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Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
Results of Operations and Known Trends or Future Events
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities, those necessary to prepare for our Initial Public Offering and identifying a target company for our initial Business Combination. We do not expect to generate any operating revenues until after completion of our initial Business Combination. We generate
non-operating
income in the form of interest income on cash and cash equivalents held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the period from January 27, 2021 (inception) through September 30, 2021, we had a net income of $6,692,179. We recorded a gain on the change in fair value of warrants of $8,689,999 and a change in value of over-allotment liability of $10,676, offset by $233,453 of offering costs allocated to warrants, $267,150 of stock compensation expense, and $1,518,441 of formation and operating costs consisting mostly of general and administrative expenses.
For the three months ended September 30, 2021, we had a net income of $3,519,558. We recorded a gain on the change in fair value of warrants of $4,620,000, offset by $1,103,855 of formation and operating costs consisting mostly of general and administrative expenses.
As a result of the restatement described in Note 2 to the financial statements included herein, we have
re-evaluated
our application of ASC 718, “Compensation—Stock Compensation,” and note that the transfer of the Class B Ordinary shares is in the scope of ASC 718. We have, as such, recorded compensation expense related to the Founders Shares within our accompanying condensed financial statements.
In addition to our
re-evaluation
of ASC 718, we also
re-evaluated
our application of ASC 480, “Distinguishing Liabilities from Equity,” for the underwriter’s over-allotment option, of which we recorded a liability and changed in value of the over-allotment liability within the condensed financial statements.
Furthermore, we have analyzed the impacts of deferred legal fees that were not recorded in the original filing of the Form
10-Q
for the period ended September 30, 2021. These deferred legal fees have been recorded and are presented within the financial statements of this quarterly report.
Liquidity and Capital Resources
As of September 30, 2021, the Company had approximately $487,000 in its operating bank account, and working capital deficit of approximately $29,000. All remaining cash held in the Trust Account is generally unavailable for the Company’s use, prior to an initial Business Combination, and is restricted for use either in a Business Combination or to redeem Class A ordinary shares. As of September 30, 2021, none of the amount in the Trust Account was available to be withdrawn as described above.
Through September 30, 2021, the Company’s liquidity needs were satisfied through receipt of $25,000 from the sale of the Founder Shares and the net proceeds from the consummation of the Private Placement not held in the Trust Account. 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 officers and directors may, but are not obligated to, provide the Company with working capital loans. As of September 30, 2021, there were no amounts outstanding under any working capital loan.
Until consummation of our initial Business Combination, the Company will be using the funds not held in the Trust Account, and any additional Working Capital Loans (as defined in Note 6 to our financial statements) from the initial shareholders, the Company’s officers and directors, or their respective affiliates (which is described in Note 6 to our financial statements), for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the initial Business Combination.
The Company does not believe it will need to raise additional funds in order to meet the expenditures required for operating its business. However, if the Company’s estimates of the costs of undertaking
in-depth
due diligence and negotiating a Business Combination is less than the actual amount necessary to do so, the Company may have insufficient funds available to operate its business prior to the initial Business Combination.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern until the earlier of the consummation of a Business Combination or one year from the issuance date of the financial statements. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.