This Quarterly Report on Form 10-Q includes forward-looking statements. These
forward-looking statements are based on our current expectations and beliefs
concerning future developments and their potential effects on us. There can be
no assurance that future developments affecting us will be those that we have
anticipated. These forward-looking statements involve a number of risks,
uncertainties (some of which are beyond our control) or other assumptions that
may cause actual results or performance to be materially different from those
expressed or implied by these forward-looking statements. Our forward-looking
statements include, but are not limited to, statements regarding our or our
management team's expectations, hopes, beliefs, intentions or strategies
regarding the future. In addition, any statements that refer to projections,
forecasts or other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking statements. The words
"anticipate," "believe," "continue," "could," "estimate," "expect," "intends,"
"may," "might," "plan," "possible," "potential," "predict," "project," "should,"
"would" and similar expressions may identify forward-looking statements, but the
absence of these words does not mean that a statement is not forward-looking.
Factors that might cause or contribute to such forward-looking statements
include, but are not limited to, those set forth in the Risk Factors section of
the Company's final prospectus for the Company's initial public offering filed
with the SEC on February 11, 2021 and the Company's Annual Report on Form 10-K
filed with the SEC on April 15, 2022. The following discussion should be read in
conjunction with our financial statements and related notes thereto included
elsewhere in this report.
Overview
We are a blank check company incorporated on October 26, 2020 as a Delaware
corporation and 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 ("Business Combination"). The
registration statement for the Company's IPO was declared effective by the U.S.
Securities and Exchange Commission (the "SEC") on February 10, 2021. On February
16, 2021, the Company consummated the IPO of 22,500,000 units (the "Units") at a
price of $10.00 per Unit, for total gross proceeds of $225,000,000. On February
24, 2021, the underwriters exercised the over-allotment option in full, and the
closing of the issuance and sale of the additional 3,375,000 Units (the
"Over-Allotment Units"). The issuance by the Company of the Over-Allotment Units
at a price of $10.00 per unit resulted in total gross proceeds of $33,750,000.
Each Unit consists of one shares of common stock, $0.0001 par value, and one
redeemable warrant entitling its holder to purchase one share of common stock at
a price of $11.50 per share.
Simultaneously with the closing of the IPO, the Company consummated the sale of
600,000 units (the "Private Units"), at a price of $10.00 per Private Unit. On
February 24, 2021, simultaneously with the issuance and sale of the
Over-Allotment Units, the Company consummated the sale of an additional 67,500
Private Units (the "Over-Allotment Private Units" and, together with the IPO
Private Placement, the "Private Placements"), generating gross proceeds of
$6,675,000.
Since completing the Company's IPO, the Company has reviewed, and continues to
review, a number of opportunities to enter into a Business Combination with an
operating business, but the Company is not able to determine at this time
whether it will complete a Business Combination with any of the target
businesses that it has reviewed or with any other target business. The Company
intends to effectuate its Business Combination using cash from the proceeds of
its IPO and the proceeds of the Private Placements, its capital stock, debt, or
a combination of cash, stock and debt.
Results of Operations
For the three months ended September 30, 2022, we had net income of $748,310. We
had investment income of $1,167,939 on the amount held in Trust. We recognized a
$40,503 gain on the change in the fair value of the warrant liability. We
incurred $225,368 of operating costs. We also recognized a $234,764 provision
for income taxes.
For the nine months ended September 30, 2022, we had net income of $862,844. We
had investment income of $1,543,418 on the amounts held in Trust. We recognized
a $343,550 gain on the change in the fair value of the warrant liability. We
incurred $763,453 of operating costs. We also recognized a $260,671 provision
for income taxes.
For the three months ended September 30, 2021, we had net loss of $163,285. We
incurred $221,686 of formation and operating costs. We had investment income of
$3,330 on our amounts held in Trust and $3 of interest on operating bank
account. We also recognized $55,068 gain on the change in the fair value of the
warrant liability.
For the nine months ended September 30, 2021, we had net loss of $400,618. We
incurred $677,712 of formation and operating costs. We had investment income of
$20,111 on our amounts held in Trust and $13 of interest on operating bank
account. We also recognized $256,970 gain on the change the fair value of the
warrant liability.
Liquidity, Capital Resources and Going Concern
As of September 30, 2022, we had $22,318 in cash and a working capital deficit
of $1,029,394 (including unbilled legal costs related to our search for a
prospective initial Business Combination of $546,116). In addition, in order to
finance transaction costs in connection with a Business Combination, our initial
stockholders, or certain of our officers and directors may, but are not
obligated to, provide us with working capital loans (see Note 5 of the
accompanying condensed financial statements). There are currently no amounts
outstanding under any working capital loans.
In addition, in May 2021, we received a commitment letter from the Sponsor
whereby the Sponsor committed to fund any working capital shortfalls through the
earlier of an initial Business Combination or our liquidation. The loans would
be issued as required and each loan would be evidenced by a promissory note, up
to an aggregate of $300,000. In August 2021, we received a new commitment letter
from the Sponsor to increase such loan amount up to $500,000. The loans will be
non-interest bearing, unsecured and payable upon the consummation of our initial
Business Combination or at the holder's discretion, convertible into warrants of
the Company at a price of $1.50 per warrant.
Effective as of November 4, 2021, upon approval of the Board of Directors, we
entered into an Expense Advancement Agreement with Goal Acquisitions Sponsor,
LLC (the "Funding Party"). Pursuant to the Expense Advancement Agreement, the
Funding Party has agreed to advance to us from time to time, upon request by us,
a maximum of $1,500,000 in the aggregate, in each instance issued pursuant to
the terms of the form of promissory note, as may be necessary to fund our
expenses relating to the investigation and selection of a target business and
other working capital requirements prior to completion of any potential Business
Combination.
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Pursuant to the terms of the Expense Advancement Agreement, if we complete a
Business Combination, we will repay all outstanding loaned amounts. No interest
accrues on the unpaid principal balance of any Promissory Note. The Funding
Party cannot seek repayment from the trust account for amounts owed under the
Agreement. All loans from the Funding Party are convertible into warrants to
purchase shares of common stock (the "Conversion Warrants"), at the option of
the Funding Party. The number of Conversion Warrants granted will be equal to
the portion of the principal amount of the Promissory Note being converted,
divided by $1.50 (as adjusted for any stock dividend, stock split, stock
combination, reclassification or similar transaction related to our common stock
occurring after the date of the Expense Advancement Agreement), rounded up to
the nearest whole number of shares. The Conversion Warrants shall be identical
to those warrants that were issued in a private placement that closed
concurrently with our initial public offering. The holders of Conversion
Warrants or shares of common stock underlying the Conversion Warrants are
entitled to certain demand and piggyback registration rights pursuant to the
terms of the Expense Advancement Agreement. All previously outstanding
commitments from the Sponsor have been consolidated under the Expense
Advancement Agreement, effective November 4, 2021.
Until consummation of its Business Combination, the Company will be using the
funds not held in the trust account, and any additional Working Capital Loans
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 Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our Sponsor or its affiliates may, but
are not obligated to, loan us funds as may be required. If we complete a
Business Combination, we will repay such loaned amounts. In the event that a
Business Combination does not close, we may use a portion of the working capital
held outside the trust account to repay such loaned amounts but no proceeds from
our trust account would be used for such repayment. Up to $1,500,000 of such
working capital loans may be convertible into units of the post Business
Combination entity at a price of $10.00 per unit. The units would be identical
to the Private Units. To date, the Company had no borrowings under the working
capital loans.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if the 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 a Business Combination or because we may 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. Subject to compliance
with applicable securities laws, we would only complete such financing
simultaneously with the completion of our Business Combination. If we are unable
to complete a Business Combination because we do not have sufficient funds
available, we will be forced to cease operations and liquidate the trust
account. 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.
We have incurred and expect to continue to incur significant costs in pursuit of
our financing and acquisition plans. In addition, we are within 12 months of our
mandatory liquidation date of February 16, 2023 (the "Liquidation Date") as of
the time of filing this Quarterly Report on Form 10-Q. These conditions raise
substantial doubt about our ability to continue as a going concern 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.
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 balance sheet. The unaudited condensed financial statements do 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.
Critical Accounting Policies and Estimates
This management's discussion and analysis of our financial condition and results
of operations is based on our unaudited condensed financial statements, which
have been prepared in accordance with U.S. GAAP. The preparation of these
unaudited condensed financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses and the disclosure of contingent assets and liabilities in our
unaudited condensed financial statements. On an ongoing basis, we evaluate our
estimates and judgments, including those related to fair value of financial
instruments and accrued expenses. We base our estimates on historical
experience, known trends and events and various other factors that we believe to
be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. We have identified the
following as our critical accounting policies:
Warrant Liabilities
We account for the warrants issued in connection with our initial public
offering in accordance with Accounting Standards Codification ("ASC") 815-40,
Derivatives and Hedging-Contracts in Entity's Own Equity ("ASC 815"), under
which the warrants do not meet the criteria for equity classification and must
be recorded as liabilities. As the warrants meet the definition of a derivative
as contemplated in ASC 815, the Warrants are measured at fair value at inception
and at each reporting date in accordance with ASC 820, Fair Value Measurement,
with changes in fair value recognized in the Statement of Operations in the
period of change.
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 is classified as a
liability instrument and is measured at fair value. Conditionally redeemable
common stock (including 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, 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
occurrence of uncertain future events. As of both September 30, 2022 and
December 31, 2021, 25,875,000 shares of common stock subject to possible
redemption are presented at redemption value as temporary equity, outside of the
stockholders' equity section of the Company's condensed balance sheets.
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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. Increases or decreases in the
carrying amount of redeemable common stock are affected by charges against
additional paid-in capital and accumulated deficit.
Net (Loss) Income Per Common Share
The Company has one class of common stock, common stock sold in the IPO is
subject to possible redemption. The 25,875,000 common stock underlying the
outstanding warrants were excluded from diluted earnings per common stock for
the three and nine months ended September 30, 2022 because the warrants are
contingently exercisable, and the contingencies have not yet been met. As a
result, diluted net (loss) income per common share is the same as basic net loss
per common share for the periods.
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board issued ASU 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) ("ASU 2020-06")
to simplify accounting for certain financial instruments. ASU 2020-06 eliminates
the current models that require separation of beneficial conversion and cash
conversion features from convertible instruments and simplifies the derivative
scope exception guidance pertaining to equity classification of contracts in an
entity's own equity. The new standard also introduces additional disclosures for
convertible debt and freestanding instruments that are indexed to and settled in
an entity's own equity. ASU 2020-06 amends the diluted earnings per share
guidance, including the requirement to use the if-converted method for all
convertible instruments. ASU 2020-06 is effective for the fiscal years beginning
after December 15, 2023 and should be applied on a full or modified
retrospective basis, with early adoption permitted beginning on January 1, 2021.
The adoption of ASU 2020-06 is not expected to have an impact on our financial
position, results of operations or cash flows.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on the Company's condensed financial statements.
Off-Balance Sheet Arrangements
As of September 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
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" under
the JOBS Act and are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We elected 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, our financial statements may not
be comparable to companies that comply with new or revised accounting
pronouncements as of public company effective dates.
As an "emerging growth company", we are not 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.
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