Juniper II Corp. - Quarter Report: 2023 March (Form 10-Q)

JUNIPER II CORP.

Quarterly Report on Form 10-Q

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

References to “we”, “us”, “our” or the “company” are to Juniper II Corp., except where the context requires otherwise. The following discussion should be read in conjunction with our financial statements and related notes thereto included elsewhere in this report (“Report”). You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed financial statements and related notes included in Part I, Item 1 of this Report. This discussion and other parts of this Report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements.” Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on April 6, 2023 (the “2022 Annual Report”).

Cautionary Note Regarding Forward-Looking Statements

This Report 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” or “continue,” or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Report. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other filings with the U.S. Securities and Exchange Commission (the “SEC”).

Overview

We are a blank check company incorporated in Delaware on December 30, 2020 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”) that we have not yet identified. We are an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies. Our sponsor (“sponsor”) is Juniper II Management, LLC, a Delaware limited liability company and an affiliate of certain of our officers, directors and advisors.

Our registration statement for our initial public offering (the “initial public offering”) was declared effective on November 3, 2021. On November 8, 2021, we consummated the initial public offering of 29,900,000 units (the “units” and, with respect to the shares of our Class A common stock, $0.0001 par value per share (“Class A common stock”), included in the units sold in the initial public offering (whether purchased in the initial public offering or thereafter in the open market), the “public shares”), including 3,900,000 units to cover over-allotments, at $10.00 per unit, generating gross proceeds of $299.0 million, and incurring offering costs of approximately $17.3 million, of which approximately $10.5 million and approximately $560,000 was for deferred underwriting commissions and offering costs allocated to derivative warrant liabilities, respectively.

Simultaneously with the closing of the initial public offering, we consummated the private placement (the “private placement”) of 14,960,000 private placement warrants to our sponsor, each private placement warrant exercisable to purchase one share of Class A common stock at $11.50 per share, at a price of $1.00 per private placement warrant, generating gross proceeds of approximately $15.0 million.

Upon the closing of the initial public offering and the private placement, approximately $305.0 million ($10.20 per unit) of net proceeds, including the net proceeds of the initial public offering and certain of the proceeds of the private placement, was placed in the trust account (the “trust account”), located in the United States and invested only in 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 in any open-ended investment company that holds itself out as a money market fund selected by the company meeting the conditions of Rule 2a-7 of the Investment Company Act, 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. Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our taxes, if any, the funds held in the trust account will not be released until the earliest to occur of: (a) the completion of our initial business combination; (b) the redemption of any public shares properly tendered 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 allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of the initial public offering (or 24 months, if we extend the period of time to consummate a business combination) or (ii) with respect to any other provisions relating to the rights of holders of our Class A common stock; and (c) the redemption of all of our public shares if we have not completed our initial business combination within 18 months (or 24 months, if extended) from the closing of the initial public offering, subject to applicable law. Based on current interest rates, we expect that interest income earned on the trust account (if any) will be sufficient to pay our income and franchise taxes.

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If we are unable to complete a business combination within 24 months from the closing of the initial public offering, or November 8, 2023, (or February 8, 2024, if extended by the board of directors), we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 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 including interest earned on the funds held in the trust account and not previously released to us to pay our tax obligations (less 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 company’s remaining stockholders and the company’s 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.

Recent Developments

Amendments to Amended and Restated Certificate of Incorporation

On May 2, 2023, the Company held a special meeting in lieu of an annual meeting of stockholders (the “Extension Meeting”), to, among other things, amend the Amended and Restated Certificate of Incorporation to:

(i) extend the date by which the Company must (1) consummate an initial Business Combination, (2) cease its operations except for the purpose of winding up if it fails to complete such business combination, and (3) redeem all Public Shares, from May 8, 2023 (which is 18 months from the closing date of the IPO (the “Current Outside Date”)) to November 8, 2023 (such date, the “Extended Date”), and to allow the Company, without another stockholder vote, by resolution of the Company’s board of directors, to elect to further extend the Extended Date in one-month increments up to three additional times, or a total of up to nine months after the Current Outside Date, until February 8, 2024, unless the closing of a business combination shall have occurred prior thereto or such earlier date as determined by our board of directors to be in the best interests of the Company (the “Extension” and, such amendment, the “Extension Amendment” and, such proposal, the “Extension Amendment Proposal”); and

(ii) eliminate from the Amended and Restated Certificate of Incorporation the limitation that the Company may not redeem public shares to the extent that such redemption would result in the Company having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act (or any successor rule)) of less than $5,000,001 (the “Redemption Limitation”) in order to allow the Company to redeem public shares irrespective of whether such redemption would exceed the Redemption Limitation (such amendment the “Redemption Limitation Amendment and, together with the Extension Amendment, the “Charter Amendments”).

The stockholders of the Company approved the Charter Amendments at the Extension Meeting and on May 2, 2023 the Company filed the Charter Amendments with the Secretary of State of the State of Delaware.

Redemption of Class A Common Stock

In connection with the Extension, 25,127,993 shares of Class A common stock were redeemed at a redemption price of approximately $10.41 per share, resulting in the payment of approximately $261.2 million from the Trust Account.

Non-Redemption Agreements

In connection with the Extension Meeting, the Company and the Sponsor entered into non-redemption agreements with 11 unaffiliated third parties (each, a “Holder,” and collectively, the “Holders”) in exchange for the Holder or Holders agreeing either not to request redemption in connection with the Extension Proposal or to reverse any previously submitted redemption demand with respect to an aggregate of 4,200,000 shares of the Company’s Class A common stock. In consideration of the foregoing agreements, immediately prior to, and substantially concurrently with, the closing of an initial Business Combination, the Sponsor (or its designees) will surrender and forfeit to the Company for no consideration an aggregate of 1,260,000 Founder Shares (the “Forfeited Shares”), and in consideration of the Holders’ agreements, the Company shall issue to the Holders a number of Class A common stock equal to the Forfeited Shares.

Chief Executive Officer and Chairman Appointment

On May 15, 2023, the board of directors of the Company appointed Bill Fradin to serve as Chief Executive Officer and Chairman of the Board of the Company, effective May 15, 2023.

Results of Operations

Our entire activity since inception up to March 31, 2023 related to our formation, the preparation for the initial public offering, and since the closing of the initial public offering, the search for a prospective initial business combination. We will not be generating any operating revenues until the closing and completion of our initial business combination, at the earliest.

For the three months ended March 31, 2023, we had net income of approximately $3.6 million, which consisted of approximately $3.3 million in interest income from investments held in the trust account and non-operating income of approximately $1.9 million resulting from changes in fair value of derivative warrant liabilities, partially offset by approximately $865,000 in general and administrative expenses, approximately $53,000 in franchise tax expense, $30,000 general and administrative expenses—related party and approximately $686,000 in income tax expense.

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For the three months ended March 31, 2022, we had a net income of approximately $11.1 million, which consisted approximately $6,000 in interest income from investments held in the trust account, non-operating income of approximately $11.5 million resulting from changes in fair value of derivative warrant liabilities, offset by approximately $402,000 in general and administrative expenses, approximately $49,000 in franchise tax expense and $30,000 in general and administrative expenses – related party.

Liquidity and Going Concern

As of March 31, 2023, we had approximately $496,000 in cash and a working capital of approximately $1,732,000.

Our liquidity needs prior to the consummation of the initial public offering were satisfied through the payment of $25,000 from our sponsor to cover certain offering costs in exchange for issuance of the founder shares, a loan under a promissory note from our sponsor of $300,000 (the “Promissory Note”) and advances from related parties in the amount of approximately $13.1 million. We fully repaid the Promissory Note balance upon closing of the initial public offering. Subsequent from the consummation of the initial public offering, our liquidity has been satisfied through the net proceeds from the consummation of the initial public offering and the private placement held outside of the trust account.

Our management has determined that we could have insufficient liquidity to meet our anticipated obligations for at least twelve months after the financial statements are available to be issued due to recurring operating losses and negative cash utilized in operating activities. We may need to raise additional capital through loans or additional investments from our sponsor, shareholders, officers, directors or third parties as needed. Our officers, directors and sponsor may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet our working capital needs. Accordingly, we may not be able to obtain additional financing. We cannot provide any assurance that new financing will be available to us or on acceptable terms, if at all. These conditions raise substantial doubt about our ability to continue as a going concern.

In connection with our management’s assessment of going concern considerations in accordance with the FASB ASC Topic 205-40, “Presentation of Financial Statements-Going Concern,” our management has also determined that these considerations taken together with the mandatory liquidation and subsequent dissolution raise substantial doubt about our ability to continue as a going concern one year from the date that these financial statements are issued. No adjustments have been made to the carrying amounts of assets or liabilities should we be unable to continue as a going concern.

Related Party Transactions

Founder Shares

On January 21, 2021, our sponsor paid $25,000 on behalf of us to cover certain offering costs in exchange for issuance of 8,625,000 shares of Class B common stock. On February 4, 2021, we effected a forward stock split that increased the number of founder shares held by our sponsor from 8,625,000 to 11,500,000. On July 12, 2021, our sponsor surrendered, for no consideration, an aggregate of 5,031,250 founder shares, which we canceled, resulting in an aggregate of 6,468,750 founder shares outstanding. Immediately prior to the consummation of the initial public offering, we effected a stock

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dividend with respect to our Class B common stock, resulting in an aggregate of 7,475,000 shares of Class B common stock outstanding. The founder shares included an aggregate of up 975,000 shares subject to forfeiture by our sponsor to the extent that the underwriters’ option to purchase additional units was not exercised in full or in part, so that our initial stockholders would own, on an as-converted basis, 20% of our issued and outstanding shares after the initial public offering. The underwriters exercised their over-allotment option in full on November 8, 2021; thus, these 975,000 founder shares were no longer subject to forfeiture.

In March and April 2021, our sponsor transferred 35,000 founder shares to each of our independent directors and to Darius Adamczyk, one of our advisors. The transfer of the founder shares is in the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The founders shares were granted subject to a performance condition (i.e., the occurrence of a business combination). Compensation expense related to the founders shares is recognized only when the performance condition is probable of occurrence under the applicable accounting literature in this circumstance. As of March 31, 2023, we determined that a business combination was not considered probable, and, therefore, no stock-based compensation expense has been recognized. Stock-based compensation would be recognized at the date a business combination is considered probable (i.e., upon consummation of a business combination) in an amount equal to the number of founders shares that ultimately vest multiplied times the grant date fair value per share (unless subsequently modified).

Our sponsor agreed, subject to limited exceptions, not to transfer, assign or sell any of our founder shares until the earlier to occur of: (A) one year after the completion of a business combination or (B) subsequent to a business combination, (x) if the closing price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a business combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property.

Private Placement Warrants

Simultaneously with the closing of the initial public offering, we consummated the private placement of 14,960,000 private placement warrants (the “private placement warrants”), at a price of $1.00 per private placement warrant to our sponsor, generating proceeds of approximately $15.0 million.

Each private placement warrant will be exercisable to purchase one share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the private placement warrants was added to the proceeds from the initial public offering held in the trust account. If we do not complete a business combination by November 8, 2023 (or February 8, 2024, if extended by the board of directors), the proceeds of the sale of the private placement warrants will be used to fund the redemption of the public shares (subject to the requirements of applicable law), and the private placement warrants will expire worthless. There will be no redemption rights or liquidating distributions from the trust account with respect to the private placement warrants.

Related Party Loans

Our sponsor agreed to loan us an aggregate of up to $300,000 to cover expenses related to the initial public offering pursuant to a promissory note dated January 21, 2021, which was later amended on September 30, 2021. The Promissory Note was non-interest bearing and payable upon the completion of the initial public offering. We fully borrowed $300,000 under the Promissory Note. In addition, we received additional advances from related parties of approximately $13.1 million to cover for certain offering costs and pre-payment for private placement warrants. We fully repaid the Promissory Note and the advances as of the consummation of the initial public offering.

In addition, in order to finance transaction costs in connection with a business combination, our sponsor or an affiliate of our sponsor, or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a business combination, we would repay the working capital loans out of the proceeds of the trust account released to us. 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, we 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, without interest, 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 $1.00 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.

If we anticipate that we may not be able to consummate the initial business combination within 18 months from the closing of the initial public offering, we may, but are not obligated to, extend the period of time to consummate a business combination by an additional six months (for a total of 24 months to complete an initial business combination). In connection with such extension, our sponsor or affiliates or designees may loan us the required funds to deposit into the trust account an amount of $0.10 per public share, or approximately $3.0 million in the aggregate. Any such payments would be made in the form of a loan (the “extension loans”). The extension loans will be non-interest bearing and payable upon the consummation of the initial business combination. If we complete our initial business combination, we would be obligated to repay such extension loans. Except for the foregoing, the terms of such extension loans, if any, have not been determined and no written agreements exist with respect to such loans.

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Commitments and Contingencies

Registration Rights

The holders of the founder shares, private placement warrants and warrants that may be issued upon conversion of working capital loans (and any shares of Class A common stock issuable upon the exercise of the private placement warrants and warrants that may be issued upon conversion of working capital loans and upon conversion of the founder shares) are entitled to registration rights pursuant to a registration rights agreement signed upon the effective date of initial public offering, requiring us to register such securities for resale (in the case of the founder shares, only after conversion to Class A common stock). The holders of the majority of these securities will be entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a business combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. We will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement

We granted the underwriters of our initial public offering a 45-day option from the date of initial public offering to purchase up to 3,900,000 additional units at the initial public offering price less the underwriting discounts and commissions. The underwriters exercised such over-allotment option in full on November 8, 2021.

The underwriters were entitled to a cash underwriting discount of $0.20 per unit, approximately $6.0 million in the aggregate, paid upon the closing of the initial public offering. In addition, the underwriters are entitled to a deferred fee of $0.35 per unit, or approximately $10.5 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

This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. The preparation of our 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 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:

Investments Held in the Trust Account

Our portfolio of investments is comprised of 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 investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When our investments held in the trust account are comprised of U.S. government securities, the investments are classified as trading securities. When our 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 from investments held in the trust account in the accompanying statements of operations. The estimated fair values of investments held in the trust account are determined using available market information.

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 FASB ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”). Shares of Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable shares of Class A common stock (including shares of Class A 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 our control) are classified as temporary equity. At all other times, shares of Class A common stock are classified as stockholders’ equity. Our shares of Class A common stock feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, as of March 31, 2023 and December 31, 2022, 29,900,000 shares of Class A common stock subject to possible redemption were presented as temporary equity, outside of the stockholders’ equity section of the accompanying balance sheets.

Under ASC 480, we have elected to recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal the redemption value at the end of the reporting period. This method would view the end of the reporting period as if it were also the redemption date of the security. Effective with the closing of the initial public offering, 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.

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Net Income Per Share of Common Stock

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 common share is calculated by dividing the net income by the weighted average shares of common stock outstanding for the respective period. We have not considered the effect of the warrants sold in the initial public offering and private placement to purchase an aggregate of 29,910,000 shares of our Class A common stock in the calculation of diluted loss per share, since such warrants are not yet exercisable. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value.

Derivative Warrant Liabilities

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 stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 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 warrants issued to investors in our initial public offering 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 instruments to fair value at each reporting period. The difference between the fair market value of the private placement warrants and the initial purchase consideration thereof is recorded as compensation expense. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statements of operations. The fair value of the public warrants and private placement warrants were initially and subsequently measured at fair value using a Black Scholes model. Beginning as of December 22, 2021, the fair value of the public warrants has been measured based on the listed market price of such public warrants. The private placement warrants are measured at fair value using a Black Scholes model at March 31, 2023 and December 31, 2022.

Recent Adopted Accounting Standards

In August 2020, the FASB issued Accounting Standards Update (“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,” which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. We early adopted the ASU on January 1, 2021 using a modified retrospective method for transition. Adoption of the ASU did not impact our financial position, results of operations or cash flows.

Recent Accounting Pronouncements

Our management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

Off-Balance Sheet Arrangements

As of March 31, 2023, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

JOBS Act

The Jumpstart Our Business Startups Act of 2012 (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.

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Additionally, we have elected to rely on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404 (an “Attestation Report”), (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 Chief Executive Officer’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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial and accounting officer, to allow timely decisions regarding required disclosure.

As of March 31, 2023, as required by Rules 13a-15 and 15d-15 under the Exchange Act, our principal executive officer and principal financial and accounting officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2023 covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 1A. Risk Factors.

Our material risk factors are disclosed in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes from the risk factors previously disclosed in such filing.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities

Unregistered Sales

On January 21, 2021, our sponsor purchased 8,625,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.003 per share. The number of founder shares was determined based on the expectation that the founder shares would represent 20% of the total outstanding equity after our initial public offering. Such securities were issued in connection with our organization pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. On February 4, 2021, we effected a forward stock split that increased the number of founder shares held by our sponsor from 8,625,000 to 11,500,000. In March and April 2021, our sponsor transferred 35,000 founder shares to each of our independent directors and to Darius Adamczyk, one of our advisors. On July 12, 2021, our sponsor surrendered, for no consideration, an aggregate of 5,031,250 founder shares, which we canceled, resulting in an aggregate of 6,328,750 founder shares held by our sponsor and an aggregate of 6,468,750 founder

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shares outstanding. Immediately prior to the consummation of our initial public offering, we effected a stock dividend with respect to our Class B common stock, resulting in 7,335,000 founder shares held by our sponsor and an aggregate of 7,475,000 founder shares outstanding. Up to 975,000 founder shares were subject to forfeiture by our sponsor to the extent that the underwriters’ option to purchase additional units was not exercised in full or in part. The underwriters exercised their over-allotment option in full on November 8, 2021; thus, these 975,000 founder shares are no longer subject to forfeiture.

Our sponsor is an accredited investor for purposes of Rule 501 of Regulation D under the Securities Act. The sole business of our sponsor was to act as our sponsor in connection with our initial public offering.

Simultaneous with the consummation of our initial public offering and the issuance and sale of the units, we consummated the private placement of 14,960,000 private placement warrants to our sponsor, at a price of $1.00 per private placement warrant, generating total proceeds of $14,960,000. Such issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. Each private placement warrant entitles the holder to purchase one share of our Class A common stock at $11.50 per share. The private placement warrants (including the Class A common stock issuable upon exercise thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder.

No underwriting discounts or commissions were paid with respect to such sales.

Use of Proceeds

In connection with our initial public offering we incurred approximately $17.3 million in transaction costs (including $5,980,000 of underwriting fees, $10,465,000 of deferred underwriting fees and $560,000 of offering costs allocated to derivative warrant liabilities). Other incurred offering costs consisted principally preparation fees related to the initial public offering. After deducting the underwriting discounts and commissions (excluding the deferred portion, which amount will be payable upon consummation of the initial business combination, if consummated) and the initial public offering expenses, $304,980,000 of the net proceeds from our initial public offering and certain of the proceeds from the private placement of the private placement warrants (or $10.20 per unit sold in the initial public offering) was placed in the trust account and invested as described elsewhere in this Report.

There has been no material change in the planned use of the proceeds from our initial public offering and private placement as is described in the final prospectus associated with our initial public offering and our subsequent filings with the SEC.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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