Item 1. Condensed Financial Statements
BILANDER ACQUISITION CORP.
CONDENSED BALANCE SHEETS
| |
June 30,
2022 | | |
December 31,
2021 | |
| |
(Unaudited) | | |
| |
Assets: | |
| | |
| |
Current assets: | |
| | | |
| | |
Cash | |
$ | 443,624 | | |
$ | 722,633 | |
Prepaid expenses | |
| 428,475 | | |
| 586,960 | |
Total current assets | |
| 872,099 | | |
| 1,309,593 | |
Deferred tax assets | |
| 705 | | |
| - | |
Investments held in Trust Account | |
| 168,590,341 | | |
| 168,530,964 | |
Total Assets | |
$ | 169,463,145 | | |
$ | 169,840,557 | |
| |
| | | |
| | |
Liabilities, Class A Common Stock Subject
to Possible Redemption and Stockholders’ Deficit: | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 1,054 | | |
$ | - | |
Accrued expenses | |
| 88,451 | | |
| 76,000 | |
Due to related party | |
| 19,995 | | |
| 5,380 | |
Franchise tax payable | |
| 23,004 | | |
| 96,358 | |
Total current liabilities | |
| 132,504 | | |
| 177,738 | |
Accrued liabilities | |
| 3,793,478 | | |
| 1,793,478 | |
Deferred underwriting commissions | |
| 5,898,059 | | |
| 5,898,059 | |
Derivative warrant liabilities | |
| 2,504,667 | | |
| 7,374,236 | |
Total Liabilities | |
| 12,328,708 | | |
| 15,243,511 | |
| |
| | | |
| | |
Commitments and Contingencies (Note 5) | |
| | | |
| | |
| |
| | | |
| | |
Class A common stock subject to possible redemption, $0.0001 par value; 16,851,598 shares at $10.00 per share redemption value at June 30, 2022 and December 31, 2021 | |
| 168,515,980 | | |
| 168,515,980 | |
| |
| | | |
| | |
Stockholders’ Deficit: | |
| | | |
| | |
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding at June 30, 2022 and December 31, 2021 | |
| - | | |
| - | |
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; none issued or outstanding (excluding 16,851,598 shares subject to possible redemption) at June 30, 2022 and December 31, 2021 | |
| - | | |
| - | |
Class B common stock, $0.000075 par value; 20,000,000 shares authorized; 5,617,199 shares issued and outstanding at June 30, 2022 and December 31, 2021 | |
| 421 | | |
| 421 | |
Additional paid-in capital | |
| - | | |
| - | |
Accumulated deficit | |
| (11,381,964 | ) | |
| (13,919,355 | ) |
Total stockholders’ deficit | |
| (11,381,543 | ) | |
| (13,918,934 | ) |
Total Liabilities,
Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit | |
$ | 169,463,145 | | |
$ | 169,840,557 | |
The accompanying notes are an integral part
of these unaudited interim condensed financial statements.
BILANDER ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
| |
For the three months
ended June 30, | | |
For the six
months ended
June 30, | | |
For the
period from February 5,
2021
(inception)
through
June 30, | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
General and administrative expenses | |
$ | 1,168,493 | | |
$ | 543 | | |
$ | 2,391,431 | | |
$ | 10,216 | |
Franchise tax expenses | |
| 50,000 | | |
| 50,000 | | |
| 100,050 | | |
| 79,639 | |
Loss from operations | |
| (1,218,493 | ) | |
| (50,543 | ) | |
| (2,491,481 | ) | |
| (89,855 | ) |
Other income: | |
| | | |
| | | |
| | | |
| | |
Change in fair value of derivative warrant liabilities | |
| 1,497,330 | | |
| - | | |
| 4,869,569 | | |
| - | |
Income from investments held in Trust Account | |
| 148,161 | | |
| - | | |
| 158,598 | | |
| - | |
Total other income | |
| 1,645,491 | | |
| - | | |
| 5,028,167 | | |
| - | |
Income (loss) before benefit from income taxes | |
| 426,998 | | |
| (50,543 | ) | |
| 2,536,686 | | |
| (89,855 | ) |
Benefit from income taxes | |
| 705 | | |
| - | | |
| 705 | | |
| - | |
Net income (loss) | |
$ | 427,703 | | |
$ | (50,543 | ) | |
$ | 2,537,391 | | |
$ | (89,855 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding of Class A common stock, basic and diluted | |
| 16,851,598 | | |
| - | | |
| 16,851,598 | | |
| - | |
Basic and diluted net income per share, Class A common stock | |
$ | 0.02 | | |
$ | - | | |
$ | 0.11 | | |
$ | - | |
Weighted average shares outstanding of Class B common stock, basic and diluted | |
| 5,617,199 | | |
| 5,000,000 | | |
| 5,617,199 | | |
| 5,000,000 | |
Basic and diluted net income (loss) per share, Class B common stock | |
$ | 0.02 | | |
$ | (0.01 | ) | |
$ | 0.11 | | |
$ | (0.02 | ) |
The accompanying notes are an integral part
of these unaudited interim condensed financial statements.
BILANDER ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ DEFICIT
FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
2022
| |
Common
Stock | | |
Additional | | |
| | |
Total | |
| |
Class
A | | |
Class
B | | |
Paid-In | | |
Accumulated | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance - December 31, 2021 | |
| - | | |
$ | - | | |
| 5,617,199 | | |
$ | 421 | | |
$ | - | | |
$ | (13,919,355 | ) | |
$ | (13,918,934 | ) |
Net income | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 2,109,688 | | |
| 2,109,688 | |
Balance - March 31, 2022 (unaudited) | |
| - | | |
| - | | |
| 5,617,199 | | |
| 421 | | |
| - | | |
| (11,809,667 | ) | |
| (11,809,246 | ) |
Net income | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 427,703 | | |
| 427,703 | |
Balance - June 30, 2022 (unaudited) | |
| - | | |
$ | - | | |
| 5,617,199 | | |
$ | 421 | | |
$ | - | | |
$ | (11,381,964 | ) | |
$ | (11,381,543 | ) |
FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND
FOR THE PERIOD FROM FEBRUARY 5, 2021 (INCEPTION) THROUGH JUNE 30, 2021
| |
Common
Stock | | |
Additional | | |
| | |
Total | |
| |
Class
A | | |
Class
B | | |
Paid-In | | |
Accumulated | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance - February 5, 2021 (inception) | |
| - | | |
$ | - | | |
| - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
Issuance of
Class B common stock to Sponsor (1)(2) | |
| - | | |
| - | | |
| 5,750,000 | | |
| 431 | | |
| 24,569 | | |
| - | | |
| 25,000 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (39,312 | ) | |
| (39,312 | ) |
Balance - March 31, 2021 (unaudited) | |
| - | | |
| - | | |
| 5,750,000 | | |
| 431 | | |
| 24,569 | | |
| (39,312 | ) | |
| (14,312 | ) |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (50,543 | ) | |
| (50,543 | ) |
Balance - June 30, 2021 (unaudited) | |
| - | | |
$ | - | | |
| 5,750,000 | | |
$ | 431 | | |
$ | 24,569 | | |
$ | (89,855 | ) | |
$ | (64,855 | ) |
(1) | This number includes up to 750,000 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 August 9, 2021, the underwriters partially exercised the over-allotment option to purchase an additional 1,851,598 Units. Subsequently, the Sponsor forfeited 132,801 shares of Class B common stock (see Notes 4 and 7). |
(2) | On April 30, 2021, the Company effected a 4:3 split of the Class B common stock, resulting in an aggregate of 5,750,000 shares of Class B common stock. All shares and associated amounts have been retroactively restated to reflect the stock split (see Notes 4 and 7). |
The accompanying notes are an integral part
of these unaudited interim condensed financial statements.
BILANDER ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
| |
For the
six months
ended
June 30,
2022 | | |
For the
period from
February 5, 2021
(inception) through
June 30, 2021 | |
Cash Flows from Operating Activities: | |
| | | |
| | |
Net income (loss) | |
$ | 2,537,391 | | |
$ | (89,855 | ) |
Adjustments to reconcile net income (loss) to net cash
used in operating activities: | |
| | | |
| | |
General and administrative expenses paid by related party
under promissory note | |
| - | | |
| 215 | |
Change in fair value of derivative warrant liabilities | |
| (4,869,569 | ) | |
| - | |
Income from investments held in Trust Account | |
| (158,598 | ) | |
| - | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Deferred tax asset | |
| (705 | ) | |
| - | |
Prepaid expenses | |
| 158,485 | | |
| - | |
Accounts payable | |
| 1,054 | | |
| 3,661 | |
Accrued expenses | |
| 12,451 | | |
| 6,000 | |
Due to related party | |
| 14,615 | | |
| - | |
Franchise tax payable | |
| (73,354 | ) | |
| 79,639 | |
Accrued liabilities | |
| 2,000,000 | | |
| - | |
Net cash used
in operating activities | |
| (378,230 | ) | |
| (340 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities | |
| | | |
| | |
Interest released from Trust Account | |
| 99,221 | | |
| - | |
Net cash provided
by investing activities | |
| 99,221 | | |
| - | |
| |
| | | |
| | |
Cash Flows from Financing Activities: | |
| | | |
| | |
Proceeds from issuance of Class B common stock to Sponsor | |
| - | | |
| 25,000 | |
Proceeds from note payable to related party | |
| - | | |
| 100,140 | |
Offering costs paid | |
| - | | |
| (99,800 | ) |
Net cash provided
by financing activities | |
| - | | |
| 25,340 | |
| |
| | | |
| | |
Net increase (decrease) in cash | |
| (279,009 | ) | |
| 25,000 | |
| |
| | | |
| | |
Cash - beginning
of the period | |
| 722,633 | | |
| - | |
Cash - end of
the period | |
$ | 443,624 | | |
$ | 25,000 | |
| |
| | | |
| | |
Supplemental disclosure of noncash
activities: | |
| | | |
| | |
Offering costs included in accounts payable | |
$ | - | | |
$ | 29,575 | |
Offering costs included in accrued expenses | |
$ | - | | |
$ | 374,643 | |
The accompanying notes are an integral part
of these unaudited interim condensed financial statements.
BILANDER ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 - Description of Organization and Business
Operations
Bilander Acquisition Corp. (the “Company”)
is a blank check company incorporated in Delaware on February 5, 2021. The Company was formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses
(the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to all of the
risks associated with emerging growth companies.
As of June 30, 2022, the Company had not commenced
any operations. All activity for the period from February 5, 2021 (inception) through June 30, 2022 relates to the Company’s formation
and the initial public offering (the “Initial Public Offering”), described below, and since the Initial Public Offering,
its search for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial
Business Combination, at the earliest. The Company generates non-operating income from the proceeds derived from the Initial Public Offering
and placed in a Trust Account (as defined below) and is subject to non-cash fluctuations in its statement of operations due to changes
in the fair value of its derivative warrant liabilities.
The Company’s sponsor is Bilander Holdings
LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public
Offering was declared effective on July 15, 2021. On July 20, 2021, the Company consummated its Initial Public Offering of 15,000,000
units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”),
at $10.00 per Unit, generating gross proceeds of $150.0 million, and incurring offering costs of approximately $8.9 million, of which
approximately $5.3 million was for deferred underwriting commissions and $218,000 was for offering costs allocated to derivative warrant
liabilities. The Company granted the underwriters a 45-day option to purchase up to an additional 2,250,000 Units at the Initial Public
Offering price to cover over-allotments. On August 9, 2021, the underwriters purchased an additional 1,851,598 Units pursuant to the
partial exercise of the over-allotment option. The over-allotment units were sold at the offering price of $10.00 per Unit, generating
additional gross proceeds to the Company of $18.5 million. The Company incurred additional offering costs of approximately $1.0 million
in connection with the over-allotment, of which approximately $0.6 million was for deferred underwriting commissions.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated a private placement (“Private Placement”) of 3,500,000 warrants (each, a “Private
Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant
to the Sponsor, generating proceeds of approximately $5.3 million (see Note 4). In connection with the partial exercise of the over-allotment
option on August 9, 2021, the Sponsor purchased an additional 246,880 Private Placement Warrants at a purchase price of $1.50 per Private
Placement Warrant, generating additional gross proceeds to the Company of $370,320.
Upon the closing of the Initial Public Offering,
the over-allotment and the Private Placement, $168.5 million ($10.00 per Unit) of the net proceeds of the sale of the Units in the Initial
Public Offering and over-allotment and of the Private Placement Warrants in the Private Placement were placed in a trust account (“Trust
Account”) located in the United States with American Stock Transfer & Trust Company acting as trustee, and invested only in
U.S. “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the
“Investment Company Act”), having a maturity of 185 days or less or in money market funds meeting certain conditions under
Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined
by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as
described below.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering, the over-allotment and the sale of Private
Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business
Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete
one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account
(net of amounts disbursed to management for working capital purposes and excluding the deferred underwriting commissions and taxes payable
on the interest earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the
Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the voting securities
of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act.
BILANDER ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Company will provide the holders of the Company’s
outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares
upon the completion of a Business Combination either (i) in connection with a stockholders meeting called to approve the Business Combination
or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or
conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their
Public Shares for a pro rata portion of the amount then held in the Trust Account (initially at $10.00 per Public Share, plus any pro
rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The
per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting
commissions that the Company will pay to the underwriters (as discussed in Note 5). These Public Shares were recorded at a redemption
value and classified as temporary equity in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting
Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.” The Company will proceed
with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. The Company will not redeem
the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not required
by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to
its Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant
to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the
SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company
decides to obtain stockholder approval for business or legal 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. Additionally, each public stockholder may elect
to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder
approval in connection with a Business Combination, the Initial Stockholders (as defined below) agreed to vote their Founder Shares (as
defined below in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination.
In addition, the Initial Stockholders agreed to waive their redemption rights with respect to their Founder Shares and Public Shares
in connection with the completion of a Business Combination.
Our Certificate of Incorporation provides that
a Public Stockholder, together with any affiliate of such Public Stockholder or any other person with whom such Public Stockholder is
acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares,
without the prior consent of the Company.
The Sponsor and any other holders of the Founder
Shares immediately prior to the Initial Public Offering (the “Initial Stockholders”), as well as the Company’s officers
and directors, agreed not to propose an amendment to the Certificate of Incorporation to modify the substance or timing of the Company’s
obligation to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period
(as defined below) or with respect to any other material provisions relating to stockholders’ rights or pre-initial Business Combination
activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with
any such amendment.
If the Company is unable to complete a Business
Combination within 24 months from the closing of the Initial Public Offering, or July 20, 2023, (or 27 months from the closing of the
Initial Public Offering, or October 20, 2023, if the Company has executed a letter of intent, agreement in principle or definitive agreement
for an initial Business Combination within 24 months from the closing of the Initial Public Offering) (the “Combination Period”),
the Company will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more
than ten business days thereafter, redeem the Public Shares, at a per share price, payable in cash, equal to the aggregate amount then
on deposit in the Trust Account calculated as of two business days prior to the consummation of the initial Business Combination, including
interest (net of amounts withdrawn to fund our working capital requirements, subject to an annual limit of $500,000, and/or to pay for
the Company’s taxes (“permitted withdrawals”) and up to $100,000 of interest to pay dissolution expenses), divided
by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any), subject to applicable law; and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate,
subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of
other applicable law.
BILANDER ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Initial Stockholders agreed to waive their
rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business
Combination within the Combination Period. However, if the Initial Stockholders acquire Public Shares in or after the Initial Public
Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company
fails to complete a Business Combination within the Combination Period. The underwriters agreed to waive their rights to the deferred
underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within
the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be
available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of
the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00. In order to protect the
amounts held in the Trust Account, the Sponsor agreed to be liable to the Company if and to the extent any claims by a third party (except
for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective
target business with which the Company has entered into a letter of intent, confidentiality or other similar agreement or business combination
agreement (a “Target”), 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 Public 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 Target that 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 of 1933, as amended (the “Securities
Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims
of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company
does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the
Trust Account.
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (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 an
emerging growth 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 an 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,
we, 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 financial statements with another public company that is neither an emerging growth company
nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.
BILANDER ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Liquidity and Going Concern
As of June 30, 2022, the Company had approximately
$444,000 in its operating bank account and working capital of approximately $740,000.
The Company’s liquidity needs prior to
the consummation of the Initial Public Offering were satisfied through the cash contribution of $25,000 from the Sponsor to purchase
Founder Shares (as defined in Note 4), and a loan from the Sponsor of approximately $100,000 under the Note (as defined in Note 4). The
Company repaid the Note in full on July 20, 2021 in connection with the Initial Public Offering, at which time the Note was terminated.
Subsequent to the consummation of the Initial Public Offering, the Company’s liquidity has been satisfied through the net proceeds
from the consummation of the Initial Public Offering, over-allotment and the Private Placement held outside of the Trust Account. In
addition, in order to finance business operations and transaction costs in connection with a Business Combination, the Sponsor or an
affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, provide the Company
Working Capital Loans (as defined in Note 4). As of June 30, 2022 and December 31, 2021, there were no amounts outstanding under any
Working Capital Loan.
In connection with management’s assessment
of going concern considerations in accordance with FASB ASC Topic 205-40 “Presentation of Financial Statements - Going Concern,”
as of June 30, 2022, the Company has sufficient liquidity to meet its obligations for the next twelve months from the date of issuance
of these condensed financial statements. The Company has determined that the Company may need access to funds from the Sponsor after
that to fund the working capital needs until the earlier of the consummation of an Initial Business Combination or a minimum one year
from the date of issuance of these condensed financial statements following this filing.
The Company has until July 20, 2023 to
consummate a Business Combination. It is uncertain whether the Company will be able to consummate a Business Combination by this
time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of
the Company. In connection with management’s assessment of going concern considerations, in accordance with FASB ASC Topic
205-40, “Presentation of Financial Statements - Going Concern,” management determined that the mandatory liquidation and
subsequent dissolution raises 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 July 20, 2023.
Note 2 - Basis of Presentation and Summary
of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial
statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America
(“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X 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 period presented. Operating results for the three and six months
ended June 30, 2022 and since inception are not necessarily indicative of the results that may be expected through December 31, 2022,
or any future period.
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 March 31, 2022.
BILANDER ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 liabilities at the date of the financial statements and the reported amounts of income and 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. Accordingly,
the actual results could differ significantly from those estimates.
The Company’s valuation of its Public and
Private Placement Warrants requires significant management estimates and judgments and is further described below.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal
Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on these accounts and management believes
the Company is not exposed to significant risks on such accounts.
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. As of June 30, 2022 and December 31, 2021, the
Company had no cash equivalents.
Investments Held in the Trust Account
The Company’s portfolio of investments
is comprised of (i) 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 (ii) investments in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by the Company. When
the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified
as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments
are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value
at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in income
on investments held in the Trust Account in the accompanying unaudited condensed statement of operations. The estimated fair values of
investments held in the Trust Account are determined using available market information.
Fair Value of Financial Instruments
Fair value is defined as the price that would
be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement
date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of:
| ● | Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments
in active markets; |
| ● | Level
2, defined as inputs other than quoted prices in active markets that are either directly
or indirectly observable such as quoted prices for similar instruments in active markets
or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring
an entity to develop its own assumptions, such as valuations derived from valuation techniques
in which one or more significant inputs or significant value drivers are unobservable. |
In some circumstances, the inputs used to measure
fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is
categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
BILANDER ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Derivative Financial Instruments
The Company does not use derivative instruments
to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all its financial instruments, including issued
Public Warrants (as defined below in Note 3) and Private Placement Warrants, to determine if such instruments are derivatives or contain
features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC
815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as
equity, is re-assessed at the end of each reporting period. Derivative liabilities related to the warrants will be classified as non-current
liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities,
while the derivative liabilities related to the over-allotment option given to the underwriters are classified as current liabilities
as it is a 45-day option.
The 7,250,000 warrants issued in connection with
the Initial Public Offering and the Private Placement (including the 3,750,000 Public Warrants, as defined in Note 4, included in the
Units and the 3,500,000 Private Placement Warrants) were recognized as derivative liabilities in accordance with ASC 815. Accordingly,
the Company recognizes 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. The fair value of the Public Warrants
and the Private Placement Warrants are estimated using Monte Carlo simulation and Black-Scholes option pricing model, respectively. The
determination of the fair value of the warrant liability may be subject to change as more current information becomes available and accordingly
the actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation
is not reasonably expected to require the use of current assets or require the creation of current liabilities.
The Company granted the underwriters a 45-day
option to purchase up to 2,250,000 additional Units solely to cover over-allotments, if any. The Company estimated the fair value of
the over-allotment option using a Black-Scholes model. On August 9, 2021, the underwriters partially exercised their over-allotment option
and subsequently, on August 29, 2021, the over-allotment option expired partially unexercised.
The Public Warrants and the Private Placement
Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments
as liabilities at fair value and adjusts the carrying value of the instruments to fair value at each reporting period until they are
exercised. The initial fair value of the Public Warrants issued in connection with the Initial Public Offering were estimated using a
Monte Carlo simulation model. The fair value of the Public Warrants as of June 30, 2022 and December 31, 2021, is based on quoted market
prices for such warrants. The fair value of the Private Placement Warrants as of June 30, 2022 and December 31, 2021, is determined using
a Black-Scholes option pricing model. The determination of the fair value of the warrant liability may be subject to change as more current
information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified
as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation
of current liabilities.
Offering Costs Associated with the Initial
Public Offering and Over-Allotment
Offering costs consisted of legal, accounting,
underwriting fees and other costs incurred through the Initial Public Offering and over-allotment that were directly related to the Initial
Public Offering and over-allotment. Offering costs were allocated to the separable financial instruments issued in the Initial Public
Offering and over-allotment based on a relative fair value basis, compared to total proceeds received. Offering costs associated with
derivative warrant liabilities were expensed as incurred and presented as non-operating expenses in the condensed statements of operations.
Offering costs associated with the Class A common stock issued were charged against the carrying value of the Class A common stock subject
to possible redemption upon the completion of the Initial Public Offering and over-allotment. The Company classifies deferred underwriting
commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require
the creation of current liabilities.
BILANDER ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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. Class A common stock subject to mandatory redemption
(if any) are classified as liability instruments and are 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 are classified as stockholders’ equity. The Company’s Class A common stock 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,
16,851,598 shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’
equity section of the Company’s condensed balance sheet.
The Company recognizes changes in redemption
value immediately as they occur and adjusts the carrying value of the Class A ordinary shares subject to possible redemption 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. Effective with the closing of the Initial Public Offering and the over-allotment option, the Company
recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to
the extent available) and accumulated deficit.
Income Taxes
The Company complies with the accounting and
reporting requirements of FASB ASC 740, “Income Taxes,” which requires an asset and liability approach to financial accounting
and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement
and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be realized. As of June 30, 2022, there was $705 of deferred tax assets
related to the net operating losses. As of December 31, 2021, there was no deferred tax asset.
FASB ASC 740 prescribes a recognition threshold
and a measurement attribute for the financial statement recognition and measurement of tax positions 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. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.
Net Income (Loss) Per Share of Common Stock
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share.” 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. Net income per
share of common stock is calculated by dividing the net income by the weighted average shares of common stock outstanding for the respective
period.
The calculation of diluted net income (loss)
does not consider the effect of the warrants underlying the Units sold in the Initial Public Offering (including the consummation of
the over-allotment) and the Private Placement Warrants to purchase an aggregate of 7,959,780 shares of Class A common stock in the calculation
of diluted income (loss) per share, because their exercise is contingent upon future events and their inclusion would be anti-dilutive
under the treasury stock method. The Company has considered the effect of Class B common stock that were excluded from the weighted average
number of basic shares outstanding as they were contingent on the exercise of over-allotment option by the underwriters. Though the contingency
was satisfied, the Company had losses for the period from February 5, 2021 (inception) through June 30, 2021. As such these shares were
not included in the weighted average number as their inclusion would be anti-dilutive under the treasury stock method. Accretion associated
with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value.
BILANDER ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The table below presents a reconciliation of
the numerator and denominator used to compute basic and diluted net loss per share for each class of common stock:
| |
For
the three months ended
June 30, | | |
For
the six months ended June 30, | | |
For
the
period from
February 5,
2021
(inception)
through
June 30, | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
| |
Class
A | | |
Class
B | | |
Class
B | | |
Class
A | | |
Class
B | | |
Class
B | |
Basic
and diluted net income (loss) per common stock: | |
| | |
| | |
| | |
| | |
| | |
| |
Numerator: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Allocation
of net income (loss) | |
$ | 320,777 | | |
$ | 106,926 | | |
$ | (50,543 | ) | |
$ | 1,903,043 | | |
$ | 634,348 | | |
$ | (89,855 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Denominator: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic
and diluted weighted average common stock outstanding | |
| 16,851,598 | | |
| 5,617,199 | | |
| 5,000,000 | | |
| 16,851,598 | | |
| 5,617,199 | | |
| 5,000,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic
and diluted net income (loss) per common stock | |
$ | 0.02 | | |
$ | 0.02 | | |
$ | (0.01 | ) | |
$ | 0.11 | | |
$ | 0.11 | | |
$ | (0.02 | ) |
Recent Accounting Pronouncements
In June 2022, the FASB issued ASU 2022-03, ASC
Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The ASU amends ASC 820
to clarify that a contractual sales restriction is not considered in measuring an equity security at fair value and to introduce new
disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. The ASU applies
to both holders and issuers of equity and equity-linked securities measured at fair value. The amendments in this ASU are effective for
the Company in fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted
for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is still evaluating
the impact of this pronouncement on the condensed financial statements.
The Company’s management does not believe
that any recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on
the accompanying financial statements.
Note 3 - Initial Public Offering
On July 20, 2021, the Company consummated its
Initial Public Offering of 15,000,000 Units, at $10.00 per Unit, generating gross proceeds of $150.0 million, and incurring offering
costs of approximately $8.9 million, of which approximately $5.3 million was for deferred underwriting commissions and $218,000 was for
offering costs allocated to derivative warrant liabilities. On August 9, 2021, the underwriters purchased an additional 1,851,598 Units
pursuant to the partial exercise of the over-allotment option. The over-allotment units were sold at an offering price of $10.00 per
Unit, generating additional gross proceeds to the Company of $18.5 million. The Company incurred additional offering cost of approximately
$1.0 million in connection with the over-allotment, of which approximately $0.6 million was for deferred underwriting commissions.
Each Unit consists of one share of Class A common
stock and one-fourth of one redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles the holder to purchase
one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7).
Note 4 - Related Party Transactions
Founder Shares
On February 11, 2021, the Sponsor purchased 4,312,500
shares of the Company’s Class B common stock, par value $0.0001 per share, (the “Founder Shares”) for an aggregate
purchase price of $25,000. In February 2021, the Sponsor transferred 12,500 Founder Shares to each of Messrs. Kirkpatrick, Wagner, Thompson
and Ms. Wellman. On April 30, 2021, the Company effected a 4:3 split of the Founder Shares, resulting in an aggregate of 5,750,000 Founder
Shares, par value $0.000075, 5,683,332 shares of which were held by the Sponsor and 66,668 shares of which were held by the officers
and directors. All share and per share amounts have been retroactively restated. In May 2021, the Company nominated Mr. Janetschek as
director and assigned him 16,667 Founder Shares, which together resulted in the Sponsor holding 5,666,665 Founder Shares and the officers
and directors holding 83,335 Founder Shares. The 83,335 Founder Shares held by the officers and directors would not have been subject
to forfeiture in the event the underwriters’ over-allotment option were not exercised. The Initial Stockholders agreed to forfeit
up to 750,000 Founder Shares to the extent that the over-allotment option is not exercised in full by the underwriters, such that the
Founder Shares will represent 25% of the Company’s issued and outstanding shares after the Initial Public Offering. On August 9,
2021, the underwriters partially exercised the over-allotment option to purchase an additional 1,851,598 Units. Subsequently, the Sponsor
forfeited 132,801 shares of Class B common stock.
BILANDER ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
On May 9, 2022, Ms. Alexi A. Wellman resigned
from our Board effective immediately. Ms. Wellman transferred back to the Sponsor 8,334 shares of Class B common stock following her
resignation and retained the remaining 8,333 shares of Class B common stock received upon the Company’s initial public offering.
The Founder Shares will automatically convert
into Class A common stock after the initial Business Combination (i) when certain triggering events based on our shares of Class A common
stock trading at $12.00, $15.00 and $18.00 per share for any 20 trading days within a 30-trading day period commencing any time after
the completion of the initial Business Combination or (ii) upon specified strategic transactions, in each case prior to the ten year
anniversary of the initial Business Combination, and as further described in the final prospectus filed with the SEC on July 19, 2021.
The Initial Stockholders agreed, subject to limited
exceptions, not to transfer, assign or sell any of the Founder Shares; provided, that any Class A common stock issued upon conversion
of the Founder Shares will not be subject to such restrictions on transfer after one year has passed since the completion of the initial
Business Combination.
Private Placement Warrants
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the Private Placement of 3,500,000 Private Placement Warrants at a price of $1.50 per Private
Placement Warrant to the Sponsor, generating proceeds of approximately $5.3 million. In connection with the exercise of the over-allotment
option on August 9, 2021, the Sponsor purchased an additional 246,880 Private Placement Warrants at a purchase price of $1.50 per Private
Placement Warrant, generating additional gross proceeds to the Company of $370,320.
Each Private Placement Warrant is exercisable
for one whole share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement
Warrants to the Sponsor was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not
complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. Except as set forth
below, the Private Placement Warrants will be non-redeemable for cash and exercisable on a cashless basis so long as they are held by
the Sponsor or their permitted transferees.
The Sponsor and the Company’s officers
and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30
days after the completion of the initial Business Combination.
Related Party Loans
On February 11, 2021, the Sponsor agreed to loan
the Company an aggregate of up to $350,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the
“Note”). This loan was non-interest bearing and payable upon the completion of the Initial Public Offering. The Company borrowed
approximately $100,000 under the Note and it was repaid in full on July 20, 2021. Subsequent to the repayment, the facility was no longer
available to the Company.
In addition, in order to finance transaction
costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers
and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the
Company completes a 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 a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the
Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital
Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1.5 million of
such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant.
The warrants would be identical to the Private Placement Warrants. Except for the foregoing, the terms of such Working Capital Loans,
if any, have not been determined and no written agreements exist with respect to such loans. As of June 30, 2022 and December 31, 2021,
the Company has an immaterial amount due to an affiliate of the Sponsor and had no borrowings under the Working Capital Loans.
BILANDER ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Due to Related Party
An affiliate of the Company paid general and
administrative expenses on behalf of the Company. An aggregate of $19,995 and $5,380, as reflected in the accompanying condensed balance
sheets is outstanding as of June 30, 2022 and December 31, 2021, respectively. These amounts are due on demand and are non-interest bearing.
Consulting Agreement
As contemplated in our Registration Statement,
the Company entered into a Consulting Agreement with Shipyard Advisors, L.P. (“Shipyard”), dated as of August 28, 2021, pursuant
to which Shipyard will provide consulting services in connection with the Company’s search for a target business and completion
of the Company’s initial business combination. The Company will pay Shipyard $1,000,000 per fiscal quarter payable from July 20,
2021 until the earlier of the closing of a Business Combination and July 20, 2023. The payment is deferred until the closing of a Business
Combination or such other date as the parties mutually agree, and either party may terminate this agreement upon thirty (30) days’
prior written notice to the other party. Shipyard is the managing member of the Sponsor. Mr. James H. Greene, Jr. and Mr. Adam H. Clammer
are the managing members of Shipyard Advisors GP, LLC, which is the general partner of Shipyard. As of June 30, 2022 and December 31,
2021, the Company incurred approximately $3,793,000 and approximately $1,793,000, respectively, in expenses related to this agreement,
which was included in accrued liabilities on the unaudited condensed balance sheets.
Note 5 - Commitments and Contingencies
Forward Purchase Agreements
In connection with the consummation of the Initial
Public Offering, the Company has entered into forward purchase agreements with certain institutional accredited investors (“Forward
Purchasers”) that will provide for the aggregate purchase of at least $50,000,000 of Class A common stock at $10.00 per share,
in a private placement that will close concurrently with the closing of the Business Combination. The Forward Purchasers’ commitments
under the forward purchase agreements are subject to certain conditions described in the prospectus for the Initial Public Offering.
The obligations under the forward purchase agreements will not depend on whether any shares of Class A common stock are redeemed by the
Company’s Public Stockholders. The Forward Purchasers will not receive any Class B common stock or warrants as part of the forward
purchase agreements; these shares will be identical to the shares of Class A common stock included in the Units being sold in the Initial
Public Offering, except that the forward purchase shares will be subject to certain transfer restrictions and have certain registration
rights.
Registration and Stockholder Rights
The holders of Founder Shares, Private Placement
Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of common stock issuable upon the exercise
of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder
Shares), as well as the Forward Purchasers and their permitted transferees, were entitled to registration rights pursuant to a registration
and stockholder rights agreement signed upon the consummation of the Initial Public Offering. These holders will be entitled to certain
demand and “piggyback” registration rights. The Company will bear the expenses incurred in connection with the filing of
any such registration statements.
BILANDER ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Underwriting Agreement
The underwriters were entitled to an underwriting
discount of $0.20 per Unit, or $3.4 million in the aggregate, paid upon the closing of the Initial Public Offering (including over-allotment).
An additional fee of $0.35 per Unit, or approximately $5.9 million in the aggregate will be payable to the underwriters for deferred
underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely
in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Risks and Uncertainties
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 pandemic could have a negative
effect on the Company’s financial position, and the results of its operations and/or search for a target company, the specific
impact is not readily determinable as of the date of the financial statement. The financial statement does 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 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 financial statements.
Note 6 - Derivative Warrant Liabilities
As of June 30, 2022 and December 31, 2021, in
connection with the Initial Public Offering and over-allotment, the Company had 4,212,900 Public Warrants and 3,746,880 Private Placement
Warrants outstanding.
Public Warrants may only be exercised for a whole
number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade.
The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months
from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under
the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus
relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless
exercise is exempt from registration under the Securities Act). The Company agreed that as soon as practicable, but in no event later
than 15 business days after the closing of the initial Business Combination, the Company will use its best efforts to file with the SEC
and have an effective registration statement covering 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. If a registration
statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the
closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and
during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless
basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Company’s
shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they
satisfy 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 elect, it will not be required to file or maintain in effect a registration
statement, and in the event the Company does not so elect, it will use our best efforts to register or qualify the shares under applicable
blue sky laws to the extent an exemption is not available.
The warrants have an exercise price of $11.50
per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption
or liquidation. 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 the initial Business Combination at an issue price or effective issue price of less
than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the 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
the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the
volume weighted average trading price of Class A common stock during the 20 trading day period starting on the trading day prior to the
day on which the Company consummates its 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, the $18.00 per share redemption trigger price 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 price will be adjusted (to
the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
BILANDER ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Private Placement Warrants are identical
to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of the
Private Placement Warrants will not be transferable, assignable or salable until the completion of a Business Combination, subject to
certain limited exceptions. Additionally, except as set forth below, the Private Placement Warrants will be non-redeemable so long as
they are held by the Sponsor or their permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor
or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the
same basis as the Public Warrants.
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 for cash (except as described herein with respect to the Private Placement Warrants):
|
● |
in whole and not in part; |
|
● |
at a price of $0.01 per warrant; |
|
|
|
|
● |
upon a minimum of 30 days’ prior written notice of redemption;
and |
| ● | if, and only if, the closing price of 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 to the date on which the Company sends the notice of redemption to the warrant holders (the “Reference Value”). |
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 (except as described with respect to the Private Placement Warrants):
|
● |
in whole and not in part; |
|
● |
at $0.10 per warrant upon a minimum of 30 days’ prior written
notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive
that number of shares determined by reference to an agreed table based on the redemption date and the fair market value of the Shares
of Class A common stock; and |
| ● | if, and only if, the closing price of the Shares of Class A common stock equals or exceeds $10.00 per public share (as adjusted) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders. |
In no event will the Company be required to net
cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates
the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will
they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly,
the warrants may expire worthless.
BILANDER ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 7 - Class A Common Stock Subject to Possible
Redemption
The Company’s Class A common stock features
certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events.
The Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s
Class A common stock are entitled to one vote for each share. As of June 30, 2022 and December 31, 2021, there were 16,851,598 Class
A common stock outstanding, all of which were subject to possible redemption.
The Class A common stock subject to possible
redemption reflected on the condensed balance sheet is reconciled on the following table:
Gross proceeds | |
$ | 168,515,980 | |
Less: | |
| | |
Fair value of Public Warrants at issuance | |
| (3,827,481 | ) |
Fair value of over-allotment option liabilities | |
| (16,852 | ) |
Offering costs allocated to Class A common stock subject to possible redemption | |
| (9,725,650 | ) |
Plus: | |
| | |
Accretion on Class A common stock subject to possible redemption amount | |
| 13,569,983 | |
Class A common stock subject to possible redemption | |
$ | 168,515,980 | |
Note 8 - Stockholders’ Deficit
Preferred Stock - The Company is
authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights
and preferences as may be determined from time to time by the Company’s board of directors. As of June 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 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of June 30, 2022 and December
31, 2021, there were 16,851,598 shares of Class A common stock issued and outstanding, which were all subject to possible redemption
and have been classified as temporary equity (see Note 7).
Class B Common Stock - The Company
is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.000075 per share. As of June 30, 2022 and December
31, 2021, 5,617,199 shares of Class B common stock were issued and outstanding with no shares subject to forfeiture (see Note 4).
Common stockholders of record are entitled to
one vote for each share held on all matters to be voted on by stockholders. Holders of Class B common stock will have the right to elect
all of the Company’s directors prior to the consummation of the initial Business Combination. On any other matter submitted to
a vote of the Company’s stockholders, holders of Class B common stock and holders of Class A common stock will vote together as
a single class, except as required by applicable law or stock exchange rule.
The shares of Class B common stock, divided into
three tranches equal to 40%, 40% and 20% of the shares of Class B common stock outstanding upon the completion of this offering, will
automatically convert into shares of Class A common stock on a one-for-one basis (subject to adjustment as provided herein) after our
initial Business Combination when the triggering event corresponding to each such tranche based on the shares trading at $12.00, $15.00
or $18.00 per share for any 20 trading days within a 30-trading day period occurs prior to the ten year anniversary of our initial Business
Combination. 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 sold in the Initial Public Offering 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 anti-dilution 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 each tranche of Class B common stock will
equal, in the aggregate, on an as-converted basis, at a “conversion ratio” of 10%, 10% or 5% (based on varying price triggers
as discussed in more detail below) of the total number of all shares of common stock outstanding upon completion of the Initial Public
Offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial
Business Combination (including the forward purchase shares), excluding any shares or equity-linked securities issued, or to be issued,
to any seller in the initial Business Combination in consideration for such seller’s interest in the Business Combination target
and any Private Placement Warrants issued upon the conversion of Working Capital Loans made to the Company.
BILANDER ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 9 - Fair Value Measurements
The following tables present information about
the Company’s assets and liabilities that are measured at fair value on a recurring basis and indicate the fair value hierarchy
of the valuation techniques that the Company utilized to determine such fair value.
June 30, 2022
Description | |
Quoted Prices in Active
Markets (Level 1) | | |
Significant Other Observable
Inputs (Level 2) | | |
Significant Other Unobservable
Inputs (Level 3) | |
Assets: | |
| | |
| | |
| |
Investments held in Trust Account - U.S. Treasury Securities | |
$ | 168,590,341 | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | |
Liabilities: | |
| | | |
| | | |
| | |
Derivative warrant liabilities - Public Warrants | |
$ | - | | |
$ | 1,316,531 | | |
$ | - | |
Derivative warrant liabilities - Private Warrants | |
$ | - | | |
$ | - | | |
$ | 1,188,136 | |
December 31, 2021
Description | |
Quoted Prices in Active
Markets (Level 1) | | |
Significant Other Observable
Inputs (Level 2) | | |
Significant Other Unobservable
Inputs (Level 3) | |
Assets: | |
| | | |
| | | |
| | |
Investments held in Trust Account - U.S. Treasury Securities | |
$ | 168,530,964 | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | |
Liabilities: | |
| | | |
| | | |
| | |
Derivative warrant liabilities - Public Warrants | |
$ | 3,875,025 | | |
$ | - | | |
$ | - | |
Derivative warrant liabilities - Private Warrants | |
$ | - | | |
$ | - | | |
$ | 3,499,211 | |
Transfers to/from Levels 1, 2 and 3 are recognized
at the beginning of the reporting period. The estimated fair value of Public Warrants was transferred from a Level 3 measurement to a
Level 1 measurement, when the Public Warrants were separately listed and traded in an active market in September 2021. The estimated
fair value of Public Warrants was transferred from a Level 1 measurement to a Level 2 measurement due to lack of trading activity as
of June 30, 2022. There were no other transfers to/from Levels 1, 2, and 3 during the six months ended June 30, 2022.
Level 1 assets include investments in U.S. government
securities. The Company uses inputs such as actual trade data, quoted market prices from dealers or brokers, and other similar sources
to determine the fair value of its investments.
For periods where no observable traded price
is available, the fair value of the Public Warrants has been estimated using a Monte Carlo simulation and the Private Placement Warrants
have been estimated using Black-Scholes option pricing model. For periods subsequent to the detachment of the Public Warrants from the
Units, the fair value of the Public Warrants is based on the quoted market price for such warrants and the fair value of the Private
Placement Warrants continue to be estimated using the Black-Scholes option pricing model. For the three and six months ended June 30,
2022, the Company recognized gain on the unaudited condensed statements of operations resulting from a decrease in the fair value of
liabilities of approximately $1.5 million and $4.9 million, respectively, presented as change in fair value of derivative warrant liabilities
on the accompanying unaudited condensed statements of operations.
BILANDER ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The estimated fair value of the Public Warrants
and Private Placement Warrants, prior to the Public Warrants being traded in an active market, was determined using Level 3 inputs. Inherent
in a Monte Carlo simulation and a Black-Scholes option 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 warrants based on implied volatility from
the Company’s traded warrants and from historical volatility of select peer companies’ common stock that match 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 assumed to be equivalent to their
remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.
The following table provides quantitative information
regarding Level 3 fair value measurements input at their measurement dates:
| |
As of June 30, 2022 | |
As of December 31, 2021 |
Exercise price | |
$11.50 | |
$11.50 |
Stock price | |
$9.68 | |
$9.73 |
Volatility | |
3.0% - 3.9% | |
5% - 15.2% |
Term (years) | |
5.53 | |
5.78 |
Risk-free rate | |
3.02% | |
1.33% |
Dividend yield | |
0.0% | |
0.0% |
The change in the fair value of the derivative
liabilities, measured using Level 3 inputs, for the six months ended June 30, 2022, is summarized as follows:
Derivative liabilities at December 31, 2021 | |
$ | 3,499,211 | |
Change in fair value of derivative warrant liabilities | |
| (1,603,664 | ) |
Derivative liabilities at March 31, 2022 (unaudited) | |
| 1,895,547 | |
Change in fair value of derivative warrant liabilities | |
| (707,411 | ) |
Derivative liabilities at June 30, 2022 (unaudited) | |
$ | 1,188,136 | |
Note 10 - Subsequent Events
The Company evaluated subsequent events and transactions
that occurred up to the date condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent
events that would have required adjustment to or disclosure in the condensed financial statements.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References
to the “Company,” “Bilander Acquisition Corp.,” “our,” “us” or “we” refer
to Bilander Acquisition Corp. The following discussion and analysis of the Company’s financial condition and results of operations
should be read in conjunction with the unaudited interim condensed financial statements and the notes thereto contained elsewhere in
this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve
risks and uncertainties.
Cautionary
Note Regarding Forward-Looking Statements
This
Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (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. For
information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking
statements, please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public Offering filed with
the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR
section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any
intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We
are a blank check company incorporated in Delaware on February 5, 2021. We were formed for the purpose of effecting a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business
Combination”). We are an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth
companies.
As
of June 30, 2022, we had not commenced any operations. All activity for the period from February 5, 2021 (inception) through June 30,
2022 relates to our formation and the initial public offering (the “Initial Public Offering”), described below and subsequent
to the Initial Public Offering, the search for a Business Combination target. We will not generate any operating revenues until after
the completion of the initial Business Combination, at the earliest. We will generate non-operating income in the form of interest income
from the proceeds derived from the Initial Public Offering.
Our
sponsor is Bilander Holdings LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for our
Initial Public Offering was declared effective on July 15, 2021 (the “Registration Statement”). On July 20, 2021, we consummated
our Initial Public Offering of 15,000,000 units (the “Units” and, with respect to the Class A common stock included in the
Units being offered, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $150.0 million, and incurring
offering costs of approximately $8.9 million, of which approximately $5.3 million was for deferred underwriting commissions and $218,000
was for offering costs allocated to derivative warrant liabilities. We granted the underwriter a 45-day option to purchase up to an additional
2,250,000 Units at the Initial Public Offering price to cover over-allotments, if any. On August 9, 2021, the underwriters purchased
an additional 1,851,598 Units pursuant to the partial exercise of the over-allotment option. The over-allotment units were sold at an
offering price of $10.00 per Unit, generating additional gross proceeds of $18.5 million. We incurred additional offering cost of approximately
$1.0 million in connection with the over-allotment, of which approximately $0.6 million was for deferred underwriting commissions and
approximately $23,000 of the offering costs was allocated to derivative warrant liabilities.
Simultaneously
with the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 3,500,000
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price
of $1.50 per Private Placement Warrant to the Sponsor, generating proceeds of approximately $5.3 million (see Note 4). In connection
with the exercise of the over-allotment option on August 9, 2021, the Sponsor purchased an additional 246,880 Private Placement Warrants
at a purchase price of $1.50 per Private Placement Warrant, generating additional gross proceeds of $370,320.
Upon
the closing of the Initial Public Offering, over-allotment and the Private Placement, $168.5 million ($10.00 per Unit) of the net proceeds
of the sale of the Units in the Initial Public Offering, over-allotment and of the Private Placement Warrants in the Private Placement
were placed in a trust account (“Trust Account”) located in the United States with American Stock Transfer & Trust Company
acting as trustee, and invested only in U.S. “government securities” within the meaning of Section 2(a)(16) of the Investment
Company Act of 1940, as amended (the “Investment Company Act”), having a maturity of 185 days or less or in money market
funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government
treasury obligations, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution
of the Trust Account as described below.
Liquidity
and Going Concern
At
June 30, 2022, we had operating cash of approximately $444,000 and working capital of approximately $740,000.
Our
liquidity needs up to June 30, 2022 had been satisfied through the cash receipt of $25,000 from the Sponsor to purchase Founder Shares
(as defined in Note 4), and loan from the Sponsor of approximately $100,000 under the Note (as defined in Note 4). We repaid the Note
in full on July 20, 2021. Subsequent to the consummation of the Initial Public Offering, our liquidity has been satisfied through the
net proceeds from the consummation of the Initial Public Offering, over-allotment and the Private Placement held outside of the Trust
Account. In addition, in order to finance business operations and transaction costs in connection with a Business Combination, the Sponsor
or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, provide us Working Capital Loans
(as defined in Note 4). As of June 30, 2022, the Company has an immaterial amount due to an affiliate of the Sponsor and there were no
amounts outstanding under any Working Capital Loan.
Management
has determined that the Company has access to funds from the Sponsor or an affiliate of the Sponsor, or certain of the Company’s
officers and directors to meet its need through the earlier consummation of a Business Combination or one year from this filing. Over
this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective
initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting
the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
Our
management continues to evaluate the impact of the COVID-19 pandemic and has concluded that the specific impact is not readily determinable
as of the date of the financial statements. The unaudited condensed financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
We
have until July 20, 2023 to consummate a Business Combination. It is uncertain whether the Company will be able to consummate a
Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation
and subsequent dissolution of the Company. In connection with the Company’s assessment of going concern considerations, in
accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification
(“ASC”) Topic 205-40, “Presentation of Financial Statements - Going Concern,” management determined that the
mandatory liquidation and subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going
concern. The condensed financial statements do not include any adjustment that might be necessary if the Company is unable to
continue as a going concern.
Results
of Operations
Our
entire activity since inception up to June 30, 2022 was in preparation for our Initial Public Offering and since the Initial Public Offering,
our search for prospective Business Combination. We will not generate any operating revenues until the closing and completion of our
initial Business Combination. We generate non-operating income in the form of investment income from our investments held in the Trust
Account. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and
auditing compliance), as well as for due diligence expenses.
For
the three months ended June 30, 2022, we had a net income of approximately $428,000, which consisted of a non-cash gain of approximately
$1.5 million for the change in fair value of derivative warrant liabilities, approximately $148,000 of income from investments held in
the Trust Account, which was offset by approximately $1.2 million in general and administrative expenses and approximately $50,000 in
franchise tax expenses.
For
the three months ended June 30, 2021, we had a net loss of approximately $51,000, which consisted of approximately $1,000 in general
and administrative expenses and approximately $50,000 in franchise tax expense.
For
the six months ended June 30, 2022, we had a net income of approximately $2.5 million, which consisted of a non-cash gain of approximately
$4.9 million for the change in fair value of derivative warrant liabilities, approximately $159,000 of income from investments held in
the Trust Account, which was offset by approximately $2.4 million in general and administrative expenses and approximately $100,000 in
franchise tax expenses.
For
the period from February 5, 2021 (inception) through June 30, 2021, we had a net loss of approximately $90,000, which consisted of approximately
$10,000 in general and administrative expenses and approximately $80,000 in franchise tax expense.
Contractual
Obligations
Registration
Rights
The
holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any
shares of common stock issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working
Capital Loans and upon conversion of the Founder Shares), as well as the Forward Purchasers and their permitted transferees, were entitled
to registration rights pursuant to a registration and stockholder rights agreement signed upon the consummation of the Initial Public
Offering. These holders will be entitled to certain demand and “piggyback” registration rights. We will bear the expenses
incurred in connection with the filing of any such registration statements.
Underwriting
Agreement
The
underwriters were entitled to an underwriting discount of $0.20 per Unit, or $3.4 million in the aggregate, paid upon the closing of
the Initial Public Offering (including over-allotment). In addition, the underwriters will be entitled to a deferred fee of $0.35 per
Unit, or $5.9 million in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account
solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
Critical
Accounting Policies
Derivative
Financial Instruments
We
do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial
instruments, including issued Public Warrant and Private Placement Warrants, to determine if such instruments are derivatives or contain
features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC
815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as
equity, is re-assessed at the end of each reporting period.
The
Public Warrants and the Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly,
we recognize the warrant instruments as liabilities at fair value and adjust the carrying value of the instruments to fair value at each
reporting period until they are exercised. The initial fair value of the Public Warrants issued in connection with the Initial Public
Offering were estimated using a Monte Carlo simulation model. The fair value of the Public Warrants as of June 30, 2022 and December
31, 2021, is based on quoted market prices for such warrants. The fair value of the Private Placement Warrants as of June 30, 2022 and
December 31, 2021, is determined using a Black-Scholes option pricing model. The determination of the fair value of the warrant liability
may be subject to change as more current information becomes available and accordingly the actual results could differ significantly.
Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the
use of current assets or require the creation of current liabilities.
We
granted the underwriters a 45-day option to purchase up to 2,250,000 additional Units solely to cover over-allotments, if any. We estimated
the fair value of the over-allotment option using a Black-Scholes model. On August 9, 2021, the underwriters partially exercised their
over-allotment option and subsequently, on August 29, 2021, the over-allotment option expired partially unexercised.
Offering
Costs Associated with the Initial Public Offering and Over-Allotment
Offering
costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering and over-allotment
that were directly related to the Initial Public Offering and over-allotment. Offering costs were allocated to the separable financial
instruments issued in the Initial Public Offering and over-allotment based on a relative fair value basis, compared to total proceeds
received. Offering costs associated with derivative warrant liabilities were expensed as incurred and presented as non-operating expenses
in the condensed statements of operations. Offering costs associated with the Class A common stock issued were charged against the carrying
value of the Class A common stock subject to possible redemption upon the completion of the Initial Public Offering and over-allotment.
We classify deferred underwriting commissions as non-current liabilities because their liquidation is not reasonably expected to require
the use of current assets or require the creation of current liabilities.
Class
A Common Stock Subject to Possible Redemption
We
account for our Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480. Class A common
stock subject to mandatory redemption (if any) are classified as liability instruments and are 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 are classified as stockholders’ equity. Our Class A common stock features certain
redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly,
16,851,598 shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’
equity section of our condensed balance sheet.
We
recognize changes in redemption value immediately as they occur and adjusts the carrying value of the Class A ordinary shares subject
to possible redemption 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. Effective with the closing of the Initial Public Offering and the over-allotment
option, we recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in
capital (to the extent available) and accumulated deficit.
Net
Income (Loss) Per Share of Common Stock
We
comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” We have two classes of shares,
which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes
of shares. Net income per share of common stock is calculated by dividing the net income by the weighted average shares of common stock
outstanding for the respective period.
The
calculation of diluted net income (loss) does not consider the effect of the warrants underlying the Units sold in the Initial Public
Offering (including the consummation of the over-allotment) and the Private Placement Warrants to purchase an aggregate of 7,959,780
shares of Class A common stock in the calculation of diluted income (loss) per share, because their exercise is contingent upon future
events and their inclusion would be anti-dilutive under the treasury stock method. We have considered the effect of Class B common stock
that were excluded from the weighted average number of basic shares outstanding as they were contingent on the exercise of over-allotment
option by the underwriters. Since the contingency was satisfied, we have included these shares in the weighted average number as of the
beginning of the interim period to determine the dilutive impact of these shares. Accretion associated with the redeemable Class A common
stock is excluded from earnings per share as the redemption value approximates fair value.
Recent
Accounting Pronouncements
In
June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale
Restrictions”. The ASU amends ASC 820 to clarify that a contractual sales restriction is not considered in measuring an equity
security at fair value and to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that
are measured at fair value. The ASU applies to both holders and issuers of equity and equity-linked securities measured at fair value.
The amendments in this ASU are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within
those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made
available for issuance. The Company is still evaluating the impact of this pronouncement on the condensed financial statements.
Our
management does not believe that any other recently issued, but not yet effective, accounting standards updates, if currently adopted,
would have a material effect on the accompanying financial statements.
Off-Balance
Sheet Arrangements
As
of June 30, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
JOBS
Act
The
JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify
as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements
based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such
standards is required for non-emerging growth companies. As a result, the financial statements may not be comparable to companies that
comply with new or revised accounting pronouncements as of public company effective dates.
Additionally,
we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject
to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions
we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over
financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted
by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about
the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items
such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee
compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until
we are no longer an “emerging growth company,” whichever is earlier.