank check company incorporated as a Delaware corporation and formed
for the purpose of effecting a merger, consolidation, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses or entities. We have not selected any
specific business combination target and we have not, nor has anyone on our
behalf, engaged in any substantive discussions, directly or indirectly, with any
business combination target with respect to an initial business combination with
us. 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.
On December 14, 2021, we consummated the initial public offering (the "IPO") of
17,250,000 units (the "Units"), including the issuance of 2,250,000 Units as a
result of the underwriters' exercise of their over-allotment option in full.
Each Unit consists of one share of our Class A common stock, par value $0.0001
per share (the "Class A common stock"), and one-half of one of our redeemable
public warrants (each whole warrant, a "Public Warrant"), with each whole Public
Warrant entitling the holder thereof to purchase one share of Class A common
stock for $11.50 per share, subject to adjustment. The Units were sold at a
price of $10.00 per Unit, generating gross proceeds of $172,500,000.
On December 14, 2021, simultaneously with the consummation of the IPO, we
completed the private sale (the "Private Placement") of an aggregate of
5,725,000 warrants (the "Private Placement Warrants") to Trajectory Alpha
Sponsor LLC at a purchase price of $1.00 per Private Placement Warrant,
generating gross proceeds of $5,725,000.
The net proceeds from the IPO, together with certain of the proceeds from the
Private Placement, $174,225,000 in the aggregate (the "Offering Proceeds"), were
placed in a U.S.-based trust account maintained by Continental Stock Transfer &
Trust Company, acting as trustee.
Transaction costs amounted to $22,323,737, consisting of $1,500,000 of cash
underwriting commissions, $5,366,378 of fair value shares of Class B common
stock issued to the underwriter, $6,262,500 of deferred underwriting
commissions, $8,658,646 of the excess of fair value of the shares of Class B
common stock acquired by Anchor Investors, and $536,213 of other offering costs.
As of September 30, 2022, the Company had $721,489 in our operating bank account
and working capital of $1,046,619. Further, 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.
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities since inception have been organizational activities and
those necessary to prepare for the IPO. Following the IPO, we will not generate
any operating revenues until after completion of our initial business
combination. We will generate non-operating income in the form of interest
income on cash and cash equivalents after the IPO. There has been no significant
change in our financial or trading position and no material adverse change has
occurred since the date of our financial statements. We incur expenses as a
result of being a public company (for legal, financial reporting, accounting and
auditing compliance), as well as expenses as we conduct due diligence on
prospective business combination candidates.
For the three months ended September 30, 2022, we had a net income of $319,305,
which consisted of $685,599 of interest income and an income tax benefit of
$41,929, all partially offset by formation and operating costs of $358,223 and
franchise tax expense of $50,000. For the three months September 30, 2021, we
had a net loss of $0.
For the nine months ended September 30, 2022, we had a net loss of $221,912,
which consisted of formation and operating costs of $901,080 and franchise tax
expense of $150,000, partially offset by $787,239 of interest income and an
income tax benefit of $41,929. For the period from February 1, 2021 (inception)
to September 30, 2021, we had a net loss of $587, which consisted of formation
and operating costs.
Liquidity and Capital Resources
As of September 30, 2022, the Company had $721,489 in its operating bank account
and working capital of $1,046,619.
Management has determined that the possibility that the Company may be
unsuccessful in consummating an initial Business Combination within 18 months
(or up to 24 months if the Company extends the period of time to consummate a
business combination for total payment value of $3,450,000) from the closing of
the Initial Public Offering, and thereby be required to cease all operations,
redeem the public shares and thereafter liquidate and dissolve, raises
substantial doubt about the ability to continue as a going concern for at least
one year from the date these financial statements are issued. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty. Management has determined that the Company has funds that are
sufficient to fund the working capital needs of the Company until the
consummation of an initial Business Combination or the winding up of the Company
as stipulated in the Company's second amended and restated certificate of
incorporation. The accompanying financial statements have been prepared in
conformity with U.S. GAAP, which contemplate continuation of the Company as a
going concern and the realization of assets and satisfaction of liabilities in
the normal course of business. The carrying amounts of assets and liabilities
presented in the financial statements do not necessarily purport to represent
realizable or settlement values. The financial statements do not include any
adjustment that might result from the outcome of this uncertainty.
Off-Balance Sheet Financing Arrangements
As of September 30, 2022 and December 31, 2021, we did not have
any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of
Regulation S-K.
Commitments and Contractual Obligations
Other than the below, we do not have any long-term debt obligations, capital
lease obligations, operating lease obligations, purchase obligations or
long-term liabilities.
Administrative Services Agreement
We entered into an agreement, commencing on the effective date of the IPO, to
pay the Sponsor $10,000 per month for office space and secretarial and
administrative services provided to members of our management team. Upon
completion of the initial Business Combination or our liquidation, we will cease
paying these monthly fees. During the three and nine months ended September 30,
2022, we recognized $30,000 and $90,000, respectively, of such administrative
support services expense. During the period from February 1, 2021 (inception) to
September 30, 2021, the Company recognized $0 of such administrative support
services expense.
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Registration and Stockholder Rights
The holders of the Class B common stock, Private Placement Warrants and warrants
that may be issued upon conversion of working capital loans (and any shares of
common stock issuable upon the exercise of the Private Placement Warrants or
warrants issued upon conversion of the working capital loans and upon conversion
of the Class B common stock) are entitled to registration rights pursuant to a
registration rights agreement entered into on the effective date of the IPO
requiring us to register such securities for resale (in the case of the Class B
common stock, only after conversion to shares of Class A common stock). The
holders of these securities will be entitled to make up to three demands,
excluding short form registration demands, that we register such securities. In
addition, the holders have certain "piggy-back" registration rights with respect
to registration statements filed subsequent our completion of the initial
Business Combination and rights to require us to register for resale such
securities pursuant to Rule 415 under the Securities Act. However, the
registration rights agreement provides that no sales of these securities will be
effected until after the expiration of the applicable lock-up period, as
described herein. We will bear the expenses incurred in connection with the
filing of any such registration statements.
Underwriting Agreement
The underwriter had a 45-day option from the date of the IPO to purchase up to
an additional 2,250,000 Units to cover over-allotments. On December 14, 2021,
the underwriter fully exercised its over-allotment option.
The underwriter was paid an underwriting commission of $0.10 per unit, or
$1,500,000 in the aggregate, upon the closing of the IPO. The underwriter was
also issued 662,434 shares of Class B Common Stock (as defined below) with a
fair value of $5,366,378, or $8.10 per share. We valued those shares using a
Black-Scholes Model. In addition, $6,262,500 is payable to the underwriter for
deferred underwriting commissions. The deferred underwriting commission will
become payable to the underwriter from the amounts held in the Trust Account
solely in the event that we complete the Business Combination, subject to the
terms of the underwriting agreement.
The underwriters have agreed (i) to waive their conversion rights (or right to
participate in any tender offer) with respect to such shares in connection with
the initial business combination and (ii) to waive their rights to liquidating
distributions from the trust account with respect to such shares if we fail to
complete the initial business combination within the completion window.
The Class B common stock received by the underwriter has been deemed
compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to
FINRA Rule 5110(e)(1). Additionally, these Class B common stock may not be sold,
transferred, assigned, pledged or hypothecated or be the subject of any hedging,
short sale, derivative, put or call transaction that would result in the
economic disposition of the securities by any person for a 180-day period
following the effective date of this prospectus except to any selected dealer
participating in the offering and the bona fide officers or partners of the
underwriter and any such participating selected dealer. The underwriter has
agreed that the Class B common stock they receive will not be sold or
transferred by them (except to certain permitted transferees) until after we
completed an initial Business Combination. We granted the holders of Class B
common stock the registration rights. In compliance with FINRA Rule 5110, the
underwriter's registration rights are limited to demand and "piggy back" rights
for periods of five and seven years, respectively, from the effective date of
this prospectus with respect to the registration under the Securities Act of the
Class B common stock.
Critical Accounting Policies and Estimates
The preparation of the financial statement in conformity with US GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statement.
Making estimates requires management to exercise significant judgment. It is at
least reasonably possible that the estimate of the effect of a condition,
situation or set of circumstances that existed at the date of the financial
statement, which management considered in formulating its estimate, could change
in the near term due to one or more future confirming events. Accordingly, the
actual results could differ significantly from those estimates. We have
identified the following as our critical accounting policies:
Offering Costs
We comply with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting
Bulletin ("SAB") Topic 5A - "Expenses of Offering". Offering costs consist of
legal, accounting, underwriting fees and other costs incurred through the IPO
date that are directly related to the IPO. Offering costs directly attributable
to the issuance of an equity contract to be classified in equity are recorded as
a reduction of equity. Offering costs for equity contracts that are classified
as assets and liabilities are expensed immediately.
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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 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 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 in temporary equity. At all other times, common stock
is classified as stockholders' equity. Our Class A common stock feature certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, at September 30, 2022 and
December 31, 2021, the 17,250,000 shares of Class A common stock is presented at
redemption value as temporary equity, outside of the stockholders' deficit
section of our balance sheets.
Net Loss per Common Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share". Net loss per common stock is computed by dividing net loss
by the weighted average number of common stock for the period. We have two
classes of stock, which are referred to as Class A common stock and Class B
common stock. Earnings and losses are shared pro rata between the two classes of
stock. We apply the two-class method in calculating earnings per share.
Remeasurement adjustments associated with the redeemable Class A common stock
are excluded from earnings per share as the redemption value approximates fair
value.
The calculation of diluted loss per share does not consider the effect of the
warrants issued in connection with the (i) IPO, and (ii) the private placement
because the warrants are contingently exercisable, and the contingencies have
not yet been met. The warrants are exercisable to purchase 14,350,000 Class A
common stock in the aggregate. As of September 30, 2022 and December 31, 2021,
the Company did not have any dilutive securities or other contracts that could,
potentially, be exercised or converted into common stock and then share in the
earnings of the Company. As a result, diluted net loss per common stock is the
same as basic net loss per common stock for the periods presented.
Recent Accounting Pronouncements
Management does not believe that any 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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