All statements other than statements of historical fact included in this Report
including, without limitation, statements under "Item 7. 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 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 certain factors detailed in our filings with the SEC.
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. Certain information contained
in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
Overview
We are a blank check company incorporated as a Delaware Corporation on March 12,
2021 (inception) formed for the purpose of effecting a merger, amalgamation,
share exchange, asset acquisition, share purchase, reorganization or other
similar business combination with one or more businesses (the "Business
Combination"). We intend to effectuate our Business Combination using cash
derived from the proceeds of the Initial Public Offering and the sale of the
Private Placement Warrants (as defined below), our shares, debt or a combination
of cash, shares 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 nor generated any operating revenues
to date. Our only activities from inception through December 31, 2022 were
organizational activities and those necessary to prepare for the Initial Public
Offering and an Initial Business Combination, described below. We do not expect
to generate any operating revenues until after the completion of our initial
Business Combination. We expect to generate non-operating income in the form of
interest income on marketable securities held after the Initial Public Offering.
We expect that we will 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 in connection with searching for, and
completing, a Business Combination.
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For the year ended December 31, 2022 and the period from March 12, 2021
(inception) through December 31, 2021, we had a net loss from operations of
$2,036,415 and $434,274, respectively, which consisted of operating and business
combination costs.
Liquidity and Capital Resources
For the year ended December 31, 2022 and the period from March 12, 2021
(inception) through December 31, 2021, net cash used in operating activities was
$1,241,114 and $910,267, respectively. Net income of $9,584,028 was impacted by
$8,996,400 of change in the fair value of the warrant liabilities related to the
outstanding public and private warrants, $1,986,491 of income on investments
held in the Trust Account, and $1,239,168 of unrealized gains on investments
held in the Trust Account for the year ended December 31, 2022. For the period
from March 12, 2021 (inception) through December 31, 2021, net loss of
$1,523,440 was impacted by $1,061,386 of offering costs allocated to operating
expenses in connection with the Public and Private placement warrants that were
classified as liabilities.
At December 31, 2022, we had cash and investments held in the Trust Account of
$237,537,270. As of December 31, 2021, we had cash held in the Trust Account of
$232,302,620. We may withdraw interest from the Trust Account to pay taxes,
which amounted to $291,009 during the year ended December 31, 2022. To the
extent that our share capital or debt is used, in whole or in part, as
consideration to complete a 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. On November 16, 2022, our Sponsor deposited $2,300,000 in to the
Trust Account, as a capital contribution, to extend the deadline for an initial
business combination to February 16, 2023. On February 8, 2023, following a
Special Meeting of Stockholder, 9,155,918 shares were redeemed requiring a
payment of $94,489,074 from the funds held in Trust. On February 16, 2023, our
Sponsor deposited $692,204 into the Trust Account, as a capital contribution, to
extend the deadline to complete an Initial Business Combination to March 15,
2023. On March 13, 2023, our Sponsor deposited $692,204 into the Trust Account,
as a capital contribution, to extend the deadline to complete an Initial
Business Combination to April 15, 2023. As of March 16, 2023, there was
$146,286,095 available in the trust account. We intend to use substantially all
of the funds held in the Trust Account, including any amounts representing
interest earned on the Trust Account, which interest shall be net of taxes
payable and excluding deferred underwriting commissions, to complete our
Business Combination.
At December 31, 2022 and 2021, we had cash of $54,173 and $1,004,278,
respectively, 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, 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 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 $1,500,000 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.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, 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 initial 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 completion of
our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination.
In February 2023, we signed a promissory note with a related party where we are
entitled to borrow up to $600,000 convertible into warrants, identical to the
warrants issued during the Initial Public Offering to the Payee as private
placement warrants, at the option of the lender.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2022 and 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.
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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, secretarial,
and administrative services provided to the Company. We will continue to incur
these fees monthly until the earlier of the completion of a Business Combination
and the Company's liquidation. During 2022, our Sponsor waived 2 months, or
$20,000, of fees for office space, secretarial, and administrative services.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or
approximately $8.1 million. The deferred fee will become payable to 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 not identified any critical accounting policies.
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 Accounting Standards Codification ("ASC") Topic
480, Distinguished Liabilities from Equity. Common stock subject to 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 the
Company's control) are classified as temporary equity.
At all other times, shares of common stock are classified as stockholders'
equity. The Company's shares of common stock feature certain redemption rights
that are considered to be outside of the Company's control and subject to the
occurrence of uncertain future events. As of December 31, 2022 and 2021,
23,000,000 shares of Class A common stock subject to possible redemption are
presented at redemption value as temporary equity, outside of stockholders'
equity section of the Company's balance sheet.
Public and Private Warrants
We account for Public and Private Placement Warrants in accordance with
Accounting Standards Codification ("ASC") Topic 480, Distinguished Liabilities
from Equity. The warrants have a provision to be net-share settled ("cashless
exercise") and therefore do not meet the requirements to be treated as equity,
as the number of shares to be issued when the warrants are exercised is variable
and the monetary value of the obligation varies inversely with changes in the
fair value of the shares. This liability is subject to re-measurement at each
balance sheet date. The warrants will be adjusted to fair value with the changes
in fair value recognized in the statement of operations. Due to the fair value
treatment, this is deemed a critical accounting estimate in our Financial
Statements as the redemption value approximates fair value.
Net Income (Loss) per Common Stock
We comply with accounting and disclosure requirements of ASC Topic 260,
"Earnings Per Share." Net loss per share is computed by dividing net loss by the
weighted average number of common stock outstanding during the period, excluding
Class A common stock subject to forfeiture.
Recent Accounting Standards
The Company's management does not believe that any recently issued, but not yet
effective, accounting pronouncements, if currently adopted, would have a
material effect on the accompanying financial statements.
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