Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Report
including, without limitation, statements in this section regarding our
financial position, business strategy and the plans and objectives of management
for future operations, are forward-looking statements. When used in this Report,
words such as "anticipate," "believe," "estimate," "expect," "intend" and
similar expressions, as they relate to us or our management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of our management, as well as assumptions made by, and information
currently available to, our management. Actual results could differ materially
from those contemplated by the forward-looking statements as a result of certain
factors detailed in our filings with the SEC. All subsequent written or oral
forward-looking statements attributable to us or persons acting on our behalf
are qualified in their entirety by this paragraph.
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.
Overview
We are a blank check company incorporated on October 12, 2020 as a Delaware
corporation and formed for the purpose of effecting a business combination with
one or more businesses or entities.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete an initial
business combination will be successful.
Our sponsor is VO Sponsor, LLC. The IPO Registration Statement was declared
effective on November 3, 2021. On November 8, 2021, the Company consummated its
initial public offering of 15,500,000 units at $10.00 per unit (which included a
partial exercise of the underwriters' over-allotment option), which is discussed
in Note 3 of the financial statements included elsewhere in this Report and the
sale of an aggregate of 770,000 shares at a price of $10.00 per private
placement share in a private placement to the sponsor and Cantor that closed
simultaneously with the initial public offering. On November 8, 2021, the
underwriter exercised 2,000,000 of the full 2,025,000 over-allotment option
available to them and forfeited the remainder. Due to the partial exercise of
the over-allotment option, the initial stockholders forfeited 8,750 founder
shares. Transaction costs amounted to $11,381,247 consisting of $2,700,000 of
underwriting commissions, $8,150,000 of deferred underwriting fees and $531,247
of other cash offering costs.
Simultaneously with the closing of the initial public offering, we consummated
the sale of an aggregate of 770,000 shares of common stock at a price of $10.00
per private placement share in a private placement to our sponsor and to Cantor,
generating gross proceeds to us of $7,700,000. Of the total private placement
shares sold, 722,750 shares were purchased by the sponsor and 47,250 shares were
purchased by Cantor.
Following the closing of the initial public offering on November 8, 2021,
$158,100,000 ($10.20 per Unit) from the net proceeds sold in the initial public
offering and the proceeds of the sale of the private placement shares, was
deposited in a trust account. Except with respect to interest earned on the
funds held in the trust account that may be released to the Company to pay its
franchise and income tax obligations (less up to $100,000 of interest to pay
dissolution expenses), the proceeds from the initial public offering and the
sale of the private placement shares will not be released from the trust account
until the earliest of: (a) the completion of our initial business combination;
(b) the redemption of any public shares properly submitted in connection with a
stockholder vote to amend our certificate of incorporation: (i) to modify the
substance or timing of our obligation to redeem 100% of the public shares if we
do not complete the initial business combination within the Combination Period;
or (ii) with respect to any other material provision relating to stockholders'
rights or pre-initial business combination activity; and (c) the redemption of
the public shares if we are unable to complete the initial business combination
within the Combination Period, subject to applicable law.
Our management has broad discretion with respect to the specific application of
the net proceeds of the initial public offering and the sale of the private
placement shares, although substantially all of the net proceeds are intended to
be applied generally toward consummating an initial business combination.
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We will have until August 8, 2023, the end of the Combination Period, unless the
Company's board of directors determines not to extend it that long, to complete
an initial business combination. If we have not completed an initial business
combination by such date, 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 100% of the outstanding public shares, at a
per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account, including any interest not previously released to us but
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 liquidation 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 the case of (ii)
and (iii) above) to our obligations under Delaware law to provide for claims of
creditors and the requirements of other applicable law.
EUR Business Combination
On October 24, 2022, the Company, entered into the EU Merger Agreement. Subject
to its terms and conditions, the EU Merger Agreement provides that the Company
and ELAT will become wholly-owned subsidiaries of PubCo, a newly formed holding
company. Pursuant to the EU Merger Agreement, at the closing of the EUR Business
Combination, (a) PubCo will acquire all of the issued and outstanding capital
shares and equity interests of the ELAT from EUR in exchange for ordinary shares
of PubCo, and any shares EUR holds in Pubco shall be surrendered for no
consideration, so that ELAT becomes a wholly-owned subsidiary of PubCo and EUR
becomes a shareholder of PubCo; and immediately thereafter (b) Merger Sub will
merge with and into the Company, with the Company continuing as the surviving
entity and wholly-owned subsidiary of PubCo.
For a full description of the EUR Merger Agreement and the proposed EUR Business
Combination, please see "Item 1. Business."
Extension Amendment and Redemptions
On February 1, 2023, we held a special meeting of stockholders and approved the
Extension Amendment, which extended the date by which we must consummate a
business combination from February 8, 2023 to August 8, 2023 (or such earlier
date as determined by the board). In connection with the Extension Amendment,
stockholders holding 11,076,703 shares of common stock exercised their right to
redeem such shares for a pro rata portion of the trust account. We paid cash in
the aggregate amount of $114.3 million, or approximately $10.32 per share to
redeeming stockholders in the Extension Redemptions. For each one-month
extension our sponsor will deposit into the trust account a Contribution of
$200,000 in the aggregate for shares of common stock not redeemed in connection
with the Extension Amendment. The first Contribution was made on February 6,
2023 and subsequent Contributions are payable monthly through the Company's
extension date of August 8, 2023 (if we fully extend the term we have to
complete our initial business combination). Our board has the sole discretion
whether to continue extending for additional calendar months until August 8,
2023, the end of the Combination Period. Immediately after the Extension
Redemptions, the amount in the trust account was approximately $45.6 million.
Liquidity, Capital Resources and Going Concern
As of December 31, 2022, we had $823,945 of cash in our operating bank account
and a working capital deficit of $436,721 (excluding franchise and income taxes
payable). As of December 31, 2021, we had $1,046,646 in cash and a working
capital of $1,079,831 (excluding franchise tax payable).
Our liquidity needs up to December 31, 2022 have been satisfied through a
payment from the sponsor of $25,000 for the founder shares and the loan under an
unsecured promissory note from the sponsor of $150,000, which was fully drawn
down as of December 31, 2022. In addition, in order to finance transaction costs
in connection with an initial business combination, the Company's sponsor or an
affiliate of the sponsor or certain of the Company's officers and directors may,
but are not obligated to, provide the Company working capital loans. As of
December 31, 2022 and December 31, 2021, there were no amounts outstanding under
any working capital loans.
Based on the foregoing, management believes that we may not have sufficient
working capital and borrowing capacity to meet our needs through the earlier of
the consummation of an initial business combination or one year from filing the
financial statements. Over this time period, we will be using these funds 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 initial
business combination.
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In addition, the Company has until August 8, 2023, the end of the Combination
Period, to consummate an initial business combination. It is uncertain that we
will be able to consummate an initial business combination within the
Combination Period. If an initial business combination is not consummated within
the Combination Period, there will be a mandatory liquidation and subsequent
dissolution. As a result of the above, in connection with our assessment of
going concern considerations in accordance with 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
condition as well as possibility of liquidation raise substantial doubt about
the Company's ability to continue as a going concern through the earlier of the
liquidation deadline of August 8, 2023 and approximately one year from the date
of filing. These 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 the Company be unable to continue as a going
concern.
Results of Operations
As of December 31, 2022, we had not commenced any operations. All activity for
the period from October 12, 2020 (inception) through December 31, 2022 relates
to our formation and the initial public offering, and since the initial public
offering identifying and evaluating prospective acquisition targets for a
business combination, such as the EUR Business Combination. We have neither
engaged in any operations nor generated any revenues to date. We will not
generate any operating revenues until after the completion of our initial
business combination, at the earliest. We will generate non-operating income in
the form of interest income on funds in the Trust Account. 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 for due diligence
expenses.
For the year ended December 31, 2022, we had net loss of $253,833, which
consisted of formation and operating costs of $2,222,551 and provision for
income taxes of $445,313, offset by interest income on trust account of
$2,414,031.
For the year ended December 31, 2021, we had net loss of $345,491, which
consisted of formation and operating costs of $353,848, offset by interest
income on trust account of $8,357.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities.
Administrative Services Agreement
Commencing on the date that our securities were first listed on the Nasdaq
Global Market, we agreed to pay the sponsor $10,000 per month for office space,
utilities and secretarial and administrative support services. Upon the earlier
of the completion of the initial business combination or our liquidation, we
will cease paying such monthly fees.
Registration Rights
The holders of the founder shares, private placement shares, EarlyBirdCapital's
shares, and warrants that may be issued upon conversion of working capital loans
(and any shares of common stock issuable upon the exercise of the warrants that
may be issued upon conversion of working capital loans) will be entitled to
registration rights pursuant to a registration rights agreement dated November
8, 2021, requiring us to register such securities for resale. The holders of
these securities will be entitled to make up to three demands, excluding short
form demands, that we register such securities. In addition, the holders have
certain "piggy-back" registration rights with respect to registration statements
filed subsequent to the completion of the initial business combination.
Notwithstanding the foregoing, the underwriters may not exercise their demand
and "piggyback" registration rights after five and seven years after the
effective date of the IPO Registration Statement and may not exercise their
demand rights on more than one occasion.
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Underwriting Agreement
The underwriter had a 45-day option from the date of the initial public offering
to purchase up to an aggregate of 2,025,000 additional units at the public
offering price less the underwriting commissions to cover over-allotments, if
any. On November 8, 2021, the underwriters partially exercised this option and
purchased an additional 2,000,000 units and forfeited the remaining 25,000 units
available.
The underwriters received a cash underwriting discount of 2.0% of the gross
proceeds of the initial public offering, or $2,700,000 (which is capped at
$2,700,000 with the remaining $400,000 deferred to the close of the initial
business combination with the rest of the deferred underwriting discount due to
the underwriters' partial over-allotment exercise). The underwriters will be
entitled to a cash underwriting discount of 5.0% of the gross proceeds of the
initial public offering, or $8,150,000 (inclusive of the $400,000 deferral noted
above) upon consummation of the initial business combination.
Critical Accounting Policies
Offering Costs
We comply with the requirements of ASC Topic 340-10-S99-1,"Expenses of Offering"
and SEC Staff Accounting Bulletin Topic 5A - "Expenses of Offering." Offering
costs consist of underwriter, accounting, filing and legal expenses incurred
through the balance sheet date that are directly related to the initial public
offering and were charged to temporary equity and stockholders' equity (deficit)
based on the underlying instruments' relative fair value upon the completion of
the initial public offering. If the initial public offering had proved to be
unsuccessful, these deferred costs, as well as additional expenses to be
incurred, would have been charged to operations.
Fair Value Measurement
Fair value is defined as the price that would be received for sale of an asset
or paid for transfer of a liability, in an orderly transaction between market
participants at the measurement date. GAAP establishes a three-tier fair value
hierarchy, which prioritizes the inputs used in measuring fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). Our financial
instruments are classified as either Level 1, Level 2 or Level 3. These tiers
include:
? Level 1, defined as observable inputs such as quoted prices (unadjusted) for
identical instruments in active markets;
? Level 2, defined as inputs other than quoted prices in active markets that are
either directly or indirectly observable such as quoted prices for similar
instruments in active markets or quoted prices for identical or similar
instruments in markets that are not active; and
? Level 3, defined as unobservable inputs in which little or no market data
exists, therefore requiring an entity to develop its own assumptions, such as
valuations derived from valuation techniques in which one or more significant
inputs or significant value drivers are unobservable.
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Common Stock Subject to Possible Redemption
We account for our shares of common stock subject to possible redemption in
accordance with guidance in ASC Topic 480 "Distinguishing Liabilities from
Equity." Shares of common stock subject to mandatory redemption (if any) are
classified as a liability instrument and are measured at fair value.
Conditionally redeemable shares of common stock (including shares 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 our
control) are classified as temporary equity. At all other times, shares of
common stock are classified as stockholders' equity (deficit). Our shares of
common stock sold in the initial public offering feature certain redemption
rights that are considered to be outside of our control and subject to the
occurrence of uncertain future events.
We recognize changes in redemption value immediately as they occur and adjusts
the carrying value of shares of redeemable common stock to equal the redemption
value at the end of each reporting period. Such changes are reflected in
additional paid-in capital, or in the absence of additional capital, in
accumulated deficit.
Net Loss Per Common Stock
We apply the two-class method in calculating earnings per share, with one class
being the redeemable shares and one class being the non-redeemable shares. The
contractual formula utilized to calculate the redemption amount approximates
fair value. Changes in fair value are not considered a dividend for the purposes
of the numerator in the earnings per share calculation. Net loss per common
stock is computed by dividing the pro rata net loss between the redeemable
common stock and the non-redeemable common stock by the weighted average number
of shares of common stock outstanding for each of the periods. The calculation
of diluted loss per share of common stock does not consider the effect of the
warrants issued in connection with the initial public offering since the
exercise of the warrants is contingent upon the occurrence of future events and
the inclusion of such warrants would be anti-dilutive.
Off-Balance Sheet Arrangements
As of December 31, 2022 and 2021, we did not have any off-balance sheet
arrangements.
Inflation
We do not believe that inflation had a material impact on our business, revenues
or operating results during the period presented.
Emerging Growth Company Status
We are an "emerging growth company," as defined in Section 2(a) of the
Securities Act, as modified by the JOBS Act, and may take advantage of certain
exemptions from various reporting requirements that are applicable to other
public companies that are not emerging growth companies including, but not
limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in its periodic reports and proxy
statements, and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and stockholder approval of any golden
parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies
from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act
registration statement declared effective or do not have a class of securities
registered under the Exchange Act) are required to comply with the new or
revised financial accounting standards. The JOBS Act provides that a company can
elect to opt out of the extended transition period and comply with the
requirements that apply to non-emerging growth companies but any such election
to opt out is irrevocable. We have elected not to opt out of such extended
transition period which means that when a standard is issued or revised and it
has different application dates for public or private companies, the Company, as
an emerging growth company, can adopt the new or revised standard at the time
private companies adopt the new or revised standard. This may make comparison of
our financial statements with another public company which is neither an
emerging growth company nor an emerging growth company which has opted out of
using the extended transition period difficult or impossible because of the
potential differences in accounting standards used.
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Recent Accounting Pronouncements
Our management does not believe that there are any recently issued, but not
effective, accounting standards, which, if currently adopted, would have a
material effect on our financial statements.
Factors That May Adversely Affect Our Results of Operations
Our results of operations and our ability to complete an initial business
combination may be adversely affected by various factors that could cause
economic uncertainty and volatility in the financial markets, many of which are
beyond our control. Our business could be impacted by, among other things,
downturns in the financial markets or in economic conditions, increases in oil
prices, inflation, increases in interest rates, supply chain disruptions,
declines in consumer confidence and spending, the ongoing effects of the
COVID-19 pandemic, including resurgences and the emergence of new variants, and
geopolitical instability, such as the military conflict in Ukraine. We cannot at
this time fully predict the likelihood of one or more of the above events, their
duration or magnitude or the extent to which they may negatively impact our
business and our ability to complete an initial business combination.
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