References to "we," "us," "our" or the "Company" are to Live Oak Crestview
Climate Acquisition Corp., except where the context requires otherwise.
References to our "management" or our "management team" are to our officers and
directors, and references to the "sponsor" are to LOCC Sponsor, LLC. The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the 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.
Overview
We are a blank check company incorporated in Delaware on February 12, 2021. We
were formed for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with
one or more businesses. We are an emerging growth company and, as such, we are
subject to all of the risks associated with emerging growth companies.
Our sponsor is LOCC Sponsor, LLC, a Delaware limited liability company. The
registration statement for our initial public offering was declared effective on
September 22, 2021. On September 27, 2021, we consummated our Initial Public
Offering of 20,000,000 units. Each unit consists of one share of our Class A
common stock, par value $0.0001 per share, and one-third of one redeemable
warrant of the Company, with each whole warrant entitling the holder thereof to
purchase one share of Class A common stock for $11.50 per share. The units were
sold at a price of $10.00 per unit, generating gross proceeds to us of
$200,000,000.
Simultaneously with the closing of our initial public offering, we consummated
the private placement of 4,666,666 private placement warrants at a price of
$1.50 per private placement warrant to our sponsor, generating proceeds of $7.0
million (Note 4).
Upon the closing of our initial public offering and the private placement of
private placement warrants, a total of $200,000,000, comprised of $196,400,000
of the proceeds from our initial public offering (which amount includes
$6,300,000 of deferred underwriting commissions) and $3,600,000 of the proceeds
from the sale of the private placement warrants, was placed in a U.S.-based
trust account maintained by Continental Stock Transfer & Trust Company, acting
as trustee, and invested only in U.S. government treasury bills with a maturity
of 185 days or less or in money market funds investing solely in U.S. Treasuries
and meeting certain conditions under Rule 2a-7 under the Investment Company Act,
as determined by us, until the earlier of: (i) the completion of a business
combination and (ii) the distribution of the trust account as described below.
Our management has broad discretion with respect to the specific application of
the net proceeds of our initial public offering and the sale of the private
placement warrants, although substantially all of the net proceeds are intended
to be applied generally toward consummating a business combination. There is no
assurance that we will be able to complete a business combination successfully.
We must complete one or more initial business combinations having an aggregate
fair market value of at least 80% of the net assets held in the trust account
(net of amounts disbursed to management for working capital purposes, if
permitted, and excluding the amount of any deferred underwriting commissions) at
the time of the agreement to enter into the initial business combination.
However, we will only complete a business combination if the post-business
combination company owns or acquires 50% or more of the voting securities of the
target or otherwise acquires a controlling interest in the target sufficient for
it not to be required to register as an investment company under the Investment
Company Act.
If we are unable to complete a business combination within 24 months from the
closing of our initial public offering, or September 27, 2023, or during any
extended period of time that we may have to consummate a business combination as
a result of an amendment to our amended and restated certificate of
incorporation (the "Combination Period"), we will (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible
but not more than ten business days thereafter, redeem the public shares, at a
per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account, including interest earned on the funds held in the trust
account and not previously released to us to pay our taxes (less up to $100,000
of interest to pay dissolution expenses), divided by the number of then
outstanding public shares, which redemption will completely extinguish public
stockholders' rights as stockholders (including the right to receive further
liquidating distributions, if any), and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the remaining stockholders
and the board of directors, liquidate and dissolve, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law.
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Liquidity and Capital Resources
As of December 31, 2022, we had approximately $0.5 million in our operating bank
account and working capital of approximately $0.8 million.
Our liquidity needs prior to the consummation of our initial public offering
were satisfied through a payment of $25,000 from our sponsor to purchase the
founder shares, and the loan proceeds from our sponsor of $125,500 under a
promissory note. We repaid the promissory note in full on September 27, 2021.
Subsequent to the consummation of our initial public offering, our liquidity has
been satisfied through the net proceeds from the consummation of our initial
public offering and the private placement of the private placement warrants held
outside of the trust account.
In connection with the Company's assessment of going concern considerations in
accordance with FASB Accounting Standards Update ("ASU") 2014-15, "Disclosures
of Uncertainties about an Entity's Ability to Continue as a Going Concern,"
management has determined that the liquidity needs, mandatory liquidation and
subsequent dissolution 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 September 27, 2023. The financial statements do not include any adjustment
that might be necessary if the Company is unable to continue as a going concern.
The Company intends to complete a business combination before the mandatory
liquidation date. Over this time period, the Company will be using the funds
held outside of the trust account 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.
Management continues to evaluate the impact of the COVID-19 pandemic on the
industry and has concluded that while it is reasonably possible that the virus
could have a negative effect on our financial position, results of our
operations, and/or search for a target company, the specific impact is not
readily determinable as of the date of the financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
In February 2022, the Russian Federation and Belarus commenced a military action
with the country of Ukraine. As a result of this action, various nations,
including the United States, have instituted economic sanctions against the
Russian Federation and Belarus. Further, the impact of this action and related
sanctions on the world economy are not determinable as of the date of the
financial statements and the specific impact on the Company's financial
condition, results of operations, and cash flows is also not determinable as of
the date of the financial statements.
Results of Operations
Our entire activity from inception to December 31, 2022 was in preparation for
our formation and our initial public offering, and, subsequent to our initial
public offering, identifying a target company for a business combination. We
will not be generating any operating revenues until the closing and completion
of our initial business combination, at the earliest.
For the year ended December 31, 2022, we had net loss of approximately $489,000,
which consisted of general and administrative expenses of approximately
$2,611,000, income tax expense of approximately $564,000, and franchise tax
expenses of approximately $204,000, partially offset by interest income from
investments held in the Trust Account of approximately $2,883,000 and by
interest income from operating account of approximately $8,000.
For the period from February 12, 2021 (inception) through December 31, 2021, we
had net loss of approximately $983,000, which consisted of general and
administrative expenses of approximately $934,000, and franchise tax expenses of
approximately $56,000; offset by interest income from investments held in the
Trust Account of approximately $4,000 and by interest income from operating
account of approximately $2,000.
Contractual Obligations
Administrative Support Agreement
On September 22, 2021, we entered into an agreement with an affiliate of our
sponsor, pursuant to which we agreed to pay such affiliate a total of $15,000
per month for utilities and secretarial and administrative support through the
earlier of consummation of our initial business combination and our liquidation.
Our sponsor, officers and directors, or any of their respective affiliates, will
be reimbursed for any out-of-pocket expenses incurred in connection with
activities on our behalf such as identifying potential target businesses and
performing due diligence on
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suitable business combinations. The audit committee will review on a quarterly
basis all payments that were made to our sponsor, officers, directors or their
affiliates and will determine which expenses and the amount of expenses that
will be reimbursed. There is no cap or ceiling on the reimbursement of
out-of-pocket expenses incurred by such persons in connection with activities on
our behalf.
We incurred approximately $180,000 and $60,000 in general and administrative
expenses-related party in the accompanying statement of operations for the year
ended December 31, 2022 and for the period from February 12, 2021 (inception)
through December 31, 2021, respectively.
Registration Rights
The holders of the founder shares, private placement warrants and warrants that
may be issued upon conversion of working capital loans, if any (and any shares
of 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 and upon conversion of the founder shares) are entitled to registration
rights pursuant to a registration rights agreement signed upon the consummation
of our initial public offering. The holders of at least $25 million in value of
these securities are entitled to demand that we file a registration statement
covering such securities and to require us to effect up to an aggregate of three
underwritten offerings of such securities, the holders have certain "piggy-back"
registration rights with respect to registration statements filed subsequent to
the completion of our initial business combination. We will bear the expenses
incurred in connection with the filing of any such registration statements.
Underwriting Agreement
We granted the underwriters a 45-day option from the date of the underwriting
agreement for our initial public offering to purchase up to 3,000,000 additional
units to cover over-allotments, if any, at our initial public offering price
less the underwriting discounts and commissions. On November 8, 2021, the
over-allotment option expired unexercised.
The underwriters agreed not to take any commissions for the 2,000,000 units sold
to certain investors identified by our sponsor as described in Note 3. The
underwriters were entitled to an underwriting discount of $0.20 per unit, or
$3.6 million in the aggregate, paid upon the closing of our initial public
offering. In addition, the underwriters will be entitled to a deferred fee of
$0.35 per unit, or $6.3 million 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 Estimates
The preparation of financial statements in conformity with U.S. 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 income and
expenses during the reporting period. Making estimates requires management to
exercise significant judgment. It is at least reasonably possible that the
estimate of the effect of a condition, situation or set of circumstances that
existed at the date of the financial statements, which management considered in
formulating its estimate, could change in the near term due to one or more
future confirming events. Accordingly, the actual results could differ
significantly from those estimates. As of December 31, 2022 and 2021, we did not
have any critical accounting estimates to be disclosed.
Recent Accounting Pronouncements
Our management does not believe that any recently issued, but not yet effective,
accounting standards updates, if currently adopted, would have a material effect
on our financial statements.
Off-Balance Sheet Arrangements
As of December 31, 2022, we did not have any off-balance sheet arrangements.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act 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, the financial statements may not
be comparable to companies that comply with new or revised accounting
pronouncements as of public company effective dates.
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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 auditor'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 auditor'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 our initial public offering or until we are no
longer an "emerging growth company," whichever is earlier.
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