The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our audited financial statements
and the notes related thereto included in "Item 8. Financial Statements and
Supplementary Data" of this Annual Report. Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that
involve risks and uncertainties.
All statements other than statements of historical fact included in this Annual
Report including, without limitation, statements under "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. When used in
this Annual Report, words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to us or the Company's
management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of management, as well as assumptions made by, and
information currently available to, the Company's management. Actual results
could differ materially from those contemplated by the forward-looking
statements as a result of many factors, including those set forth under
"Cautionary Note Regarding Forward-Looking Statements," "Item 1A. Risk Factors"
and elsewhere in this Annual Report.
Overview
We are a blank check company formed under the laws of the State of Delaware on
October 6, 2020 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business
combination with one or more target businesses. We intend to effectuate our
business combination using cash from the proceeds of our initial public offering
and the sale of the placement units that occurred simultaneously with the
completion of our initial public offering, 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 complete a Business
Combination will be successful.
Results of Operations
We have neither engaged in any operations (other than searching for a Business
Combination after the Initial Public Offering) nor generated any revenues to
date. Our only activities from inception through December 31, 2021 were
organizational activities, those necessary to prepare for the Initial Public
Offering, described below, and, after the Initial Public Offering, identifying a
target company for an initial Business Combination. We do not expect to generate
any operating revenues until after the completion of our Business Combination,
at the earliest. We expect to generate non-operating income in the form of
interest income on marketable securities held in the Trust Account after the
Initial Public Offering. 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.
For the year ended December 31, 2021, we had net income of $4,105,266, which
consists of interest earned on marketable securities held in the Trust Account
of $25,413 and a change in fair value warrant liabilities of $5,806,585, offset
by general and administrative expenses of $1,726,732.
For the period from October 6, 2020 (inception) through December 31, 2020, we
had a net loss of $2,016,618, which consists of general and administrative
expenses of $72,640, a change in fair value of warrant liabilities of
$1,367,834, and transaction costs allocable to warrants of $576,350, offset by
interest earned on marketable securities held in the Trust Account of $206.
Liquidity and Capital Resources
On December 22, 2020, we consummated the Initial Public Offering of 25,000,000
Units, which included the partial exercise by the underwriters of their
over-allotment option in the amount of 3,200,000 Units, at a price of $10.00 per
Unit, generating gross proceeds of $250,000,000. Simultaneously with the closing
of the Initial Public Offering, we consummated the sale of 575,000 Placement
Units at a price of $10.00 per Placement Unit in a private placement to our
Sponsor, generating gross proceeds of $5,750,000.
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Following the Initial Public Offering, the partial exercise of the
over-allotment option, and the sale of the Placement Units, a total of
$250,000,000 was placed in the Trust Account. We incurred $15,448,021 in
transaction costs, including $4,360,000 of underwriting fees, $10,640,000 of
deferred underwriting fees and $448,021 of other offering costs.
For the year ended December 31, 2021, cash used in operating activities was
$837,671. Net income of $4,105,266 was affected by a change in fair value of
warrant liabilities of $5,806,585 and interest earned on marketable securities
held in the Trust Account of $25,413. Changes in operating assets and
liabilities provided $889,061 of cash from operating activities.
For the period from October 6, 2020 (inception) through December 31, 2020, cash
used in operating activities was $422,621. Net loss of $2,016,618 was affected
by interest earned on marketable securities held in the Trust Account of $206,
change in fair value of warrant liabilities of $1,367,834, transaction costs
allocable to warrants of $576,350 and changes in operating assets and
liabilities, which used $349,981 of cash from operating activities.
As of December 31, 2021, we had cash, investments and marketable securities held
in the Trust Account of $250,008,357. We intend to use substantially all of the
funds held in the Trust Account, including any amounts representing interest
earned on the Trust Account to complete our Business Combination. We may
withdraw interest to pay taxes. During the year ended December 31, 2021, we
withdrew $17,262 of interest income from the Trust Account to pay franchise
taxes. 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 December 31, 2021, we had $223,949 of cash held outside of the Trust
Account. We intend to use the funds held outside the Trust Account primarily to
identify and evaluate target businesses, perform business due diligence on
prospective target businesses, travel to and from the offices, plants or similar
locations of prospective target businesses or their representatives or owners,
review corporate documents and material agreements of prospective target
businesses, and structure, negotiate and complete a Business Combination.
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 one of its affiliates has committed to loan us funds as may be
required up to a maximum of $810,000 and may, but are not obligated to, loan us
additional 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 $1,500,000 of such loans may be convertible into units, at a
price of $10.00 per unit, at the option of the lender. The units would be
identical to the Placement Units. As of December 31, 2021, $500,000 in such
loans were outstanding.
If our estimate of the costs of identifying a target business, undertaking
in-depth due diligence and negotiating a Business Combination are less than the
actual amount necessary to do so, we may have insufficient funds available to
operate our business prior to our Business Combination. Moreover, we may need to
obtain additional financing either to complete our Business Combination or
because we become obligated to redeem a significant number of our public shares
upon consummation of our Business Combination, in which case we may issue
additional securities or incur debt in connection with such Business
Combination. Subject to compliance with applicable securities laws, we would
only complete such financing simultaneously with the completion of our Business
Combination. If we are unable to complete our Business Combination because we do
not have sufficient funds available to us, we will be forced to cease operations
and liquidate the Trust Account. In addition, following our Business
Combination, if cash on hand is insufficient, we may need to obtain additional
financing in order to meet our obligations.
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Off-balance sheet financing arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2021. 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 $20,000 for office space,
administrative and shared personnel support services to the Company. We began
incurring these fees on December 18, 2020 and will continue to incur these fees
monthly until the earlier of the completion of the business combination and our
liquidation.
In addition, we have an agreement to pay the underwriters a deferred fee of
$10,640,000. The deferred fee will become payable to the representatives of 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 Policies and Estimates
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 income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies and
estimates:
Warrant Liabilities
We account for the Warrants in accordance with the guidance contained in
Accounting Standards Codification ("ASC") 815-40 under which the Warrants do not
meet the criteria for equity treatment and must be recorded as liabilities.
Accordingly, we classify the Warrants as liabilities at their fair value and
adjust the Warrants to fair value at each reporting period. This liability is
subject to re-measurement at each balance sheet date until exercised, and any
change in fair value is recognized in the statements of operations. The Warrants
for periods where no observable trading price was available are valued using a
Modified Black-Scholes Option Pricing Model for the Placement Warrants and a
binomial / lattice model for the Public Warrants. For periods subsequent to the
detachment of the Public Warrants from the Units, the Public Warrant quoted
market price was used as the fair value as of each relevant date.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from
Equity." Class A common stock subject to mandatory redemption is classified as a
liability instrument and is measured at fair value. Conditionally redeemable
common stock (including common stock 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) is classified as
temporary equity. At all other times, common stock is classified as
stockholders' equity. Our Class A common stock features certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, Class A common stock subject
to possible redemption is presented as temporary equity, outside of the
stockholders' deficit section of our balance sheets.
Net Income (Loss) per Common Share
We have two classes of shares, which are referred to as Class A common stock and
Class B common stock. Income and losses are shared pro rata between the two
classes of shares. Net income (loss) per common share is calculated by dividing
net income (loss) by the weighted average number of shares of common stock
outstanding for the respective period.
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Recent Accounting Standards
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. ASU 2020-06 removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope
exception and it also simplifies the diluted earnings per share calculation in
certain areas. ASU 2020-06 is effective for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal years, with
early adoption permitted. We adopted ASU 2020-06 effective as of January 1,
2021. The adoption of ASU 2020-06 did not have an impact on our financial
statements.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.
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