References in this Quarterly Report on Form 10-Q (this "Quarterly Report") to
"we," "us," "our" or the "Company" refer to Jupiter Acquisition Corporation.
References to our "management" or our "management team" refer to our officers
and directors, and references to the "Sponsor" refer to Jupiter Founders LLC.
The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the condensed 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, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (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 Quarterly Report including, without limitation, statements in
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. 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. 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 this
Quarterly Report and the Company's Annual Report on Form 10-K filed with the
U.S. Securities and Exchange Commission (the "SEC") on April 1, 2022. 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 incorporated as a Delaware corporation on June 17,
2020, formed 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 ("Business Combination"). We intend to
effectuate our initial Business Combination using cash derived from the proceeds
of our initial public offering ("Initial Public Offering"), including the
partial exercise of the underwriters' over-allotment option, and the private
placements of the private placement units ("Private Placement Units") that
occurred simultaneously with our Initial Public Offering and the closing of the
partial exercise of such over-allotment option (collectively, the "Private
Placement"), the proceeds of the sale of our shares in connection with our
initial Business Combination (pursuant to forward purchase agreements or
backstop agreements we may enter into), shares issued to the owners of the
target, debt issued to bank or other lenders or the owners of the target, or a
combination of the foregoing.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete our initial
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 June 17, 2020 (inception) through September 30, 2022
were organizational activities and those necessary to prepare for our Initial
Public Offering, described below, and, subsequent to our Initial Public
Offering, identifying a target company for our initial Business Combination. We
do not expect to generate any operating revenues until after the completion of
our initial Business Combination, at the earliest. We generate non-operating
income in the form of interest income on marketable securities held in the trust
account established for the benefit of our public stockholders (the "Trust
Account"), with Continental Stock Transfer & Trust Company acting as trustee. 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 in connection with searching for, and completing, an initial Business
Combination.
For the three months ended September 30, 2022, we had a net income of $582,710,
which consists of changes in fair value of warrant liability of $408,927,
interest earned on marketable securities held in the Trust Account of $672,213
and unrealized gain on marketable securities held in the Trust Account of
$27,589, offset by operating cost of $396,705 and a provision for income taxes
of $129,314.
For the nine months ended September 30, 2022, we had a net income of $2,538,924,
which consists of changes in fair value of warrant liability of $3,069,883,
interest earned on marketable securities held in the Trust Account of $818,225
and unrealized gain on marketable securities held in the Trust Account of
$13,602, offset by operating cost of $ $1,233,472 and a provision for income
taxes of $129,314.
For the three months ended September 30, 2021, we had net income of $61,595,
which consists of changes in fair value of warrant liability of $834,508,
interest earned on marketable securities held in the Trust Account of $8,225,
and unrealized gain on marketable securities held in the Trust Account of
$3,331, offset by operating cost of $259,610 and transaction cost of $524,859.
For the nine months ended September 30, 2021, we had a net income of $52,840,
which consists of changes in fair value of warrant liability of $834,508,
interest earned on marketable securities held in the Trust Account of $8,225,
and unrealized gain on marketable securities held in the Trust Account of
$3,331, offset by operating cost of $268,365 and transaction cost of $524,859.
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Liquidity and Capital Resources
Until the consummation of our Initial Public Offering, our only source of
liquidity was an initial purchase of shares of Class B common stock, par value
$0.0001 per share ("Founder Shares"), by the Sponsor and our independent
directors and loans from the Sponsor.
On August 17, 2021, we consummated our Initial Public Offering of 15,000,000
units ("Units"), at $10.00 per Unit, generating total gross proceeds of
$150,000,000. Simultaneously with the closing of our Initial Public Offering, we
consummated the private placement of 580,000 Private Placement Units at a price
of $10.00 per Private Placement Unit to the Sponsor and certain of the
underwriters of our Initial Public Offering and certain of the underwriters'
employees, generating total gross proceeds of $5,800,000.
On August 23, 2021, the underwriters of our Initial Public Offering notified us
of their exercise of the over-allotment option in part and concurrent forfeiture
of the remaining portion of such option. As such, on August 25, 2021, the
underwriters purchased 761,850 additional Units at $10.00 per additional Unit
upon the closing of the partial exercise of the over-allotment option,
generating total gross proceeds of $7,618,500. Simultaneously with the closing
of the partial exercise of the over-allotment option, we consummated the private
placement of 15,237 additional Private Placement Units at $10.00 per additional
Private Placement Unit to the Sponsor and certain of the underwriters of our
Initial Public Offering and certain of the underwriters' employees, generating
total gross proceeds of $152,370.
Of the aggregate 15,761,850 Units sold in our Initial Public Offering,
13,365,000 Units were purchased by certain qualified institutional buyers or
institutional accredited investors that are not affiliated with us, the Sponsor,
our directors or any member of our management team (the "Anchor Investors"). In
connection with the closing of our Initial Public Offering, the Anchor Investors
each acquired from the Sponsor an indirect economic interest in 100,000 Founder
Shares (or an aggregate of 900,000 Founder Shares) at the original purchase
price that the Sponsor paid for the Founder Shares. The Sponsor has agreed to
distribute such Founder Shares to the Anchor Investors after the completion of
our initial Business Combination.
Following our Initial Public Offering, including the partial exercise of the
over-allotment option, and the Private Placement, a total of $157,618,500 was
placed in the Trust Account. We incurred $9,292,595 in Initial Public Offering
related costs, including $3,152,370 of underwriting fees, $5,516,648 of deferred
underwriting fees and $623,577 of other offering costs.
For the nine months ended September 30, 2022, cash used in operating activities
was $843,102. Net income of $2,538,924 was affected by interest earned on
marketable securities held in the Trust Account of $818,225, unrealized gain on
marketable securities held in the Trust Account of $13,602 and change in fair
value of the warrant liability of $3,069,883. Changes in operating assets and
liabilities used $519,684 of cash for operating activities.
For the nine months ended September 30, 2021, cash used in operating activities
was $740,416. Net income of $52,840 was affected by interest earned on
marketable securities held in the Trust Account of $8,225, unrealized gain on
marketable securities held in the Trust Account of $3,331, changes in fair value
of warrant liability of $834,508, offering costs charged directly to operations
of $19,659 and transaction costs incurred in connection with the Initial Public
Offering of $524,859. Changes in operating assets and liabilities used $491,710
of cash for operating activities.
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
deferred underwriting commissions and taxes payable), to complete our initial
Business Combination. To the extent that our capital 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 September 30, 2022, we had cash of $650,714 held outside the Trust
Account. 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 our initial Business
Combination, and to pay for directors and officers liability insurance premiums.
In order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial Business Combination, the Sponsor, an
affiliate of the Sponsor, or certain of our officers and directors may, but are
not obligated to, loan us funds as may be required. If we complete our initial
Business Combination, we would repay such loaned amounts. 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 for such repayment. Up to
$1,500,000 of such loans may be convertible into units at a price of $10.00 per
unit at the option of the lender. The units would be identical to the Private
Placement Units.
Nomura Securities International, Inc. ("Nomura"), an underwriter of our Initial
Public Offering, has indicated its intent, if so requested by us, to use its
commercially reasonable efforts to underwrite, arrange and/or syndicate up to
$400 million of additional financing for us in the form of equity or debt (or a
combination thereof) in connection with our initial Business Combination,
subject to market conditions and on terms and conditions satisfactory in all
respects to Nomura in its sole judgment and determination.
22
Going Concern
As of September 30, 2022, we had $650,714 in our operating bank account and
working capital of $587,596.
Until the consummation of our initial Business Combination, we will be using the
funds not held in the Trust Account for identifying and evaluating prospective
acquisition candidates, performing due diligence on prospective target
businesses, paying for travel expenditures, selecting the target business to
acquire, and structuring, negotiating and consummating our initial Business
Combination.
We may need to raise additional capital through loans or additional investments
from the Sponsor or our stockholders, officers, directors, or third parties. Our
officers and directors, the Sponsor, or their affiliates, may, but are not
obligated to ), loan us additional funds, from time to time or at any time, in
whatever amount they deem reasonable in their sole discretion, to meet our
working capital needs. Accordingly, we may not be able to obtain such additional
financing. If we are unable to raise additional capital, we 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 expenses. We cannot provide any
assurance that new financing will be available to us on commercially acceptable
terms, if at all.
In connection with the our assessment of going concern considerations in
accordance with Financial Accounting Standard Board's ("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 we are unable to complete a Business Combination by August 17, 2023, then we
will cease all operations except for the purpose of liquidating.
In connection with the Company's assessment of going concern considerations in
accordance with FASB Accounting Standards Codification Subtopic 205-40,
"Presentation of Financial Statements - Going Concern," management has
determined that the liquidity conditions raise substantial doubt about our
ability to continue as a going concern through approximately one year from the
date the financial statements are issued. The financial statements do not
include any adjustments relating to the recovery of the recorded assets or the
classification of the liabilities that might be necessary should we be unable to
continue as a going concern.
Moreover, we may need to obtain additional financing either to complete our
initial Business Combination or because we become obligated to redeem a
significant number of our public shares upon completion of our initial Business
Combination, in which case we may issue additional securities or incur debt in
connection with such Business Combination. In addition, we intend to target
businesses larger than we could acquire with the net proceeds of our Initial
Public Offering and the Private Placement, and may as a result be required to
seek additional financing to complete such proposed initial Business
Combination. Subject to compliance with applicable securities laws, we would
only complete such financing simultaneously with the completion of our initial
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.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of September 30, 2022.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or other long-term
liabilities, other than an agreement to pay an affiliate of the Sponsor a
monthly fee of $15,000 for office space, utilities and secretarial and
administrative support. We began incurring these fees on August 12, 2021 and
will continue to incur these fees monthly until the earlier of the completion of
our initial Business Combination and our liquidation.
The underwriters of our Initial Public Offering are entitled to a deferred fee
of $0.35 per Unit sold in our Initial Public Offering, or $5,516,648 in the
aggregate. Subject to the terms of the underwriting agreement, the deferred fee
(i) will become payable to the underwriters from the amounts held in the Trust
Account solely in the event that we complete our initial Business Combination
and (ii) will be waived by the underwriters in the event that we do not complete
our initial Business Combination.
Critical Accounting Policies and Estimates
The preparation of condensed financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America ("U.S. GAAP") 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
We account for the warrants issued in connection with our Initial Public
Offering in accordance with the guidance contained in Accounting Standards
Codification ("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 statements of operations.
23
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from
Equity." Shares of Class A common stock subject to mandatory redemption are
classified as a liability instrument and are 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, shares of Class A common
stock subject to possible redemption are presented at redemption value as
temporary equity, outside of the stockholders' equity section of our condensed
balance sheets.
Net Income Per Common Share
Net income per common share is computed by dividing net income by the weighted
average number of shares of common stock outstanding during the period. We apply
the two-class method in calculating net income per common share. Accretion
associated with the redeemable shares of Class A common stock is excluded from
net income per common share as the redemption value approximates fair value.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU No.
2020-06, "Debt-Debt with Conversion and Other Options (Subtopic 470-20) and
Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity's Own Equity"
("ASU 2020-06"), which simplifies accounting for convertible instruments by
removing major separation models required under current U.S. GAAP. ASU 2020-06
removes certain settlement conditions that are required for equity contracts to
qualify for the derivative scope exception, and it also simplifies the diluted
earnings per share calculation in certain areas. ASU 2020-06 is effective for
fiscal years beginning after December 15, 2023, including interim periods within
those fiscal years, with early adoption permitted. We adopted ASU 2020-06
effective as of January 15, 2021. The adoption of ASU 2020-06 did not have an
impact on our condensed financial statements.
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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JUPITER ACQUISITION CORPORATION 
