References in this report (the "Amended Quarterly Report") to "we," "us" or the
"Company" refer to Astrea Acquisition Corp. References to our "management" or
our "management team" refer to our officers and directors, and references to the
"Sponsor" refer to Astrea Acquisition Sponsor, LLC. 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 amended Quarterly Report. Certain information
contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This amended Quarterly Report includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Exchange Act that are not historical facts and involve risks and uncertainties
that could cause actual results to differ materially from those expected and
projected. All statements, other than statements of historical fact included in
this Form
10-Q
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
completion of the Proposed Business Combination (as defined below), the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. Words such as
"expect," "believe," "anticipate," "intend," "estimate," "seek" and variations
and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future
performance, but reflect management's current beliefs, based on information
currently available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and results
discussed in the forward-looking statements, including that the conditions of
the Proposed Business Combination are not satisfied. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of the Company's final prospectus for its Initial Public
Offering filed with the U.S. Securities and Exchange Commission (the "SEC"). The
Company's securities filings can be accessed on the EDGAR section of the SEC's
website at www.sec.gov. Except as expressly required by applicable securities
law, the Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations has been amended and restated to give effect to the restatement of
our financial statements as of March 31, 2021 and June 30, 2021. Management
identified errors made in its historical financial statements where, at the
closing of our Initial Public Offering, we improperly classified our common
stock subject to possible redemption. The Company determined, at the closing of
the Company's Initial Public Offering, the Company improperly classified its
common stock subject to possible redemption. The Company previously classified a
portion of the common stock subject to redemption in stockholder equity when it
should have been recorded as temporary equity. Management determined that the
Public Shares underlying the Units issued during the Initial Public Offering can
be redeemed or become redeemable subject to the occurrence of future events
considered outside the Company's control. Therefore, management concluded that
the redemption value should include all common stock subject to possible
redemption, resulting in the common stock subject to possible redemption being
equal to their redemption value. As a result, management has noted a
reclassification error related to temporary equity and permanent equity. This
resulted in a restatement to the initial carrying value of the common stock
subject to possible redemption with the offset recorded to additional
paid-in
capital (to the extent available), accumulated deficit and common stock.
Overview
We are a blank check company formed under the laws of the State of Delaware on
August 11, 2020 for the purpose of entering into a merger, share exchange, asset
acquisition, stock purchase, recapitalization, reorganization or other similar
business combination with one or more businesses or entities (the "Business
Combination"). We intend to effectuate our Business Combination using cash from
the proceeds of the Initial Public Offering and the sale of the Private
Placement Units, 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.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from August 11, 2020 (inception) through September 30, 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 three months ended September 30, 2021, we had a net loss of $797,811,
which consists of a change in fair value of warrant liability of $239,875,
interest earned from the bank of $2, interest earned on marketable securities
held in the Trust Account of $19,788, and unrealized gain on marketable
securities held in Trust Account of $545, offset by formation and operational
costs of $578,271.
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For the nine months ended September 30, 2021, we had a net loss of $1,130.126,
which consists of transaction costs associated with the Initial Public Offering
of $17,428, change in fair value of warrant liability of $209,000, change in
fair value of overallotment liability of $134,105, interest income from the bank
of $8, interest earned on marketable securities held in the Trust Account of
$49,479 and unrealized gain on marketable securities held in the Trust Account
of $545, offset by formation and operational costs of $1,087,835.
For the period from August 11, 2020 (inception) through September 30, 2020, we
had a net loss of $177, which consists of formation and operational costs.
Liquidity and Capital Resources
On February 8, 2021, we consummated the Initial Public Offering of 15,000,000
Units at $10.00 per Unit, generating gross proceeds of $150,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 430,000 Private Placement Unit a price of $10.00 per Private
Placement Unit in a private placement to the Sponsor generating gross proceeds
of $4,300,000.
On February 18, 2021, in connection with the underwriters' exercise of their
over-allotment option in full, we consummated the sale of an additional
2,250,000 Units at a price of $10.00 per Unit, generating total gross proceeds
of $22,500,000. In addition, we also consummated the sale of an additional
45,000 Private Units at $10.00 per Private Unit, generating total gross proceeds
of $450,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Units, a total of $172,500,000 was placed in
the Trust Account. We incurred $4,664,421 in Initial Public Offering related
costs, consisting of $3,450,000 of underwriting fees, $466,059 of deferred
underwriting fees, and $748,362 of other offering costs.
For the nine months ended September 30, 2021, cash used in operating activities
was $1,232,202. Net loss of $1,130,126 was affected by interest earned on
marketable securities held in the Trust Account of $49,479, unrealized gain on
marketable securities held in the Trust Account of $545, change in fair value of
warrant liability of $209,000, change in fair value of overallotment liability
of $134,105 and transaction costs associated with the Initial Public Offering of
$17,428. Changes in operating assets and liabilities used $144,375 of cash for
operating activities.
For the period from August 11, 2020 (inception) through September 30, 2020, cash
used in operating activities was $177 which consists of the net loss.
As of September 30, 2021, we had marketable securities held in the Trust Account
of $172,550,024 (including $50,024 of interest income) consisting of U.S.
Treasury Bills with a maturity of 185 days or less. Interest income on the
balance in the Trust Account may be used by us to pay taxes. Through
September 30, 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 September 30, 2021, we had cash of $51,562. We intend to use the funds
held outside the Trust Account primarily to identify and evaluate target
businesses, perform business due diligence on prospective target businesses,
travel to and from the offices, plants or similar locations of prospective
target businesses or their representatives or owners, review corporate documents
and material agreements of prospective target businesses, and structure,
negotiate and complete a 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 units at
a price of $10.00 per unit, at the option of the lender. The units would be
identical to the Private Units.
For the three months ended September 30, 2021, we determined that there was
substantial doubt about our ability to continue as a going concern through one
year from the date of the September 30, 2021 report. The Company will need to
raise additional capital through loans or additional investments from its
initial stockholders, officers or directors. The Company's initial stockholders,
officers or directors may, but are not obligated to, loan the Company funds,
from time to time or at any time, in whatever amount they deem reasonable in
their sole discretion, to meet the Company's working capital needs. Accordingly,
the Company may not be able to obtain additional financing. If the Company is
unable to raise additional capital, it may be required to take additional
measures to conserve liquidity, which could include, but not necessarily be
limited to, curtailing operations, suspending the pursuit of a potential
transaction, and reducing overhead expenses. The Company cannot provide any
assurance that new financing will be available to it on commercially acceptable
terms, if at all. These conditions resulted in the conclusion that there is
substantial doubt about the Company's ability to continue as a going concern
through one year and one day from the issuance of this report. These
consolidated financial statements do not include any adjustments relating to the
recovery of the recorded assets or the classification of the liabilities that
might be necessary should the Company be unable to continue as a going concern.
The Sponsor has committed to provide the Company with an aggregate of up to
$400,000 in loans through August 16, 2022 if needed.
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Off-Balance
Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance
sheet arrangements as of September 30, 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 total of up to $10,000 per month for office space, utilities and secretarial
support services. We began incurring these fees on February 3, 2021 and will
continue to incur these fees monthly until the earlier of the completion of the
Business Combination and our liquidation.
The Company engaged EarlyBirdCapital, Inc. ("EarlyBirdCapital"), the
representative of the underwriters in the Initial Public Offering, as an advisor
in connection with its Business Combination to assist in holding meetings with
the Company stockholders to discuss the potential Business Combination and the
target business' attributes, introduce, introduce the Company to potential
investors that are interested in purchasing its securities in connection with
its initial Business Combination, assist in obtaining stockholder approval for
the Business Combination and assist with press releases and public filings in
connection with the Business Combination. The Company will pay EarlyBirdCapital
a cash fee for such services upon the consummation of its initial business
combination in an amount equal to 3.5% of the gross proceeds of the Initial
Public Offering (exclusive of any applicable finder's fees which might become
payable).
Critical Accounting Policies
The preparation of condensed 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:
Convertible Instruments
The Company accounts for its promissory notes that feature conversion options in
accordance with ASC No. 815,
Derivatives and Hedging Activities
(
"ASC No.
815"
). ASC No. 815 requires companies to bifurcate conversion options from their
host instruments and account for them as freestanding derivative financial
instruments according to certain criteria. The criteria includes circumstances
in which (a) the economic characteristics and risks of the embedded derivative
instrument are not clearly and closely related to the economic characteristics
and risks of the host contract, (b) a promissory note that embodies both the
embedded derivative instrument and the host contract is not
re-measured
at fair value under otherwise applicable GAAP with changes in fair value
reported in earnings as they occur and (c) a separate instrument with the same
terms as the embedded derivative instrument would be considered a derivative
instrument.
Warrant Liabilities
We account for the Warrants in accordance with the guidance contained in ASC
815-40
under which the Private Placement Warrants do not meet the criteria for equity
treatment and must be recorded as liabilities. Accordingly, we classify the
Private Placement Warrants as liabilities at their fair value and adjust the
Private Placement 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 our statements of operations. The Private Placement Warrants are
valued using binomial lattice model.
Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Shares of 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 is either within the control of the holder or
subject to redemption upon the occurrence of uncertain events not solely within
the Company's control) is classified as temporary equity. At all other times,
common stock is classified as stockholders' equity. The Company's common stock
features certain redemption rights that are considered to be outside of the
Company's control and subject to occurrence of uncertain future events.
Accordingly, as of September 30, 2021, common stock subject to possible
redemption is presented at redemption value as temporary equity, outside of the
stockholders' equity section of the Company's balance sheet.
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Net Income (Loss) Per Common Share
Net income (loss) per common share is calculated by dividing net income (loss)
by the weighted average number of shares of common stock outstanding for the
respective periods. Accretion associated with the redeemable shares of common
stock is excluded from income (loss) per common share as the redemption value
approximates fair value.
Recent Accounting Standards
In August 2020, the FASB issued ASU No.
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):
Accounting for Convertible Instruments and Contracts in an Entity's Own Equity"
("ASU
2020-06"),
which simplifies accounting for convertible instruments by removing major
separation models required under current GAAP. ASU
2020-06
removes certain settlement conditions that are required for equity contracts to
qualify for the derivative scope exception and it also simplifies the diluted
earnings per share calculation in certain areas. ASU
2020-06
is effective for fiscal years beginning after December 15, 2023, including
interim periods within those fiscal years, with early adoption permitted. The
Company is currently assessing the impact, if any, that ASU2020-06would have on
its financial position, results of operations or cash flows.
The Company's management does not believe that any other recently issued, but
not yet effective, accounting standards if currently adopted would have a
material effect on the accompanying unaudited condensed financial statements.
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