☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Cayman Islands | 001-40549 | 98-1581385 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Class A ordinary shares included as part of the Units, par value $0.0001 per share | EOCW | The New York Stock Exchange | ||
Redeemable warrants to acquire one Class A ordinary share included as part of the Units | EOCW WS | The New York Stock Exchange | ||
Units, each consisting of one Class A ordinary share one-fourth of a redeemable warrant to acquire one Class A ordinary share | EOCW.U | The New York Stock Exchange |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
ELLIOTT OPPORTUNITY II CORP.
Form 10-Q
For the Quarter Ended September 30, 2022
Table of Contents
Page | ||||
1 | ||||
2 | ||||
3 | ||||
4 | ||||
5 | ||||
20 | ||||
27 | ||||
27 | ||||
28 | ||||
28 | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities | ||||
28 | ||||
29 | ||||
30 | ||||
30 | ||||
30 | ||||
31 |
Item 1. | Financial Statements. |
September 30, 2022 (Unaudited) | December 31, 2021 (Audited) | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 400,054 | $ | 720,480 | ||||
Prepaid expenses | 636,842 | 856,416 | ||||||
Total Current Assets | 1,036,896 | 1,576,896 | ||||||
Prepaid expenses—noncurrent | — | 413,554 | ||||||
Investment held in Trust Account | 613,359,931 | 609,610,629 | ||||||
TOTAL ASSETS | $ | 614,396,827 | $ | 611,601,079 | ||||
Liabilities and Shareholders’ Deficit | ||||||||
Current liabilities: | ||||||||
Accrued expenses | $ | 1,316,092 | $ | 1,252,721 | ||||
Due to related party | 150,000 | 60,000 | ||||||
Total Current Liabilities | 1,466,092 | 1,312,721 | ||||||
Deferred underwriters’ discount | 21,332,500 | 21,332,500 | ||||||
Warrant liability | 4,164,933 | 28,176,791 | ||||||
Total liabilities | 26,963,525 | 50,822,012 | ||||||
Commitments and contingencies (Note 6) | ||||||||
Class A ordinary shares subject to possible redemption, 60,950,000 at redemption value of $10.00 at September 30, 2022 and December 31, 2021 | 613,359,931 | 609,500,000 | ||||||
Shareholders’ Deficit | ||||||||
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | — | ||||||
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; none issued or outstanding (excluding 60,950,000 shares subject to possible redemption) at September 30, 2022 and December 31, 2021 | — | — | ||||||
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 15,237,500 issued and outstanding at September 30, 2022 and December 31, 2021 | 1,524 | 1,524 | ||||||
Additional paid-in capital | — | — | ||||||
Accumulated deficit | (25,928,153 | ) | (48,722,457 | ) | ||||
Total Shareholders’ Deficit | (25,926,629 | ) | (48,720,933 | ) | ||||
Total Liabilities and Shareholders’ Deficit | $ | 614,396,827 | $ | 611,601,079 | ||||
March 31, 2023 (Unaudited) | December 31, 2022 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 216,824 | $ | 356,174 | ||||
Prepaid expenses | 279,031 | 428,561 | ||||||
Total Current Assets | 495,855 | 784,735 | ||||||
Investment held in Trust Account | 625,163,280 | 618,545,624 | ||||||
TOTAL ASSETS | $ | 625,659,135 | $ | 619,330,359 | ||||
Liabilities and Shareholders’ Deficit | ||||||||
Current liabilities: | ||||||||
Accrued expenses | $ | 111,970 | $ | 44,635 | ||||
Due to related party | 1,281,310 | 1,251,310 | ||||||
Total Current Liabilities | 1,393,280 | 1,295,945 | ||||||
Deferred underwriters’ discount | 21,332,500 | 21,332,500 | ||||||
Warrant liability | 1,980,947 | 2,061,642 | ||||||
Total liabilities | 24,706,727 | 24,690,087 | ||||||
Commitments and contingencies (Note 6) | ||||||||
Class A ordinary shares subject to possible redemption, 60,950,000 at redemption value of $10.26 and $10.15 at March 31, 2023 and December 31, 2022, respectively | 625,163,280 | 618,545,624 | ||||||
Shareholders’ Deficit | ||||||||
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | — | ||||||
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; none issued or outstanding (excluding 60,950,000 shares subject to possible redemption) at March 31, 2023 and December 31, 2022 | — | — | ||||||
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 15,237,500 issued and outstanding at March 31, 2023 and December 31, 2022 | 1,524 | 1,524 | ||||||
Additional paid-in capital | — | — | ||||||
Accumulated deficit | (24,212,396 | ) | (23,906,876 | ) | ||||
Total Shareholders’ Deficit | (24,210,872 | ) | (23,905,352 | ) | ||||
Total Liabilities and Shareholders’ Deficit | $ | 625,659,135 | $ | 619,330,359 | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | For the period from February 1, 2021 (Inception) to September 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Formation and operating costs | $ | 311,612 | $ | 348,223 | $ | 1,108,070 | $ | 360,490 | ||||||||
Loss from operations | (311,612 | ) | (348,223 | ) | (1,108,070 | ) | (360,490 | ) | ||||||||
Other income: | ||||||||||||||||
Interest earned on investment held in Trust Account | 2,697,903 | 58,244 | 3,749,302 | 58,244 | ||||||||||||
Interest earned on cash held in bank account | 623 | 1,140 | 1,145 | 1,153 | ||||||||||||
Offering costs allocated to warrants | — | (1,053,836 | ) | — | (1,053,836 | ) | ||||||||||
Fair value in excess of proceeds from sale of private warrants | — | (188,584 | ) | — | (188,584 | ) | ||||||||||
Change in fair value of warrant liability | 2,616,099 | 1,979,159 | 24,011,858 | 1,979,159 | ||||||||||||
Total other income, net | 5,314,625 | 796,123 | 27,762,305 | 796,136 | ||||||||||||
Net income | $ | 5,003,013 | $ | 447,900 | $ | 26,654,235 | $ | 435,646 | ||||||||
Weighted average shares outstanding of Class A ordinary shares subject to possible redemption | 60,950,000 | 60,950,000 | 60,950,000 | 23,171,074 | ||||||||||||
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption | $ | 0.07 | $ | 0.01 | $ | 0.35 | $ | 0.01 | ||||||||
Weighted average shares outstanding, Class B ordinary shares | 15,237,500 | 15,237,500 | 15,237,500 | 14,005,579 | ||||||||||||
Basic and diluted net income per share, Class B ordinary shares | $ | 0.07 | $ | 0.01 | $ | 0.35 | $ | 0.01 | ||||||||
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Formation and operating costs | $ | 387,351 | $ | 426,919 | ||||
Loss from operations | (387,351 | ) | (426,919 | ) | ||||
Other income: | ||||||||
Interest earned on investment held in Trust Account | 6,617,656 | 48,767 | ||||||
Interest earned on cash held in bank account | 1,136 | 270 | ||||||
Change in fair value of warrant liability | 80,695 | 12,545,861 | ||||||
Total other income, net | 6,699,487 | 12,594,898 | ||||||
Net income | $ | 6,312,136 | $ | 12,167,979 | ||||
Weighted average shares outstanding of Class A ordinary shares subject to possible redemption | 60,950,000 | 60,950,000 | ||||||
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption | $ | 0.08 | $ | 0.16 | ||||
Weighted average shares outstanding, Class B ordinary shares | 15,237,500 | 15,237,500 | ||||||
Basic and diluted net income per share, Class B ordinary shares | $ | 0.08 | $ | 0.16 | ||||
Class A Ordinary shares | Class B Ordinary shares | Additional Paid-in | Accumulated | Total Shareholder’s | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
Balance as of January 1, 2022 | — | $ | — | 15,237,500 | $ | 1,524 | $ | — | $ | (48,722,457 | ) | $ | (48,720,933 | ) | ||||||||||||||
Net income | — | — | — | — | — | 12,167,979 | 12,167,979 | |||||||||||||||||||||
March 31, 2022 | — | $ | — | 15,237,500 | $ | 1,524 | $ | — | $ | (36,554,478 | ) | $ | (36,552,954 | ) | ||||||||||||||
Change in value of ordinary shares subject to redemption | — | — | — | — | — | (1,162,028 | ) | (1,162,028 | ) | |||||||||||||||||||
Net income | — | — | — | — | — | 9,483,243 | 9,483,243 | |||||||||||||||||||||
June 30, 2022 | — | $ | — | 15,237,500 | $ | 1,524 | $ | — | $ | (28,233,263 | ) | $ | (28,231,739 | ) | ||||||||||||||
Change in value of ordinary shares subject to redemption | — | — | — | (2,697,903 | ) | (2,697,903 | ) | |||||||||||||||||||||
Net income | — | — | — | — | — | 5,003,013 | 5,003,013 | |||||||||||||||||||||
September 30, 2022 | — | $ | — | 15,237,500 | $ | 1,524 | $ | — | $ | (25,928,153 | ) | $ | (25,926,629 | ) | ||||||||||||||
Class A Ordinary shares | Class B Ordinary shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Deficit | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance as of January 1, 2023 | — | $ | — | 15,237,500 | $ | 1,524 | $ | — | $ | (23,906,876 | ) | $ | (23,905,352 | ) | ||||||||||||||
Change in value of ordinary shares subject to redemption | — | — | — | (6,617,656 | ) | (6,617,656 | ) | |||||||||||||||||||||
Net income | — | — | — | — | — | 6,312,136 | 6,312,136 | |||||||||||||||||||||
March 31, 2023 | — | $ | — | 15,237,500 | $ | 1,524 | $ | — | $ | (24,212,396 | ) | $ | (24,210,872 | ) | ||||||||||||||
Class A Ordinary shares | Class B Ordinary shares | Additional Paid-in | Accumulated | Total Shareholder’s | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
Balance as of February 1, 2021 (Inception) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Issuance of Class B ordinary shares to Sponsor | — | — | 15,237,500 | 1,524 | 23,476 | — | 25,000 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (12,267 | ) | (12,267 | ) | |||||||||||||||||||
March 31, 2021 | — | $ | — | 15,237,500 | $ | 1,524 | $ | 23,476 | $ | (12,267 | ) | $ | 12,733 | |||||||||||||||
Net income | — | — | — | — | — | 13 | 13 | |||||||||||||||||||||
June 30, 2021 | — | $ | — | 15,237,500 | $ | 1,524 | $ | 23,476 | $ | (12,254 | ) | $ | 12,746 | |||||||||||||||
Sale of 60,950,000 Units net of underwriting discount and offering expenses and fair value of public warrants | 60,950,000 | 6,095 | — | — | 557,850,297 | — | 557,856,392 | |||||||||||||||||||||
Class A ordinary shares subject to redemption | (60,950,000 | ) | (6,095 | ) | — | — | (557,873,773 | ) | (51,620,132 | ) | (609,500,000 | ) | ||||||||||||||||
Net income | — | — | — | — | — | 447,900 | 447,900 | |||||||||||||||||||||
September 30, 2021 | — | $ | — | 15,237,500 | $ | 1,524 | $ | — | $ | (51,184,486 | ) | $ | (51,182,962 | ) | ||||||||||||||
Class A Ordinary shares | Class B Ordinary shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Deficit | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance as of January 1, 2022 | — | $ | — | 15,237,500 | $ | 1,524 | $ | — | $ | (48,722,457 | ) | $ | (48,720,933 | ) | ||||||||||||||
Net income | — | — | — | — | — | 12,167,979 | 12,167,979 | |||||||||||||||||||||
March 31, 2022 | — | $ | — | 15,237,500 | $ | 1,524 | $ | — | $ | (36,554,478 | ) | $ | (36,552,954 | ) | ||||||||||||||
Nine Months Ended September 30, 2022 | For the period from February 1, 2021 (Inception) to September 30, 2021 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 26,654,235 | $ | 435,646 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Formation cost paid by Sponsor | — | 12,267 | ||||||
Interest earned on marketable securities held in Trust Account | (3,749,302 | ) | (58,244 | ) | ||||
Offering costs allocated to warrants | 1,053,837 | |||||||
Fair value in excess of proceed from sale of private warrants | 188,584 | |||||||
Change in fair value of warrant liability | (24,011,858 | ) | (1,979,159 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expense | 633,128 | (863,171 | ) | |||||
Other assets | (626,106 | ) | ||||||
Accrued expenses | 63,371 | 20,144 | ||||||
Due to related party | 90,000 | 30,000 | ||||||
Net cash used in operating activities | (320,426 | ) | (1,786,202 | ) | ||||
Cash Flows from Investing Activities: | ||||||||
Investment of cash into Trust Account | $ | — | $ | (609,500,000 | ) | |||
Net cash used in investing activities | — | (609,500,000 | ) | |||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from sale of Units, net of underwriting discount | — | 597,310,000 | ||||||
Proceeds from sale of Private Placements Warrants | — | 16,190,000 | ||||||
Payment of promissory note | — | (286,377 | ) | |||||
Payment of offering costs | — | (442,856 | ) | |||||
Net cash provided by financing activities | $ | — | $ | 612,770,767 | ||||
Net change in cash | (320,426 | ) | 1,484,565 | |||||
Cash, beginning of period | 720,480 | — | ||||||
Cash, end of the period | $ | 400,054 | $ | 1,484,565 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Remeasurement of carrying value to redemption value | $ | 3,859,931 | $ | 51,620,132 | ||||
Deferred underwriters’ discount payable charged to additional paid-in capital | $ | — | $ | 21,332,500 | ||||
Accrued offering costs | $ | — | $ | 580,500 | ||||
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 6,312,136 | $ | 12,167,979 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Interest earned on marketable securities held in Trust Account | (6,617,656 | ) | (48,767 | ) | ||||
Change in fair value of warrant liability | (80,695 | ) | (12,545,861 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expense | 149,530 | 221,068 | ||||||
Accrued expenses | 67,335 | (1,768 | ) | |||||
Due to related party | 30,000 | 30,000 | ||||||
Net cash used in operating activities | (139,350 | ) | (177,349 | ) | ||||
Net change in cash | (139,350 | ) | (177,349 | ) | ||||
Cash, beginning of period | 356,174 | 720,480 | ||||||
Cash, end of the period | $ | 216,824 | $ | 543,131 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Remeasurement of carrying value to redemption value | $ | 6,617,656 | $ | — | ||||
Carrying Value as of September 30, 2022 | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value as of September 30, 2022 | |||||||||||||
Cash | $ | 365 | $ | — | $ | — | $ | 365 | ||||||||
U.S. Treasury Securities | 613,175,673 | 183,893 | — | 613,359,565 | ||||||||||||
$ | 613,176,038 | $ | 183,893 | $ | — | $ | 613,359,930 | |||||||||
Carrying Value as of March 31, 2023 | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value as of March 31, 2023 | |||||||||||||
Cash | $ | 506 | $ | — | $ | — | $ | 506 | ||||||||
U.S. Treasury Securities | 624,944,544 | 218,229 | — | 625,162,774 | ||||||||||||
$ | 624,945,051 | $ | 218,229 | $ | — | $ | 625,163,280 | |||||||||
Carrying Value as of December 31, 2021 | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value as of December 31, 2021 | Carrying Value as of December 31, 2022 | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value as of December 31, 2022 | |||||||||||||||||||||||||
Cash | $ | 1,396 | $ | — | $ | — | $ | 1,396 | $ | 1,051 | $ | — | $ | — | $ | 1,051 | ||||||||||||||||
U.S. Treasury Securities | 609,609,233 | — | (30,488 | ) | 609,578,745 | 618,143,315 | 401,259 | — | 618,544,573 | |||||||||||||||||||||||
$ | 609,610,629 | $ | — | $ | (30,488 | ) | $ | 609,580,141 | $ | 618,144,365 | $ | 401,259 | $ | — | $ | 618,545,624 | ||||||||||||||||
Gross Proceeds from IPO | $ | 609,500,000 | $ | 609,500,000 | ||||
Less: | ||||||||
Proceeds allocated to public warrants | (17,852,479 | ) | (17,852,479 | ) | ||||
Class A ordinary shares issuance costs | (33,791,129 | ) | (33,791,129 | ) | ||||
Plus: | ||||||||
Remeasurement of carrying value to redemption value | 51,643,608 | 60,689,232 | ||||||
Class A ordinary shares subject to possible redemption, December 31, 2021 | $ | 609,500,000 | ||||||
Class A ordinary shares subject to possible redemption, December 31, 2022 | $ | 618,545,624 | ||||||
Remeasurement of carrying value to redemption value | 3,859,931 | 6,617,656 | ||||||
Class A ordinary shares subject to possible redemption, September 30, 2022 | $ | 613,359,931 | ||||||
Class A ordinary shares subject to possible redemption, March 31, 2023 | $ | 625,163,280 | ||||||
For the Three Months Ended September 30, 2022 | For the Three Months Ended September 30, 2021 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic and diluted net income per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 4,002,410 | $ | 1,000,603 | $ | 358,320 | $ | 89,580 | ||||||||
Denominator: | ||||||||||||||||
Weighted-average shares outstanding | 60,950,000 | 15,237,500 | 60,950,000 | 15,237,500 | ||||||||||||
Basic and diluted net income per share | $ | 0.07 | $ | 0.07 | $ | 0.01 | $ | 0.01 |
For the Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2022 | For the period from February 1, 2021 (Inception) to September 30, 2021 | 2023 | 2022 | |||||||||||||||||||||||||||||
Class A | Class B | Class A | Class B | Class A | Class B | Class A | Class B | |||||||||||||||||||||||||
Basic and diluted net income per share: | ||||||||||||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||||||||||
Allocation of net income | $ | 21,323,388 | $ | 5,330,847 | $ | 271,525 | $ | 164,121 | $ | 5,049,709 | $ | 1,262,427 | $ | 9,734,383 | $ | 2,433,596 | ||||||||||||||||
Denominator: | ||||||||||||||||||||||||||||||||
Weighted-average shares outstanding | 60,950,000 | 15,237,500 | 23,171,076 | 14,005,579 | 60,950,000 | 15,237,500 | 60,950,000 | 15,237,500 | ||||||||||||||||||||||||
Basic and diluted net income per share | $ | 0.35 | $ | 0.35 | $ | 0.01 | $ | 0.01 | $ | 0.08 | $ | 0.08 | $ | 0.16 | $ | 0.16 |
Level 1 | Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. | |
Level 2 | Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means. | |
Level 3 | Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
September 30, 2022 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||||
Assets: | ||||||||||||||||
Cash and Investments Held in Trust Account | $ | 613,359,931 | $ | 613,359,931 | $ | — | $ | — | ||||||||
$ | 613,359,931 | $ | 613,359,931 | $ | — | $ | — | |||||||||
Liabilities: | ||||||||||||||||
Public Warrants Liability | $ | 2,438,000 | $ | 2,438,000 | $ | — | $ | — | ||||||||
Private Placement Warrants Liability | 1,726,933 | — | 1,726,933 | — | ||||||||||||
$ | 4,164,933 | $ | 2,438,000 | $ | 1,726,933 | $ | — | |||||||||
March 31, 2023 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||||
Assets: | ||||||||||||||||
Cash and Investments Held in Trust Account | $ | 625,163,280 | $ | 625,163,280 | $ | — | $ | — | ||||||||
$ | 625,163,280 | $ | 625,163,280 | $ | — | $ | — | |||||||||
Liabilities: | ||||||||||||||||
Public Warrants Liability | $ | 1,159,574 | $ | 1,159,574 | $ | — | $ | — | ||||||||
Private Placement Warrants Liability | 821,373 | — | 821,373 | — | ||||||||||||
$ | 1,980,947 | $ | 1,159,574 | $ | 821,373 | $ | — | |||||||||
December 31, 2021 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | December 31, 2022 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Cash and Investments Held in Trust Account | $ | 609,610,629 | $ | 609,610,629 | $ | — | $ | — | $ | 618,545,624 | $ | 618,545,624 | $ | — | $ | — | ||||||||||||||||
$ | 609,610,629 | $ | 609,610,629 | $ | — | $ | — | $ | 618,545,624 | $ | 618,545,624 | $ | — | $ | — | |||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Public Warrants Liability | $ | 16,304,125 | $ | 16,304,125 | $ | — | $ | — | $ | 1,206,810 | $ | 1,206,810 | $ | — | $ | — | ||||||||||||||||
Private Placement Warrants Liability | 11,872,666 | — | — | 11,872,666 | 854,832 | — | 854,832 | — | ||||||||||||||||||||||||
$ | 28,176,791 | $ | 16,304,125 | $ | — | $ | 11,872,666 | $ | 2,061,642 | $ | 1,206,810 | $ | 854,832 | $ | — | |||||||||||||||||
Inputs | December 31, 2021 | July 1, 2021 (Initial Measurement) | ||||||
Risk-free interest rate | 1.3 | % | 1.4 | % | ||||
Expected term remaining (years) | 5.0 | 5.0 | ||||||
Expected volatility | 17.1 | % | 30.1 | % | ||||
Implied Stock price | $ | 9.77 | $ | 9.60 | ||||
Exercise price | $ | 11.50 | $ | 11.50 |
Warrant Liabilities | ||||
Fair Value as of December 31, 2021 | $ | 11,872,666 | ||
Change in fair value of Warrants | (5,381,189 | ) | ||
Fair Value as of March 31, 2022 | 6,491,477 | |||
Change in fair value of Warrants | (3,679,814 | ) | ||
Fair Value as of June 30, 2022 | $ | 2,811,663 | ||
Change in fair value of Warrants | (1,084,730 | ) | ||
Transfer of Private Placement Warrants to Level 2 | (1,726,933 | ) | ||
Fair Value as of September 30, 2022 | $ | — | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
References to the “Company,” “Elliott Opportunity II Corp.,” “our,” “us” or “we” refer to Elliott Opportunity II Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim condensed financial statements and the notes thereto contained elsewhere in this 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
This Quarterly Report on Form10-QincludesForm 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of 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,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
Overview
We are a newly organized blank check company incorporated on February 1, 2021, as a Cayman Islands exempted company with a business purpose to effect a merger, capital share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or assets (the “Business Combination”).
Our sponsor is Elliott Opportunity Sponsor II L.P., a Delaware limited partnership (the “Sponsor”). The registration statement for our initial public offering was declared effective on June 28, 2021. On July 1, 2021, we consummated our initial public offering (the “Initial Public Offering”) of 60,950,000 Units, which includes the full exercise by the underwriters of the over-allotment option to purchase an additional 7,950,000 Units, at $10.00 per unit, generating gross proceeds of $609,500,000. Transaction costs of the Initial Public Offering amounted to $34,844,966, comprised of $12,190,000 of underwriting discount, $21,332,500 of deferred underwriting discount, and $1,322,466 of other offering costs, and of which $1,053,837 were allocated to expenses associated with the warrant liability.
Concurrently with the closing of the Initial Public Offering, we completed the private sale (the “Private Placement”) of 10,793,333 warrants (the “Private Placement Warrants”) to our Sponsor at a purchase price of $1.50 per Private Placement Warrant, generating gross proceeds of $16,190,000.
Upon the closing of the Initial Public Offering and the Private Placement, $609,500,000 ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in a U.S.-based trust account (the “Trust Account”) at UBS Financial Services Inc., maintained by Continental Stock Transfer & Trust Company, acting as trustee, and was invested in permitted United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, having a maturity of 185 days or less or in money market funds meeting certain conditions
We will have 24 months from the closing of the Initial Public Offering, or July 1, 2023, to complete the initial Business Combination (the “Combination Period”). However, if we are unable to complete the initial Business Combination within the Combination Period, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the Public Shares,
20
Public Shares the right to have their 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 within the Combination Period, (B) with respect to any other provision relating to the rights of holders of our Public Shares
Results of Operations
All activity for the period from February 1, 2021 (inception) through March 31, 2023 relates to our formation, the Initial Public Offering and, since the closing of the Initial Public Offering, the search for a prospective initial Business Combination candidate. Except as set forth in the immediately preceding sentence, we have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after the completion of our initial Business Combination, at the earliest.
We generate non-operating income in the form of interest income on cash from the proceeds derived from the Initial Public Offering. We expect 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 March 31, 2023, we had net income of $6,312,136. This consisted of interest income from investment in Trust Account and cash of $6,617,656, interest income from bank of $1,136 and gain from change in fair market value of warrants of $80,695, offset by formation and operating costs of $387,351.
For the three months ended March 31, 2022, we had net income of $12,167,979, which consisted of formation and operating costs of $426,919 offset by interest income from investment in Trust Account of $48,767, interest income from bank of $270 and gain from change in fair market value of warrants of $12,545,861.
Liquidity and Capital Resources
As of September 30, 2022March 31, 2023 and December 31, 20212022 the Company had approximately $0.4 million$216,824 and $0.7 million$356,174 in cash, respectively, and approximately ($0.4 million)$897,425 and $0.3 million$511,210 in working capital deficit, respectively. As of September 30, 2022March 31, 2023 and December 31, 2021, approximately $3.7 million2022, $15,663,280 and $0.11 million,$9,045,624, respectively, of the amount on deposit in investment held in the Trust Account represented interest income.
The Company’s liquidity needs up to its IPO were satisfied through a capital contribution from the Sponsor of $25,000 (see Note 5) for the founder shares and the loan under an unsecured promissory note from the Sponsor of up to $300,000, which was repaid in full on July 23, 2021 (see Note 5). Subsequent to the consummation of the IPO, the Company’s liquidity needs have been satisfied through the net proceeds from the consummation of the Private Placement not held in the Trust Account. In addition, in order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans (see Note 5). To date, there were no amounts outstanding under any Working Capital Loans.
The Company received a commitment letter dated March 30, 2022 that confirms the Sponsor will commit to provide periodic financial support to the Company at the request of the Company, sufficient for it to satisfy its obligations as they come due until the earlier of: (a) the completion of the initial Business Combination, or (b) liquidation. Any such support will be repaid to the Sponsor by the Company upon the completion of the Initial Business Combination or upon liquidation.
Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, we will be using these funds to pay 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.
Going Concern
The Company does not believe it 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
21
The Company is a Special Purpose Acquisition Corporation with a scheduled liquidation date of July 1, 2023. The Company plans to complete the transaction before the liquidation date. In connection with the Special Purpose Acquisition Corporation’s assessment of going concern considerations in accordance with ASC Topic
22
Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective targets, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the business Combination.
Risks and Uncertainties
Management continues to evaluate the impact of
23
The United States and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the recent invasion of Ukraine by Russia in February 2022. In response to such invasion, the North Atlantic Treaty Organization (“NATO”) deployed additional military forces to eastern Europe, and the United States, the United Kingdom, the European Union and other countries have announced various sanctions and restrictive actions against Russia, Belarus and related individuals and entities, including the removal of certain financial institutions from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system. Certain countries, including the United States, have also provided and may continue to provide military aid or other assistance to Ukraine during the ongoing military conflict, increasing geopolitical tensions with Russia. The invasion of Ukraine by Russia and the resulting measures that have been taken, and could be taken in the future, by NATO, the United States, the United Kingdom, the European Union and other countries have created global security concerns that could have a lasting impact on regional and global economies. Although the length and impact of the ongoing military conflict in Ukraine is highly unpredictable, the conflict could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. Additionally, Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Off-Balance Sheet Arrangements
As of Operations
Inflation
We do not believe that inflation had a material impact on our business, revenues or operating results during the period from February 1, 2021 (inception) through September 30, 2022 relates to our formation, the Initial Public Offering and, since the closingpresented.
Emerging Growth Company Status
We are an “emerging growth company,” as defined in Section 2(a) of the Initial Public Offering,Securities Act, as modified by the searchJumpstart our Business Startups Act of 2012, (the “JOBS Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for a prospective initial Business Combination candidate. Exceptpublic or private companies, the Company, as set forth inan emerging growth company, can adopt the immediately preceding sentence, we have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until afternew or revised standard at the completiontime private companies adopt the new or revised standard. This may make comparison of our initial Business Combination, at the earliest.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities other than deferred underwriting fee of $21,332,500, warrant liabilities of $4,164,933$1,980,947 as of March 31, 2023 and amounts owed to our Sponsor for administrative services of $120,000.
Administrative Services Agreement
We pay the Sponsor $10,000 per month for office space, secretarial and administrative services provided to members of our founding team. Upon completion of the initial Business Combination or our liquidation, we will cease paying such monthly fees. For the three and nine months ended September 30, 2022,March 31, 2023, $30,000 and $90,000 in administrative fee expense was incurred by the Company and accrued as due to related party, respectively.party. For the three months ended September 30, 2021 and period from February 1, 2021 (Inception) to September 30,March 31, 2022, we incurred a total of $30,000 and $38,691 in administrative fee expense was incurred by the Company and accrued as due to related party, respectively, $30,000 was accrued as due to related party and $8,691 was paid by the Company.
Registration Rights
The holders of the Founder Shares, Private Placement Warrants, Class A ordinary shares underlying the Private Placement Warrants and Warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and Warrants that may be issued upon conversion of Working Capital Loans) will be entitled to registration rights pursuant to a registration and shareholder rights agreement. The holders of these securities are 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 our completion of the initial Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
24
Underwriting Agreement
On July 1, 2021, we paid an underwriting discount of 2% of the per Unit offering price, or approximately $12,190,000 million in the aggregate at the closing of the Initial Public Offering, and the underwriters are entitled to a deferred underwriting discount of 3.5% of the gross proceeds of the Initial Public Offering, or $21,332,500 in the aggregate. The deferred fee will be payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete an initial Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
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 critical accounting policies.
Ordinary Shares Subject to Possible Redemption
All of the Class A Ordinary Shares sold as part of the Units in the Public Offering contain a redemption feature which allows for the redemption of such public shares in connection with the Company’s liquidation, if there is a shareholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s charter. In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. Derivative instruments are initially recorded at fair value on the grant
Warrant Liability
The Company evaluated the Public Warrants and Private Placement Warrants (collectively, “Warrants”, which are discussed in Note 3, Note 4 and Note 7) in
Net Income per Ordinary Share
The Company has two classes of shares, Class A ordinary shares and Class B ordinary shares. Earnings and losses are shared pro rata between the two classes of shares. The Company has not considered the effect of the outstanding warrants to purchase 26,030,833 Class A ordinary shares in the calculation of diluted income per share, since their exercise is contingent upon future events. As a result, diluted net income per ordinary share is the same as basic net income per ordinary share for the periods.
25
Recent Accounting Pronouncements
We do not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the accompanyingCompany’s financial statements.
26
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
We are a smaller reporting company as defined
Item 4. | Controls and Procedures. |
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our
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 September 30, 2022March 31, 2023 covered by this Quarterly Report onForm10-Qthaton Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
27
PART II—OTHER INFORMATION
Item 1. | Legal Proceedings. |
None.
Item 1A. | Risk Factors. |
Factors that could cause our actual results to differ materially from those in this Quarterly Report onForm10-Qareon Form 10-Q are any of the risks described in our AnnualForm10-KfiledAnnual Form 10-K filed with the SEC on April 14, 2022.March 16, 2023. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our Business Combination and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on the business, investments and results of our operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our Business Combination and results of operations.
On March 30, 2022, the SEC issued proposed rules (the “2022 Proposed Rules”) relating to, among other items, enhancing disclosures in business combination transactions involving SPACs and private operating companies; amending the financial statement requirements applicable to transactions involving shell companies; effectively limiting the use of projections in SEC filings in connection with proposed business combination transactions; increasing the potential liability of certain participants in proposed business combination transactions; and the extent to which SPACs could become subject to regulation under the Investment Company Act of 1940. These 2022 Proposed Rules, if adopted, whether in the form proposed or in revised form, and certain positions and legal conclusions expressed by the SEC in connection with the 2022 Proposed Rules may materially adversely affect our ability to negotiate and complete our Business Combination and may increase the costs and time related thereto.
Our search for a Business Combination, and any target business with which we may ultimately consummate a Business Combination, may be materially adversely affected by the geopolitical conditions resulting from the recent invasion of Ukraine by Russia and subsequent sanctions against Russia, Belarus and related individuals and entities and the status of debt and equity markets, as well as protectionist legislation in our target markets.
United States and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the recent invasion of Ukraine by Russia in February 2022. In response to such invasion, the North Atlantic Treaty Organization (“NATO”) deployed additional military forces to eastern Europe, and the United States, the United Kingdom, the European Union and other countries have announced various sanctions and restrictive actions against Russia, Belarus and related individuals and entities, including the removal of certain financial institutions from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system. Certain countries, including the United States, have also provided and may continue to provide military aid or other assistance to Ukraine during the ongoing military conflict, increasing geopolitical tensions with Russia. The invasion of Ukraine by Russia and the resulting measures that have been taken, and could be taken in the future, by NATO, the United States, the United Kingdom, the European Union and other countries have created global security concerns that could have a lasting impact on regional and global economies. Although the length and impact of the ongoing military conflict in Ukraine is highly unpredictable, the conflict could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. Additionally, Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets.
Any of the abovementioned factors, or any other negative impact on the global economy, capital markets or other geopolitical conditions resulting from the Russian invasion of Ukraine and subsequent sanctions, could adversely affect our search for a Business Combination and any target business with which we may ultimately consummate a Business Combination. The extent and duration of the Russian invasion of Ukraine, resulting sanctions and any related market disruptions are impossible to predict, but could be substantial, particularly if current or new sanctions continue for an extended period of time or if geopolitical tensions result in expanded military operations on a global scale. Any such disruptions may also have the effect of heightening many of the other risks described in the “Risk Factors” section of our Annual Report on Form10-K.IfForm 10-K. If these disruptions or other matters of global concern continue for an extensive period of time, our ability to consummate a Business Combination, or the operations of a target business with which we may ultimately consummate a Business Combination, may be materially adversely affected.
In addition, the recent invasion of Ukraine by Russia, and the impact of sanctions against Russia and the potential for retaliatory acts from Russia, could result in increased cyber-attacks against U.S. companies.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
None.
28
Item 3. | Defaults upon Senior Securities. |
None.
29
Item 4. | Mine Safety Disclosures. |
Not applicable.
Item 5. | Other Information. |
None.
Item 6. | Exhibits. |
* | Filed herewith. |
** | These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. |
30
SIGNATURE
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 hereunto duly authorized.
By: | /s/ Steven Barg | |
Name: Steven Barg | ||
Title: Chief Financial Officer |
Dated: November 7, 2022May 10, 2023
31