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Item 2. Management’s Discussion and Analysis

2022-11-21 compared with 2022-08-23 · 48 added, 41 removed, 80 unchanged (53% of the section changed)

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The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly 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

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A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements.

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 filed with the U.S.

Securities and Exchange Commission (the “SEC”) on September 8, 2021.

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.

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Subject to the terms and conditions set forth therein, (i) upon the consummation of the transactions contemplated by the Merger Agreement (the “Closing”), Merger Sub will merge with and into TMTG (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Transactions”), with TMTG continuing as the surviving corporation in the Merger and a wholly-owned subsidiary of the Company.

dissenters rights under Delaware law) will be converted into the right to receive the Merger Consideration;

In the Merger, (i) all shares of TMTG common stock (together, “TMTG Stock”) issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) (other than those properly exercising any applicable dissenters rights under Delaware law) will be converted into the right to receive the Merger Consideration;

(ii) each outstanding option to acquire shares of TMTG common stock (whether vested or unvested) will be assumed by the Company and automatically converted into an option to acquire shares of the Company common stock, with its price and number of shares equitably adjusted based on the conversion ratio of the shares of TMTG common stock into the Merger Consideration and (iii) each outstanding restricted stock unit of TMTG shall be converted into a restricted stock unit relating to shares of the Company’s common stock.

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The aggregate Merger Consideration to be paid pursuant to the Merger Agreement to the TMTG Stockholders as of immediately prior to the Effective Time will be an amount equal to $875,000,000, subject to adjustments for TMTG’s closing debt, net of cash and unpaid transaction expenses, plus the additional contingent right to receive certain earnout shares after the Closing, provided that it shall exclude any additional shares issuable upon conversion of certain TMTG convertible notes.

The Merger Consideration to be paid to TMTG Stockholders will be paid solely by the delivery of new shares of the Company’s common stock, with each valued at the price per share at which each share of the Company’s common stock is redeemed or converted pursuant to the redemption by the Company of its public stockholders in connection with the Company’s initial Business Combination, as required by the Company’s Amended and Restated Certificate of Incorporation and by-laws

and the Company’s Initial Public Offering prospectus.

The Merger Consideration will be subject to a post-Closing true up 90 days after the Closing.

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The Merger Agreement also contains certain customary covenants by each of the parties during the period between the signing of the Merger Agreement and the earlier of the Closing or the termination of the Merger Agreement.

Consummation of the Transactions is subject to customary conditions of the respective parties, including the approval of the Transactions by the Company’s stockholders in accordance with the Company’s Amended and Restated Certificate of Incorporation and the completion of a redemption offer whereby the Company will be providing its public stockholders with the opportunity to redeem their shares of Class A common stock for cash equal to their pro rata share of the aggregate amount on deposit in the Company’s Trust Account.

Simultaneously with the execution of the Merger Agreement, the majority stockholder of TMTG entered into a voting agreement (the “Voting Agreement”) with the Company and TMTG.

Under the Voting Agreement, the TMTG Stockholder agreed to vote all of his shares of TMTG Stock in favor of the Merger Agreement and related transactions and to otherwise take certain other actions in support of the Merger Agreement and related transactions and the other matters submitted to the TMTG Stockholders for their approval.

Upon Closing, (i) certain senior executive officers of TMTG who own shares of TMTG and (ii) stockholders of TMTG who own more than 10% of the issued and outstanding shares of TMTG Stock immediately prior to the Effective Time (each, a “Significant Stockholder”) shall entered into a Lock-Up

Agreement with the Company and the Sponsor (each, a “Lock-Up

Pursuant to the Lock-Up

Agreement, with respect to the shares received as merger consideration, each Significant Stockholder shall agree not to, during the period commencing from the Closing and ending on the earliest of (a) the six-month

anniversary of the Closing, (b) the date on which the closing price of the Company’s common stock equals or exceeds $12.00 per share for any 20 trading days within any 30 trading day period commencing at least 150 days after the Closing and (c) the date that the Company consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in all of the Company stockholders having the right to exchange their equity holdings in the Company for cash, securities or other property:

Pursuant to the Lock-Up Agreement, with respect to the shares received as merger consideration, each Significant Stockholder shall agree not to, during the period commencing from the Closing and ending on the earliest of (a) the six-month anniversary of the Closing, (b) the date on which the closing price of the Company’s common stock equals or exceeds $12.00 per share for any 20 trading days within any 30 trading day period commencing at least 150 days after the Closing and (c) the date that the Company consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in all of the Company stockholders having the right to exchange their equity holdings in the Company for cash, securities or other property:

(i) lend, offer, pledge, hypothecate, encumber, donate, assign, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any restricted securities, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the restricted securities, or (iii) publicly disclose the intention to do any of the foregoing.

The Merger Agreement and related agreements are further described in the registration statement on Form S-4

(as amended, the “Form S-4”),

which was filed with the SEC on May 16, 2022 and includes a preliminary proxy statement of the Company, and a prospectus in connection with the proposed Transactions.

The Merger Agreement and related agreements are further described in the registration statement on Form S-4 (as amended, the “Form S-4”), which was filed with the SEC on May 16, 2022 and includes a preliminary proxy statement of the Company, and a prospectus in connection with the proposed Transactions.

For additional information regarding the Merger Agreement and the Transactions contemplated therein, including a discussion of risks and uncertainties associated with the Merger and TMTG, please see the Form S-4.

which was initially filed with the SEC on May 16, 2022.

On December 4, 2021, in support of the Transactions, the Company entered into securities purchase agreements (the “SPAs”) with certain institutional accredited investors (the “PIPE Investors”), pursuant to which the investors agreed to purchase an aggregate of 1,000,000 shares of the Company’s Series A Convertible Preferred Stock (the “Preferred Stock”), at a purchase price of $1,000 per share of Preferred Stock, for an aggregate commitment of $1,000,000,000 in a private placement (the “PIPE”) to be consummated concurrently with the Transactions.

The shares of Preferred Stock have an initial conversion price per share of $33.60 and are initially convertible into an aggregate of 29,761,905 shares of common stock.

The closing of the PIPE is conditioned on the concurrent closing of the Transactions and other closing conditions as set forth in the SPA.

Pursuant to the SPAs, each of the PIPE Investors may terminate its respective SPA, among other things, if the closing of the PIPE has not occurred on or prior to September 20, 2022.

Between September 19, 2022 and September 23, 2022, the Company received termination notices from PIPE Investors representing approximately $138.5 million of the PIPE.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date.

Our only activities from inception through June 30, 2022 were organizational activities and those necessary to prepare for the Initial Public Offering and the search for targets for our initial Business Combination, including the proposed Merger with TMTG.

Our only activities from inception through September 30, 2022 were organizational activities and those necessary to prepare for the Initial Public Offering and the search for targets for our initial Business Combination, including the proposed Merger with TMTG.

We do not expect to generate any operating revenues until after the completion of our initial Business Combination.

We generate non-operating

income in the form of interest income on marketable securities held in the Trust Account.

We generate non-operating income in the form of interest income on marketable securities held in the Trust Account.

We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence in connection with our search for targets for our initial Business Combination.

For the three months ended June 30, 2022, we had a net loss of $4,341,387, which consists primarily of general and administrative costs of $4,702,670.

For the six months ended June 30, 2022, we had a net loss of $6,225,776, which consists primarily of general and administrative costs of $6,616,590.

For the three months ended September 30, 2022, we had a net loss of $3,797,121, which consists of general and administrative costs of $4,801,532 and taxes of $322,546, partially offset by interest income on the assets in the Trust Account of $1,326,957.

For the nine months ended September 30, 2022, we had a net loss of $10,022,897, which consists of general and administrative costs of $11,418,122 and taxes of $357,259, partially offset by interest income on the assets in the Trust Account of $1,752,484.

For the three months ended September 30, 2021, we had a net loss of $159,170, which consists of general and administrative costs of $160,072 and $902 interest earned on trust.

For the nine months ended September 30, 2021, we had a net loss of $160,395, which consists of general and administrative costs of $161,297 and $902 interest earned on trust.

Liquidity and Capital Resources

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We incurred $15,668,029 in transaction costs, including $3,593,750 of underwriting fees, $10,062,500 of deferred underwriting fees, fair value of representative shares of $1,437,500 and $574,279 of other offering costs.

For the six months ended June 30, 2022, net decrease in cash was $324,763 and was comprised of net cash used in operating activities of $776,463 and net cash provided by financing activities of $451,700 .

Net cash used in operating activities of $776,463 consisted of a net loss of $6,225,776 partially offset by a change in accrued expenses of $5,656,004.

Net cash provided by financing activities of $451,700

consisted of proceeds from working capital loans.

As of June 30, 2022, we had cash of $293,682,625 held in the Trust Account.

For the nine months ended September 30, 2022, the net decrease in cash was $326,719 and was comprised of net cash used in operating activities of $908,419, net cash used on investing activities of $2,875,000 and net cash provided by financing activities of $3,456,700.

Net cash used in operating activities of $908,419 consisted of a net loss of $10,022,897, interest income on the assets in the Trust Account of $1,752,484 partially offset by a change in accrued expenses of $10,538,707, change in franchise tax payable of $150,000 and change in prepaid insurance of $178,255.

Net cash used in investing activities of $2,875,000 consisted of funds deposited into the Trust Account in connection with the extension of the termination date for the Company’s initial Business Combination from September 8, 2022 to December 8, 2022.

Net cash provided by financing activities of $3,456,700 consisted of funds provided by the Sponsor.

For the nine months ended September 30, 2021, the net increase in cash was $1,494,632.

Cash provided by operating activities was $52,820.

Net loss of $160,395 was offset by changes in franchise tax payable and accrued expenses.

Net cash used in investing activities of $293,250,000 consisted of funds deposited into the Trust Account in connection with the IPO.

Cash provided by financing activities of $294,691,812 consisted of funds from the IPO.

As of September 30, 2022, we had cash of $297,884,582 held in the Trust Account.

We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account to complete our initial Business Combination.

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To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

As of June 30, 2022, we had cash of $2,968 outside of the Trust Account.

As of September 30, 2022, we had cash of $1,012 outside of the Trust Account.

We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.

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The units would be identical to the Placement Units.

In November 2021, our Sponsor committed to provide loans of up to an aggregate of $1,000,000 to the Company through September 8, 2022 (or up to March 8, 2023 if the Company extends the maximum time to complete a Business Combination), which loans will be non-interest

bearing, unsecured and will be payable upon the consummation of a Business Combination.

At June 30, 2022, $451,700 was outstanding under this commitment.

In November 2021, our Sponsor committed to provide loans of up to an aggregate of $1,000,000 to the Company through December 8, 2022 (or up to March 8, 2023 if the Company extends the maximum time to complete a Business Combination), which loans will be non-interest bearing, unsecured and will be payable upon the consummation of a Business Combination.

At September 30, 2022, $581,700 was outstanding under this commitment.

In November 2022, the Sponsor amended the November 2021 Commitment to provide loans of up to an aggregate of $1,000,000 to the Company through December 8, 2022, which loans will be non-interest bearing, unsecured and will be payable upon the consummation of a Business Combination.

On May 12, 2022, we entered into an amendment (the “Amendment to the Insider Letter”) to that certain letter agreement, dated September 2, 2021 (“Insider Letter”), with the Sponsor and our directors, officers or other initial shareholders named therein (the “Insiders”).

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The securities issuable upon conversion of such loans are subject to stockholder approval at the special meeting of the Company’s stockholders to be held to approve the Business Combination.

On September 8, 2022, the Company issued a promissory note (the “Note”) in the aggregate principal amount of $2,875,000 to the Sponsor, in connection with the extension of the termination date for the Company’s initial Business Combination from September 8, 2022 to December 8, 2022.

The Note bears no interest and is repayable in full upon the earlier of (i) the date on which the Company consummates its initial Business Combination and (ii) the date that the winding up of the Company is effective.

At the election of the Sponsor and subject to certain conditions, all of the unpaid principal amount of the Note may be converted into units of the Company (the “Conversion Units”) upon consummation of the initial Business Combination with the total Conversion Units so issued shall be equal to:

(x) the portion of the principal amount of the Note being converted divided by (y) the conversion price of ten dollars ($10.00), rounded up to the nearest whole number of units.

As of September 30, 2022, there was $2,875,000 outstanding under this Note.

We believe we will need to raise additional funds in order to meet the expenditures required for operating our business.

Additionally, if our estimate of the costs of identifying a target business, undertaking in-depth

due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination.

Additionally, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination.

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

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In addition, following our Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

Management anticipates that the $2,968 held outside of the Trust Account as of June 30, 2022 may not be sufficient to allow the Company to meet its needs through the earlier of the consummation of a Business Combination or September 8, 2022 (or up to March 8, 2023 if the Company extends the maximum time to complete a Business Combination), the liquidation date should a Business Combination not be consummate.

Management anticipates that the $1,012 held outside of the Trust Account as of September 30, 2022 may not be sufficient to allow the Company to meet its needs through the earlier of the consummation of a Business Combination or December 8, 2022 (or up to March 8, 2023 if the Company extends the maximum time to complete a Business Combination), the liquidation date should a Business Combination not be consummate.

Over this time period, the Company will be using the funds held outside of the Trust Account and additional funds it will need to raise 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.

The Company has until September 8, 2022 (or up to March 8, 2023 if the Company extends the maximum time to complete a Business Combination) to consummate a Business Combination.

The Company has filed a definitive proxy statement dated August 25, 2022 with the SEC to hold a special meeting of its stockholders (the “Extension Meeting”) for approval to further amend the Company’s Amended and Restated Certificate of Incorporation (the “Extension Amendment”) to extend the period of time for completing an initial Business Combination, in three-month increments, until September 8, 2023 or such earlier date as determined by the Company’s Board of Directors.

The Extension Amendment would effectively provide for an additional six months, past the two three-month extensions permitted by the Company’s existing governing documents, to complete an initial Business Combination.

The Extension Meeting was originally scheduled for September 6, 2022 and was adjourned to September 8, 2022, October 10, 2022, November 3, 2022 and November 22, 2022.

The Company has until December 8, 2022 (or up to March 8, 2023 if the Company extends the maximum time to complete a Business Combination) to consummate a Business Combination.

It is uncertain that the Company will be able to consummate a Business Combination by this time.

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As a result, these factors raise substantial doubt about the Company’s ability to continue as a going concern.

Sheet Arrangements

We did not have any off-balance

sheet arrangements as of June 30, 2022.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of September 30, 2022.

Contractual Obligations

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The deferred fee will become payable to the underwriters solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

Critical Accounting Policies

Critical Accounting Estimates

Class A Common Stock Subject to Possible Redemption

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Our results of operations and our ability to complete an initial Business Combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control.

pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in the Ukraine.

Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in the Ukraine.

We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial Business Combination.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis