References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Arbor Rapha Capital Bioholdings Corp. I. 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.
Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act, and Section 21E of the
Exchange Act. 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 were formed on March 4, 2021, for the purpose of entering into a Business
Combination. Our efforts to identify a prospective target business will not be
limited to any particular industry or geographic region. We intend to utilize
cash derived from the proceeds of our IPO in effecting our initial Business
Combination.
We are an emerging growth company and, as such, we are subject to all of the
risks associated with emerging growth companies.
We presently have no revenue. All activities for the period from March 4, 2021
(inception) through September 30, 2022, relate to the formation and the IPO, and
subsequent to the IPO, identifying a target company for a Business Combination.
We will have no operations other than the active solicitation of a target
business with which to complete a Business Combination, and we will not generate
any operating revenue until after our initial Business Combination, at the
earliest. We will have non-operating income in the form of interest income from
the proceeds derived from the IPO.
On November 2, 2021, we completed our IPO of 17,250,000 Units, including the
issuance of 2,250,000 Units as a result of the underwriter's exercise of its
option to purchase additional Units in full. Each Unit consists of one share of
Class A common stock of the Company, par value $0.0001 per share ("Class A
common stock"), and one-third of one redeemable warrant of the Company. Each
whole warrant entitles 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 to the Company of
$172,500,000.
Substantially concurrently with the closing of the IPO, we completed the private
sale of 4,133,33 Private Placement Warrants to our Sponsor at a purchase price
of $1.50 per Private Placement Warrant, generating gross proceeds of $6,200,000.
We also executed a promissory note with the Sponsor, the Sponsor Loan,
generating gross proceeds to the Company of $4,312,500. The Sponsor Loan shall
be repaid or converted into Sponsor Loan Warrants at a purchase price of $1.50
per warrant, at the Sponsor's direction. The Sponsor Loan Warrants will be
identical to the Private Placement Warrants.
A total of $176,812,500, comprised of net proceeds from the IPO, a portion of
the proceeds from the sale of the Private Placement Warrants and proceeds from
the execution of the Sponsor Loan, was placed in a U.S.-based trust account at
J.P. Morgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust
Company, acting as trustee.
We cannot assure you that our plans to complete our initial Business Combination
will be successful.
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Extension Meeting
We intend to mail to our stockholders of record as of October 28, 2022, a
definitive proxy statement for a special meeting of stockholders ("Extension
Meeting") to approve an extension of time for us to complete an initial Business
Combination (the "Extension Proposal") from February 2, 2023 which is 15 months
from the date of the IPO, to August 2, 2023 (the "Extension Date"). The
Company's public stockholders will be able to elect to redeem their shares in
connection with the Extension Meeting for a pro rata portion of the amount then
on deposit in the Trust Account (approximately $10.25 per share, plus any pro
rata interest earned on the funds held in the Trust Account and not previously
released to the Company (net of taxes payable)), which could result in a smaller
number of Public Shares. There is no assurance that the Company's stockholders
will vote to approve the Extension Proposal. If the Company does not obtain
stockholder approval, the Company would wind up its affairs and liquidate.
If we are unable to complete our initial Business Combination (i) within 15
months from the date of the IPO or (ii) by the Extension Date (if the if the
Extension Proposal is approved and implemented), we will (i) cease all
operations except for the purpose of winding up; (ii) as promptly as reasonably
possible, but not more than ten business days thereafter, redeem our Public
Shares, at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the Trust Account, including interest (less up to $100,000 of
interest to pay dissolution expenses and which interest will be net of taxes
payable), divided by the number of then issued and outstanding Public Shares,
which redemption will completely extinguish public stockholders' rights as
stockholders (including the right to receive further liquidating distributions,
if any); and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board of
directors, liquidate and dissolve, subject, in each case, to the Company's
obligations under the Delaware General Corporation Law (the "DGCL") to provide
for claims of creditors and the requirements of other applicable law. In the
event of liquidation, the holders of the Founder Shares and Private Placement
Warrants will not participate in any redemption distribution with respect to
their Founder Shares or Private Placement Warrants, until all of the claims of
any redeeming stockholders and creditors are fully satisfied (and then only from
funds held outside the Trust Account).
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through September 30, 2022, were organizational activities,
those necessary to prepare for the IPO, described below, and, after our IPO,
day-to-day operations and identifying a target company for an initial Business
Combination. We do not expect to generate any operating revenues until after the
completion of our initial Business Combination. 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 net income of $350,124,
consisting primarily of interest income on investments held in the Trust Account
of $798,072, net of general and administrative expense of $292,237 and incomes
taxes of $155,711.
There was no activity for the three months ended September 30, 2021.
For the nine months ended September 30, 2022, we had a net loss of $184,577,
consisting primarily of interest income on investments held in the Trust Account
of $1,054,638, net of general and administrative expense of $1,083,504 and
incomes taxes of $155,711.
For the period from March 4, 2021 (inception) through September 30, 2021, we had
a net loss of $234, consisting of general and administrative expense.
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Going Concern and Capital Resources
As of September 30, 2022, we had cash of $883,612 and working capital of
$504,048.
Until the consummation of a Business Combination, the Company has used and will
be using the funds not held in the Trust Account for identifying and evaluating
prospective acquisition candidates, performing due diligence on prospective
target businesses, paying for travel expenditures, selecting the target business
to acquire, and structuring, negotiating and consummating the Business
Combination.
In connection with our assessment of going concern considerations in accordance
with FASB's Accounting Standards Update ("ASU") 205-40, "Disclosure of
Uncertainties about an Entity's Ability to Continue as a Going Concern,"
management believes that the funds which we have available following the
completion of the IPO will enable us to sustain operations. However, the Company
has until February 2, 2023, to consummate a Business Combination. It is
uncertain that the Company will be able to consummate an initial Business
Combination by this time. If an initial Business Combination is not consummated
by this date, there will be a mandatory liquidation and subsequent dissolution
of the Company. This condition raises substantial doubt about the Company's
ability to continue as a going concern. The unaudited condensed financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
For the nine months ended September 30, 2022, cash used in operating activities
was $460,504.
For the period from March 4, 2021 (inception) through September 30, 2021, no
cash was used in operating activities.
Commitments and Contingencies
Our Sponsor lent us $4,312,500 as of the closing date of the IPO. The Sponsor
Loan will bear no interest. The proceeds of the Sponsor Loan were deposited into
the Trust Account and will be used to fund the redemption of our Public Shares
(subject to the requirements of applicable law). The Sponsor Loan shall be
repaid or converted into Sponsor Loan Warrants at a conversion price of $1.50
per warrant, at our Sponsor's discretion. The Sponsor Loan Warrants would be
identical to the Private Placement Warrants sold. The Sponsor Loan was extended
in order to ensure that the amount in the Trust Account is $10.25 per Public
Share. If we do not complete a Business Combination, we will not repay the
Sponsor Loan and its proceeds will be distributed to our public stockholders.
Our Sponsor has waived any claims against the Trust Account in connection with
the Sponsor Loan. As of September 30, 2022, there was $4,312,500 outstanding
under the Sponsor Loan.
As of September 30, 2022, except for the Sponsor Loan, we did not have any
long-term debt, capital lease obligations, operating lease obligations or
long-term liabilities.
Critical Accounting Estimates
This management's discussion and analysis of financial condition and results of
operations is based on our unaudited condensed financial statements, which have
been prepared in accordance with GAAP. The preparation of financial statements
in conformity with GAAP requires the use of estimates and assumptions that could
affect the reported amounts in our unaudited condensed financial statements.
Actual results could differ from these estimates.
A summary of our significant accounting policies is presented in Note 2. Many of
these accounting policies require judgment and the use of estimates and
assumptions when applying these policies in the preparation of our financial
statements. Each quarter, we assess these estimates and assumptions based on
several factors, including historical experience, which we believe to be
reasonable under the circumstances. These estimates are subject to change in the
future if any of the underlying assumptions or factors change.
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