Item 1. Financial Statements
TWELVE SEAS INVESTMENT COMPANY II
CONDENSED BALANCE SHEETS
| |
September 30, 2022 (Unaudited) | | |
December 31, 2021 | |
Assets: | |
| | |
| |
Current Assets: | |
| | |
| |
Cash | |
$ | 123,009 | | |
$ | 751,090 | |
Prepaid expenses | |
| 47,500 | | |
| 36,590 | |
Total current assets | |
| 170,509 | | |
| 787,680 | |
| |
| | | |
| | |
Marketable Securities held in trust account | |
| 347,096,193 | | |
| 345,017,951 | |
Total Assets | |
$ | 347,266,702 | | |
$ | 345,805,631 | |
| |
| | | |
| | |
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 438,167 | | |
$ | 326,527 | |
Income taxes payable | |
| 366,324 | | |
| — | |
Due to Related Party | |
| 59,820 | | |
| — | |
Promissory note – related party | |
| 36,921 | | |
| 37,500 | |
Total current liabilities | |
| 901,232 | | |
| 364,027 | |
| |
| | | |
| | |
Warrant liabilities | |
| 668,398 | | |
| 5,903,562 | |
Total Liabilities | |
| 1,569,630 | | |
| 6,267,589 | |
| |
| | | |
| | |
Commitments and Contingencies (See Note 8) | |
| | | |
| | |
| |
| | | |
| | |
Common Stock subject to possible redemption, 34,500,000 shares at redemption value of $10.04 and $10.00 per share as of September 30, 2022, and December 31, 2021, respectively | |
| 346,379,869 | | |
| 345,000,000 | |
| |
| | | |
| | |
Stockholders’ Deficit: | |
| | | |
| | |
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding | |
| — | | |
| — | |
Class A common stock, $0.0001 par value; 100,000,000 shares authorized; 1,165,000 non-redeemable shares issued and outstanding (excluding 34,500,000 shares subject to possible redemption) as of September 30, 2022 and December 31, 2021 | |
| 116 | | |
| 116 | |
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 8,625,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021 | |
| 863 | | |
| 863 | |
Additional paid-in capital | |
| — | | |
| — | |
Accumulated deficit | |
| (683,776 | ) | |
| (5,462,937 | ) |
Total Stockholders’ Deficit | |
| (682,797 | ) | |
| (5,461,958 | ) |
Total Liabilities, Class A Common Stock Subject to Redemption and Stockholders’ Deficit | |
$ | 347,266,702 | | |
$ | 345,805,631 | |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
TWELVE SEAS INVESTMENT COMPANY II
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
|
|
For the Three Months Ended September 30 |
|
|
For the Nine Months Ended September 30 |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Formation and operating costs |
|
$ |
165,568 |
|
|
$ |
271,386 |
|
|
$ |
788,052 |
|
|
$ |
523,784 |
|
Loss from Operations |
|
|
(165,568 |
) |
|
|
(271,386 |
) |
|
|
(788,052 |
) |
|
|
(523,784 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest earned on cash and marketable securities held in trust account |
|
|
1,560,064 |
|
|
|
5,301 |
|
|
|
2,078,242 |
|
|
|
11,409 |
|
Offering costs allocated to warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(260,113 |
) |
Change in fair value of warrant liabilities |
|
|
276,124 |
|
|
|
2,761,355 |
|
|
|
5,235,164 |
|
|
|
1,259,444 |
|
Total other income, net |
|
|
1,836,188 |
|
|
|
2,766,656 |
|
|
|
7,313,406 |
|
|
|
1,010,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for income taxes |
|
|
1,670,620 |
|
|
|
2,495,270 |
|
|
|
6,525,354 |
|
|
|
486,956 |
|
Provision for income taxes |
|
|
(292,994 |
) |
|
|
— |
|
|
|
(366,324 |
) |
|
|
— |
|
Net income |
|
$ |
1,377,626 |
|
|
$ |
2,495,270 |
|
|
$ |
6,159,030 |
|
|
$ |
486,956 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A common stock subject to possible redemption |
|
|
35,665,000 |
|
|
|
35,665,000 |
|
|
|
35,665,000 |
|
|
|
27,692,033 |
|
Basic and diluted net income per share, Class A common stock subject to possible redemption |
|
$ |
0.03 |
|
|
$ |
0.06 |
|
|
$ |
0.14 |
|
|
$ |
0.01 |
|
Weighted average shares outstanding of Class B common stock |
|
|
8,625,000 |
|
|
|
8,625,000 |
|
|
|
8,625,000 |
|
|
|
8,344,780 |
|
Basic and diluted net income per share, Class B common stock |
|
$ |
0.03 |
|
|
$ |
0.06 |
|
|
$ |
0.14 |
|
|
$ |
0.01 |
|
The accompanying notes are an integral part of
these unaudited condensed financial statements.
TWELVE SEAS INVESTMENT COMPANY II
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER
30, 2022
| |
Common Stock | | |
Additional | | |
| | |
Total | |
| |
Class A | | |
Class B | | |
Paid-in | | |
Accumulated | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance as of January 1, 2022 | |
| 1,165,000 | | |
$ | 116 | | |
| 8,625,000 | | |
$ | 863 | | |
$ | — | | |
$ | (5,462,937 | ) | |
$ | (5,461,958 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 2,528,335 | | |
| 2,528,335 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as of March 31, 2022 | |
| 1,165,000 | | |
$ | 116 | | |
| 8,625,000 | | |
$ | 863 | | |
| — | | |
$ | (2,934,602 | ) | |
$ | (2,933,623 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accretion for Class A common stock subject to redemption | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | (536,129 | ) | |
$ | (536,129 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 2,253,069 | | |
| 2,253,069 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as of June 30, 2022 | |
| 1,165,000 | | |
$ | 116 | | |
| 8,625,000 | | |
$ | 863 | | |
| — | | |
$ | (1,217,662 | ) | |
$ | (1,216,683 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accretion for Class A common stock subject to redemption | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | (843,740 | ) | |
$ | (843,740 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 1,377,626 | | |
$ | 1,377,626 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as of September 30, 2022 | |
| 1,165,000 | | |
$ | 116 | | |
| 8,625,000 | | |
$ | 863 | | |
$ | — | | |
$ | (683,776 | ) | |
$ | (682,797 | ) |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
TWELVE SEAS INVESTMENT COMPANY II
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER
30, 2021
| |
Common Stock | | |
Additional | | |
| | |
Total
Stockholders’ | |
| |
Class A | | |
Class B | | |
Paid-in | | |
Accumulated | | |
Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
(Deficit) | |
Balance as of January 1, 2021 | |
| — | | |
$ | — | | |
| 8,625,000 | | |
$ | 863 | | |
$ | 24,137 | | |
$ | (951 | ) | |
$ | 24,049 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Sale of 800,000 private Class A common stock on March 2, 2021 and 90,000 Class A common stock on March 10, 2021, through public offering and over-allotment, net of fair value of warrant liability and offering costs | |
| 890,000 | | |
| 89 | | |
| — | | |
| — | | |
| 8,660,613 | | |
| — | | |
| 8,660,702 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of representative shares | |
| 275,000 | | |
| 27 | | |
| — | | |
| — | | |
| 2,749,973 | | |
| — | | |
| 2,750,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accretion of Class A common stock subject to redemption | |
| — | | |
| — | | |
| — | | |
| — | | |
| (11,434,723 | ) | |
| (7,300,158 | ) | |
| (18,734,881 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (88,591 | ) | |
| (88,591 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as of March 31, 2021 | |
| 1,165,000 | | |
| 116 | | |
| 8,625,000 | | |
| 863 | | |
| — | | |
| (7,389,700 | ) | |
$ | (7,388,721 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (1,919,723 | ) | |
| (1,919,723 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as of June 30, 2021 | |
| 1,165,000 | | |
| 116 | | |
| 8,625,000 | | |
| 863 | | |
| — | | |
| (9,309,423 | ) | |
$ | (9,308,444 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 2,495,270 | | |
| 2,495,270 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as of September 30, 2021 | |
| 1,165,000 | | |
$ | 116 | | |
| 8,625,000 | | |
$ | 863 | | |
$ | — | | |
$ | (6,814,153 | ) | |
$ | (6,813,174 | ) |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
TWELVE SEAS INVESTMENT COMPANY II
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
| |
For The Nine Months Ended September 30,
2022 | | |
For The Nine Months Ended September 30, 2021 | |
Cash flows from operating activities: | |
| | | |
| | |
Net income | |
$ | 6,159,030 | | |
$ | 486,956 | |
Adjustments to reconcile net income to net cash used in operating activities: | |
| | | |
| | |
Interest earned on marketable securities held in trust account | |
| (2,078,242 | ) | |
| (11,409 | ) |
Offering costs allocated to warrants | |
| — | | |
| 260,113 | |
Change in fair value of warrant liabilities | |
| (5,235,164 | ) | |
| (1,259,444 | ) |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| (10,910 | ) | |
| (87,924 | ) |
Income taxes payable | |
| 366,324 | | |
| — | |
Accounts payable and accrued expenses | |
| 111,640 | | |
| 100,656 | |
Due to related party | |
| 59,820 | | |
| — | |
Net cash used in operating activities | |
| (627,502 | ) | |
| (511,052 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities: | |
| | | |
| | |
Investment of cash in trust account | |
| — | | |
| (345,000,000 | ) |
Net cash used in investing activities | |
| — | | |
| (345,000,000 | ) |
| |
| | | |
| | |
Cash Flows from Financing Activities: | |
| | | |
| | |
Proceeds from sale of units, net of underwriters’ discount | |
| — | | |
| 338,100,000 | |
Proceeds from issuance of private placement | |
| — | | |
| 8,900,000 | |
Repayment of promissory note – related party | |
| (579 | ) | |
| (163,561 | ) |
Payment of offering costs | |
| — | | |
| (368,059 | ) |
Net cash (used in) provided by financing activities | |
| (579 | ) | |
| 346,468,380 | |
| |
| | | |
| | |
Net change in cash | |
| (628,081 | ) | |
| 957,328 | |
Cash, beginning of period | |
| 751,090 | | |
| 74,810 | |
Cash, end of the period | |
$ | 123,009 | | |
$ | 1,032,138 | |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
TWELVE SEAS INVESTMENT COMPANY II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 — Organization and Business Operations
The Company is a blank check company incorporated
in Delaware on July 21, 2020. The Company was formed for the purpose of effecting an initial business combination with one or more
businesses. The Company has not selected any specific business combination target and the Company has not, nor has anyone on its behalf,
initiated any substantive discussions, directly or indirectly, with any business combination target with respect to the initial business
combination.
As of September 30, 2022, the Company had not
commenced any operations. All activity for the period from July 21, 2020 (inception) through September 30, 2022 relates to the Company’s
formation and the initial public offering, which is described below. The Company will not generate any operating revenues until after
the completion of an initial business combination, at the earliest. The Company generates non-operating income in the form of interest
income from the proceeds derived from the initial public offering.
The Company’s sponsor is Twelve Seas Sponsor
II LLC, a Delaware limited liability company.
The Registration Statement for the Company’s
initial public offering was declared effective on February 25, 2021 (the “Effective Date”). On March 2, 2021, the Company
consummated the initial public offering of 30,000,000 units, at $10.00 per unit, generating gross proceeds of $300,000,000,
which is discussed in Note 3.
The underwriters had a 45-day option from the
date of the initial public offering to purchase up to an additional 4,500,000 over-allotment units. On March 8, 2021, the underwriters
exercised their over-allotment option in full, and the closing of the issuance and sale of the additional 4,500,000 over-allotment
units occurred on March 10, 2021, generating gross proceeds of $45,000,000.
Simultaneously with the closing of the initial
public offering, the Company completed the private placement of an aggregate of 800,000 placement units to the sponsor and the
representative at a purchase price of $10.00 per placement unit, generating gross proceeds to the Company of $8,000,000. In connection
with the closing of the purchase of the over-allotment units, the Company sold an additional 90,000 placement units to the sponsor
at a price of $10.00 per placement unit, generating an additional $900,000 of gross proceeds.
On March 2, 2021, the Company also issued to the
representative 275,000 representative shares upon the consummation of the initial public offering. The Company accounts for
the representative shares as an expense of the initial public offering resulting in a charge directly to stockholders’ deficit,
at an estimated fair value of $2,750,000.
Transaction costs amounted to $10,178,359 consisting
of $6,900,000 of underwriting commissions, fair value of the representative shares of $2,750,000 and $528,359 of other
cash offering costs.
As of September 30, 2022, $123,009 of cash was
held outside of the trust account and is available for working capital purposes.
Following the closing of the initial public offering
and the over-allotment option, which was fully exercised, on March 2, 2021 and March 10, 2021, respectively, $345,000,000 ($10.00 per
unit) from the net proceeds of the sale of the units in the initial public offering and the sale of the placement units was placed in
a trust account and was invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company
Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund meeting
the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company. 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 placement units will not be
released from the trust account until the earliest of (a) the completion of the Company’s initial business combination, (b) the
redemption of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated
certificate of incorporation (the “Certificate of Incorporation”), and (c) the redemption of the Company’s public shares
if the Company is unable to complete the initial business combination within 24 months from the closing of the initial public offering,
subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of the Company’s creditors,
if any, which could have priority over the claims of the Company’s public stockholders.
The Company will have 24 months from the closing
of the initial public offering, or until March 2, 2023, to consummate an initial business combination (the “Combination Period”).
However, if the Company is unable to complete an initial business combination within the Combination Period, the Company will redeem 100%
of the outstanding public shares for a pro rata portion of the funds held in the trust account, 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 the Company
to pay its franchise and income taxes, divided by the number of then outstanding public shares, subject to applicable law and as further
described in the Registration Statement, and then seek to dissolve and liquidate.
The Company will only proceed with an initial
business combination if the Company has net tangible assets of at least $5,000,001 following any related redemptions and, if the
Company seeks stockholder approval, a majority of the shares voted are voted in favor of the initial business combination. If a stockholder
vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote
for business or other reasons, the Company will, pursuant to its Certificate of Incorporation, conduct the redemptions pursuant to the
tender offer rules of the SEC, and file tender offer documents with the SEC prior to completing an initial business combination. If, however,
stockholder approval of the transaction is required by applicable law or stock exchange listing requirements, or the Company decides to
obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation
pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with an
initial business combination, the Company’s sponsor has agreed to vote its founder shares and any public shares purchased during
or after the initial public offering in favor of approving an initial business combination. Additionally, each public stockholder may
elect to redeem their public shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed
transaction.
The sponsor, officers and directors and representative
have agreed to (i) waive their redemption rights with respect to their founder shares, private shares, and public shares in connection
with the completion of the initial business combination, (ii) waive their redemption rights with respect to their founder shares, private
shares, and public shares in connection with a stockholder vote to approve an amendment to the Company’s Certificate of Incorporation,
and (iii) waive their rights to liquidating distributions from the trust account with respect to their founder shares and private shares
if the Company fails to complete the initial business combination within the Combination Period.
The Company’s sponsor has agreed that it
will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company,
or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement
or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share
and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less
than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not
apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in
the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the
underwriters of the initial public offering against certain liabilities, including liabilities under the Securities Act. However, the
Company has not asked its sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether
its sponsor has sufficient funds to satisfy its indemnity obligations and its belief that the Company’s sponsor’s only assets
are securities of the Company. Therefore, the Company cannot assure that its sponsor would be able to satisfy those obligations.
Risks and Uncertainties
On January 30, 2020, the World Health Organization
(“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”).
In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact
of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on the Company’s financial position will depend
on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments
and the impact of the COVID-19 outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted.
If the financial markets and/or the overall economy are impacted for an extended period, the Company’s financial position may be
materially adversely affected. Additionally, the Company’s ability to complete an initial business combination may be materially
adversely affected due to significant governmental measures being implemented to contain the COVID-19 outbreak or treat its impact, including
travel restrictions, the shutdown of businesses and quarantines, among others, which may limit the Company’s ability to have meetings
with potential investors or affect the ability of a potential target company’s personnel, vendors and service providers to negotiate
and consummate an initial business combination in a timely manner. The Company’s ability to consummate an initial business combination
may also be dependent on the ability to raise additional equity and debt financing, which may be impacted by the COVID-19 outbreak and
the resulting market downturn. Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded
that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of
its operations, close of the initial public offering and/or search for a target company, the specific impact is not readily determinable
as of the date of the unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation and Belarus
commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have
instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on
the world economy are not determinable as of the date of these unaudited condensed financial statements and the specific impact on the
Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these unaudited
condensed financial statements.
Inflation Reduction Act of 2022
On August 16, 2022, the Inflation Reduction Act
of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise
tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded
foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its
shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased
at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the
fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition,
certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority
to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.
Any redemption or other repurchase that occurs
after December 31, 2022, in connection with an initial business combination, extension vote or otherwise, may be subject to the excise
tax. Whether and to what extent the Company would be subject to the excise tax in connection with an initial business combination, extension
vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection
with the initial business combination, extension or otherwise, (ii) the structure of an initial business combination, (iii) the nature
and amount of any “PIPE” or other equity issuances in connection with an initial business combination (or otherwise issued
not in connection with an initial business combination but issued within the same taxable year of an initial business combination) and
(iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company
and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could
cause a reduction in the cash available on hand to complete an initial business combination and in the Company’s ability to complete
an initial business combination.
Liquidity and Capital Resources
As of September 30, 2022, the Company had $123,009
in its operating bank account and working capital deficit of $14,399, excluding franchise and income taxes payable. All remaining cash
held in the trust account is generally unavailable for the Company’s use, prior to an initial business combination, and is restricted
for use either in a business combination or to redeem common stock.
Through September 30, 2022, the Company’s
liquidity needs were satisfied through receipt of $25,000 from the sale of the founder shares, issuance of a $300,000 unsecured
promissory note to the sponsor, and the remaining net proceeds from the initial public offering and the sale of placement units.
Going Concern
The Company anticipates that the $123,009 outside
of the trust account as of September 30, 2022, might not be sufficient to allow the Company to operate until March 2, 2023 (i.e.,
the Combination Period), assuming that an initial business combination is not consummated during that time. Until consummation of its
initial business combination, the Company will be using the funds not held in the trust account, and any additional working capital loans
from the initial stockholders, the Company’s officers and directors, or their respective affiliates (which is described in Note
5), for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses,
traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material
agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the
initial business combination.
The Company can raise additional capital through
working capital loans from the initial stockholders, the Company’s officers, directors, or their respective affiliates (which is
described in Note 5), or through loans from third parties. None of the sponsor, officers or directors is under any obligation to advance
funds to, or to invest in, the Company. If the Company is unable to raise additional capital, it may be required to take additional measures
to conserve liquidity, which could include, but may not necessarily be limited to, curtailing operations, suspending the pursuit of its
business plan, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on
commercially acceptable terms, if at all.
In connection with the Company’s assessment
of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”)
2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until
March 2, 2023 to consummate an initial business combination. However, if the Company is unable to complete an initial business combination
within the Combination Period, the Company will redeem 100% of the outstanding public shares for a pro rata portion of the funds
held in the trust account, 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 the Company, divided by the number of then outstanding public shares, subject to applicable
law and as further described in the Registration Statement, and then seek to dissolve and liquidate. Management plans to complete an initial
business combination prior to the mandatory liquidation date.
Management has determined that the uncertainty
of availability of new financing to meet its liquidity needs and mandatory liquidation, should an initial business combination not occur,
and potential subsequent dissolution raise substantial doubt about the Company’s 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 March 2, 2023. The Company
intends to complete a Business Combination prior to its liquidation date.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial
statements are presented in U.S. dollars in conformity with GAAP for financial information and pursuant to the rules and regulations of
the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited
condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement
of the balances and results for the periods presented. The interim results for the three and nine months ended September 30, 2022 are
not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future periods.
The accompanying unaudited condensed financial
statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form
10-K filed by the Company with the SEC on April 1, 2022.
Emerging Growth Company Status
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and it 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. The Company has 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 the Company’s unaudited condensed 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.
Use of Estimates
The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and warrant liabilities at the date of the financial statements and the reported amounts of expenses during the reporting
period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of
the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered
in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting
estimates included in these unaudited condensed financial statements is the determination of the fair value of the warrant liability.
Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of September
30, 2022 and December 31, 2021.
Marketable Securities Held in Trust Account
The funds in the trust account are invested in
United States government securities within the meaning of Section 2(a)(16) of the Investment Company Act, having a maturity of 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 promulgated under
the Investment Company Act (or any successor rule), which invest only in direct U.S. government treasury obligations, as determined by
the Company. As of September 30, 2022 and December 31, 2021 the assets held in the trust account were held in a money market mutual fund
and presented at fair value at each reporting period.
Financial Instruments
The fair value of the Company’s certain
assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates
the carrying amounts represented in the condensed balance sheets as of September 30, 2022 and December 31, 2021, except for warrant liabilities
(Note 7). The fair values of cash, accounts payable, accrued expenses, and promissory note – related party are estimated to approximate
the carrying values as of September 30, 2022 and December 31, 2021 due to the short maturities of such instruments.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Deposit Insurance Corporation Coverage of $250,000. As of September 30, 2022 and December 31, 2021, the Company has not experienced losses
on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair Value of Financial Instruments
The Company follows the guidance in ASC 820, “Fair
Value Measurement,” for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period,
and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
|
Level 1 — |
Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. |
|
Level 2 — |
Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means. |
|
Level 3 — |
Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
See Note 7 for additional information on assets
and liabilities measured at fair value.
Derivative Warrant Liabilities
The Company does not use derivative instruments
to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives,
pursuant to ASC 480 and ASC 815-15. 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.
Derivative assets and liabilities are classified
on the condensed balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument
is required within 12 months of the balance sheet date. The Company has determined that both the private and public warrants are a derivative
instrument.
The Company evaluated the warrants (which are
discussed in Note 4, Note 6, and Note 7) in accordance with ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s
Own Equity”, and concluded that a provision in the Warrant Agreement relating to certain tender or exchange offers precludes the
warrants from being accounted for as components of equity. As the warrants meet the definition of a derivative as contemplated in ASC
815, the warrants are recorded as derivative liabilities on the condensed balance sheets and measured at fair value at inception (on the
date of the initial public offering) and at each reporting date in accordance with ASC 820, “Fair Value Measurement”, with
changes in fair value recognized in the unaudited condensed statements of operations in the period of change.
Offering Costs Associated with the Initial
Public Offering
The Company complies with the requirements of
the ASC 340-10-S99-1. Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the initial public
offering that were directly related to the initial public offering. Offering costs were allocated to the separable financial instruments
issued in the initial public offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated
with warrant liabilities were expensed as incurred and presented as non-operating expenses in the unaudited condensed statements of operations.
Offering costs associated with the Class A common stock, including the cost of the Class A warrants, were charged to Class A common stock
subject to possible redemption upon the completion of the initial public offering.
Class A Common Stock Subject to Possible Redemption
The Company accounts for its 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 (if any) is classified as liability instruments and is measured at fair value. Conditionally
redeemable Class A common stock (including Class A 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 the Company’s control) is classified
as temporary equity. At all other times, Class A common stock is classified as stockholders’ deficit. The Company’s Class
A common stock sold at the IPO features certain redemption rights that are considered to be outside of the Company’s control and
subject to the occurrence of uncertain future events. Accordingly, as of September 30, 2022 and December 31, 2021, 34,500,000 shares
of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ deficit section
of the Company’s condensed balance sheets.
Additionally, the Company has issued representative
shares (see Note 8). The representative has waived their redemption rights, and as such these shares remain in permanent deficit.
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting
period. This method would view the end of the reporting period as if it were also the redemption date for the security.
Immediately upon the closing of the initial public
offering, the Company recognized the accretion from initial book value to redemption amount. Increases or decreases in the carrying amount
of redeemable common stock are affected by charges against additional paid-in capital and accumulated deficit.
As of September 30, 2022 and December 31, 2021,
the Class A common stock reflected in the condensed balance sheets are reconciled in the following table:
Gross Proceeds | |
$ | 345,000,000 | |
Less: | |
| | |
Proceeds allocated to public warrants | |
| (8,816,636 | ) |
Issuance costs related to Class A common stock | |
| (9,918,245 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 18,734,881 | |
Class A common stock subject to possible redemption, December 31, 2021 | |
| 345,000,000 | |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 1,379,869 | |
Class A common stock subject to possible redemption, September 30, 2022 | |
$ | 346,379,869 | |
Income Taxes
The Company accounts for income taxes under ASC
740, “Income Taxes.” ASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities for both the expected
impact of differences between the unaudited condensed financial statements and tax basis of assets and liabilities and for the expected
future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be
established when it is more likely than not that all or a portion of deferred tax assets will not be realized. ASC 740-270-25-2 requires
that an annual effective tax rate be determined and that such annual effective rate be applied to year-to-date income in interim periods
under ASC 740-270-30-5. As of September 30, 2022 and December 31, 2021, the Company’s deferred tax asset had a full valuation allowance
recorded against it. The Company’s effective tax rate was 17.54% and 0.00% for the three months ended September 30, 2022 and 2021,
respectively, and 5.61% and 0.00% for the nine months ended September 30, 2022 and 2021, respectively. The effective tax rate differs
from the statutory tax rate of 21% for the three and nine months ended September 30, 2022 and 2021, due to changes in fair value in warrant
liability and the valuation allowance on the deferred tax assets.
ASC 740 also clarifies the accounting for uncertainty
in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process
for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits
to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides
guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest
and penalties as of September 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could
result in significant payments, accruals or material deviation from its position.
The Company has identified the United States as
its only “major” tax jurisdiction. The Company is subject to income taxation by major taxing authorities since inception.
These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and
compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits
will materially change over the next twelve months.
Net Income Per Common Share
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income per common stock is computed by dividing net income by
the weighted average number of common stock outstanding for the period. The Company has 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. Accretion associated
with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value.
The calculation of diluted income (loss) per share does not consider the effect of the warrants issued in connection with the (i) initial
public offering and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events.
The warrants are exercisable to purchase 11,796,667 Class A common stock in the aggregate. For the three and nine months ended
September 30, 2022 and 2021, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised
or converted into common stock and then share in the earnings of the Company. As a result, diluted net income per common stock is the
same as basic net income per common stock for the periods presented.
The following table reflects the calculation of
basic and diluted net income (loss) per common stock (in dollars, except per share amounts):
| |
For The Three Months Ended September 30, 2022 | | |
For The Nine Months Ended September 30, 2022 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income per common stock | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income | |
$ | 1,109,348 | | |
$ | 268,278 | | |
$ | 4,959,625 | | |
$ | 1,199,405 | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 35,665,000 | | |
| 8,625,000 | | |
| 35,665,000 | | |
| 8,625,000 | |
Basic and diluted net income per common stock | |
$ | 0.03 | | |
$ | 0.03 | | |
$ | 0.14 | | |
$ | 0.14 | |
| |
For The Three Months Ended September 30, 2021 | | |
For The Nine Months Ended September 30, 2021 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income per common stock | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income | |
$ | 2,009,343 | | |
$ | 485,927 | | |
$ | 374,195 | | |
$ | 112,761 | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 35,665,000 | | |
| 8,625,000 | | |
| 27,692,033 | | |
$ | 8,344,780 | |
Basic and diluted net income per common stock | |
$ | 0.06 | | |
$ | 0.06 | | |
$ | 0.01 | | |
| 0.01 | |
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 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 GAAP. ASU 2020-06 also removes certain settlement conditions
that are required for equity-linked contracts to qualify for scope exception, and it simplifies the diluted earnings per share calculation
in certain areas. ASU 2020-06 is effective January 1, 2024, for smaller reporting companies using a December 31 fiscal year end, and should
be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is reviewing
the impact adoption would have, if any, on its financial statements.
In June 2016, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic
326): Measurement of Credit Losses on Financial Instruments, which requires entities to measure all expected credit losses for financial
assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13
also requires additional disclosures regarding significant estimates and judgments used in estimating credit losses, as well as the credit
quality and underwriting standards of an entity’s portfolio. The Company expects to adopt the provisions of this guidance on January
1, 2023. The adoption is not expected to have a material impact on the Company’s condensed financial statements.
Management does not believe that any other recently
issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed
financial statements.
Note 3 — Initial Public Offering
On March 2, 2021, the Company consummated the
initial public offering of 30,000,000 units at a purchase price of $10.00 per unit. Each unit consists of one share
of Class A common stock, and one-third warrant to purchase one share of Class A common stock. Each warrant will entitle the holder to
purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment. Each warrant will become exercisable
on the later of 30 days after the completion of the initial business combination or 12 months from the closing of the initial public offering
and will expire five years after the completion of the initial business combination, or earlier upon redemption or liquidation (see Note
6).
The underwriters had a 45-day option from the
date of the initial public offering to purchase up to an additional 4,500,000 units to cover over-allotments. On March 8, 2021,
the underwriters exercised their over-allotment option in full, and the closing of the issuance and sale of the additional 4,500,000 units
occurred on March 10, 2021, generating proceeds of $45,000,000.
Note 4 — Private Placement
Simultaneously with the closing of the initial
public offering, the sponsor and the representative purchased an aggregate of 800,000 placement units at a purchase price
of $10.00 per placement unit, generating gross proceeds to the Company of $8,000,000. The placement units (and the underlying securities)
are identical to the units sold as part of the units in the initial public offering.
In connection with the closing of the purchase
of the over-allotment units, the Company sold an additional 90,000 placement units to the sponsor at a price of $10.00 per
placement unit, generating an additional $900,000 of gross proceeds.
The Company’s sponsor, officers, directors,
and representative agreed to (i) waive their redemption rights with respect to their founder shares, private shares, and public shares
in connection with the completion of the Company’s initial business combination, (ii) waive their redemption rights with respect
to the founder shares, private shares, and public shares in connection with a stockholder vote to approve an amendment to the Company’s
Certificate of Incorporation (A) to modify the substance or timing of the Company’s obligation to redeem 100% of its public
shares if the Company does not complete its initial business combination within 24 months from the closing of this offering or (B) with
respect to any other provision relating to stockholders’ rights or pre-initial business combination activity and (iii) waive
their rights to liquidating distributions from the trust account with respect to their founder shares if the Company fails to complete
its initial business combination within 24 months from the closing of this offering. In addition, the Company’s sponsor, officers,
directors, and representative have agreed to vote any founder shares, private shares, and public shares held by them and any public shares
purchased during or after this offering (including in open market and privately negotiated transactions) in favor of the Company’s
initial business combination.
Note 5 — Related Party Transactions
Founder Shares
In August 2020, the Company issued 5,750,000 founder
shares to the sponsor for $25,000 in cash, or approximately $0.004 per share, in connection with formation. On January 26,
2021, the Company effected a stock dividend of 0.25 shares for each Class B common stock outstanding, resulting in there being
an aggregate of 7,187,500 founder shares outstanding. On February 25, 2021, the Company effected a stock dividend of 0.2 for
each share of Class B common stock outstanding, resulting in the initial stockholders holding an aggregate of 8,625,000 founder
shares. This number included up to 1,125,000 shares of Class B common stock subject to forfeiture if the over-allotment option
is not exercised in full or in part by the underwriters. On March 8, 2021, the underwriter exercised its over-allotment option in
full; since then, the 1,125,000 founder shares are no longer subject to forfeiture.
The sponsor agreed not to transfer, assign or
sell its founder shares until the earlier of (A) one year after the completion of the Company’s initial business combination
or (B) subsequent to the Company’s initial business combination, (x) if the last sale price of the Company’s Class A
common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s
initial business combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other
similar transaction that results in all of its stockholders having the right to exchange their shares of common stock for cash, securities
or other property.
Promissory Note — Related Party
On July 21, 2020, the Company issued an unsecured
promissory note to the sponsor (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal
amount of $300,000 to be used for a portion of the expenses of the initial public offering. This loan is non-interest bearing,
unsecured and due at the earlier of June 30, 2021, or the closing of the initial public offering. The loan was not repaid upon the closing
of the initial public offering and is due on demand. As of March 2, 2021, the Company had incurred an aggregate of $201,061 of
offering expenses from the initial public offering under the promissory note. The Company owes $36,921 and $37,500 as
of September 30, 2022 and December 31, 2021, respectively. There are no remaining borrowings available to the Company and the balance
is due on demand.
Related Party Loans
To finance transaction costs in connection with
an initial 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 working capital loans as may be required. If the Company completes an initial business combination,
the Company would repay the working capital loans out of the proceeds of the trust account released to the Company. Otherwise, the working
capital loans would be repaid only out of funds held outside the trust account. In the event that an initial business combination does
not close, the Company may use a portion of the working capital held outside the trust account to repay the working capital loans but
no proceeds from the trust account would be used to repay the working capital loans. Up to $1,500,000 of such working capital 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 placement warrants, including as to exercise price, exercisability and exercise period. At September 30, 2022 and December 31, 2021,
no working capital loans were outstanding.
Administrative Service Fee
The Company has agreed, commencing on the Effective
Date of the initial public offering, to pay an affiliate of the Company’s sponsor a monthly fee of an aggregate of $10,000 for
office space, utilities and secretarial and administrative support. Upon completion of the Company’s initial business combination
or its liquidation, the Company will cease paying these monthly fees. For the three and nine months ended September 30, 2022, the Company
incurred and paid $30,000 and $90,000, respectively, of which $30,000 and $90,000, respectively, is included in formation costs on
the unaudited condensed statements of operations. For the three and nine months ended September 30, 2021, the Company incurred and paid
$30,000 and $70,000, respectively.
Due to Related Parties
In order to facilitate payments for the Company,
parties related to the Company may make payments on behalf of the Company. These amounts due to the related party are non-interest bearing
and are due on demand. At September 30, 2022 and December 31, 2021, excluding the Promissory Note to the Sponsor that was outstanding
at September 30, 2022, December 31, 2021, the Company owed related parties $59,820 and $0, respectively.
Note 6 — Warrant Liabilities
The Company has outstanding warrants to purchase
an aggregate of 11,796,667 shares of the Company’s common stock issued in connection with the initial public offering
and the private placement (including warrants issued in connection with the consummation of the over-allotment).
Each whole warrant entitles the registered holder
to purchase one share of the Company’s Class A common stock at a price of $11.50 per share, subject to adjustment. Pursuant
to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares of Class A common stock. No fractional
warrants will be issued upon separation of the units and only whole warrants will trade. The public warrants will become exercisable on
the later of (a) 30 days after the completion of an initial business combination and (b) 12 months from the closing of the initial public
offering. The public warrants will expire five years after the completion of an initial business combination or earlier upon
redemption or liquidation.
The Company will not be obligated to deliver any
shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless
a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of
the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available, subject to the
Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will
be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise
their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state
of residence of the exercising holder, or an exemption from registration is available.
The Company has agreed that as soon as practicable,
but in no event later than 20 business days after the closing of an initial business combination, the Company will use its commercially
reasonable efforts to file – and within 60 business days following an initial business combination, to have declared effective –
a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and to maintain
a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. Notwithstanding the above,
if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies
the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require
holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of
the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration
statement, but will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent
an exemption is not available.
Redemption of Warrants When the Price per Share
of Class A Common Stock Equals or Exceeds $18.00
Once the warrants become exercisable, the Company
may redeem the outstanding warrants:
| ● | in whole and not in part; |
|
● |
at a price of $0.01 per warrant; |
|
● |
upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and |
|
● |
if, and only if, the last reported sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior the date on which the Company sends the notice of redemption to the warrant holders. |
If and when the warrants become redeemable by
the Company, the Company may exercise the redemption right even if it is unable to register or qualify the underlying securities or sale
under all applicable state securities laws.
Redemption of Warrants When the Price per Share
of Class A Common Stock Equals or Exceeds $10.00
Once the warrants become exercisable, the Company
may redeem the outstanding warrants:
| ● | in whole and not in part; |
|
● |
at a price of $0.10 per warrant provided that the holder will be able to exercise their warrants on cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair market value of the Class A common stock; |
|
● |
upon a minimum of 30 days’ prior written notice of redemption; |
|
● |
if, and only if, the last reported sale price of the Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders; and |
|
● |
if the last reported sale price of the Class A common stock for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like), the private warrants must also be concurrently called for redemption on the same terms as the outstanding public warrants, as described above. |
If the Company calls the public warrants for redemption,
as described above, its management will have the option to require any holder that wishes to exercise the public warrants to do so on
a “cashless basis,” as described in the warrant agreement.
In addition, if (x) the Company issues additional
shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of an initial business
combination at an issue price or effective issue price of less than $9.20 per share (with such issue price or effective issue price to
be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the sponsor or its affiliates,
without taking into account any founder shares held by the sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly
Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest
thereon, available for the funding of an initial business combination on the date of the consummation of an initial business combination
(net of redemptions), and (z) the volume weighted average trading price of the Company’s common stock during the 20 trading day
period starting on the trading day prior to the day on which the Company consummates an initial business combination (such price, the
“Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be
equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described
above will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the
$10.00 per share redemption trigger described above will be adjusted (to the nearest cent) to be equal to the higher of the Market Value
and the Newly Issued Price.
The warrant agreement contains an Alternative
Issuance provision providing that, if less than 70% of the consideration receivable by the holders of the shares of common stock
in the initial business combination is payable in the form of common equity in the successor entity, and if the holders of the warrants
properly exercise the warrants within thirty days following the public disclosure of the consummation of the initial business combination
by the Company, the warrant price shall be reduced by an amount equal to the difference (but in no event less than zero) of (i) the
warrant price in effect prior to such reduction minus (ii) (A) the Per Share Consideration (as defined below) minus (B) the
Black-Scholes Warrant Value (as defined below). The “Black-Scholes Warrant Value” means the value of a warrant immediately
prior to the consummation of the initial business combination based on the Black-Scholes Warrant Model for a Capped American Call on Bloomberg
Financial Markets. “Per Share Consideration” means (i) if the consideration paid to holders of the shares of common stock
consists exclusively of cash, the amount of such cash per share of common stock, and (ii) in all other cases, the volume weighted
average price of the shares of common stock as reported during the ten-trading day period ending on the trading day prior to
the effective date of the initial business combination.
The Company believes that the Alternative Issuance
provision and the adjustments to the exercise price of the warrants is based on a variable that is not an input to the fair value of a
“fixed-for-fixed” option as defined under FASB ASC Topic No. 815 – 40, and thus the warrants are not eligible
for an exception from derivative accounting.
The accounting treatment of derivative financial
instruments requires that the Company record a derivative liability upon the closing of the initial public offering. Accordingly, the
Company has classified each warrant as a liability at its fair value and the warrants were allocated a portion of the proceeds from the
issuance of the units equal to its fair value determined by the Monte Carlo simulation. This liability is subject to re-measurement at
each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change
in fair value recognized in the Company’s unaudited condensed statements of operations. The Company will reassess the classification
at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as
of the date of the event that causes the reclassification. As such, the Company recorded $9,055,934 of warrant liability upon issuance
as of March 2, 2021, as adjusted for the closing of the underwriters’ fully exercised over-allotment option. For the three
and nine months ended September 30, 2022, the Company recorded a change in the fair value of the warrant liabilities in the amount of
$276,124 and $5,235,164, respectively, on the unaudited condensed statements of operations, resulting in warrant liabilities of $668,398
as of September 30, 2022, on the condensed balance sheets.
Note 7 — Fair Value Measurements
The following table presents information about
the Company’s assets and liabilities that are measured on a recurring basis as of September 30, 2022 and December 31, 2021 and indicates
the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value:
| |
September 30, 2022 | | |
Quoted Prices In Active Markets
(Level 1) | | |
Significant Other Observable Inputs
(Level 2) | | |
Significant Other Unobservable Inputs
(Level 3) | |
Assets: | |
| | |
| | |
| | |
| |
Marketable Securities held in trust account | |
$ | 347,096,193 | | |
$ | 347,096,193 | | |
$ | — | | |
$ | — | |
| |
$ | 347,096,193 | | |
$ | 347,096,193 | | |
$ | — | | |
$ | — | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Warrant liability - public warrants | |
$ | 650,900 | | |
$ | — | | |
$ | 650,900 | | |
$ | — | |
Warrant liability – private warrants | |
| 17,498 | | |
| — | | |
| — | | |
| 17,498 | |
| |
$ | 668,398 | | |
$ | — | | |
$ | 650,900 | | |
$ | 17,498 | |
| |
December 31, 2021 | | |
Quoted Prices In Active Markets
(Level 1) | | |
Significant Other Observable Inputs
(Level 2) | | |
Significant Other Unobservable Inputs
(Level 3) | |
Assets: | |
| | |
| | |
| | |
| |
Marketable Securities held in trust account | |
$ | 345,017,951 | | |
$ | 345,017,951 | | |
$ | — | | |
$ | — | |
| |
$ | 345,017,951 | | |
$ | 345,017,951 | | |
$ | — | | |
$ | — | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Warrant liability – public warrants | |
$ | 5,750,000 | | |
$ | 5,750,000 | | |
$ | — | | |
$ | — | |
Warrant liability – private warrants | |
| 153,562 | | |
| — | | |
| — | | |
| 153,562 | |
| |
$ | 5,903,562 | | |
$ | 5,750,000 | | |
$ | — | | |
$ | 153,562 | |
Transfers to/from Levels 1, 2 and 3 are recognized
at the end of the reporting period. The subsequent measurement of the public warrants for the year ended December 31, 2021 is classified
as Level 1 due to the use of an observable market quote in an active market. The estimated fair value of the public warrants transferred
from a Level 1 measurement to a Level 2 fair value measurement during the three months ended June 30, 2022. The estimated fair value of
public warrants transferred from a Level 1 to a Level 2 fair value measurement during the three and nine months ended September 30, 2022
was $0 and $920,000, respectively.
The following table sets forth a summary of the
changes in the fair value of the Level 3 warrant liabilities for the three and nine months ended September 30, 2022:
Warrant liabilities as of December 31, 2021 | |
$ | 153,562 | |
Change in fair value of warrant liabilities | |
| (73,939 | ) |
Warrant liabilities as of March 31, 2022 | |
$ | 79,623 | |
Change in fair value of warrant liabilities | |
| (55,101 | ) |
Warrant liabilities as of June 30, 2022 | |
$ | 24,522 | |
Change in fair value of warrant liabilities | |
| (7,024 | ) |
Warrant liabilities as of September 30, 2022 | |
$ | 17,498 | |
The following table sets forth a summary of the
changes in the fair value of the Level 3 warrant liabilities for the three and nine months ended September 30, 2021:
Fair Value, January 1, 2021 | |
$ | - | |
Initial measurement on March 2, 2021, as adjusted for over-allotment | |
| 9,055,934 | |
Change in fair value of warrant liabilities | |
| (1,259,444 | ) |
Less: Transfer of public warrant liabilities to Level 1 | |
| (7,590,000 | ) |
Warrant liabilities at September 30, 2021 | |
$ | 206,490 | |
The estimated fair value of the warrant liability
at March 2, 2021, was determined using Level 3 inputs. Inherent in a Monte Carlo options pricing model are assumptions related to expected
stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common
stock based on projected volatility of comparable public companies that matches the expected remaining life of the warrants. The risk-free
interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining
life of the warrants. The expected life of the warrants is based on management assumptions regarding the timing and likelihood of completing
a business combination. The dividend rate is based on the historical rate, which the Company anticipates will remain at zero. Based on
management’s observation, there is a 6.9% likelihood of completing an initial business combination following historical trends
of SPACs.
The subsequent measurement of private warrants
is determined using Level 3 inputs. The following table provides quantitative information regarding Level 3 fair value measurements of
the Company’s private warrant liabilities as of September 30, 2022 and December 31, 2021.
| |
September 30, 2022 | | |
December 31, 2021 | |
Exercise price | |
$ | 11.50 | | |
$ | 11.50 | |
Stock price | |
$ | 9.85 | | |
$ | 9.70 | |
Volatility | |
| 5.6 | % | |
| 10.6 | % |
Expected life of the options to convert | |
| 5.29 | | |
| 5.62 | |
Risk-free rate | |
| 4.05 | % | |
| 1.32 | % |
Dividend yield | |
| — | % | |
| — | % |
Likelihood of completing a business combination | |
| 6.9 | % | |
| 85 | % |
Note 8 — Commitments and Contingencies
Registration Rights
The holders of the founder shares, placement
warrants, and warrants that may be issued upon conversion of working capital loans will have registration rights to require the Company
to register a sale of any of its securities held by them pursuant to a registration rights agreement to be signed prior to or on February
25, 2021. These holders will be entitled to make up to three demands, excluding short form registration demands, that the Company registers
such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights
to include their securities in other registration statements filed by the Company.
Underwriters Agreement
The underwriters had a 45-day option from
March 2, 2021 to purchase up to an additional 4,500,000 units to cover over-allotments.
On March 2, 2021, the Company paid an underwriting
discount of $6,000,000.
On March 10, 2021, the underwriters
purchased an additional 4,500,000 units to exercise its over-allotment option in full. The Company paid an additional underwriting discount
of $900,000 related to the exercise of the over-allotment option.
Business Combination Marketing Agreement
The Company has engaged the representative as
an advisor in connection with its initial business combination to assist the Company in holding meetings with its stockholders to discuss
the potential business combination and the target business’ attributes, introduce the Company to potential investors that are interested
in purchasing the Company’s securities in connection with its initial business combination, assist the Company in obtaining stockholder
approval for the initial business combination and assist the Company with its press releases and public filings in connection with the
initial business combination. The Company will pay the representative a cash fee for such services upon the consummation of our
initial business combination in an amount equal to 3.5% of the gross proceeds of the initial public offering.
Representative Shares
On March 2, 2021, the Company issued the representative
shares to the representative upon the consummation of the initial public offering. The Company accounts for the representative shares
as an expense of the initial public offering resulting in a charge directly to stockholders’ deficit, at an estimated fair value
of $2,750,000. In addition, the representative agrees (i) to waive its redemption rights with respect to such shares in connection with
the completion of the initial business combination and (ii) to waive its rights to liquidating distributions from the trust account with
respect to such shares if the Company fails to complete its initial business combination within the Combination Period.
Note 9 — Stockholders’ Deficit
Preferred Stock — The
Company is authorized to issue a total of 1,000,000 shares of preferred stock at par value of $0.0001 each. As of September
30, 2022 and December 31, 2021, there were no shares of preferred stock issued or outstanding.
Class A Common Stock —
The Company is authorized to issue a total of 100,000,000 shares of Class A common stock at par value of $0.0001 each.
As of September 30, 2022 and December 31, 2021, there were 1,165,000 shares of Class A common stock issued and outstanding,
excluding 34,500,000 shares of Class A common stock subject to possible redemption.
Class B Common Stock —
The Company is authorized to issue a total of 10,000,000 shares of Class B common stock at par value of $0.0001 each.
In August 2020, the Company issued 5,750,000 shares of Class B common stock to its initial stockholders for $25,000, or approximately
$0.004 per share. On January 26, 2021, the Company effected a stock dividend of 0.25 shares for each share of Class B
common stock outstanding, resulting in there being an aggregate of 7,187,500 founder shares outstanding. On February 25, 2021,
the Company effected another stock dividend of 0.2 shares for each share of Class B common stock outstanding, resulting in
the initial stockholders holding an aggregate of 8,625,000 founder shares. Shares of Class B common stock outstanding as of
September 30, 2022 and December 31, 2021 was 8,625,000. This number included up to 1,125,000 shares of Class B common
stock subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriters. On March 8, 2021,
the underwriters exercised their over-allotment option in full; for this reason, the 1,125,000 founder shares are no longer
subject to forfeiture.
The Company’s initial stockholders have
agreed not to transfer, assign or sell their founder shares until the earlier to occur of (A) one year after the completion of the
Company’s initial business combination or (B) subsequent to the Company’s initial business combination, (x) if
the last sale price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing
at least 150 days after the Company’s initial business combination, or (y) the date on which the Company completes a
liquidation, merger, capital stock exchange or other similar transaction that results in all of its stockholders having the right to
exchange their shares of common stock for cash, securities or other property. Any permitted transferees will be subject to the same restrictions
and other agreements of the Company’s initial stockholders with respect to any founder shares.
The shares of Class B common stock will
automatically convert into shares of the Company’s Class A common stock at the time of its initial business combination on
a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and
subject to further adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities,
are issued or deemed issued in excess of the amounts offered in this prospectus and related to the closing of the initial business combination,
the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless
the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such
issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B
common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common
stock outstanding upon the completion of this offering plus all shares of Class A common stock and equity-linked securities
issued or deemed issued in connection with the initial business combination (excluding any shares or equity-linked securities issued,
or to be issued, to any seller in the initial business combination or any private placement-equivalent units issued to the sponsor
or its affiliates upon conversion of loans made to the Company).
Holders of the Class A common stock and
holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of the Company’s
stockholders, with each share of common stock entitling the holder to one vote.
Note 10 — Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the condensed financial statements were issued. Based upon this review,
the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.
Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward-Looking Statements
This Report includes forward-looking statements
within the meaning of Section 27A of the Securities Act 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 formed as a Delaware
corporation for the purpose of effecting our initial business combination. While we may pursue an initial business combination target
in any business, industry or geographic location, we have focused and will continue to focus our search on companies located outside
the United States, primarily in the Pan-Eurasian region, including Western Europe, Eastern Europe and the Middle East. We will also consider
prospective targets located in the United States, but which are owned by non-U.S. shareholders, including sovereign wealth funds, family
offices or industrial conglomerates headquartered in the Pan-Eurasian region. Our management team has an extensive track record of creating
value for stockholders by acquiring attractive businesses at disciplined valuations, investing in growth while fostering financial discipline
and ultimately improving financial results.
On March 2, 2021, we consummated our initial
public offering of 30,000,000 units. Each unit consists of one share of Class A common stock, and one-third of one redeemable warrant
of the Company, with each warrant entitling the holder thereof to purchase one share of Class A common stock for $11.50 per whole share.
The units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $300,000,000.
Simultaneously with the closing of the initial
public offering, we completed the private sale of an aggregate of 800,000 units to our sponsor and the representative at a purchase price
of $10.00 per placement unit, generating gross proceeds of $8,000,000.
A total of $300,000,000, comprised of $294,000,000
of the proceeds from the initial public offering and $6,000,000 of the proceeds of the sale of the placement units was placed in the
trust account maintained by Continental, acting as trustee.
On March 8, 2021, the underwriters exercised
their over-allotment option in full, and the closing of the issuance and sale of the 4,500,000 over-allotment units occurred on March
10, 2021, generating gross proceeds of $45,000,000. In connection with the closing of the purchase of the over-allotment units, the Company
sold an additional 90,000 placement units to the sponsor at a price of $10.00 per placement unit, generating an additional $900,000 of
gross proceeds.
Results of Operations
We have neither engaged in any operations nor
generated any revenues to date. Our only activities through September 30, 2022 were organizational activities, those necessary to prepare
for our initial public offering, described below, and, after our initial public offering, identifying a target company for our initial
business combination. We do not expect to generate any operating revenues until after the completion of our initial business combination.
We generate non-operating income in the form of interest income on marketable securities held in the trust account. 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 nine months ended September 30, 2022, there was $2,078,242 interest earned from the trust account.
For the three months ended September 30, 2022,
we had a loss from operations of $165,568 which consisted of formation and operating costs, and net income of $1,377,626, which included
gain from the change in the fair value of warrants of $276,124, interest income of $1,560,064 and provision for incomes taxes of $292,994.
We are required to revalue our liability-classified warrants at the end of each reporting period and reflect in the unaudited condensed
statements of operations a gain or loss from the change in fair value of the warrant in the period in which the change occurred.
For the nine months ended September 30, 2022,
we had a loss from operations of $788,052, which consisted of formation and operating costs, and net income of $6,159,030, which included
gain from the change in the fair value of warrants of $5,235,164, interest income of $2,078,242 and provision for income taxes of $366,324.
We are required to revalue our liability-classified warrants at the end of each reporting period and reflect in the unaudited condensed
statements of operations a gain or loss from the change in fair value of the warrant in the period in which the change occurred.
For the three months ended September 30, 2021,
we had a loss from operations of $271,386, which consisted of formation and operating costs, and net income of $2,495,270, which included
a net gain from the change in the fair value of warrants of $2,761,355 and interest income of $5,301. We are required to revalue our
liability-classified warrants at the end of each reporting period and to reflect in the statement of operations a gain or loss from the
change in fair value of the warrant in the period in which the change occurred.
For the nine months ended September 30, 2021,
we had a loss from operations of $523,784, which consisted of formation and operating costs, and net income of $486,956, which included
warrant issuance costs of $260,113 offset by a net gain from the change in the fair value of warrants of $1,259,444, and interest income
of $11,409. We are required to revalue our liability-classified warrants at the end of each reporting period and reflect in the statement
of operations a gain or loss from the change in fair value of the warrant in the period in which the change occurred.
Liquidity and Capital Resources
On March 2, 2021, we consummated our initial
public offering of 30,000,000 units at a price of $10.00 per unit, generating gross proceeds of $300,000,000. In connection with the
initial public offering, the underwriters were granted a 30-day option from the date of the prospectus to purchase up to 4,500,000 additional
units to cover over-allotment, if any. On March 8, 2021, the underwriters fully exercised the over-allotment option, generating gross
proceeds of $45,000,000.
Simultaneously with the initial closing and over-allotment
closing of the initial public offering, we consummated the sale of 890,000 placement units to the sponsor at a price of $10.00 per unit,
generating gross proceeds of $8,900,000.
Following the initial public offering, the exercise
of the over-allotment option and the sale of the placement units, a total of $345,000,000 was placed in the trust account.
As of September 30, 2022, we had marketable securities
held in the trust account of $347,096,193. Interest income on the balance in the trust account may be used by us to pay taxes. For the
nine months ended September 30, 2022 and 2021, there was $2,078,242 and $11,409 interest income earned from the trust account, respectively.
For the nine months ended September 30, 2022,
cash used in operating activities was $627,502.
We intend to use substantially all of the funds
held in the trust account, including any amounts representing interest earned on the trust account (less income taxes payable), to complete
our initial business combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete
our initial 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 September 30, 2022, we had cash of $123,009
held outside 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 our initial business combination.
In order to fund working capital deficiencies
or finance transaction costs in connection with our initial business combination, the initial stockholders or their affiliates may, but
are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts.
In the event that our initial 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 identical to the placement warrants, at a price of $1.00 per warrant at the option of the lender.
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 our initial 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 initial business combination or because we become obligated to redeem a significant
number of our public shares upon consummation of our initial business combination, in which case we may issue additional securities or
incur debt in connection with such initial business combination. Subject to compliance with applicable securities laws, we would only
complete such financing simultaneously with the completion of our initial business combination. If we are unable to complete our initial
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 initial business combination, if cash on hand is insufficient, we may need to obtain additional
financing in order to meet our obligations.
Going Concern
The Company anticipates that the $123,009 outside
of the trust account as of September 30, 2022, might not be sufficient to allow the Company to operate until March 2, 2023 (i.e.,
the Combination Period), assuming that an initial business combination is not consummated during that time. Until consummation of its
initial business combination, the Company will be using the funds not held in the trust account, and any additional working capital loans
from the initial stockholders, the Company’s officers and directors, or their respective affiliates (which is described in Note
5), for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses,
traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material
agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the
initial business combination.
The Company can raise additional capital through
working capital loans from the initial stockholders, the Company’s officers, directors, or their respective affiliates (which is
described in Note 5), or through loans from third parties. None of the sponsor, officers or directors is under any obligation to advance
funds to, or to invest in, the Company. If the Company is unable to raise additional capital, it may be required to take additional measures
to conserve liquidity, which could include, but may not necessarily be limited to, curtailing operations, suspending the pursuit of its
business plan, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on
commercially acceptable terms, if at all.
In connection with the Company’s assessment
of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”)
2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until
March 2, 2023 to consummate an initial business combination. However, if the Company is unable to complete an initial business combination
within the Combination Period, the Company will redeem 100% of the outstanding public shares for a pro rata portion of the funds
held in the trust account, 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 the Company, divided by the number of then outstanding public shares, subject
to applicable law and as further described in the Registration Statement, and then seek to dissolve and liquidate. Management plans to
complete an initial business combination prior to the mandatory liquidation date.
Management has determined that the uncertainty
of availability of new financing to meet its liquidity needs and mandatory liquidation, should an initial business combination not occur,
and potential subsequent dissolution raise substantial doubt about the Company’s 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 March 2, 2023. The
Company intends to complete a Business Combination prior to its liquidation date.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet
arrangements as of September 30, 2022 and December 31, 2021.
Contractual Obligations
At September 30, 2022 and December 31, 2021,
we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities. On February 25,
2021, we entered into an administrative support agreement pursuant to which we have agreed to pay an affiliate of the sponsor a total
of $10,000 per month for office space, utilities and secretarial and administrative support. Upon the earlier of the completion of the
initial business combination and our liquidation, we will cease paying these monthly fees. For the three and nine months ended September
30, 2022, the Company incurred and paid $30,000 and $90,000, respectively, which are included in formation costs on the unaudited
condensed statements of operations. For the three and nine months ended September 30, 2021, the Company incurred and paid $30,000. For
the nine months ended September 30, 2021, the Company incurred and paid $30,000 and $70,000, respectively, which is included in formation
cost on the condensed statement of operations.
We have engaged the representative as an advisor
in connection with our initial business combination to assist us in holding meetings with our stockholders to discuss the potential initial
business combination and the target business’ attributes, introduce us to potential investors that are interested in purchasing
our securities in connection with our initial business combination, assist us in obtaining stockholder approval for the initial business
combination and assist us with our press releases and public filings in connection with the initial business combination. We will pay
the representative a cash fee for such services upon the consummation of our initial business combination in an amount equal to 3.5%
of the gross proceeds of our initial public offering ($12,075,000).
Critical Accounting Policies
The preparation of unaudited condensed financial
statements and related disclosures in conformity with GAAP 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:
Class A Common stock subject to possible redemption
We account for Class A common stock subject to
possible redemption in accordance with the guidance in Accounting Standards Codification (“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 Class A common stock (including Class A 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, Class A common stock is classified as stockholders’ deficit. 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 at redemption value as temporary equity,
outside of the stockholders’ deficit section of our condensed balance sheets.
Derivative warrant liabilities
We do not use derivative instruments to hedge
exposures to cash flow, market, or foreign currency risks. We evaluate all of the Company’s financial instruments, including issued
stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant
to ASC 480 and ASC 815-15. 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.
We account for our 11,796,667 common stock warrants
issued in connection with our initial public offering (11,500,000) and placement warrants (296,667) as derivative warrant liabilities
in accordance with ASC 815-40. 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 unaudited condensed statements of operations. The fair value of placement warrants issued
by us in connection with our initial public offering and private placement has been estimated using Monte-Carlo simulations at each measurement
date. The fair value of public warrants issued with our initial public offering was initially measured using Monte-Carlo simulations
and then measured based trading price once they commenced trading on March 29, 2021.
Offering costs associated with the initial
public offering
We allocated in accordance with the requirements
of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - “Expenses of Offering.” Offering
costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the initial
public offering.
We allocated the offering costs between common
stock and public warrants using the relative fair value method. The offering costs allocated to the public warrants will be expensed
immediately, and offering costs allocated to common stock were charged to temporary equity upon the completion of our initial public
offering.
Net income per share of common stock
We compute net income (loss) per common stock
by dividing net income by the weighted average number of common stock outstanding for the period. 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.
This presentation assumes an initial business combination as the most likely outcome. Accretion associated with the redeemable shares
of Class A common stock is excluded from earnings per share as the redemption value approximates fair value.
Recent accounting standards
In August 2020, the FASB issued ASU 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 also 2020-06 removes certain
settlement conditions that are required for equity-linked contracts to qualify for scope exception, and it simplifies the diluted earnings
per share calculation in certain areas. ASU 2020-06 is effective January 1, 2024, for smaller reporting companies using a December 31
fiscal year end, and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January
1, 2021. The Company is reviewing the impact adoption would have, if any, on its financial statements.
Management does not believe that any other recently
issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our unaudited condensed
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 the 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.