References to the "Company," "EAC," "our," "us" or "we" refer to Edify
Acquisition Corp. The following discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the unaudited interim condensed financial statements and the notes thereto
contained elsewhere in this report. Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that
involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act. We have based these forward-looking statements
on our current expectations and projections about future events. These
forward-looking statements are subject to known and unknown risks, uncertainties
and assumptions about us that may cause our actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Factors that might cause or contribute to
such a discrepancy include, but are not limited to, those described in our other
U.S. Securities and Exchange Commission ("SEC") filings.
Overview
We are a blank check company formed under the laws of the State of Delaware on
September 30, 2020, 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
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities from inception through June 30, 2022 were
organizational activities and 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 initial Business Combination. We generate non-operating income
in the form of interest income on marketable securities held in the Trust
Account. We expect that we will 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 in connection with searching
for, and completing, a Business Combination.
For the three months ended June 30, 2022, we had net income of approximately
$1.05 million, which consists of income of approximately $1.0 million derived
from the changes in fair value of the warrant liabilities and interest earned on
marketable securities held in Trust of approximately $0.4, offset by formation
and operating costs of approximately $0.2 million and provision to income taxes
of approximately $0.02 million.
For the six months ended June 30, 2022, we had net income of approximately $7.4
million, which consists of income of approximately $7.6 million derived from the
changes in fair value of the warrant liabilities and interest earned on
marketable securities held in Trust of approximately $0.4, offset by formation
and operating costs of approximately $0.6 million and provision to income taxes
of approximately $0.02 million.
For the three months ended June 30, 2021, we had net loss of approximately $3.6
million, which consists of income of approximately $3.3 million derived from the
changes in fair value of the warrant liabilities and formation and operating
costs of approximately $0.3 million, offset by interest earned on marketable
securities held in Trust of approximately $6,882.
For the six months ended June 30, 2021, we had net income of approximately $5.5
million, which consists of income of approximately $10.2 million derived from
the changes in fair value of the warrant liabilities and interest earned on
marketable securities held in Trust of approximately $12,176, offset by
formation and operating costs of approximately $1.5 million and transaction
costs incurred in connection with the IPO of approximately $3.2 million.
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Liquidity and Capital Resources
On January 20, 2021, we consummated the Initial Public Offering of 27,600,000
Units, at a price of $10.00 per Units, which included the full exercise by the
underwriters of their over-allotment option in the amount of 3,600,000 Units,
generating gross proceeds of $276,000,000. Simultaneously with the closing of
the Initial Public Offering, we consummated the sale of 5,640,000 Private
Placement Warrants to the Sponsor at a price of $1.00 per Private Placement
Warrant generating gross proceeds of $5,640,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Placement Warrants, a total of $276,000,000
was placed in the Trust Account, and we had $1,305,151 of cash held outside of
the Trust Account, after payment of costs related to the Initial Public
Offering, and available for working capital purposes. We incurred $14,214,049 in
transaction costs incurred in connection with IPO, including $4,140,000 of
underwriting fees, net of $1,380,000 reimbursed from the underwriters,
$9,660,000 of deferred underwriting fees and $414,049 of other offering costs.
For the six months ended June 30, 2022, cash used in operating activities was
$458,544. Net income of $7,393,298 was affected by interest earned on marketable
securities held in Trust Account of $375,200 and change in fair value of warrant
liabilities of $7,638,000. Changes in operating assets and liabilities provided
$161,358 of cash for operating activities.
For the six months ended June 30, 2021, cash used in operating activities was
$1,043,007. Net income of $5,469,362 was affected by interest earned on
marketable securities held in Trust Account of $12,176, change in fair value of
warrant liabilities of $10,166,400, transaction costs incurred in connection
with the IPO of $943,412, and a loss on issuance of Private Placement warrants
of $3,158,400. Changes in operating assets and liabilities used $435,605 of cash
for operating activities.
As of June 30, 2022, we had marketable securities held in the Trust Account of
$276,401,292 consisting of securities held in a money market fund and government
bonds that invests in United States government treasury bills, bonds or notes
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 June 30, 2022, we did not
withdraw any interest earned on the Trust Account to pay our taxes. We intend to
use substantially all of the funds held in the Trust Account, to acquire a
target business and to pay our expenses relating thereto. To the extent that our
capital stock is used in whole or in part as consideration to effect a Business
Combination, the remaining funds held in the Trust Account will be used as
working capital to finance the operations of the target business. Such working
capital funds could be used in a variety of ways including continuing or
expanding the target business' operations, for strategic acquisitions and for
marketing, research and development of existing or new products. Such funds
could also be used to repay any operating expenses or finders' fees which we had
incurred prior to the completion of our Business Combination if the funds
available to us outside of the Trust Account were insufficient to cover such
expenses.
As of June 30, 2022, we had cash of $67,944. 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, our Sponsor or an affiliate of our
Sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required. If we complete a Business Combination, we may
repay such loaned amounts out of the proceeds of the Trust Account released to
us. 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 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.
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.
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Going Concern
In connection with the Company's assessment of going concern considerations in
accordance with FASB's Accounting Standards Update ("ASU") 2014-15, "Disclosures
of Uncertainties about an Entity's Ability to Continue as a Going Concern,"
management has determined that if the Company is unable to complete a Business
Combination by January 20, 2023, then the Company will cease all operations
except for the purpose of liquidating. The date for mandatory liquidation and
subsequent dissolution coupled with the current liquidity 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 January 20, 2023. The Company intends to
complete a Business Combination before the mandatory liquidation date. However,
there can be no assurance that the Company will be able to consummate any
business combination by January 20, 2023.
Off-Balance Sheet Financing 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 described below, an agreement
to pay the Sponsor a monthly fee of $10,000 for office space, utilities and
secretarial, and administrative and support services. We began incurring these
fees on January 14, 2021 and will continue to incur these fees monthly until the
earlier of the completion of the Business Combination and our liquidation.
The underwriters are entitled to a deferred fee of $0.35 per share, or
$9,660,000 in the aggregate. 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 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 period reported. Actual results could materially differ from those
estimates. We have not identified any critical accounting policies.
Warrant Liabilities
We account for 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, we classify the Warrants as
liabilities at their fair value and adjust 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 our
statement of operations. The Private Placement Warrants for periods where no
observable traded price was available are valued using the Black-Scholes Option
Pricing Model. The Public Warrants for periods where no observable traded price
was available were 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 was used as the fair value as of each relevant date.
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' deficit section of our condensed balance
sheets.
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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. The
Company has two classes of shares, which are referred to as Class A common stock
and Class B common stock. Accretion associated with the redeemable shares of
Class A common stock is excluded from earnings per share as the redemption value
approximates fair value.
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
financial statements.
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EDIFY ACQUISITION CORP. 
