References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Colombier Acquisition Corp. References to our "management" or
our "management team" refer to our officers and directors, and references to the
"Sponsor" refer to Colombier 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 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" 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 Annual Report on Form 10-K 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.
Overview
We are a blank check company formed under the laws of the State of Delaware on
February 12, 2021 for the purpose of effectuating a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or other similar
business combination with one or more businesses (the "Business Combination").
We intend to effectuate our Business Combination using cash from the proceeds of
our Initial Public Offering of 17,250,000 units (the "Units," which included the
full exercise by the underwriter of its over-allotment option in the amount of
2,250,000 Units, at $10.00 per Unit), 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
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from February 12, 2021 (inception) through June 30, 2022
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and after that 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 June 30, 2022, we had a net income of $1,944,526,
which consists of interest earned on marketable securities held in the Trust
Account of $225,971 and the change in fair value of warrant liabilities of
$1,980,664, offset by formation and operating costs of $248,757 and provision
for income taxes of $13,352.
For the six months ended June 30, 2022, we had a net income of $4,529,553, which
consists of interest earned on marketable securities held in the Trust Account
of $237,106 and the change in fair value of warrant liabilities of $4,846,916,
offset by formation and operating costs of $541,117 and provision for income
taxes of $13,352.
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For the three months ended June 30, 2021, we had a net loss of $ 988,113, which
consists of operating costs of $82,927, a change in fair value of warrant
liabilities of $615,000, and transaction costs allocated to warrants of
$290,432, offset by interest income on marketable securities held in the Trust
Account of $246.
For the period from February 12, 2021 (inception) through June 30, 2021, we had
a net loss of $989,113, which consists of operating costs of $83,927, a change
in fair value of warrant liabilities of $615,000, and transaction costs
allocated to warrants of $290,432, offset by interest income on marketable
securities held in the Trust Account of $246.
Going concern and Capital Resources
On June 11, 2021, we completed 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 completed the sale of
5,250,000 Private Placement Warrants at a price of $1.00 per Private Placement
Warrant in a private placement to the Sponsor, generating gross proceeds of
$5,250,000.
On July 1, 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
450,000 Private Placement Warrants at $1.00 per warrant, 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 Placement Warrants, a total of $172,500,000
was placed in the Trust Account. We incurred $9,947,799 in Initial Public
Offering related costs, including $3,450,000 of underwriting fees, $6,037,500 of
deferred underwriting fees and $460,299 of other costs.
For the six months ended June 30, 2022, cash used in operating activities was
$559,968. Net income of $4,529,553 was affected by interest earned on marketable
securities held in the Trust Account of $237,106 and the change in fair value of
warrant liabilities of $4,846,916. Changes in operating assets and liabilities
used $5,499 of cash for operating activities.
For the period from February 12, 2021 (inception) through June 30, 2021, cash
used in operating activities was $39,100. Net loss of $989,113 was affected by
interest earned on marketable securities held in the Trust Account of $246, a
change in fair value of warrant liabilities of $615,000, and transaction costs
allocated to warrants of $290,432. Changes in operating assets and liabilities
provided $44,827 of cash for operating activities.
As of June 30, 2022, we had marketable securities held in the Trust Account of
$172,743,618 (including $243,618 of interest income) consisting of money market
funds, which are invested primarily in U.S. Treasury Securities. Interest income
on the balance in the Trust Account may be used by us to pay franchise taxes.
Through June 30, 2022, we have not withdrawn any amount 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.
At June 30, 2022, we had cash of $281,25 and working capital of $651,675. (after
adding back $100,000 in franchise tax payable as that liability, which is
included in accrued expenses in the accompanying condensed balance sheet, is
allowed to be settled using earnings from the trust account and $143,618 of
franchises taxes paid out of operating cash account not yet reimbursed from the
Trust account).
The Company's liquidity needs up to June 30, 2022 were satisfied through the
proceeds of $25,000 from the sale of the founder shares (Note 5), a loan of
$46,975 under an unsecured and noninterest bearing promissory note - related
party (Note 5), and from the net proceeds from the consummation of the Initial
Public Offering and the Private Placement held outside of the trust account.
If the Business Combination is not consummated, the Company 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 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
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expenses. In connection with the Company's assessment of going concern
considerations in accordance with Financial Accounting Standard Board's
Accounting Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about
an Entity's Ability to Continue as a Going Concern," the Company has until June
11, 2023 to consummate a Business Combination. It is uncertain that the Company
will be able to consummate a Business Combination by this time. If a Business
Combination is not consummated by this date, there will be a mandatory
liquidation and subsequent dissolution of the Company. Management has determined
that the liquidity condition and mandatory liquidation, should a Business
Combination not occur, and potential subsequent dissolution raises substantial
doubt about the Company's ability to continue as a going concern. No adjustments
have been made to the carrying amounts of assets or liabilities should the
Company be required to liquidate after June 11, 2023.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of June 30, 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.
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 the Sponsor a monthly fee of $10,000 for office space,
administrative and support services. We began incurring these fees on June 8,
2021 and will continue to incur these fees monthly until the earlier of the
completion of the Business Combination and our liquidation. For the three and
six months ended June 30, 2022, the Company incurred $30,000 in fees for these
services, of which such amount is included in accrued expenses in the
accompanying balance sheet. For the period from February 12, 2021 (inception)
through June 30, 2021, the Company incurred $10,000 which is included in accrued
expensed in the accompanying balance sheet.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or
$6,037,500. The deferred fee will become payable to the underwriters from the
amounts held in the Trust Account solely in the event that we complete a
Business Combination, subject to the terms of the underwriting agreement.
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 condensed 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:
Warrant Liabilities
The Company accounts for the Public Warrants (as defined in Note 3) and the
Private Placement Warrants (collectively, with the Public Warrants, the
"Warrants") in accordance with the guidance contained in ASC 815-40 under which
the Warrants do not meet the criteria for equity treatment and must be recorded
as liabilities. Accordingly, the Company classifies the Warrants as liabilities
at their fair value and adjusts the 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 the statements of
operations. The Warrants for periods where no observable traded price was
available are valued using a binomial/lattice model. For periods subsequent to
the detachment of the Public Warrants from the Units, the Public Warrant quoted
market price will be used as the fair value as of each relevant date.
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Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible conversion in
accordance with the guidance in ASC 480 "Distinguishing Liabilities from
Equity." Shares of Class A common stock subject to mandatory redemption is
classified as a liability instrument and 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 Class A common stock features certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, Class A common stock subject
to possible redemption is presented at redemption value as temporary equity,
outside of the stockholders' deficit section of our condensed balance sheets.
Immediately upon the closing of the Initial Public Offering, the Company
recognized the re-measurement from initial book value to redemption amount,
which approximates fair value. The change in the carrying value of the
redeemable Class A common stock subject to possible redemption resulted in
charges against additional paid-in capital (to the extent available) and
accumulated deficit and Class A common stock.
The Company recognizes 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.
Net Income (Loss) Per Common Share
Net income (loss) per common share is computed by dividing net income (loss) by
the weighted average number of common shares outstanding for the period.
Re-measurement associated with the redeemable shares of Class A common stock is
excluded from income per common share as the redemption value approximates fair
value.
The calculation of diluted income per common share does not consider the effect
of the warrants issued in connection with the (i) Initial Public Offering, and
(ii) the private placement to purchase an aggregate of 11,450,000 shares of
common stock in the calculation of diluted income per common share, since the
exercise of the warrants is contingent upon the occurrence of future events. As
of June 30, 2022 and 2021, we did not have any dilutive securities or 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
net income (loss) per common stock is the same as basic net income (loss) per
common share for the period presented.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
condensed financial statements.
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