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Item 2. Management’s Discussion and Analysis

2023-07-17 compared with 2022-11-14 · 28 added, 51 removed, 69 unchanged (53% of the section changed)

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Risk Factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2022 filed with the U.S.

Securities and Exchange Commission (the “SEC”) and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.

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, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

We are a blank check company incorporated as a Delaware corporation on April 13, 2021 and formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this report as our “initial business combination”.

While efforts to identify a target business may span many industries, our focus will be predominantly within the financial software space with particular focus on mortgage and real estate verticals in the United States.

We plan to look for a leading financial services software or Financial Technology partner, with particular focus on mortgage and real estate software verticals, that generates between $50 million and $100 million of revenues and is valued between $1 billion and $2 billion.

We intend to effectuate our initial business combination using cash from the proceeds of our IPO (as defined below) and the private placement warrants (as defined below), our capital stock, debt or a combination of cash, stock and debt.

We have not identified any business combination target.

We intend to effectuate our initial business combination using cash from the proceeds from our IPO and the Private Placement, our capital stock, debt or a combination of cash, capital stock and debt.

On December 14, 2021, we consummated our initial public offering (our “IPO”) of 23,000,000 units (the “units”), each unit consisting of one share of Class A common stock of the Company, par value $0.0001 per share (the “Class A Common Stock”) and one-half of one warrant of the Company, each whole warrant entitling the holder thereof to purchase one share of Class A Common Stock for $11.50 per share (subject to adjustment).

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On December 14, 2021, a total of $234,600,000 of the net proceeds from our IPO and the Private Placement were deposited in a trust account (the “Trust Account”) established for the benefit of the Company’s public stockholders at JPMorgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company, acting as trustee.

The net proceeds deposited into the Trust Account remain on

deposit in the Trust Account earning interest and are available for a business combination, assuming no redemptions, before fees and expenses associated with our initial business combination.

The net proceeds deposited into the Trust Account remain on deposit in the Trust Account earning interest and are available for a business combination, assuming no redemptions, before fees and expenses associated with our initial business combination.

Except with respect to interest earned on the funds held in the Trust Account that may be released to us to pay our tax obligations (less up to $100,000 of interest to pay dissolution expenses), the proceeds deposited in the Trust Account will not be released from the Trust Account until the earliest of (a) the completion of our initial business combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to provide our public stockholders the right to have their public shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination by June 14, 2023 or during any extended time we have to consummate our initial business combination beyond June 14, 2023 as a result of a stockholder vote to amend our amended and restated certificate of incorporation (an “Extension Period”) or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, and (c) the redemption of all of our public shares if we are unable to complete our initial business combination by June 14, 2023 or during any Extension Period, subject to applicable law.

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government treasury obligations.

As of September 30, 2022, we had not yet commenced any operations.

All activity for the three and nine months ended September 30, 2022 and for the period April 13, 2021 (inception) through December 31, 2021 relates to our formation, our IPO and our pursuit of a target company with which to effect our initial business combination.

On June 9, 2023, the Company’s stockholders approved a proposal to amend the Company’s amended and restated certificate of incorporation (the “Extension Amendment Proposal”) to extend the time that the Company has to consummate its initial business combination from June 14, 2023 to September 14, 2023 (the “Extended Date”) and to allow the board of directors of the Company, without another stockholder vote, to elect to further extend the date to consummate an initial business combination after the Extended Date up to six times, by an additional month each time, up to March 14, 2024, providing the Company a 21-month period (or up to 27-month period) from the closing of the IPO to consummate its initial Business Combination.

As of March 31, 2023, we had not yet commenced any operations.

All activity for the three months ended March 31, 2023, and 2022 relates to our formation, our IPO and our pursuit of a target company with which to effect our initial business combination.

The Company has selected December 31 as its fiscal year end.

Results of Operations and Known Trends or Future Events

Our entire activity from inception through September 30, 2022 relates solely to our formation, our IPO and, since the closing of our IPO, a search for a business combination candidate.

Our entire activity from inception through March 31, 2023 relates solely to our formation, our IPO and, since the closing of our IPO, a search for a business combination candidate.

We have not generated any operating revenues to date, and we will not generate any operating revenues until after completion of our initial business combination.

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We have incurred and expect to continue 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 September 30, 2022, we had net income of $1, 306,458, which consisted of a $593,000 gain on the change in fair value of warrant liabilities, a $657,605 unrealized gain on marketable securities held in the Trust Account, and $408,362 of dividend income on marketable securities held in the Trust Account, offset by $82,705 in legal and accounting expenses, $50,411 of franchise tax expense, $129,063 of insurance expense, $63,750 of listing fees, and $26,581 of administrative expenses and bank fees expenses.

For the nine months ended September 30, 2022, we had net income of $15, 047,487, which consisted of a $14,872,000 gain on the change in fair value of warrant liabilities, a $990,869 unrealized gain on marketable securities held in the Trust Account, and $408,362 of dividend income on marketable securities held in the Trust Account, offset by $429,833 in legal and accounting expenses, $149,589 of franchise tax expense, $387,189 of insurance expense, $153,874 of listing fees, and $101,395 of administrative expenses and bank fees expenses.

For the three months ended March 31, 2023, we had net income of $1,184,465, which consisted of $2,525,300 dividend income on marketable securities held in the Trust Account, offset by a $542,100 loss on the change in fair value of the warrant liability, $76,671 in legal and accounting expenses, $49,315 of franchise tax expense, $129,063 of insurance expense, and $23,729 of administrative expenses and bank fees expenses.

For the three months ended March 31, 2022, we had net income of $10,369,840, which consisted of a $10,852,000 gain on the change in fair value of warrant liabilities, a $22,304 unrealized gain on marketable securities held in the Trust Account, offset by $264,030 in legal and accounting expenses, $49,315 of franchise tax expense, $129,063 of insurance expense, and $62,056 of administrative expenses and bank fees expenses.

Liquidity and Capital Resources

As of September 30, 2022 and December 31, 2021, we had cash of $173,387 and $1,950,543, respectively, and working capital deficit of $213,445 and working capital of $1,010,298, respectively.

We expect to use our working capital primarily for legal and accounting fees related to our regulatory reporting requirements, fees for office space, utilities, and secretarial and administrative services, continued listing fees on the New York Stock Exchange (“NYSE”), and for expenses in connection with identifying and evaluating target businesses, performing business due diligence on prospective target businesses, travelling to and from the offices or similar locations of prospective target businesses or their

representatives or owners, reviewing corporate documents and material agreements of prospective target businesses and structuring, negotiating and completing a business combination.

Specifically, we expect that our primarily liquidity requirements over the next 12 months from September 30, 2022 will include, among other things, approximately $180,000 for office space, utilities, and secretarial and administrative services pursuant to our agreement with our sponsor to pay our sponsor $15,000 per month for these services until our initial business combination or liquidation;

As of March 31, 2023 and December 31, 2022, we had cash of $16,721 and $50,858, respectively, and working capital deficit of $1,728,262 and $929,527, respectively.

As of March 31, 2023, net cash provided by operating activities was $1,578,970.

Net income of $1,184,465 was adjusted by a $542,100 loss on the change in fair value of the warrant liability and changes in operating assets and liabilities of $764,597, offset by $912,193 of accrued dividend on marketable securities held in the Trust Account.

As of March 31, 2022, net cash used in operating activities was $1,503,029.

Net income of $10,369,840 was adjusted by a $10,852,000 gain on the change in fair value of the warrant liability, changes in operating assets and liabilities of $998,565, and a $22,304 unrealized gain on marketable securities held in the Trust Account.

Specifically, we expect that our primary liquidity requirements over the next 12 months from March 31, 2023 will include, among other things, approximately $180,000 for office space, utilities, and secretarial and administrative services pursuant to our agreement with our sponsor to pay our sponsor $15,000 per month for these services until our initial business combination or liquidation;

$300,000 for legal, accounting, due diligence, travel and other expenses in connection with any business combination;

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These warrants would be identical to the private placement warrants.

These conditions raise substantial doubt about our ability to continue as a going concern for a period of time within 12 months from September 30, 2022.

These conditions raise substantial doubt about our ability to continue as a going concern for a period of time within 12 months from March 31, 2023.

Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination.

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If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account.

On May 25, 2023, pursuant to the terms of the amended and restated certificate of incorporation of the Company, the Sponsor converted 4,200,000 shares of the Company’s Class B common stock held by it on a one-for-one basis into shares of the Company’s Class A common stock, resulting in an aggregate of 27,200,000 shares of Class A common stock issued and outstanding, comprised of 4,200,000 shares of Class A common stock held by the Sponsor and not subject to possible redemption and 23,000,000 shares of Class A common stock subject to possible redemption.

On June 9, 2023, the holders of 18,849,935 shares of Class A common stock properly exercised their right to redeem their shares in connection with the vote on the Extension Amendment Proposal for $197,694,657 in cash, resulting in 4,150,065 shares of Class A common stock issued and outstanding that are subject to possible redemption and $43,525,120 remaining in the Trust Account.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2022 or December 31, 2021.

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2023 or December 31, 2022.

We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

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Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities as of September 30, 2022 or December 31, 2021.

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities as of March 31, 2023 or December 31, 2022.

Pursuant to the underwriting agreement for our IPO, the underwriter of our IPO was entitled to a deferred fee of $0.35 per unit, or $8,050,000 in the aggregate, payable to the underwriter 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.

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The $8,050,000 waived fee was recorded to accumulated deficit.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported.

Actual results could materially differ from those estimates.

We have identified the following as our critical accounting policies:

Common Stock Subject to Possible Redemption

The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value.

Conditionally redeemable common stock (including common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity.

At all other times, common stock is classified as stockholders’ equity.

The Company’s 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, at September 30, 2022, 23,000,000 shares of Class A common stock subject to possible redemption is presented, at redemption value, as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period.

Such changes are reflected in additional paid-in capital, or in the absence of additional capital, in accumulated deficit.

For the three and nine months ended September 30, 2022, the Company

has recorded accretion of $1,065,967 and $1,399,231 to remeasure the value of Class A common stock subject to possible redemption to $235,999,921.

Warrant Liability

The Company accounts for warrants for the Company’s common stock that are not indexed to its own shares as liabilities at fair value on the balance sheet.

The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of other income (expense), net on the statement of operations.

The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the common stock warrants.

At that time, the portion of the warrant liability related to the common stock warrants will be reclassified to additional paid-in capital.

Net Income Per Common Stock

The Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share”.

The condensed statements of operations include a presentation of income per Class A redeemable common stock and income per non-redeemable common stock following the two-class method of income per common stock.

In order to determine the net income attributable to both the Class A redeemable common stock and non-redeemable common stock, the Company first considered the total income allocable to both sets of stock.

This is calculated using the total net income less any dividends paid.

For purposes of calculating net income per share, any remeasurement of the Class A common stock subject to possible redemption was treated as dividends paid to the public stockholders.

Subsequent to calculating the total income allocable to both sets of stock, the Company split the amount to be allocated using a ratio of 80% for the Class A redeemable common stock and 20% for the non-redeemable common stock for the three and nine months ended September 30, 2022, reflective of the respective participation rights.

We have not identified any critical accounting estimates as of March 31, 2023.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP.

ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted.

The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.

Our management does not believe that there are any other recently issued, but not yet effective, accounting pronouncements, that if currently adopted, would have a material effect on our balance sheet.

Refer to Note 2.

Summary of Significant Accounting Policies of the Notes to the Financial Statements.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis