The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including those set forth under "Special Note Regarding Forward-Looking
Statements," "Item 1A. Risk Factors" and elsewhere in this Annual Report on
Form 10-K.
Overview
We are a blank check company formed under the laws of the State of Delaware on
January 14, 2021 for the purpose of entering into a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses or entities (the "Business
Combination"). 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 revenues to date.
Our only activities from January 14, 2021 (inception) through December 31, 2021
were organizational activities, those necessary to prepare for the Initial
Public Offering,
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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 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 period from January 14, 2021 (inception) through December 31, 2021, we
had net loss of $343,028, which consisted of operating and formation costs of
$344,618, offset by interest earned on marketable securities held in the Trust
Account of $1,590.
Liquidity and Capital Resources
On November 8, 2021, we consummated the Initial Public Offering of 12,500,000
Units, which includes the full exercise by the underwriter of its over-allotment
option in the amount of 1,000,000 Units, at $10.00 per Unit, generating gross
proceeds of $125,000,000. Simultaneously with the closing of the Initial Public
Offering, we consummated the sale of 2,000,000 Private Placement Warrant at a
price of $1.00 per Private Placement Warrant and the sale of 400,000 Private
Placement Units in a private placement to the Sponsor, Nomura, and the
Underwriters, generating gross proceeds of $6,000,000.
Following the Initial Public Offering on November 8, 2021, including the full
exercise of the over-allotment option, and the Private Placement, a total of
$126,250,000 (or $10.10 per Unit) was placed in the Trust Account. We incurred
$7,438,270 in Initial Public Offering related costs, including $2,500,000 of
underwriting fees, $4,375,000 of deferred underwriting fees, and $513,270 of
other offering costs.
For the period from January 14, 2021 (inception) through December 31, 2021, cash
used in operating activities was $406,173. Net loss of $343,028 was affected by
interest earned on marketable securities held in the Trust Account of $1,590.
Changes in operating assets and liabilities used $61,555 of cash for operating
activities.
As of December 31, 2021, we had marketable securities held in the Trust Account
of $126,251,590 (including approximately $1,590 of interest income) consisting
of U.S. Treasury Bills with a maturity of 185 days or less. Interest income on
the balance in the Trust Account may be used by us to pay taxes. Through
December 31, 2021, we have not withdrawn any interest earned 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.
As of December 31, 2021, we had cash of $1,416,688. 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, the Sponsor, or certain of our officers
and directors or their affiliates may, but are not obligated to, loan us funds
as may be required. If we complete a Business Combination, we would repay such
loaned amounts. 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 Working Capital Loans may be
convertible into units of the post-Business Combination entity at a price of
$10.00 per unit. The units would be identical to the Private Placement Units.
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Going Concern
We have until November 8, 2022 to consummate an initial business combination. It
is uncertain that we will have sufficient liquidity to fund the working capital
needs of the Company until the liquidation date and/or through twelve months
from the issuance of this report. Additionally, it is uncertain that we will be
able to consummate an initial business combination by this time. The Company may
not have sufficient liquidity to fund the working capital needs of the Company
until November 8, 2022, the liquidation date. If an initial business combination
is not consummated by the liquidation date, there will be a mandatory
liquidation and subsequent dissolution. Management has determined that the
mandatory liquidation, should an initial business combination not occur, and
potential subsequent dissolution raises substantial doubt about our ability to
continue as a going concern. No adjustments have been made to the carrying
amounts of assets or liabilities should we be required to liquidate after
November 8, 2022.
Off-Balance Sheet Financing 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.
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 the Sponsor
a total of $15,000 per month for office space, utilities and secretarial and
administrative support. We began incurring these fees on November 2, 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 Unit, or $4,375,000
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 the Company
completes 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 periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Class A Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." 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 common stock features certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, common stock subject to
possible redemption is presented at redemption value as temporary equity,
outside of the stockholders' deficit section of our balance sheet.
Net 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. Net
income (loss) per share of common stock is calculated by dividing net income
(loss) by the
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weighted average number of shares of common stock outstanding for the respective
period. Accretion associated with the redeemable shares of common stock is
excluded from income (loss) per common share as the redemption value
approximates fair value.
Recent Accounting Standards
In August 2020, the 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 GAAP. The ASU also removes certain settlement conditions
that are required for equity-linked contracts to qualify for the derivative
scope exception, and it simplifies the diluted earnings per share calculation in
certain areas. We adopted ASU 2020-06 on February 24, 2021, 2021. Adoption of
the ASU 2020-06 did not have an impact our financial position, results of
operations or cash flows.
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 financial statements.
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