References in this report (this "Quarterly Report") to "we," "us" or the
"Company" refer to BurTech Acquisition Corp. References to our "management" or
our "management team" refer to our officers and directors, and references to the
"Sponsor" refer to BurTech LP, 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. 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 Quarterly Report includes "forward-looking statements" 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 Quarterly Report
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding 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. 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 Annual Report on Form 10-K (as defined below)
filed with the U.S. Securities and Exchange Commission (the "SEC"). The
Company's filings with the SEC 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.
Overview
We are a blank check company incorporated in Delaware on March 2, 2021, for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination with one or more
businesses. We are an emerging growth company and, as such, we are subject to
all of the risks associated with emerging growth companies.
On December 15, 2021, we completed the IPO of 28,750,000 units, including
3,750,000 units from the full exercise of the overallotment option by the
underwriters, at $10.00 per unit (the "Units"). Each Unit consists of one Class
A common stock and one redeemable warrant (the "Public Warrants"). Each whole
warrant entitles the holder to purchase one Class A common stock at a price of
$11.50 per share. Simultaneously with the consummation of the IPO, we
consummated the private placement of 898,250 units (the "Private Placement
Units") to our sponsor, including 93,750 units from the full exercise of the
overallotment option by the underwriters, at a price of $10.00 per units,
generate an aggregate of $8,982,500 proceeds.
We will have only 15 months from the closing of the IPO (the "Combination
Period") to complete the initial Business Combination. If we are unable to
complete the initial business combination within the Combination Period (and the
stockholders have not approved an amendment to our charter extending this time
period), 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 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 its 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 the case of
clauses (ii) and (iii) above to our obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law. There will
be no redemption rights or liquidating distributions with respect to the
warrants, which will expire worthless if we fail to complete the initial
business combination within the Combination Period.
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Results of Operations
Our entire activity since inception up to September 30, 2022 was in preparation
for our initial public offering. We will not generate any operating revenues
until the closing and completion of our initial business combination, at the
earliest.
For the three months ended September 30, 2022, we had a net income of $661,883,
which consisted of interest from marketable securities held in our Trust Account
of $1,317,125, offset by formation and operating costs of $402,504 and provision
for income taxes of $252,738.
For the nine months ended September 30, 2022, we had a net income of $658,283,
which consisted of interest from marketable securities held in our Trust Account
of $1,740,557, offset by formation and operating costs of $748,860 and provision
for income taxes of $333,414.
For the three months ended September 30, 2021, we had no operating result.
For the period from March 2, 2021 (Inception) through September 30, 2021, we had
a net loss of $500, which consisted of formation and operating costs.
Liquidity and Going Concern
As of September 30, 2022, the Company had $480,348 in its operating bank
accounts, $293,553,956 in investments held in the Trust Account to be used for a
Business Combination or to repurchase or redeem its Public Shares in connection
therewith and working capital of $594,967. As of September 30, 2022, $1,740,557
of the amount on deposit in the Trust Account represented interest income.
Our liquidity needs up to September 30, 2022 had been satisfied through a
payment from our sponsor of $25,000 for the Founder Shares to cover certain
offering costs, the loan under an unsecured promissory note from the Sponsor of
$144,746 and the net proceeds from the consummation of the Initial Public
Offering held outside of the trust account. As of September 30, 2022, there were
no amounts outstanding under any Working Capital Loans.
Until the consummation of a Business Combination, the Company will use 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.
The Company expects it will need to raise additional capital through loans or
additional investments from its Sponsor, stockholders, officers, directors, or
third parties. The Company's officers, directors and the Sponsor 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
raise substantial doubt about the Company's ability to continue as a going
concern. These 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.
Critical Accounting Policies
The preparation of the unaudited condensed financial statements in conformity
with U.S. 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 unaudited condensed financial
statements and the reported amounts of expenses during the reporting period.
Actual results could differ from those estimates. We have identified the
following as our critical accounting policies:
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption in accordance
with the guidance in ASC Topic 480 "Distinguishing Liabilities from Equity."
Common stock subject to mandatory redemption (if any) is classified as a
liability instrument and measured at fair value. Conditionally redeemable common
stock (including common stock 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 our control) are classified as
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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 the occurrence
of uncertain future events. Accordingly, as of September 30, 2022 and December
31, 2021, 28,750,000 Class A common stock subject to possible redemption are
presented at redemption value as temporary equity, outside of the stockholders'
deficit section of our balance sheets.
We recognize changes in redemption value immediately as they occur and adjusts
the carrying value of redeemable common stock to equal the redemption value at
the end of each reporting period. Increases or decreases in the carrying amount
of redeemable common stock are affected by charges against additional paid in
capital and accumulated deficit.
Warrants
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to ASC 480
and ASC 815-15.
We account for the public warrants and private warrants collectively
("Warrants"), as either equity or liability-classified instruments based on an
assessment of the specific terms of the Warrants and the applicable
authoritative guidance in Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") 815, Derivatives and Hedging ("ASC
815"). The assessment considers whether the Warrants meet all of the
requirements for equity classification under ASC 815, including whether the
Warrants are indexed to our own common stocks and whether the warrant holders
could potentially require "net cash settlement" in a circumstance outside of our
control, among other conditions for equity classification. This assessment,
which requires the use of professional judgment, is conducted at the time of
issuance of the Warrants and as of each subsequent quarterly period end date
while the Warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity
classification, such warrants are required to be recorded as a component of
additional paid-in capital at the time of issuance. For issued or modified
warrants that do not meet all the criteria for equity classification, such
warrants are required to be recorded at their initial fair value on the date of
issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of liability-classified warrants are recognized as a non-cash gain or loss
on the statements of operations.
We evaluated the public warrants and private warrants in accordance with ASC
815-40, "Derivatives and Hedging - Contracts in Entity's Own Equity," and
concluded that they met the criteria for equity classification and are required
to be recorded as part a component of additional paid-in capital at the time of
issuance.
Net Income/Loss Per Common Stock
We have two classes of shares, 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 shares. The 29,648,250 potential common stocks for outstanding
warrants to purchase our shares were excluded from diluted earnings per share
for the three and nine months ended September 30, 2022 because the warrants are
contingently exercisable, and the contingencies have not yet been met and its
inclusion would be anti-dilutive. As a result, diluted net income or loss per
common stock is the same as basic net income or loss per common stock for the
periods.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 2022 and 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 an
affiliate of our financial advisor a monthly fee of $10,000 for office space,
utilities and administrative support. Upon completion of our Business
Combination or the Company's liquidation, we will cease paying these monthly
fees.
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Recent Accounting Pronouncements
In August 2020, the 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. As a smaller reporting company, ASU 2020-06 is
effective January 1, 2024 for fiscal years beginning after December 15, 2023 and
should be applied on a full or modified retrospective basis, with early adoption
permitted beginning on January 1, 2021. We are currently assessing the impact,
if any, that ASU 2020-06 would have on our financial position, results of
operations or cash flows. We have not adopted this guidance as of September 30,
2022.
Our 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 financial statement.
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