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 our Annual Report on Form 10-K
for the period ended December 31, 2021, filed with the U.S. Securities and
Exchange Commission (the "SEC") on April 5, 2022, along with our unaudited
condensed financial statements included in this Quarterly Report. 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 Quarterly Report on
Form 10-Q.
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 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-Q 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 the
Company's Annual report on Form 10-K for the year ended December 31, 2021 filed,
as well as the Risk Factors section in this Quarterly Report. 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 formed under the laws of the State of Delaware on
July 9, 2020, 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. 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 raise capital or to
complete our initial Business Combination will be successful.
Recent Developments
As previously disclosed, the Company, entered into that certain Business
Combination Agreement, dated as of July 21, 2021, as amended by that certain
Amendment No. 1 to the Business Combination Agreement, dated as of December 30,
2021 (as amended, supplemented or otherwise modified from time to time, the
"Business Combination Agreement"), by and among (i) Company, (ii) OP Group
Holdings, LLC, a Delaware limited liability company ("OP Group"), (iii) Paylink
Holdings Inc., a Delaware corporation ("Blocker"), (iv) Normandy Holdco LLC, a
Delaware limited liability company ("Blocker Owner"), (v) Olive Ventures
Holdings, Inc., a Delaware corporation and wholly-owned subsidiary of Blocker
("PubCo"), (vi) Milestone Merger Sub Inc., a Delaware corporation and
wholly-owned subsidiary of PubCo ("Milestone Merger Sub"), (vii) MDH Merger Sub
Inc., a Delaware corporation and wholly-owned subsidiary of PubCo ("MDH Merger
Sub"), and (viii) CF OMS LLC, a Delaware limited liability company ("CF OMS",
and collectively, the "Contracting Parties").
On April 1, 2022, the Company and OP Group entered into a Termination of
Business Combination Agreement (the "Termination Agreement") pursuant to which
the Company and OP Group mutually agreed to terminate the Business Combination
Agreement.
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As a result of the termination of the Business Combination Agreement, the
Business Combination Agreement is of no further force and effect and none of the
Contracting Parties shall have any further liability thereunder, with the
exception of (i) the agreements contained in Section 9.9(a) (Communications;
Press Release; SEC Filings), Section 9.10 (Expenses), Section 13.2 (Effect of
Termination) and Article XIV (Miscellaneous) of the Business Combination
Agreement, (ii) any corresponding definitions to the foregoing clause (i) set
forth in Section 1.1 (Certain Definitions) of the Business Combination Agreement
and (iii) the Confidentiality Agreement, dated as of February 8, 2021, by and
between the Company and OP Group, each of which shall each survive the
termination of the Business Combination Agreement and continue in full force and
effect in accordance with their respective terms. Neither party will be required
to pay the other a termination fee as a result of the mutual decision to enter
into the Termination Agreement.
The termination of the Business Combination Agreement also terminates and makes
void the Transaction Support Agreement (as defined in the Business Combination
Agreement) and the Sponsor Letter Agreement (as defined in the Business
Combination Agreement), each of which were executed concurrently with the
Business Combination Agreement.
The foregoing descriptions of the Business Combination Agreement, the
Termination Agreement, the Transaction Support Agreement, and the Sponsor Letter
Agreement are not complete and are qualified in their entirety by reference to
and the terms and conditions of, respectively, (i) the Business Combination
Agreement, a copy of which was previously filed as Exhibit 2.1 to the Company's
Current Report on Form 8-K on July 21, 2021, (ii) Amendment No. 1 to Business
Combination Agreement, a copy of which was previously filed as Exhibit 2.1 to
the Company's Current Report on Form 8-K on December 30, 2021, (iii) the
Termination Agreement, and the terms of which are incorporated by reference
herein, (iv) the Transaction Support Agreement, a copy of which was previously
filed as Exhibit 10.2 to the Company's Current Report on Form 8-K on July 21,
2021, and (v) the Sponsor Letter Agreement, a copy of which was previously filed
as Exhibit 10.3 to the Company's Current Report on Form 8-K on July 21, 2021.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities from inception through March 31, 2022 were
organizational activities, those necessary to prepare for the Initial Public
Offering, described below, and, subsequent to the Initial Public Offering,
identifying a target company for a Business Combination and activities in
connection with the proposed acquisition of Blocker and OP Group. We do not
expect to generate any operating revenues until after the completion of our
initial Business Combination. We generate non-operating income in the form of
interest income on marketable securities held in the Trust Account and
non-operating income or expenses from the changes in fair value of warrant
liabilities. 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, a Business
Combination.
For the three months ended March 31, 2022, we had a net income of $5,641,653,
which consisted of a change in fair value of warrant liabilities of $5,987,100
and income earned on our marketable securities held in the Trust Account of
$26,243, partially offset by operational costs of $371,690.
For the three months ended March 31, 2021, we had a net income of $5,326,032,
which consisted of a change in fair value of warrant liabilities of $6,453,500
and income earned on our marketable securities held in the Trust Account of
$10,317, partially offset by transaction costs allocable to warrant liabilities
of $727,230 and operational costs of $410,555.
Liquidity and Capital Resources
On February 4, 2021, we consummated the Initial Public Offering of 27,600,000
Units, at a price of $10.00 per Unit, which included the full exercise by the
underwriters of their over-allotment option in the amount of 3,600,000 Units,
generating gross proceeds of $276,000,000. Simultaneously with the closing of
the Initial Public Offering, we consummated the sale of 6,550,000 Private
Placement Warrants to the Sponsor at a price of $1.00 per Private Placement
Warrant generating gross proceeds of $6,550,000.
For the three months ended March 31, 2022, cash used in operating activities was
$250,123. Net income of $5,641,653 was affected by interest earned on marketable
securities held in the Trust Account of $26,243 and the change in fair value of
warrant liabilities of $5,987,100. Changes in operating assets and liabilities
provided $121,567 of cash for operating activities.
For the three months ended March 31, 2021, cash used in operating activities was
$158,444. Net income of $5,326,032 was affected by interest earned on marketable
securities held in the Trust Account of $10,317, the change in fair value of
warrant liabilities of $6,453,500
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and transaction costs incurred in connection with warrant liabilities of
$727,230. Changes in operating assets and liabilities provided $252,111 of cash
for operating activities.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Placement Warrants, a total of $276,000,000
was placed in the Trust Account. We incurred $15,612,362 in transaction costs,
including $5,520,000 of underwriting fees, $9,660,000 of deferred underwriting
fees and $432,362 of other offering costs.
As of March 31, 2022, we had $276,055,960 of marketable securities held in the
Trust Account. We intend to use substantially all of the funds held in the Trust
Account after any redemptions, including any amounts representing interest
earned on the Trust Account (less deferred underwriting commissions and 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 March 31, 2022, we had no cash held outside of the Trust Account.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our Sponsor or an affiliate of our
Sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required. If we complete a Business Combination, we may
repay such loaned amounts out of the proceeds of the Trust Account released to
us. 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 a mutually agreed amount of such loans may be convertible into
warrants, at a price of $1.00 per warrant, at the option of the lender. The
warrants would be identical to the Private Placement Warrants. As of March 31,
2022, the Sponsor advances amounted to $534,673 which are currently due on
demand. As of the date of this filing, the Sponsor advanced an additional
$137,372, resulting in an aggregate of $672,045 outstanding and currently due on
demand.
Going Concern
We will need to raise additional capital through loans or additional investments
from our Sponsor, stockholders, officers, directors, or third parties. Our
officers, directors and Sponsor may, but are not obligated to, loan us 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 additional financing. As of the date of this filing, the
Sponsor advanced an aggregate of $602,045 which is currently due on demand.
Accordingly, we may not be able to obtain 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. The Company
has until February 4, 2023 to consummate a Business Combination. It is uncertain
that the Company will be able to consummate a Business Combination by this time.
If a Business Combination is not consummated by this date, there will be a
mandatory liquidation and subsequent dissolution of the Company. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern for at least one year from the date that the financial statements
are issued. No adjustments have been made to the carrying amounts of assets or
liabilities should the Company be required to liquidate after February 4, 2023.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of March 31, 2022. 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 an
affiliate of the Sponsor a monthly fee of $10,000 for office space, utilities,
secretarial and administrative support services. We
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began incurring these fees on January 28, 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 $9,660,000
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
There have been no material changes to our critical accounting policies and
estimates from those disclosed in our financial statements and the related notes
and other financial information included in the Annual Report on Form 10-K for
the year ended December 31, 2021
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