References to the "Company," "Trepont Acquisition Corp I," "Trepont," "our,"
"us" or "we" refer to Trepont Acquisition Corp I. The following discussion and
analysis of the Company's financial condition and results of operations should
be read in conjunction with the unaudited 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 SEC filings.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company
on September 25, 2020. The Company was incorporated 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, the Company is subject to all of the risks
associated with emerging growth companies.
The registration statement for our IPO was declared effective on December 1,
2020. On December 4, 2020, we consummated our IPO of 23,000,000 Units, at $10.00
per Unit, generating gross proceeds of $230.0 million.
Simultaneously with the closing of the IPO, we consummated the private placement
of 8,900,000 warrants, at a price of $1.00 per private placement warrant,
generating total gross proceeds of $8.9 million.
Upon the closing of the IPO and the private placement, $232.3 million ($10.10
per Unit) of the net proceeds of the IPO and certain of the proceeds of the
private placement were placed in a trust account, located in the United States
with Continental Stock Transfer & Trust Company acting as trustee, and invested
only in U.S. government treasury obligations with a maturity of 185 days or less
or in money market funds meeting certain conditions under Rule
2a-7
under the Investment Company Act of 1940, as amended, or 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 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 the IPO and the sale of private placement warrants, although
substantially all of the net proceeds are intended to be applied generally
toward consummating a business combination.
If we are unable to complete a business combination within the allotted
18-month
period, the Company 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
(less taxes payable and up to $100,000 of interest income to pay dissolution
expenses), divided by the number of then outstanding public shares, which
redemption will completely extinguish public shareholders' rights as
shareholders (including the right to receive further liquidation distributions,
if any) and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the remaining shareholders and the board of
directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii)
to the Company's obligations under Cayman Islands law to provide for claims of
creditors and in all cases subject to the other requirements of applicable law.
There will be no redemption rights or liquidating distributions with respect to
the warrants, which will expire worthless if the Company fails to complete its
initial business combination within the allotted
18-month
period.

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Liquidity and Capital Resources
As of September 30, 2021, the Company had approximately $1.3 million in cash and
working capital deficit of approximately $638,000.
The Company's liquidity needs to date have been satisfied through a contribution
of $25,000 from the Sponsor to cover certain of the Company's expenses in
exchange for the issuance of the Founder Shares, the loan of approximately
$89,000 from the Sponsor under the Note (see Note 4), and the proceeds from the
consummation of the Private Placement not held in the Trust Account. The Company
repaid approximately $64,000 of the Note balance on December 10, 2020, and the
remaining approximately $25,000 of the Note balance was outstanding as of
September 30, 2021. In addition, in order to finance transaction costs in
connection with a Business Combination, the 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 (see Note 4). As of
September 30, 2021 and December 31, 2020, there were no amounts outstanding
under Working Capital Loans.
In connection with our assessment of going concern considerations in accordance
with FASB ASC
205-40,
"Basis of Presentation - Going Concern," management has determined that the
working capital deficit and mandatory liquidation and subsequent dissolution
raise 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 the Company be required to liquidate after June 4, 2022. The unaudited
condensed financial statements do not include any adjustment that might be
necessary if we are unable to continue as a going concern.
Results of Operations
Our entire activity from inception through September 30, 2021 related to our
formation, the preparation for the IPO, and since the closing of the IPO, the
search for a prospective initial business combination. We have neither engaged
in any operations nor generated any revenues to date. We will not generate any
operating revenues until after completion of our initial business combination.
We will generate
non-operating
income in the form of interest income on cash and cash equivalents. 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 three months ended September 30, 2021, we had net income of
approximately $4.8 million which consisted of an approximately $5.2 million gain
in change in fair value of derivative warrant liabilities and approximately
$4,000 of income from our investments held in the Trust Account, partially
offset by $347,000 in general and administrative expenses of which, $30,000 was
for general and administrative expenses - related party.
For the nine months ended September 30, 2021, we had net income of approximately
$12.6 million which consisted of an approximately $15.3 million gain in change
in fair value of derivative warrant liabilities and approximately $11,000 of
income from our investments held in the Trust Account, partially offset by
$2.7 million in general and administrative expenses of which, $90,000 was for
general and administrative expenses - related party.
For the period from September 25, 2020 (inception) through September 30, 2020,
we had net loss of approximately $10,000 which consisted of approximately
$10,000 in general and administrative expenses.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities.

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Critical Accounting Policies
This management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of our financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses and the disclosure of contingent assets and liabilities in
our financial statements. On an ongoing basis, we evaluate our estimates and
judgments, including those related to fair value of financial instruments and
accrued expenses. We base our estimates on historical experience, known trends
and events and various other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. The Company has identified the following as its
critical accounting policies:
Derivative Warrant Liabilities
We do not use derivative instruments to hedge its exposures to cash flow, market
or foreign currency risks. Management evaluates all of our financial
instruments, including issued warrants to purchase our Class A ordinary shares,
to determine if such instruments are derivatives or contain features that
qualify as embedded derivatives, pursuant to FASB's Accounting Standards
Codification ("ASC") Topic 480, "Distinguishing Liabilities from Equity" ("ASC
480") and FASB ASC Topic 815, "Derivatives and Hedging" ("ASC 815"). The
classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is
re-assessed
at the end of each reporting period.
The warrants issued in connection with the Initial Public Offering (the "Public
Warrants") and the Private Placement Warrants are recognized as derivative
liabilities in accordance with ASC 815. Accordingly, we recognize the warrant
instruments as liabilities at fair value and adjust the instruments to fair
value at each reporting period. The liabilities are subject to
re-measurement
at each balance sheet date until exercised, and any change in fair value is
recognized in our statement of operations. The estimated fair value of the
Public Warrants was measured using a Monte Carlo simulation model. The estimated
fair value of the Private Placement Warrants has been estimated using a Black
Scholes option pricing model at each measurement date. The fair value of the
Public Warrants as of September 30, 2021 is based on observable listed prices
for such warrants. The determination of the fair value of the warrant liability
may be subject to change as more current information becomes available and
accordingly the actual results could differ significantly. Derivative warrant
liabilities are classified as
non-current
liabilities as their liquidation is not reasonably expected to require the use
of current assets or require the creation of current liabilities.
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in
accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from
Equity." Class A ordinary shares subject to mandatory redemption (if any) is
classified as liability instruments and are measured at fair value.
Conditionally redeemable Class A ordinary shares (including Class A ordinary
shares 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) are classified as temporary equity. At all other
times, Class A ordinary shares is classified as shareholders' equity. Our
Class A ordinary shares feature certain redemption rights that are considered to
be outside of our control and subject to the occurrence of uncertain future
events. Accordingly, as of the Initial Public Offering, 23,000,000 Class A
ordinary shares subject to possible redemption are presented at redemption value
as temporary equity, outside of the shareholders' equity section of our
unaudited condensed balance sheets.
Effective with the closing of the Initial Public Offering, we recognized the
accretion from initial book value to redemption amount, which resulted in
charges against additional
paid-in
capital (to the extent available) and accumulated deficit.
Net Income (Loss) Per Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share." We have two classes of shares, which are referred to as
Class A ordinary shares and Class B ordinary shares. Income and losses are
shared pro rata between the two classes of shares. Net income (loss) per
ordinary share is calculated by dividing the net income (loss) by the weighted
average number of ordinary shares outstanding for the respective period.

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The calculation of diluted net income (loss) per ordinary share does not
consider the effect of the warrants underlying the Units sold in the Initial
Public Offering and the Private Placement Warrants to purchase 20,400,000
Class A ordinary shares because their exercise is contingent upon future events
and their inclusion would be anti-dilutive under the treasury stock method. As a
result, diluted net income (loss) per share is the same as basic net income
(loss) per share for the three and nine months ended September 30, 2021, and for
the period from September 25, 2020 (inception) through September 30, 2020.
Accretion associated with the redeemable Class A ordinary shares is excluded
from earnings per share as the redemption value approximates fair value.
Recent Accounting Pronouncements
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 January 1, 2021 using the modified retrospective method for transition.
Adoption of the ASU did not impact our financial position, results of operations
or cash flows.
Our management does not believe that any other recently issued, but not yet
effective, accounting standards if currently adopted would have a material
effect on the accompanying unaudited condensed financial statements.
Off-Balance
Sheet Arrangements
As of September 30, 2021, we did not have any
off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K.
Inflation
We do not believe that inflation had a material impact on our business, revenues
or operating results during the period presented.
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.
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 of the
Sarbanes-Oxley Act, (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
Public Company Accounting Oversight Board (United States), or 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 Chief Executive Officer'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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