ARENA FORTIFY ACQUISITION CORP. References to the "company," "our," "us" or "we" refer toArena Fortify Acquisition Corp. The following discussion and analysis of the company's financial condition and results of operations should be read in conjunction with "Item 1. Business," "Item 1A. Risk Factors," and "Item 15. Financial Statements" and the accompanying notes and other data, all of which appear in this Annual Report on Form 10-K. 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
In
OnNovember 15, 2021 , we consummated the initial public offering of 17,250,000 units (including 2,250,000 units issued upon exercise in full by the underwriters of their option to purchase additional units), at$10.00 per unit, generating gross proceeds of$172,500,000 . Each unit consists of one share of Class A common stock,$0.0001 par value, and one-half of one redeemable warrant. Each public warrant entitles the holder to purchase one share of Class A common stock at an exercise price of$11.50 per whole share.
Certain of our initial stockholders lent us an aggregate amount of
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Simultaneously with the closing of the initial public offering, our initial
stockholders purchased an aggregate of 5,450,000 private placement warrants
(including 450,000 private placement warrants issued in connection with the
exercise in full by the underwriters of their option to purchase additional
units), at a price of
Following our initial public offering, the closing of the over-allotment option, the sale of the private placement warrants, and the receipt of proceeds from the initial stockholder loans, approximately$175.9 million was placed in a trust account located inthe United States withContinental Stock Transfer & Trust Company acting as trustee, and invested only inU.S. "government securities" within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in directU.S. government treasury obligations, as determined by us, until the earlier of: (i) the completion of a business combination and (ii) the distribution of the trust account. If we are unable to complete an initial business combination within 15 months from the closing of our initial public offering, orFebruary 15, 2023 , 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 100% of 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), 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 underDelaware law to provide for claims of creditors and the requirements of other applicable law.
Results of Operations
Our entire activity from inception through
For the period from inception through
Liquidity and Capital Resources
As of
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Prior to the completion of our initial public offering, our liquidity needs had
been satisfied through a payment from our sponsor of
Following our initial public offering, the closing of the over-allotment option,
the receipt of proceeds from the initial stockholder loans and the sale of the
private placement warrants, a total of
In addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, provide us working capital loans. To date, there were no amounts outstanding under any working capital loans.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity to meet our needs through the earlier of the
completion of a business combination or one year from this filing. We do not
believe we will need to raise additional funds in order to meet the expenditures
required for operating our business. However there is a risk that the company's
liquidity may not be sufficient. As indicated elsewhere in this Report, we have
until
Critical Accounting Policies and Use of Estimates
The preparation of condensed financial statements and related disclosures in conformity with GAAP 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:
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Net Income (Loss) Per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC
Topic 260, "Earnings Per Share." The Company has two classes of shares, which
are referred to as Class A common stock and Class B common stock. Income and
losses are shared pro rata between the two classes of shares. Net income (loss)
per share is computed by dividing net income (loss) by the weighted average
number of shares of common stock outstanding during the period. We have not
considered the effect of the warrants sold in the initial public offering and
the private placement to purchase an aggregate of 14,075,000 shares of our Class
A common stock in the calculation of diluted income (loss) per share, since
their inclusion would be anti-dilutive under the treasury stock method. The
number of weighted average shares of Class B common stock for calculating basic
net income (loss) per share was reduced for the effect of an aggregate of
562,500 shares of Class B common stock that were subject to forfeiture if the
over-allotment option was not exercised in full or part by the underwriters.
Since the contingency was satisfied as of
Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity ("FASB ASC 480") and FASB ASC 815, Derivatives and Hedging ("FASB ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to FASB ASC 480, meet the definition of a liability pursuant to FASB ASC 480, and whether the warrants meet all of the requirements for equity classification under FASB ASC 815, including whether the warrants are indexed to the company's own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
The public warrants and the private placement warrants are recognized as
derivative liabilities in accordance with FASB ASC 815. Accordingly, the Company
recognizes the warrant instruments as liabilities at fair value and adjusts the
instruments to fair value at each reporting period until exercised. Changes in
the estimated fair value of the warrants are recognized as a
non-cash
gain or loss on the statement of operations. Upon consummating the initial
public offering on
Class A Common Stock Subject to Possible Redemption
The Company accounts for its shares of Class A common stock subject to possible
redemption in accordance with the guidance in FASB ASC 480. Shares of Class A
common stock subject to mandatory redemption (if any) are classified as
liability instruments and are measured at fair value. Conditionally redeemable
shares of common stock (including shares 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 the Company's control) are
classified as temporary equity. At all other times, Class A shares of common
stock are classified as shareholders' equity. The Company's shares of Class A
common stock sold in the initial public offering feature certain redemption
rights that are considered to be outside of the Company's control and subject to
the occurrence of uncertain future events. Accordingly, as of
Off-Balance
Sheet Arrangements
We do not currently have any off-balance-sheet arrangements; however, we do have certain contractual arrangements that would require us to make payments if certain circumstances occur; we refer to these arrangements as contingent commitments. See Note 6, "Commitments and Contingencies," to our financial statements included herein for further discussion of these matters.
Contractual Obligations
On
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Business Combination Marketing Agreement
The underwriters is entitled to a fee of
JOBS Act
OnApril 5, 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" and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing 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 pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB 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 certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer's compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our initial public offering or until we are no longer an "emerging growth company," whichever is earlier.
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