References in this Annual report to "we," "us" or the "Company" refer to G3 VRM
Acquisition Corp. References to our "management" or our "management team" refer
to our officers and directors, and references to the "Sponsor" refer to G3 VRM
Holdings 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 Annual
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 Annual Report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of
1934 (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-K including, without limitation, statements in this
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the completion of a 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 a 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 Registration Statement on
Form S-1 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
The Company was incorporated in Delaware on February 19, 2021. The Company was
formed for the purpose of entering into a merger, share exchange, asset
acquisition, stock purchase, reorganization or other similar business
transaction with one or more businesses that the Company has not yet identified
(a "Business Combination"). The Company will focus initially on transactions
with companies and/or assets within the technology industry, specifically within
software, technology-enabled and business services sector, and related sectors.
However, the Company is not limited to the technology industry, or these sectors
therein, and the Company may pursue a Business Combination opportunity in any
business or industry it chooses, and it may pursue a company with operations or
opportunities outside of the United States.
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
As of December 31, 2021, the Company had not commenced revenue-generating any
operations. All activity through December 31, 2021 relates to the Company's
formation, the initial public offering ("Initial Public Offering"), which is
described in Note 3 to the financial statements, and, since the closing of the
Initial Public Offering, the search for a prospective initial Business
Combination. The Company will not generate any operating revenues until after
the completion of a Business Combination, at the earliest. The Company will
generate non-operating income in the form of interest income from the proceeds
derived from the Initial Public Offering.
For the period from February 19, 2021 (inception) through December 31, 2021, we
had a net loss of $466,697, which consisted of general and administrative and
other professional fees related to the Company's formation and public offering.
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Liquidity and Capital Resources
The registration statement for the Company's Initial Public Offering was
declared effective on June 30, 2021. On July 6, 2021, the Company consummated
the initial public offering of 10,626,000 Units, at $10.00 per Unit, generating
proceeds of $106,260,000. Simultaneously with the closing of the Initial Public
Offering, the Company consummated the sale of 569,410 Private Placement Units at
a price of $10.00 per unit in a private placement to our Sponsor and Maxim Group
LLC and their designees (the "Private Placement").
Following the closing of the Initial Public Offering on July 6, 2021, an amount
of $107,853,900 ($10.15 per unit) from the net proceeds of the sale of the Units
in the Initial Public Offering and the sale of the Private Placement Units was
placed in a trust account 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 180 days or less or in any open-ended investment company that holds
itself out as a money market fund meeting the conditions of Rule 2a-7 of the
Investment Company Act, as determined by the Company. Except with respect to
interest earned on the funds held in the Trust Account that may be released to
the Company to pay its franchise and income tax obligations (less up to $100,000
of interest to pay dissolution expenses), the proceeds from the Initial Public
Offering and the sale of the Private Placement Units will not be released from
the Trust Account until the earliest of: (a) the completion of a Business
Combination; (b) the redemption of any public shares properly submitted in
connection with a stockholder vote to amend the Company's certificate of
incorporation; and (c) the redemption of the Company's public shares if the
Company is unable to complete a Business Combination within 12 months from the
closing of the Initial Public Offering (or 15 or 18 months, if the Company
extends the period of time to consummate a Business Combination, as described in
more detail in this Annual Report), subject to applicable law.
For the period from February 19, 2021 (inception) through December 31, 2021,
there was $714,635 of cash used in operating activities, cash used in investing
activities of $107,857,461 related to the marketable securities held in the
trust account, and $109,493,802 of cash provided by financing activities,
primarily from the issuance of redeemable Class A Units in the Company's IPO and
the Private Placement.
As of December 31, 2021, we had $107,857,461 in marketable securities held in
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 a Business Combination. To the extent that
our capital stock or debt is used, in whole or in part, as consideration to
complete a 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.
As of December 31, 2021, we had cash of $921,706. 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 finance transaction costs in connection with a Business Combination,
our Sponsor or an affiliate of our Sponsor, or certain of the Company's officers
and directors may, but are not obligated to, loan the Company funds as may be
required ("Working Capital Loans"). Such Working Capital Loans would be
convertible into private placement-equivalent units at a price of $10.00 per
unit (which, for example, would result in the holders being issued 150,000 units
if $1,500,000 of notes were so converted), at the option of the lender. Such
units would be identical to the Private Placement Units. In the event that a
Business Combination does not close, the Company may use a portion of proceeds
held outside the Trust account to repay the Working Capital Loans but no
proceeds held in the Trust Account would be used to repay the Working Capital
Loans.
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 a Business Combination. Moreover, we may need to obtain additional financing
either to complete a Business Combination or because we become obligated to
redeem a significant number of our public shares upon consummation of a Business
Combination, in which case we may issue additional securities or incur debt in
connection with such Business Combination.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of 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.
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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 our Sponsor
a total of $10,000 per month for office space, utilities and secretarial and
administrative support. The Company has paid $60,000 to the Sponsor through
December 31, 2021 for administrative support services. However, pursuant to the
terms of such agreement, the Company may delay payment of such monthly fee upon
a determination by the Company's Audit Committee that the Company lacks
sufficient funds held outside the Trust Account to pay actual or anticipated
expenses in connection with a Business Combination. For the three months ended
December 31, 2021 and the period from February 19, 2021 (inception) through
December 31, 2021 the Company has not incurred any amounts under this
arrangement.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $3,719,100
(which includes the deferred portion of the fee attributable to the
underwriters' partial exercise of the overallotment 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.
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 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:
Use of Estimates
The preparation of financial statements in conformity with US 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 financial statements and the reported amounts of expenses during
the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of
three months or less when purchased to be cash equivalents. The Company did not
have any cash equivalents as of December 31, 2021.
Fair Value of Financial Instruments
The fair value of the Company's assets and liabilities approximates the carrying
amounts represented in the accompanying balance sheet, primarily due to their
short-term nature.
Net Loss Per Common Share
Net loss per common share is computed by dividing net loss by the weighted
average number of ordinary shares outstanding during the period. At December 31,
2021, the Company did not have any dilutive securities and other contracts that
could, potentially, be exercised or converted into shares and then share in the
earnings of the Company. As a result, diluted loss per common share is the same
as basic loss per common share for the periods presented.
Management does not believe that any other 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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