The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the audited financial statements
and the notes thereto contained elsewhere in this Annual Report.
All statements other than statements of historical fact included in this Annual
Report including, without limitation, statements under this section, "Item 7.
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 Annual 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 factors
such as those set forth under Part I, Item 1A. "Risk Factors" in this Annual
Report on Form 10-K.
Overview
We are a blank check company incorporated on March 24, 2021 as a Delaware
corporation and formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses (a "Business Combination"). We are
focusing our efforts on identifying high growth, U.S. and international
acquisition targets with meaningful current, or a clear path toward future,
profitability. While initially we concentrated on the Fintech and embedded
finance sectors, we have expanded our scope of potential acquisition targets to
incorporate a broader array of industries in light of recent market volatility
and waning investor appetite for high growth technology stocks.
63
--------------------------------------------------------------------------------
Table of Contents
Our sponsor is Home Plate Sponsor LLC, a Delaware limited liability company (the
"Sponsor"). We intend to capitalize on the ability of our sponsor team to
identify and acquire and advise a business that can benefit from our founders'
management expertise and disciplined approach to capital allocation and
investment oversight. We intend to effectuate our initial Business Combination
using cash from the proceeds of our IPO and the private placement of the private
placement warrants, our capital stock, debt or a combination of cash, stock and
debt.
The issuance of additional shares in a Business Combination:
• may significantly dilute the equity interest of investors in the IPO,
which dilution would increase if the anti-dilution provisions in our
Class B common stock resulted in the issuance of our Class A common
stock on a greater than one-to-one basis upon conversion of our
Class B common stock;
• may subordinate the rights of holders of our Class A common stock if
shares of preferred stock are issued with rights senior to those
afforded our Class A common stock;
• could cause a change in control if a substantial number of shares of
our Class A common stock are issued, which may affect, among other
things, our ability to use our net operating loss carry forwards, if
any, and could result in the resignation or removal of our present
officers and directors;
• may have the effect of delaying or preventing a change of control of
us by diluting the stock ownership or voting rights of a person
seeking to obtain control of us; and
• may adversely affect prevailing market prices for our Class A common
stock and/or warrants. Similarly, if we issue debt securities, or
otherwise incur significant debt, it could result in:
• default and foreclosure on our assets if our operating revenues after
an initial Business Combination are insufficient to repay our debt
obligations;
• acceleration of our obligations to repay the indebtedness even if we
make all principal and interest payments when due if we breach certain
covenants that require the maintenance of certain financial ratios or
reserves without a waiver or renegotiation of that covenant;
• our immediate payment of all principal and accrued interest, if any,
if the debt is payable on demand;
• our inability to obtain necessary additional financing if the debt
contains covenants restricting our ability to obtain such financing
while the debt is outstanding;
• our inability to pay dividends on our common or preferred stock;
• using a substantial portion of our cash flow to pay principal and
interest on our debt, which will reduce the funds available for
dividends on our common stock if declared, our ability to pay
expenses, make capital expenditures and acquisitions and fund other
general corporate purposes;
• limitations on our flexibility in planning for and reacting to changes
in our business and in the industry in which we operate;
• increased vulnerability to adverse changes in general economic,
industry and competitive conditions and adverse changes in government
regulation; and
• limitations on our ability to borrow additional amounts for expenses,
capital expenditures, acquisitions, debt service requirements and
execution of our strategy and other purposes and other disadvantages
compared to our competitors who have less debt.
We expect to incur significant costs in the pursuit of our initial Business
Combination. We cannot assure you that our plans to raise capital or to complete
our initial Business Combination will be successful.
Recent Developments
Extension Proxy Statement and Special Meeting of Stockholders
On March 13, 2023, we filed a definitive proxy statement with the SEC in
connection with the Special Meeting for the purposes of, among other things,
voting on a proposal to amend our amended and restated certificate of
incorporation to extend the date by which we must consummate an initial Business
Combination from April 4, 2023 to October 4, 2023. See Part I, Item 1.
Overview-Extension Proxy and Special Meeting of Stockholders for a description
of the proposals to be voted on at the Special Meeting. The Special Meeting is
being held virtually. Only holders of record of our common stock at the close of
business on March 6, 2023 are entitled to receive the notice of the Special
Meeting and to vote at the Special Meeting and any adjournments or postponements
thereof.
64
--------------------------------------------------------------------------------
Table of Contents
Results of Operations and Known Trends or Future Events
As of December 31, 2022, we have neither engaged in any significant business
operations nor generated any revenues to date. Since our IPO, our sole business
activity has been identifying and evaluating suitable acquisition transaction
candidates. We will not generate any operating revenues until after the
completion of a 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 IPO. We are incurring 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 fiscal year ended December 31, 2022, we had net income of $10,085,667
which consisted of a $9,563,000 gain in fair value of our warrant liabilities
and a $3,100,460 gain on our investments held in the Trust Account offset by
$2,001,280 in general and administrative expenses and a $576,513 tax provision.
For the period from March 24, 2021 (inception) through December 31, 2021, we had
net income of $4,433,246, which consisted of $501,433 in formation, general and
administrative expenses incurred as well as $1,359,240 in offering expense
related to warrant issuance offset by $18,919 in gain on Investment Held in
Trust Account and $6,275,000 in change on the fair value of warrant liabilities.
Liquidity and Going Concern
As of December 31, 2022 we had approximately $1,082,183 in cash in our operating
bank account and working capital of approximately $416,217.
Our liquidity needs up to and through our IPO had been met through payment of
$25,000 from the sale of the Founder Shares (as defined in Note 4) to our
Sponsor and the loan under an unsecured promissory note (the "Promissory Note")
from the Sponsor of up to $300,000. The Promissory Note was fully repaid in
connection with the IPO and there is no balance outstanding as of December 31,
2022.
On October 4, 2021, we completed the sale of 20,000,000 units (the "Units") at
$10.00 per Unit generating gross proceeds of $200,000,000 in our IPO.
Simultaneously with the closing of the IPO, we completed the sale of 7,600,000
private placement warrants (the "Private Placement Warrants") at a price of
$1.00 per Private Placement Warrant in a private placement to certain funds and
accounts managed by our Sponsor as well as to Jefferies LLC ("Jefferies"), who
acted as the sole book running manager for our IPO, generating gross proceeds of
$7,600,000 from the sale of the Private Placement Warrants.
An aggregate of $10.00 per Unit sold in the IPO was held in the 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 185 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.
As of December 31, 2022 we had $202,945,447 in Investment held in 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 and not
previously released to us to pay our taxes (which interest shall be net of taxes
payable and excluding deferred underwriting commissions) to complete our initial
Business Combination. We may withdraw interest to pay taxes, if any. Our annual
income tax obligations will depend on the amount of interest and other income
earned on the amounts held in the Trust Account. To the extent that our common
stock or debt is used, in whole or in part, as consideration to complete our
initial 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, 2022, we held a cash balance of $1,082,183 outside of the
Trust Account, which is available for working capital purposes. Until the
consummation of a Business Combination, we will use the funds held outside of
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, structure, negotiate and complete a Business
Combination, and to pay taxes to the extent the interest earned on the Trust
Account is not sufficient to pay our taxes.
In order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial Business Combination, our Sponsor or an
affiliate of our Sponsor or certain of our directors and officers may, but are
not obligated to, loan us funds as may be required. If we complete our initial
Business Combination, we may repay such loaned amounts out of the proceeds of
65
--------------------------------------------------------------------------------
Table of Contents
the Trust Account released to us. Otherwise, such loans may be repaid only out
of funds held outside the Trust Account. In the event that our initial 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 to repay such loaned amounts. 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. Such warrants would be identical to the private
placement warrants issued to our sponsor. The terms of such loans, if any, have
not been determined and no written agreements exist with respect to such loans.
Through December 31, 2022, there were no amounts outstanding under any working
capital loans.
We expect our primary liquidity requirements during the period between the
consummation of our IPO and consummation of our Business Combination to include
approximately $750,000 for D&O insurance; $1,000,000 for legal, accounting, and
consulting costs in connection with any Business Combinations; $350,000 for
legal and accounting fees related to regulatory reporting requirements; $130,000
for Nasdaq continued listing fees; $270,000 for administrative, financial and
support services; $300,000 for general working capital and support costs; and
$100,000 of liquidation reserve.
These amounts are estimates and may differ materially from our actual expenses.
In addition, we could use a portion of the funds not being placed in trust to
pay commitment fees for financing, fees to consultants to assist us with our
search for a target business or as a down payment or to fund
a "no-shop" provision (a provision designed to keep target businesses from
"shopping" around for transactions with other companies or investors on terms
more favorable to such target businesses) with respect to a particular proposed
Business Combination, although we do not have any current intention to do so. If
we entered into an agreement where we paid for the right to receive exclusivity
from a target business, the amount that would be used as a down payment or to
fund a "no-shop" provision would be determined based on the terms of the
specific Business Combination and the amount of our available funds at the time.
Our forfeiture of such funds (whether as a result of our breach or otherwise)
could result in our not having sufficient funds to continue searching for, or
conducting due diligence with respect to, prospective target businesses.
Based on the foregoing, management believes that the Company will have
sufficient working capital and borrowing capacity to meet its needs through
April 4, 2023, 18 months from the closing of the IPO; however, management notes
that if an extension of time to complete an initial Business Combination is
approved by stockholders, we may not have sufficient funds to cover our working
capital needs for one year from the filing of these financial statements. Over
this time period, the Company will be using these funds for paying existing
accounts payable, identifying and evaluating prospective initial Business
Combination candidates, performing due diligence on prospective target
businesses, paying for travel expenditures, selecting the target business to
merge with or acquire, and structuring, negotiating and consummating the
Business Combination.
We may need to obtain additional financing either to complete our initial
Business Combination either because the transaction requires more cash than is
available from the proceeds held in our trust account, or because we become
obligated to redeem a significant number of our public shares upon completion of
our initial Business Combinations or upon redemptions in connection with any
amendment to our Certificate of Incorporation to extend the time to consummate
an initial 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
do not complete our initial 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 initial Business
Combination, if cash on hand is insufficient, we may need to obtain additional
financing in order to meet our obligations. We cannot provide any assurance that
such new financing will be available to us on commercially acceptable terms, if
at all.
As a result of the foregoing, in connection with the Company's assessment of
going concern considerations in accordance with Financial Accounting Standards
Board's ("FASB") Accounting Standards Codification ("ASC") Topic 205-40,
Presentation of Financial Statements-Going Concern, if we are not able to
consummate a Business Combination before April 4, 2023 (or by October 4, 2023 if
the Extension is approved and implemented), we will commence an automatic
winding up, dissolution and liquidation. Management has determined that the
automatic liquidation, should a Business Combination not occur, and potential
subsequent dissolution raises substantial doubt about our ability to continue as
a going concern. Additionally, we may not have sufficient liquidity to fund our
working capital needs through one year from the issuance of the financial
statements contained elsewhere in this Annual Report on Form 10-K. No
adjustments have been made to the carrying amounts of assets or liabilities for
these facts.
Off-Balance Sheet Financing Arrangements
We did not have any off-balance sheet arrangement as of December 31, 2022 as
defined in 303(a)(4)(ii) of Regulation S-K.
Contractual Obligations
As of December 31, 2022, we did not have any long-term debt, capital or
operating lease obligations.
66
--------------------------------------------------------------------------------
Table of Contents
The holders of our Founder Shares, Private Placement Warrants and any warrants
that may be issued upon conversion of working capital loans (and any Class A
common stock issuable upon the exercise of the Private Placement Warrants and
warrants that may be issued upon conversion of working capital loans) are
entitled to registration rights pursuant to a registration rights agreement. The
holders of these securities are entitled to make up to three demands, excluding
short form demands, that we register such securities. In addition, the holders
have certain "piggy-back" registration rights with respect to registration
statements filed subsequent to the completion of our initial Business
Combination.
Pursuant to the underwriting agreement with our IPO underwriter, the IPO
underwriter will be entitled to a deferred fee of $0.35 per Unit sold in the
IPO, or $7,000,000 in the aggregate. The deferred fee will become payable 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.
We have committed to pay up to $15,000 per month to our Sponsor for
administrative, financial and support services provided to members of our
sponsor team. This administrative service arrangement will terminate upon
completion of our initial Business Combination or liquidation of the Company. We
have incurred approximately $81,000 pursuant to this agreement for the year
ended December 31, 2022 and $30,000 for the year ended December 31, 2021.
On April 19, 2022, the Company entered into an agreement with a third-party
consultant pursuant to which the consultant will provide to the Company, among
other services, introductions to, and due diligence of, potential Business
Combination target entities. Pursuant to the terms of the agreement, the Company
has agreed to pay a contingent fee, payable upon the satisfaction of certain
transaction milestones, of up to $3,900,000 if the Company consummates a
Business Combination with a target introduced by the consultant and fewer than
25% of the public shares are redeemed by stockholders in connection with such
Business Combination. For the year ended December 31, 2022, $200,000 in expense
was included in the income statement in relation to this agreement.
In June 2022, the Company entered into an agreement with a third-party
consultant pursuant to which the consultant will provide to the Company, among
other services, introductions to, and negotiation assistance with, potential
Business Combination target entities. Pursuant to the terms of the agreement,
the Company and has agreed to pay a contingent fee, payable upon the
satisfaction of certain transaction milestones, of up to $3,900,000 if the
Company consummates a Business Combination with a target introduced by the
consultant and fewer than 25% of the public shares are redeemed by stockholders
in connection with such Business Combination. Nothing is recorded in relation to
this agreement in the financial statements.
On September 16, 2022, the Company entered into the Capital Markets Advisory
Agreement with a third-party advisor pursuant to which the advisor will provide
to the Company, among other services, introductions to potential Business
Combination target entities and introductions to, and will seek investment
commitments from, potential third-party investors in any PIPE Financing. In
consideration of the foregoing, the Company has agreed (i) to pay the advisor a
cash fee of $1,500,000 in the event a Business Combination is consummated with
Subject Target and (ii) to issue to the advisor a number of newly issued Class A
common stock of the Company equal to 945,000 multiplied by the percentage of the
aggregate PIPE Financing provided by PIPE Investors introduced by the advisor,
regardless of whether the Business Combination is with a Subject Target. In the
event that there is no PIPE Financing but the Business Combination is with a
Subject Target, the Company has agreed to issue to the advisor 945,000 shares of
Class A common stock. The payment of any case fee and the issuance of any shares
to the advisor (the "Advisor Shares") will be made simultaneously with the
successful closing of a Business Combination. Concurrently with the issuance of
the Advisor Shares, the Company will cause the Sponsor to forfeit a
corresponding number of Class B common stock.
Critical Accounting Policies and Estimates
Management's discussion and analysis of our results of operations and liquidity
and capital resources are based on our unaudited financial information. We
describe our significant accounting policies in Note 2-Summary of Significant
Accounting Policies of the Notes to Financial Statements included in this Annual
Report on Form 10-K. Our unaudited financial statements have been prepared in
accordance with U.S. GAAP. Certain of our accounting policies require that
management apply significant judgments in defining the appropriate assumptions
integral to financial estimates. On an ongoing basis, management reviews the
accounting policies, assumptions, estimates and judgments to ensure that our
financial statements are presented fairly and in accordance with U.S. GAAP.
Judgments are based on historical experience, terms of existing contracts,
industry trends and information available from outside sources, as appropriate.
However, by their nature, judgments are subject to an inherent degree of
uncertainty, and, therefore, actual results could differ from our estimates.
67
--------------------------------------------------------------------------------
Table of Contents
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible
Instruments and Contracts in an Entity's Own Equity. The update simplifies the
accounting for convertible instruments by removing certain separation models in
Subtopic 470-20, Debt-Debt with Conversion and Other Options for convertible
instruments and introducing other changes. As a result of ASU No. 2020-06, more
convertible debt instruments will be accounted for as a single liability
measured at amortized cost and more convertible preferred stock will be
accounted for as a single equity instrument measured at historical cost, as long
as no features require bifurcation and recognition as derivatives. The
amendments are effective for smaller reporting companies for fiscal years
beginning after December 15, 2023, including interim periods within those fiscal
years. Early adoption is permitted, but no earlier than fiscal years beginning
after December 15, 2020, including interim periods within those fiscal years.
The Company is currently assessing what impact, if any, that ASU 2020-06 would
have on its financial position, results of operations or cash flows.
In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 "Fair Value
Measurement of Equity Securities Subject to Contractual Sale Restrictions". The
ASU amends ASC 820 to clarify that a contractual sales restriction is not
considered in measuring an equity security at fair value and to introduce new
disclosure requirements for equity securities subject to contractual sale
restrictions that are measured at fair value. The ASU applies to both holders
and issuers of equity and equity-linked securities measured at fair value. The
amendments in this ASU are effective for the Company in fiscal years beginning
after December 15, 2023, and interim periods within those fiscal years. Early
adoption is permitted for both interim and annual financial statements that have
not yet been issued or made available for issuance. The Company is currently
assessing what impact, if any, that ASU 2022-03 would have on its financial
position, results of operations or cash flows.
We do not believe that any other recently issued, but not effective, accounting
standards, if currently adopted, would have a material effect on our financial
statements.
JOBS Act
The JOBS Act contains provisions that, among other things, relax certain
reporting requirements for qualifying public companies. We qualify as an
"emerging growth company" under the JOBS Act and are allowed to comply with new
or revised accounting pronouncements based on the effective date for private
(not publicly traded) companies. We are electing to delay the adoption of new or
revised accounting standards, and as a result, we may not comply with new or
revised accounting standards on the relevant dates on which adoption of such
standards is required for non-emerging growth companies. As a result, our
financial statements may not be comparable to companies that comply with new or
revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an independent registered public accounting firm's
attestation report on our system of internal controls over financial reporting
pursuant to Section 404, (ii) provide all of the compensation disclosure that
may be required of non-emerging growth public companies under the Dodd-Frank
Wall Street Reform and Consumer Protection Act, (iii) comply with any
requirement that may be adopted by the PCAOB regarding mandatory audit firm
rotation or a supplement to the independent registered public accounting firm's
report providing additional information about the audit and the financial
statements (auditor discussion and analysis), and (iv) disclose certain
executive compensation related items such as the correlation between executive
compensation and performance and comparisons of the CEO's compensation to median
employee compensation. These exemptions will apply for a period of five years
following the completion of the IPO or until we are no longer an "emerging
growth company," whichever is earlier.
© Edgar Online, source Glimpses
HOME PLATE ACQUISITION CORP. 
