The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report. Certain
information contained in the discussion and analysis set forth below includes
forward-looking statements. Our actual results may differ materially from those
anticipated in these forward-looking statements as a result of many factors,
including those set forth under "Special Note Regarding Forward-Looking
Statements," "Item 1A. Risk Factors" and elsewhere in this Annual Report.
Overview
We are a blank check company formed under the laws of the State of Delaware on
March 30, 2021 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or other similar Business
Combination with one or more businesses. We intend to effectuate our Business
Combination using cash from the proceeds of the Initial Public Offering and the
sale of the Private Placement Warrants, 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
Our only activities from March 30, 2021 (inception) through December 31, 2022
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and the search for 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 expect to generate
non-operating income in the form of interest income on marketable securities
held after the Initial Public Offering. 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 year ended December 31, 2022, we had net income of $1,516,291, which
consisted of investment income earned on the Trust assets of $4,183,071,
partially offset by operating expenses of $1,915,927 and income taxes of
$750,853.
For the period from March 30, 2021 (inception) through December 31, 2021, we had
a net loss of $21,784, which consists of formation and operating costs.
Liquidity and Capital Resources
On January 11, 2022, we consummated the Initial Public Offering of 28,750,000
Units at a price of $10.00 per Unit, which includes the full exercise by the
underwriters of the over-allotment option to purchase an additional 3,750,000
Units, generating gross proceeds of $287,500,000. Simultaneously with the
closing of the Initial Public Offering, we consummated the sale of 15,035,500
Private Placement Warrants at a price of $1.00 per Private Placement Warrant in
a private placement to our Sponsor, generating gross proceeds of $15,035,500.
Following the Initial Public Offering, the full exercise of the over-allotment
option by the underwriters' and the sale of the Private Placement Warrants, a
total of $293,250,000 was placed in the Trust Account and we had $3,377,397 of
cash held outside of the Trust Account, after payment of costs related to the
Initial Public Offering, and available for working capital purposes. Transaction
costs amounted to $16,368,261 consisting of $5,750,000 of underwriting fees,
$10,062,500 of deferred underwriting fees payable and $555,761 of other offering
costs.
As of December 31, 2022 and 2021, we had marketable securities held in the trust
account of $297,415,415 (including approximately $4,183,071 of interest income)
and $0 (including approximately $0 of interest income), respectively, consisting
of U.S. Treasury Bills with a maturity of 180 days or less. Interest income on
the balance in the trust account may be used by us to pay taxes. Through
December 31, 2022, we withdrew $17,656 of interest earned on the trust account.
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For the year ended December 31, 2022, cash used in operating activities was
$2,083,032. Net income of $1,516,291 was affected by interest earned on
marketable securities held in the trust account of $4,183,071, and changes in
operating assets and liabilities, which provided $583,748 of cash from operating
activities.
For the year ended December 31, 2022, cash used in investing activities was
$293,232,344, which primarily relates to the IPO proceeds deposited into the
Trust account.
For the year ended December 31, 2022, cash provided by financing activities was
$296,040,746, which primarily relates to the IPO.
For the period from March 30, 2021 (inception) through December 31, 2021, cash
used in operating activities was $4,037.
For the period from March 30, 2021 (inception) through December 31, 2021, cash
provided by financing activities was $214,351 and primarily relates to a related
party loan.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account to
complete our Business Combination. We may withdraw interest to pay franchise and
income taxes. 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.
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, an affiliate of the
Sponsor, or our officers and directors 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 $2,000,000 of such loans may be convertible into warrants,
at a price of $1.00 per warrant at the option of the lender. The warrants would
be identical to the Private Placement Warrants, including as to exercise price,
exercisability and exercise period. The terms of such loans by our officers and
directors, if any, have not been determined and no written agreements exist with
respect to such loans. The loans would be repaid upon consummation of a Business
Combination, without interest.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a Business Combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our Business Combination. Moreover, we may need to obtain additional
financing either to complete our Business Combination or because we become
obligated to redeem a significant number of our public shares upon consummation
of our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination. Subject to compliance
with applicable securities laws, we would only complete such financing
simultaneously with the completion of our Business Combination. If we are unable
to complete our Business Combination because we do not have sufficient funds
available to us, we will be forced to cease operations and liquidate the Trust
Account. In addition, following our Business Combination, if cash on hand is
insufficient, we may need to obtain additional financing in order to meet our
obligations.
At December 31, 2022, the Company had cash of $935,721 and working capital of
$333,831.
In connection with the Company's assessment of going concern considerations in
accordance with Accounting Standards Update ("ASU") 2014-15, "Disclosures of
Uncertainties about an Entity's Ability to Continue as a Going Concern,"
management has determined that the Company currently has less than 12 months
from the date these financial statements were issued to complete a Business
Combination within the Combination Period (initial completion without an
extension ends on April 11, 2023), the mandatory liquidation requirement that
the Company cease all operations, redeem the public shares and thereafter
liquidate and dissolve raises substantial doubt about the ability to continue as
a going concern. These conditions raise substantial doubt about the Company's
ability to continue as a going concern for a period of time within one year
after the date that the financial statements are issued. 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
amended and restated certificate of incorporation. The accompanying financial
statements have been prepared in conformity with US GAAP, which contemplate
continuation of the Company as a going concern. These unaudited financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2022. 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.
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Contractual Obligations
As of December 31, 2022, we do not have any long-term debt, lease obligations,
operating lease obligations or long-term liabilities.
Commencing on the date the Units are first listed on the NYSE, the Company has
agreed to pay the Sponsor a total of $35,000 per month for office space,
utilities and secretarial and administrative support for up to 15 months. Upon
completion of the Initial Business Combination or the Company's liquidation, the
Company will cease paying these monthly fees.
The underwriters will be entitled to a deferred fee of $0.35 per Unit, or
$10,062,500 in the aggregate. The deferred fee will be waived by the
underwriters in the event that we do not complete a Business Combination,
subject to the terms of the underwriting agreement.
As of December 31, 2022, the Company had incurred legal fees related to the
Initial Public Offering and general corporate services of approximately
$195,000. $110,000 of these fees will only become due and payable upon the
consummation of a Business Combination. The outstanding balance of the legal
fees is in accounts payable and accrued expenses on the balance sheets.
Critical Accounting Estimates and Policies
The preparation of 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. A critical accounting estimate to our financial statements include
valuation of warrants and valuation of allowance for taxes. We have identified
the following critical accounting policies:
Class A Common Stock Subject to Possible Redemption
We account for our shares of Class A common stock subject to possible redemption
in accordance with the guidance in Accounting Standards Codification ("ASC")
Topic 480 "Distinguishing Liabilities from Equity." Shares of 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 as temporary equity. At all other
times, common stock is classified as stockholders' equity. Our common stock
features certain redemption rights that are considered to be outside of our
control and subject to occurrence of uncertain future events. Accordingly, the
Class A common stock subject to possible redemption is presented as temporary
equity, outside of the stockholders' equity section of our balance sheet.
Warrant Liabilities
We account 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 Financial Accounting Standards Board
("FASB") Accounting Standards Codification ("ASC") 480, Distinguishing
Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and Hedging ("ASC
815"). The assessment considers whether the warrants are freestanding financial
instruments pursuant to ASC 480, meet the definition of a liability pursuant to
ASC 480, and whether the warrants meet all of the requirements for equity
classification under ASC 815, including whether the warrants are indexed to our
own Class A ordinary shares, 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. All of the Company's warrants have met
the criteria for equity treatment.
Offering Costs associated with Initial Public Offering
The Company complies with the requirements of the Financial Accounting Standards
Board ASC 340-10-S99-1 and SEC Staff Accounting Bulletin ("SAB") Topic 5A,
"Expenses of Offering." Offering costs were allocated to the separable financial
instruments issued in the Initial Public Offering based on a relative fair value
basis, compared to total proceeds received. Offering costs associated with the
Units were allocated between temporary equity and the Public Warrants by the
relative fair value method. Offering costs of $555,761 consisted principally of
costs incurred in connection with preparation for the Initial Public Offering.
These offering costs, together with the underwriter fees of $15,812,500, were
allocated between temporary equity, the Public Warrants and the Private Warrants
in a relative fair value method upon completion of the Initial Public Offering.
Net Income per Common Share
Net income per share is computed by dividing net income by the weighted average
number of shares of common stock outstanding during the period, excluding shares
of common stock subject to forfeiture. Weighted average shares were reduced for
the effect of an aggregate of 937,500 shares of Class B common stock that are
subject to forfeiture if the over-allotment option is not exercised by the
underwriters. At December 31, 2022, the Company did not have any dilutive
securities and other contracts that could, potentially, be exercised or
converted into shares of common stock and then share in the earnings of the
Company. As a result, diluted loss per share is the same as basic loss per share
for the period presented.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received for sale of an asset
or paid to transfer of a liability, in an orderly transaction between market
participants at the measurement date. US GAAP establishes a three-tier fair
value hierarchy, which prioritizes the inputs used in measuring fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities
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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