References to the "Company," "us," "our" or "we" refer to Cartica Acquisition
Corp. The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our audited financial
statements and related notes included herein.
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Report
including, without limitation, statements under 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. When used in
this Report, words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to us or the Company's
management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of management, as well as assumptions made by, and
information currently available to, the Company's management. Actual results
could differ materially from those contemplated by the forward- looking
statements as a result of certain risks and uncertainties detailed herein and in
our filings with the SEC. All subsequent written or oral forward-looking
statements attributable to us or persons acting on the Company's behalf are
qualified in their entirety by this paragraph.
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the financial statements and the
notes thereto contained elsewhere in this Report.
Overview
Cartica Acquisition Corp was incorporated in the Cayman Islands on February 3,
2021. The Company was formed for the purpose of effecting a merger, share
exchange, asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses. Our sponsor is Cartica Acquisition
Partners, LLC.
Recent Developments
Subsequent to the end of our 2021 financial year on December 31, 2021, the
registration statement for our initial public offering was declared effective,
on January 4, 2022. On January 7, 2022, the Company closed its initial public
offering and completed the sale of 23,000,000 units, including 3,000,000 units
sold pursuant to the full exercise of the underwriter's option to purchase
additional units to cover over-allotments, each unit consisting of (i) one Class
A ordinary share of the Company, par value $0.0001 per share, and (ii) one-half
of one redeemable warrant of the Company. Each whole warrant entitles the holder
thereof to purchase one Class A ordinary share for $11.50 per share. The units
were sold at a price of $10.00 per unit, generating gross proceeds to the
Company of $230,000,000 (before underwriting discounts and offering expenses).
Transaction costs amounted to $13,295,086 consisting of $12,650,000 of
underwriting discount and $645,086 of other offering costs.
Simultaneously with the closing of the IPO, the Company completed the private
sale of an aggregate of 15,900,000 warrants to the sponsor at a purchase price
of $1.00 per private placement warrant, generating gross proceeds to the Company
of $15,900,000.
At the closing of the IPO, management has agreed that an amount equal to at
least $10.30 per unit sold in the IPO, including proceeds from the sale of the
private placement warrants, will be held in a trust account, located in the
United States and invested in U.S. government securities, within the meaning set
forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185
days or less or in any open-ended investment company that holds itself out as a
money market fund selected by the Company meeting certain conditions of Rule
2a-7 of the Investment Company Act, as determined by the Company, until the
earlier of (i) the completion of a business combination and (ii) the
distribution of the funds held in the trust account, as described below.
25
The Company will provide the holders of its issued and outstanding public shares
with the opportunity to redeem all or a portion of their public shares, or Class
A ordinary shares sold as part of the IPO, upon the completion of a business
combination either (i) in connection with a shareholder meeting called to
approve the business combination or (ii) by means of a tender offer. The
decision as to whether the Company will seek shareholder approval of a business
combination or conduct a tender offer will be made by the Company. The public
shareholders will be entitled to redeem their public shares for a pro rata
portion of the amount then in the trust account (initially anticipated to be
$10.30 per Public Share, plus any pro rata interest earned on the funds held in
the trust account and not previously released to the Company to pay its tax
obligations), calculated as of two business days prior to the completion of the
business combination. The per-share amount to be distributed to Public
Shareholders who redeem their public shares will not be reduced by the deferred
underwriting commissions the Company will pay to the underwriters (as discussed
in Note 6). There will be no redemption rights upon the completion of a business
combination with respect to the Company's warrants. All of the public shares
contain a redemption feature which allows for the redemption of such public
shares in connection with our liquidation, if there is a shareholder vote or
tender offer in connection with our initial business combination and in
connection with certain amendments to our amended and restated memorandum and
articles of association. In accordance with the U.S. Securities and Exchange
Commission and its guidance on redeemable equity instruments, which has been
codified in ASC 480-10-S99, redemption provisions not solely within the control
of a company require common stock subject to redemption to be classified outside
of permanent equity. Given that the public shares have been issued with other
freestanding instruments (i.e., public warrants), the initial carrying value of
Class A ordinary shares classified as temporary equity will be the allocated
proceeds determined in accordance with ASC 470-20. The Class A ordinary shares
are subject to ASC 480-10-S99. If it is probable that the equity instrument will
become redeemable, we have the option to either (i) accrete changes in the
redemption value over the period from the date of issuance (or from the date
that it becomes probable that the instrument will become redeemable, if later)
to the earliest redemption date of the instrument or (ii) recognize changes in
the redemption value immediately as they occur and adjust the carrying amount of
the instrument to equal the redemption value at the end of each reporting
period. We have elected to recognize the changes immediately. Although
redemptions cannot cause the Company's net tangible assets to fall below
$5,000,001, the public shares are redeemable and have been classified as such on
the balance sheet until such date that a redemption event takes place.
The Company will have until 18 months from the closing of the IPO, and any
extended time beyond 18 months as a result of or during any Extension Period or
a shareholder vote to amend the Company's amended and restated memorandum and
articles of association, to complete a business combination (the "Combination
Period"). If the Company has not completed a business combination within the
Combination Period, the Company 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 the Company to pay its tax obligations (less
taxes payable and up to $100,000 of interest to pay dissolution expenses and
which interest shall be net of taxes payable), divided by the number of then
issued and outstanding public shares, which redemption will completely
extinguish public shareholders' rights as shareholders (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 the
Company's remaining shareholders and the Company's board of directors, dissolve
and liquidate, subject in each case to the Company's obligations under Cayman
Islands 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 Company's warrants, which will expire worthless if the
Company fails to complete a business combination within the Combination Period.
26
Liquidity and Capital Resources
Prior to the completion of the IPO, the Company lacked the liquidity it needed
to sustain operations for a reasonable period of time, which is considered to be
one year from the issuance date of the financial statements. As of December 31,
2021, the Company had $965 in cash and working capital deficit of $658,413.
The Company completed its IPO on January 7, 2022, at which time capital in
excess of the funds deposited in the trust account and/or used to fund offering
expenses was released to the Company for general working capital purposes.
In addition, in order to finance transaction costs in connection with a business
combination, the sponsor or an affiliate of the sponsor, or certain of the
Company's officers and directors may, but are not obligated to, loan the Company
funds as may be required (the "Working Capital Loans"). As of December 31, 2021,
there were no amounts outstanding under any Working Capital Loans.
As a result of the foregoing, management has since reevaluated the Company's
liquidity and financial condition and determined that sufficient capital exists
to sustain operations one year from the date this financial statement is issued
and therefore substantial doubt has been alleviated.
Results of Operations
As of December 31, 2021, we had not commenced any operations. All activity for
the period from February 3, 2021 (inception) through December 31, 2021 relates
to our formation and organizing our initial public offering. We have neither
engaged in any operations nor generated any revenues to date. We will not
generate any operating revenues until after the completion of our initial
business combination, at the earliest. We will generate non-operating income in
the form of interest income on cash and cash equivalents from the proceeds
derived from the initial public offering. We expect to incur increased 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 period from February 3, 2021 (inception) to December 31, 2021, we had a
net loss of approximately $268,389, which consisted of formation and operating
costs.
27
Contractual Obligations
As of the end of our 2021 financial year, on December 31, 2021, we did not have
any long-term debt obligations, capital lease obligations, operating lease
obligations, purchase obligations or long-term liabilities. Thereafter, in
connection with the completion of our IPO, we entered into a number of
agreements relating to the IPO, including the following:
Administrative Support Agreement
On January 4, 2022 we entered into an administrative support agreement, under
which we are to pay our sponsor $930,000 over eighteen months, beginning at the
closing of our IPO, for the following administrative support expenses: (i) cash
compensation to Mr. Goel, the Company's Chief Executive Officer, in the form of
an annual salary of $312,000; (ii) cash compensation to Mr. Coad, the Company's
Chief Operating Officer and Chief Financial Officer, in the form of an annual
salary of $200,000; and (iii) $9,000 per month for office space, utilities and
research, analytical, secretarial and administrative support, which the sponsor
is expected to source principally from Cartica Management, LLC ("Cartica
Management"). In addition, at the closing of the IPO, we paid the sponsor an
aggregate amount of $601,167, of which $549,000 represented compensation and
bonuses paid to Mr. Goel and Mr. Coad for their services through the closing of
the IPO and $51,667 represented a prepayment of administrative support expenses
for January 2022, to be amortized over the service period. Upon completion of a
business combination or a liquidation, we will cease paying administrative
support expenses to the sponsor (in the case of the cash compensation, after 30
days' notice).
Registration Rights Agreement
On January 4, 2022 we entered into a registration and shareholder rights
agreement. The holders of the founder shares, private placement warrants and any
warrants that may be issued upon conversion of Working Capital Loans (and any
ordinary shares issuable upon the exercise of the private placement warrants or
warrants issued upon conversion of the Working Capital Loans and upon conversion
of the founder shares) will be entitled to registration rights pursuant to a
registration rights agreement signed on the effective date of the IPO requiring
the Company to register such securities for resale. The holders of these
securities will be entitled to make up to three demands, excluding short form
demands, that the Company register such securities. In addition, the holders
have certain "piggy-back" registration rights with respect to registration
statements filed subsequent to the completion of a business combination. The
Company will bear the expenses incurred in connection with the filing of any
such registration statements.
Underwriting Agreement
On January 4, 2022, we entered into an underwriting agreement with the
underwriter of our IPO. On January 7, 2022 the underwriters received a cash
underwriting discount of $0.20 per unit, or $4,600,000 in the aggregate (which
included an additional $600,000 received pursuant to the full exercise of the
over-allotment option), which was paid at closing of the IPO. In addition, the
underwriters are entitled to a deferred fee of $0.35 per unit, or $8,050,000 in
the aggregate (which included an additional $1,050,000 received pursuant to the
full exercise of the over-allotment option). The deferred fee will become
payable to the underwriters from the amounts held in the trust account solely in
the event that the Company completes a business combination, subject to the
terms of the underwriting agreement.
28
Critical Accounting Estimates
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. We have identified the following critical accounting estimates.
Warrant Liability
A critical accounting estimate made in our financial statements is the estimated
fair value of our warrant liability. The fair value of the Company's financial
assets and liabilities reflects management's estimate of amounts that the
Company would have received in connection with the sale of the assets or paid in
connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with
measuring the fair value of its assets and liabilities, the Company seeks to
maximize the use of observable inputs (market data obtained from independent
sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following
fair value hierarchy is used to classify assets and liabilities based on the
observable inputs and unobservable inputs used in order to value the assets and
liabilities:
· Level 1, Valuations based on unadjusted quoted prices in active markets
for identical assets or liabilities that the Company has the ability to
access. Valuation adjustments and block discounts are not being applied.
Since valuations are based on quoted prices that are readily and regularly
available in an active market, valuation of these securities does not
entail a significant degree of judgment.
· Level 2, Valuations based on (i) quoted prices in active markets for
similar assets and liabilities, (ii) quoted prices in markets that are not
active for identical or similar assets, (iii) inputs other than quoted
prices for the assets or liabilities, or (iv) inputs that are derived
principally from or corroborated by market through correlation or other
means.
· Level 3, Valuations based on inputs that are unobservable and significant
to the overall fair value measurement.
As of December 31, 2021 we did not have any warrants outstanding.
Off-Balance Sheet Arrangements
As of December 31, 2021, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
Inflation
We do not believe that inflation had a material impact on our business or
operating results during the period presented.
Emerging Growth Company Status
The Company is an "emerging growth company," as defined in Section 2(a) of the
Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012
(the "JOBS Act"), and it may take advantage of certain exemptions from various
reporting requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not being required
to comply with the independent registered public accounting firm attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in its periodic reports and proxy
statements, and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and shareholder approval of any golden
parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies
from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act
registration statement declared effective or do not have a class of securities
registered under the Exchange Act) are required to comply with the new or
revised financial accounting standards. The JOBS Act provides that a company can
elect to opt out of the extended transition period and comply with the
requirements that apply to non-emerging growth companies but any such election
to opt out is irrevocable. The Company has elected not to opt out of such
extended transition period, which means that when a standard is issued or
revised and it has different application dates for public or private companies,
the Company, as an emerging growth company, can adopt the new or revised
standard at the time private companies adopt the new or revised standard. This
may make comparison of the Company's financial statement with another public
company, which is neither an emerging growth company nor an emerging growth
company that has opted out of using the extended transition period, difficult or
impossible because of the potential differences in accounting standards used.
29
© Edgar Online, source Glimpses
CARTICA ACQUISITION CORP 
