References to the "Company," "our," "us" or "we" refer to Mount Rainier
Acquisition Corp. The following discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the unaudited interim condensed 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.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act. We have based these forward-looking statements
on our current expectations and projections about future events. These
forward-looking statements are subject to known and unknown risks, uncertainties
and assumptions about us that may cause our actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Factors that might cause or contribute to
such a discrepancy include, but are not limited to, those described in our other
U.S. Securities and Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated 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 (the "initial business combination"). Our Sponsor is DC
Rainier SPV LLC, a Delaware limited liability company ("Sponsor"). While we may
pursue an initial business combination target in any industry or geographic
region, we intend to focus on established, technology focused businesses that
have an aggregate enterprise value of approximately $500 million to $2.0 billion
and would benefit from access to public markets and the operational and
strategic expertise of our management team and board of directors. We will seek
to capitalize on the significant experience of our management team in
consummating an initial business combination with the ultimate goal of pursuing
attractive returns for our shareholders.
The Registration Statement for our initial public offering was declared
effective on October 4, 2021 (the "Public Offering"). On October 7, 2021, we
consummated the Initial Public Offering of 17,250,000 units (the "Units") at
$10.00 per Unit including the underwriters' over-allotment option, generating
gross proceeds of $172.5 million, and incurring transaction costs of
approximately $8.0 million, consisting of $6.9 million of deferred underwriting
fees and approximately $1.1 million of other offering costs.
Simultaneously with the closing of the Initial Public Offering, the Company
completed the private sale of 596,200 units (the "Private Placement Units") at a
purchase price of $10.00 per Private Placement Unit (the "Private Placement"),
to the "Sponsor and the Company's Chief Executive Officer and Chief Financial
Officer, generating gross proceeds to the Company of $6.0 million.
Approximately $172.5 million ($10.00 per Unit) of the net proceeds of the
Initial Public Offering and certain of the proceeds of the Private Placement was
placed in a trust account (the "Trust Account") located in the United States
with American Stock Transfer & Trust Company, LLC, and invested only in U.S.
"government securities," within the meaning set forth in Section 2(a)(16) of the
Investment Company Act, with a maturity of one hundred eighty-five (185) days or
less, or in money market funds meeting the conditions of paragraphs (d)(1),
(d)(2), (d)(3) and (d)(4) of Rule 2a-7 under the Investment Company Act, which
invest only in direct U.S. government treasury obligations, as determined by the
Company, until the earlier of: (i) the completion of our initial business
combination and (ii) the distribution of the Trust Account as otherwise
permitted under our amended and restated certificate of incorporation.
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If we are unable to complete an initial business combination within fifteen (15)
months from the closing of the Initial Public Offering, we will (i) cease all
operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than ten (10) 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 franchise
and income taxes (less up to $100,000 of interest to pay dissolution expenses
and net of taxes payable), 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), subject to applicable law, and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of our
remaining stockholders and our board of directors, dissolve and liquidate,
subject in each case to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law.
Business Combination Agreement
On March 23, 2022, the Company, Hub Cyber Security (Israel) Ltd., a company
organized under the laws of the State of Israel (the "Hub"), and Rover Merger
Sub, Inc., a Delaware corporation and wholly owned subsidiary of Hub ("Merger
Sub"), entered into a Business Combination Agreement (the "Business Combination
Agreement"), pursuant to which, among other things, Merger Sub will merge with
and into the Company (the "Merger"), with the Company surviving the Merger (the
"Surviving Company") as a direct, wholly owned subsidiary of Hub. The parties
expect to complete the Merger in the fourth quarter of 2022 subject to our
stockholders approval of the Merger.
Subject to the terms and conditions of the Business Combination Agreement, by
virtue of the Merger:
Each Unit issued and outstanding immediately prior to the effective time of the
Merger (the "Effective Time") will be automatically detached and the holder
thereof will be deemed to hold one share of Common Stock and one warrant of the
? Company entitling the holder thereof to purchase three-fourths (3/4) of one
share of Common Stock, which underlying securities will be converted in
accordance with the applicable terms of the Business Combination Agreement as
further described below.
Each Share of Common Stock issued and outstanding immediately prior to the
Effective Time will be automatically converted into a number of ordinary
shares, no par value per share, of HUB (the "HUB Ordinary Shares" and such
number of HUB Ordinary Shares, the "Per Share Consideration") equal to the
Aggregate Transaction Share Consideration divided by the number of issued and
? outstanding shares of Common Stock immediately prior to the Effective Time,
after taking into account stockholder redemptions. Following such conversion,
all shares of Common Stock will automatically be canceled and cease to exist by
virtue of the Merger. The holders of shares of Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares, except as provided in the Business Combination
Agreement or under applicable law.
"Aggregate Transaction Share Consideration" means an aggregate number of HUB
Ordinary Shares equal to the quotient of (a) the amount equal to (i)
$221,582,000 minus (ii) the amounts payable to the Company's stockholders
pursuant to the stockholder redemptions divided by (b) $7.61 (the "HUB Share
Value").
(a) All rights with respect to shares of Common Stock underlying warrants will
be converted into rights with respect to HUB Ordinary Shares and thereupon
assumed by HUB; (b) the number of HUB Ordinary Shares subject to each warrant
assumed by HUB will be determined by multiplying (i) the number of shares of
Common Stock that were subject to such warrant, as in effect immediately prior
to the Effective Time, by (ii) the Per Share Consideration, and rounding the
? resulting number down to the nearest whole number of HUB Ordinary Shares; (c)
the per share exercise price for the HUB Ordinary Shares issuable upon exercise
of each warrant assumed by HUB will be determined by dividing (i) the exercise
price per share of Common Stock subject to such warrant, as in effect
immediately prior to the Effective Time, by (ii) the Per Share Consideration;
and (d) any restriction on the exercise of any warrant assumed by HUB will
continue in full force and effect and the term, exercisability, vesting
schedule and other provisions of such warrant will otherwise remain unchanged.
Each share of capital stock of Merger Sub issued and outstanding immediately
prior to the Effective Time will be converted into and become one validly
? issued, fully paid and non-assessable share of common stock, par value $0.0001
per share, of the Surviving Company, which shall constitute the only
outstanding share of capital stock of the Surviving Company.
The Merger Agreement contains customary representations, warranties and
covenants of the parties thereto. The consummation of the proposed Merger is
subject to certain conditions as further described in the Merger Agreement.
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Contemporaneously with the execution of the Business Combination Agreement, HUB
entered into subscription agreements (the "PIPE Subscription Agreements") with
certain qualified institutional buyers and accredited investors (the
"Subscribers"), pursuant to which, among other things, the Subscribers have
agreed to subscribe for HUB Ordinary Shares that will be issued in connection
with the closing of the Merger (the "PIPE Shares"), for aggregate gross proceeds
of approximately $50,000,000 at a purchase price of $10.00 per share, in a
private placement (the aggregate purchase price under all Subscription
Agreements, collectively, the "PIPE Financing Amount," and the equity financing
under all Subscription Agreements, collectively, the "PIPE Financing"). The
purpose of the PIPE Financing is to raise additional capital for use in
connection with the Merger. The PIPE Shares will be identical to HUB Ordinary
Shares that will be issued to our existing stockholders at the time of the
closing, except that the PIPE Shares will not be entitled to any redemption
rights and will not be registered with the SEC. The closing of the sale of PIPE
Shares will be contingent upon the substantially concurrent consummation of the
Merger.
Pursuant to the PIPE Subscription Agreements, HUB has agreed to file (at HUB's
sole cost and expense) a registration statement registering the resale of the
PIPE Shares (the "PIPE Resale Registration Statement") within 45 days of the
closing of the Merger. HUB will use its commercially reasonable efforts to have
the PIPE Resale Registration Statement declared effective as soon as practical,
but no later than the earlier of (a) ninety (90) calendar days after the filing
thereof (or one hundred twenty (120) calendar days after the filing thereof if
the SEC notifies HUB that it will "review" the Registration Statement) and (b)
ten (10) business days after HUB is notified by the SEC that the Registration
Statement will not be "reviewed" or will not be subject to further review.
Each PIPE Subscription Agreement would terminate upon the earlier to occur of
(a) such date and time as the Business Combination Agreement is terminated in
accordance with its terms, (b) upon the mutual written agreement of each of the
parties thereto to terminate the Subscription Agreement, or (c) 90 days after
the Termination Date.
Please see the Current Report on Form 8-K we filed with the SEC on March 23,
2022 for additional information.
On June 19, 2022, the Company and HUB entered into an agreement (the
"Termination Agreement") to terminate the Management Incentive Agreement
previously entered into in connection with the Business Combination Agreement.
Concurrently with the execution of the Termination Agreement, the Company, HUB,
and Merger Sub entered into the First Amendment to Business Combination
Agreement to reflect the Company and HUB's entry into the Termination Agreement.
With the exception of such amended terms, the Business Combination Agreement
remains in full force and effect. Please see the Current Report on Form 8-K we
filed with the SEC on June 21, 2022 for additional information.
Results of Operations
Our only activities from February 10, 2021 (inception) to June 30, 2022 related
to our formation and the Public Offering, as well as due diligence costs
incurred to identify a target company for a potential business combination. We
expect to incur increased expenses as a result of being a public company (for
legal, financial reporting, accounting and auditing compliance), as well as
costs in the pursuit of our acquisition plans.
For the three months ended June 30, 2022, we had a net loss of approximately
$219,000, which consisted of approximately $346,000 in general and
administrative expenses, $30,000 in related party administrative expenses,
$40,000 in franchise tax expense, and approximately $36,000 in income tax offset
by approximately $233,000 in interest income.
For the six months ended June 30, 2022, we had a net loss of approximately
$664,000, which consisted of approximately $738,000 in general and
administrative expenses, $60,000 in related party administrative expenses,
$80,000 in franchise tax expense, and approximately $36,000 in income tax offset
by approximately $250,000 in interest income.
For the period from February 10, 2021 (inception) through June 30, 2021, we had
a net loss of $4,617, which consisted of $4,617 in formation expenses.
For the three months ended June 30, 2021, we had a net loss of $117, which
consisted of $117 in formation expenses.
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Liquidity and Capital Resources
Our liquidity needs up to the Public Offering were satisfied through receipt of
a $25,000 capital contribution from our Sponsor and certain executives in
exchange for the issuance of the Founder Shares to our Sponsor and certain
executives and loans from our Sponsor and certain executives for an aggregate
amount of $975,000 to cover organizational expenses and expenses related to the
Public Offering pursuant to a promissory note (the "Note"). The Note was used to
purchase Private Placement Units on October 7, 2021 as part of the Public
Offering. Subsequent to the consummation of the Public Offering, our liquidity
needs have been satisfied through the net proceeds of approximately $1.4 million
from the Private Placement held outside of the Trust Account. The Company
anticipates that the $174,236 outside of the Trust Account as of June 30, 2022,
might not be sufficient to allow the Company to operate for at least the next 12
months from the issuance of the financial statements, assuming that a business
combination is not consummated during that time. See Note 1 to the financial
statements for further information.
In addition, in the short term and long term, 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. As of June 30, 2022, there were no amounts outstanding under any
working capital loans.
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 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 will be entitled to registration rights
pursuant to a registration rights agreement. These holders will be entitled to
certain demand and "piggyback" registration rights. We will bear the expenses
incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company paid an underwriting discount of $0.0333 per Unit, or $500,000 in
the aggregate, at the closing of the Initial Public Offering. An additional fee
equal to 4.0% of the gross proceeds of the public offering will be payable to
the representative of the underwriters for services rendered in connection with
the business combination. This business combination fee will become payable to
representative of 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. In addition, the Company provided
750,000 shares to the underwriter at the time of the Initial Public Offering at
a fair value totaling $4,346,344.
Administrative Services Agreement
Commencing on the date that our securities were first listed on The Nasdaq
Global Market and continuing until the earlier of our consummation of an initial
business combination or our liquidation, we have agreed to pay an affiliate of
our Sponsor a total of $10,000 per month for office space, utilities,
secretarial support and administrative services. We did not record
administrative services expenses for the period from February 10, 2021
(inception) to October 7, 2021, in general and administrative expenses in
connection with the related agreement in the accompanying statement of
operations. For the three and six months ending June 30, 2022, we have recorded
$30,000 and $60,000, respectively, in general and administrative expenses.
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 expenses during the
periods reported. Actual results could materially differ from those estimates.
We have identified the following critical accounting policies:
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Common stock subject to possible redemption
We account for the common stock subject to possible redemption in accordance
with the guidance in ASC 480, Distinguishing Liabilities from Equity. 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 feature redemption rights that are either within the control
of the holder or subject to redemption upon the occurrence of uncertain events
not solely within Mount Rainier's control) are classified as temporary equity.
At all other times, common stock are classified as stockholders' equity. The
Company's common stock features certain redemption rights that are considered to
be outside of Mount Rainier's control and subject to occurrence of uncertain
future events.
Impact of COVID-19
Our Sponsor continues to evaluate the impact of the COVID-19 pandemic and has
concluded that while it is reasonably possible that the virus could have a
negative effect on our financial position, results of operations and/or search
for a target company, the specific impact is not readily determinable as of the
balance date.
Recent Accounting Pronouncements
We do not believe that any recently issued, but not yet effective, accounting
pronouncements, if currently adopted, would have a material impact on our
financial statements.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report, we did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
JOBS Act
On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (the "JOBS
Act") was signed into law. 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 elected 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.
As an "emerging growth company," we are not required to, among other things,
(i) provide an auditor's attestation report on our system of internal controls
over financial reporting, (ii) provide all of the compensation disclosure that
may be required of non-emerging growth public companies, (iii) comply with any
requirement that may be adopted by the Public Company Accounting Oversight Board
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 comparisons of the CEO's
compensation to median employee compensation. These exemptions will apply for a
period of five (5) years following the completion of our Public Offering or
until we otherwise no longer qualify as an "emerging growth company."
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