The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our unaudited financial statements and accompanying notes which are included under “Item 1. Financial Statements” of this report. quarterly on Form 10Q.
Caution Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Quarterly Report on Form 10Q, including, without limitation, statements contained in this “Management’s Discussion and Analysis of Financial Condition and Results of ‘operation’ regarding the company’s financial condition, business strategy and plans and objectives. direction for future operations, are forward-looking statements. When used in this Quarterly Report on Form 10Q, words such as “anticipate”, “believe”, “estimate”, “expect”, “intend” and similar expressions, to the extent where they relate to us or the management of the company, identify forward-looking statements. These forward-looking statements are based on the beliefs of management, as well as assumptions made by the management of the Company and information currently available to them. Actual results could differ materially from those contemplated by the forward-looking statements due to certain factors detailed in our filings with the SECOND. All subsequent written or oral forward-looking statements attributable to us or to persons acting on behalf of the Company are qualified in their entirety by this paragraph.
We are a blank check company incorporated on December 21, 2020 like a Delaware
public limited company and incorporated for the purpose of carrying out a Business Combination with one or more target companies. We closed our public offering on March 16, 2021. From March 31, 2022we had not identified any business combination target nor initiated substantive discussions, directly or indirectly, regarding the identification of a business combination target.
We currently have no revenue, have incurred losses since inception due to incorporation costs and have had no transactions other than actively soliciting a target company with which to complete a business combination.
For the three months ended March 31, 2022 and March 31, 2021we had a net profit/(loss) of $7,767,127 and ($69,336), whose $8,288,000 and $592,000 is a non-cash gain related to the change in fair value of the warrant liability, respectively. Our business activities during the quarter consisted primarily of identifying and evaluating potential acquisition candidates for a business combination. We believe that we have sufficient funds to complete our efforts to effect a business combination with an operating business in March 16, 2023. However, if our estimates of the costs of identifying a target company, performing extensive due diligence and negotiating a business combination are less than the actual amount required to do so, we may not have sufficient funds to operate our business before our Combination business.
As shown in the accompanying unaudited financial statements, at March 31, 2022we have had $126,069 in cash and deferred offering costs of $16,100,000. In addition, we expect to continue to incur significant costs in pursuing our acquisition plans. We cannot assure you that our plans to complete our business combination will be successful.
Cash and capital resources
On January 21, 2021the Sponsor purchased 11,500,000 Founder Shares for
$25,000is around $0.002 per share. The number of Founder Shares issued was determined on the basis of the assumption that these Founder Shares would represent 20% of the outstanding shares following the Public Offer. On March 11, 2021the sponsor transferred 25,000 founder shares to each of the independent directors at their original purchase price.
On March 16, 2021the Company consummated its public offering of 46,000,000 units at the price of $10.00 per unit, including 6,000,000 units following the exercise in full by the underwriters of their over-allotment option, generating gross proceeds of $460,000,000. On the closing date of the IPO, we completed the private sale of an aggregate of 5,600,000 private placement warrants, each exercisable to purchase one Class A common share
Inventory at $11.50 per share, to our Sponsor, at the price of $2.00 per Private Placement Bond, generating gross proceeds, before fees, of $11,200,000. After deducting underwriting discounts and fees (excluding the Deferred Discount, the amount of which will be payable upon completion of the Business Combination, if completed) and estimated offering costs, the aggregate net proceeds of our Public Offering and the sale of the Private Placement Warrants have been $462,000,000whose $460,000,000 (or $10.00 per share sold under the public offering) was placed in the trust account. The amount of proceeds not deposited in the trust account has been $2,000,000 at the close of our public offering. Interest earned on funds held in the trust account may be paid to us to fund our statutory withdrawals, for up to 24 months and/or additional amounts necessary to pay our deductible and income taxes.
Prior to the completion of the Tender Offer, the Promoter loaned the Company a total of $300,000 by the issuance of an unsecured promissory note (the “Note”) issued by the Company in favor of the Sponsor to cover the organizational costs and costs related to the Public Offering. The note bore no interest and was payable on the earliest of the following dates: January 31, 2022 or the completion of the Public Offer. The note was redeemed at the closing of the public offering.
On April 9, 2021the Promoter has made available to the Company a loan of up to
$4,000,000 pursuant to a promissory note issued by the Company to the Sponsor. Proceeds from the note will be used for ongoing operating expenses and certain other expenses related to the business combination. The note is unsecured, does not bear interest and matures on the earliest of the following dates: (i) March 2, 2023
or (ii) the date on which the Company completes the Business Combination. From March 31, 2022the amount advanced by the Sponsor to the Company was $1,475,000.
From March 31, 2022 and December 31, 2021we had cash held outside of the trust account of $126,069 and $101,238, respectively, which is available to fund our working capital requirements. In addition, interest earned on funds held in the trust account may be paid to us to fund our regulatory withdrawals, for up to 24 months and/or additional amounts necessary to pay our deductible and income taxes.
Moreover, to March 31, 2022 and December 31, 2021the Company had current liabilities of $13,516,474 and $21,399,854 and a working capital deficit of ($12,389,833) and ($20,110,827), respectively, the balances of which relate primarily to warrants that we have recorded as liabilities, as described in Notes 2 and 3. Other amounts relate to accrued liabilities due to professionals, consultants, advisers and other who are working on the search for a business combination as described in note 1. This work continues after March 31, 2022 and the money keeps piling up. In addition, the warrant liability will not impact the Company’s liquidity until a business combination is completed, as they do not require cash settlement until such an event did not occur.
We intend to use substantially all of the funds held in the trust account, including interest (which interest will be net of regulatory withdrawals and taxes payable) to complete our business combination. In addition, we may need to obtain additional financing either to effect a business combination or because we become obligated to repurchase a substantial number of Class A common shares upon the consummation of a business combination. . Subject to compliance with applicable securities laws, we would only complete this financing concurrently with the completion of our business combination. If we are unable to complete our business combination because we do not have sufficient funds, we will be forced to cease our operations and liquidate the trust account. In addition, following our Business Combination, if cash is insufficient, we may need to obtain additional financing in order to meet our obligations. To the extent that our equity or debt is used, in whole or in part, in consideration for the completion of our business combination, the remaining proceeds held in our trust account, if any, will be used as to finance the operations of the target business(es), make other acquisitions and pursue our growth strategy. Following the closing of a business combination, we do not expect any proceeds to remain in our trust account.
From March 31, 2022 and December 31, 2021, respectively, we had no long-term debt, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities. In connection with the public offering, we entered into an administrative services agreement to pay monthly recurring expenses of $20,000 for The Gores group for offices, utilities and secretariat. Administrative
service contract ends at the earliest between the completion of a business combination or the liquidation of the Company.
Subscribers are entitled to discounts and subscription fees of 5.5% ($25,300,000), of which 2.0% ($9,200,000) was paid on the closing date of the IPO, and 3.5% ($16,100,000) have been reported. The Deferred Discount will become payable to the Underwriters from amounts held in the Trust Account only in the event that the Company completes a business combination, subject to the terms of the Underwriting Agreement. The underwriters are not entitled to any accrued interest on the deferred discount.
Recently issued accounting pronouncements not yet adopted
Management does not believe that the recently issued but not yet effective accounting pronouncements, if currently adopted, would have a material impact on the Company’s financial statements based on the Company’s current operations. The impact of any recently issued accounting standard will be reassessed on a regular basis or if a business combination is achieved when the impact could be material.
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