Table of Contents
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
FORM
10-Q
 
☒
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1034
For the quarterly period ended SeptemberJune 30, 2021
2022
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
            .
Commission File Number
001-41046
 
 
ARENA FORTIFY ACQUISITION CORP.
(Exact name of registrant as specified in its charter)
 
Delaware
(State or other jurisdiction of
incorporation or organization)
 
86-2228751
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
405 Lexington Avenue, 59th Floor
New York, New York 10174
(Address of principal executive offices and zip code)
(212)
212-612-3205612-3205
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report):
:
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading
Trading
Symbol(s)
 
Name of each exchange
on which registered
Units, each consisting of one share of Class A common stock, $0.0001$0.00001 par value per share, and
one-half
of one redeemable warrant
 
AFACU
 
The Nasdaq Stock Market LLC
Shares of Class A common stock included asincludes part of the units
 
AFAC
 
The Nasdaq Stock Market LLC
Redeemable warrants included as part of the units, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50
 
AFACW
 
The Nasdaq Stock Market LLC
Shares of Class A common stock underlying redeemable warrants included as part of the units
 
AFAC
 
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and
(2) has been subject to such filing requirements for the past 90 days.    Yes  ☐☒    No  ☒☐
Indicate by check mark whether the registrant has submitted
electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act:
Large accelerated fillerfiler ☐  Accelerated filer ☐
    
Non-accelerated filler
filer		 ☒  Smaller reporting company ☒
    
     Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    Yes  ☒    No  ☐
As of December 21, 2021,August 11, 2022, there were
17,250,000 of the registrant’s Class A common stock, par value $0.0001 per share, and 4,312,500 of the registrant’s Class B common stock, par value $0.0001 per share, issued and outstanding.
 
 
 
Table of Contents
ARENA FORTIFY ACQUISITION CORP.
TABLE OF CONTENTS
 
    
Page
 
PART I – I.—FINANCIAL INFORMATION
1
ITEM 1.
FINANCIAL STATEMENTS
1
CONDENSED BALANCE SHEET AS OF SEPTEMBER 30, 2021 (UNAUDITED)
1
CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND THE PERIOD FROM JANUARY 26, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021 (UNAUDITED)
2
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY FOR THE PERIOD FROM JANUARY 26, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021 (UNAUDITED)
  
 
3
 
ITEM 1. FINANCIAL STATEMENTS
  
3
CONDENSED STATEMENTBALANCE SHEETS AS OF JUNE 30, 2022 (UNAUDITED) AND DECEMBER 31, 2021
3
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND THE PERIOD FROM JANUARY 26, 2021 (INCEPTION) THROUGH JUNE 30, 2021
4
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND THE PERIOD FROM JANUARY 26, 2021 (INCEPTION) THROUGH JUNE 30, 2021
5
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND FOR THE PERIOD FROM JANUARY 26, 2021 (INCEPTION) THROUGH SEPTEMBERJUNE 30, 2021 (UNAUDITED)
  
4
6
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
  
5
7
ITEM 2
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
17
22
ITEM 3
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
21
27
ITEM 4
4. CONTROLS AND PROCEDURES
  
21
27
PART IIII. – OTHER INFORMATION
  
 
2229
 
ITEM 1. LEGAL PROCEEDINGS
29
ITEM 1A. RISK FACTORS
29
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
29
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
30
ITEM 4. MINE SAFETY DISCLOSURES
30
ITEM 5. OTHER INFORMATION
30
ITEM 6. EXHIBITS
31
ITEM 1.
LEGAL PROCEEDINGSSIGNATURES
  
 
22
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
22
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
22
ITEM 4.
MINE SAFETY DISCLOSURES
22
ITEM 5.
OTHER INFORMATION
23
ITEM 6.
EXHIBITS
23
SIGNATURES
2432
 
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report, including, without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” 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”). 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. Forward-looking statements in this Report may include, for example, statements about:
our ability to select an appropriate target business or businesses;
our ability to complete our initial business combination;
our expectations around the performance of the prospective target business or businesses;
our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;
our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination;
our potential ability to obtain additional financing to complete our initial business combination;
our pool of prospective target businesses;
the ability of our officers and directors to generate a number of potential investment opportunities;
our public securities’ potential liquidity and trading;
our ability to complete an initial business combination due to the uncertainty resulting from the
COVID-19
pandemic, as well as from the emergence of variant strains of
COVID-19,
including the efficacy and adoption of recently developed vaccines with respect to
COVID-19
and variant strains thereof;
general market, political and economic conditions, including as a result of
COVID-19
and the political environment of oil-producing regions, including uncertainty or instability resulting from civil disorder, an outbreak or escalation of armed hostilities or acts of war or terrorism;
the lack of a market for our securities;
the use of proceeds not held in the trust account or available to us from interest income on the trust account balance;
the trust account not being subject to claims of third parties; or
our financial performance.
1
Table of Contents
The forward-looking statements contained in this Quarterly Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks may not be exhaustive.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may not be indicative of results or developments in subsequent periods.
2
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PART I –I. - FINANCIAL INFORMATION
 
ITEM 1.
FINANCIAL STATEMENTS
ARENA FORTIFY ACQUISITION CORP.
CONDENSED BALANCE SHEETSHEETS AS OF JUNE 30, 2022 (UNAUDITED) AND DECEMBER 31, 2021
   
June 30,

2022
  
December 31,

2021
 
   
(Unaudited)
  
(Audited)
 
Assets
         
Current assets:         
Cash  $159,389  $696,759 
Prepaid expenses - current   368,696   344,104 
          
Total current assets
   528,085   1,040,863 
Prepaid expenses -
non-current
   114,795   267,623 
Investments held in Trust Account   176,265,685   175,956,892 
          
Total Assets
  
$
176,908,565
 
 
$
177,265,378
 
          
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit
         
Current liabilities:         
Accrued expenses   334,628   368,094 
Accrued offering costs  $591,576  $591,576 
          
Total current liabilities
  
 
926,204
 
 
 
959,670
 
Initial stockholder loans   3,450,000   3,450,000 
Warrant liabilities   1,404,650   7,037,500 
          
Total Liabilities
  
 
5,780,854
 
 
 
11,447,170
 
Commitments and Contingencies
   0    0  
Class A common stock subject to possible redemption, 17,250,000 shares at redemption value of $10.20 per share  
 
175,950,000
 
 
 
175,950,000
 
Stockholders’ Deficit
         
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding   —     —   
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; NaN issued and outstanding (excluding 17,250,000 shares subject to redemption)   —     —   
Class B common stock, $0.0001 par value; 30,000,000 shares authorized; 4,312,500 shares issued and outstanding   431   431 
Additional
paid-in
capital
   —     —   
Accumulated deficit   (4,822,720)   (10,132,223) 
          
Total Stockholders’ Deficit
  
 
(4,822,289
) 
 
 
(10,131,792
) 
          
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit
  
$
176,908,565
 
 
$
177,265,378
 
          
The accompanying notes are an integral part of these unaudited condensed financial statements.
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ARENA FORTIFY ACQUISITION CORP.
(UNAUDITED)UNAUDITED CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND THE PERIOD FROM JANUARY 26, 2021 (INCEPTION) THROUGH JUNE 30, 2021
 
   
September 30,
2021
 
ASSETS
  
Current asset – Prepaid Expenses
  $25,000 
Deferred offering costs
   829,520 
   
 
 
 
Total Assets
  
$
854,520
 
   
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
     
Current liabilities
     
Accrued expenses
  $1,753 
Accrued offering costs
   663,571 
Promissory note – related party
   165,949 
   
 
 
 
Total Current Liabilities
  
 
831,273
 
Commitments and Contingencies (Note 6)
0   
Stockholders’ Equity
     
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding
   0— 
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; NaN issued and outstanding
   0— 
Class B common stock, $0.0001 par value; 30,000,000 shares authorized; 4,312,500 shares issued and outstanding(1)(2)
   575 
Additional
paid-in
capital
   24,425 
Accumulated deficit
   (1,753) 
   
 
 
 
Total Stockholders’ Equity
  
 
23,247
 
   
 
 
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  
$
854,520
 
   
 
 
 
   
For the Three Months Ended
  
For the Six Months Ended
  
For the period from
January 26, 2021
(inception) through
June 30, 2021
 
   
June 30, 2022
  
June 30, 2021
  
June 30, 2022
 
General and administrative expenses  $255,430  $567  $622,813  $1,499 
Income tax expense
  
9,347
   
—
   
9,347
   
—
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Loss from operations   (264,777)   (567)   (632,160)   (1,499) 
Other income
                 
Change in fair value of derivative warrant liabilities   2,071,850   —     5,632,850   —   
Income from investments held in Trust Account   182,614   —     308,793   —   
Interest income   6   —     20   0 
                  
Net income (loss)
  $1,989,693  $(567)  $5,309,503  $(1,499) 
                  
Weighted average shares outstanding of Class A common stock, basic and diluted   17,250,000   —     17,250,000   —   
                  
Basic and diluted net income per share, Class A common stock
  $0.09  $—    $0.25  $—   
                  
Weighted average shares outstanding of Class B common stock, basic and diluted(1)(2)   4,312,500   3,750,000   4,312,500   3,750,000 
Basic and diluted net income (loss) per share, Class B common stock
  $0.09  $(0.00)  $0.25  $(0.00) 
                  
1.
The three-month period ended June 30, 2021 and the period from January 26, 2021 (inception) through June 30, 2021 exclude an aggregate of 562,500 shares that are subject to forfeiture to the extent that the underwriters’ over-allotment is not exercised in full (see Note 5). On November 15, 2021, the underwriters fully exercised their over-allotment option; thus, these shares are no longer subject to forfeiture.
2.
In October 2021, the Company effected a share contribution back to capital resulting in the Sponsor and Founders holding 4,312,500 shares of Class B common stock. All shares and associated amounts have been retroactively restated to reflect the share contribution (see Note 5).
The accompanying notes are an integral part of these unaudited condensed financial statements.
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ARENA FORTIFY ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2022
                                                                                                                                                                  
   
Common Stock
   
Additional
      
Total
 
   
Class A
   
Class B
   
Paid-in
   
Accumulated
  
Stockholders
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Deficit
  
(Deficit)
 
Balance - January 1, 2022
  
 
—  
 
  
$
—  
 
  
 
4,312,500
 
  
$
431
 
  
$
—  
 
  
$
(10,132,223
) 
  (10,131,792) 
Net Income   —      —      —      —      —      3,319,810   3,319,810 
                                   
Balance - March 31, 2022
  
 
—  
 
  
 
—  
 
  
 
4,312,500
 
  
 
431
 
  
 
—  
 
  
 
(6,812,413
) 
  
(6,811,982
)
 
Net Income   —      —      —      —      —      1,989,693
  1,989,693
                                   
Balance - June 30, 2022
  
 
—  
 
  
 
—  
 
  
 
4,312,500
 
  
 
431
 
  
 
—  
 
  
 
(4,822,720
) 
 
 
(4,822,289
) 
                                   
FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND THE PERIOD FROM JANUARY 26, 2021 (INCEPTION) THROUGH JUNE 30, 2021
                                                                                                                                                                  
   
Common Stock
   
Additional
      
Total
 
   
Class A
   
Class B
   
Paid-in
   
Accumulated
  
Stockholders
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Deficit
  
Equity
 
Balance - January 26, 2021 (inception)
  
 
—  
 
  
$
—  
 
  
 
—  
 
  
$
—  
 
  
$
—  
 
  
$
—  
 
  —   
Issuance of Class B common stock to related parties (1)(2)   —      —      4,312,500    575    24,425    —     25,000 
Net loss   —      —      —      —      —      (932)   (932) 
                                   
Balance - March 31, 2021
  
 
—  
 
  
 
—  
 
  
 
4,312,500
 
  
 
575
 
  
 
24,425
 
  
 
(932
) 
  
24,068
 
Net loss   —      —      —      —      —      (567)   (567) 
                                   
Balance - June 30, 2021
  
 
—  
 
  
 
—  
 
  
 
4,312,500
 
  
 
575
 
  
 
24,425
 
  
 
(1,499
) 
 
 
23,501
 
                                   
 
(1)1.
Includes an aggregate of 562,500 shares that are subject to forfeiture to the extent that the underwriters’ over-allotment is not exercised in full (see Note 5). On November 15, 2021, the underwriters fully exercised their over-allotment option; thus, these shares are no longer subject to forfeiture.
(2)2.
In October 2021, the Company effected a share contribution back to capital resulting in the Sponsor and Founders holding 4,312,500 shares of Class B common stock. All shares and associated amounts have been retroactively restated to reflect the share contribution (see Note 5).
The accompanying notes are an integral part of the financial statements.
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ARENA FORTIFY ACQUISITION CORP.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
   
For the three months
ended September 30,
2021
  
For the period from
January 26, 2021
(inception) through
September 30, 2021
 
Formation costs
  $—    $932 
Other expenses
   254   821 
   
 
 
  
 
 
 
Net Loss
  
$
(254
) 
 
$
(1,753
) 
   
 
 
  
 
 
 
Weighted average shares outstanding, basic and diluted(1)(2)
   3,750,000   3,750,000 
   
 
 
  
 
 
 
Basic and diluted net loss per common share
  
$
0.00
 
 
$
0.00
 
   
 
 
  
 
 
 
(1)
This number excludes an aggregate of up to 
562,500 shares of Class B common stock that were subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriters (see Note 5). On November 15, 2021, the underwriters fully exercised their over-allotment option; thus, these shares are no longer subject to forfeiture.
(2)
In October 2021, the Company effected a share contribution back to capital resulting in the Sponsor and Founders holding 4,312,500 shares of Class B common stock. All shares and associated amounts have been retroactively restated to reflect the share dividend (see Note 5).
The accompanying notes are an integral part of thethese unaudited condensed financial statements.
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ARENA FORTIFY ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND FOR THE PERIOD FROM JANUARY 26, 2021 (INCEPTION) THROUGH SEPTEMBERJUNE 30, 2021
(UNAUDITED)
 
   
Common Stock(1)
   
Additional
Paid-in

Capital
   
Accumulated
Deficit
  
Total
Stockholders’
Equity
 
   
Shares
   
Amount
            
Balance – January 26, 2021 (Inception)
   0     $0     $0     $0    $0   
Issuance of Class B common stock to Sponsor(1)(2)
   4,312,500    575    24,425    0     25,000 
Net loss
   —      —      —      (1,499)   (1,499) 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Balance – June 30, 2021
  
 
4,312,500
 
  
$
575
 
  
$
24,425
 
  
$
(1,499
) 
 
$
23,501
 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Net loss
   —      —      —      (254)   (254) 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Balance — September 30, 2021
  
 
4,312,500
 
  
$
575
 
  
$
24,425
 
  
$
(1,753
) 
 
$
23,247
 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
(1)
Includes an aggregate of 562,500 shares of Class B common stock that are subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full (see Note 5). On November 15, 2021, the underwriters fully executed their over-allotment option; thus, these shares are no longer subject to forfeiture.
(2)
In October 2021, the Company effected a share contribution back to capital resulting in the Sponsor and Founders holding 4,312,500 shares of Class B common stock. All shares and associated amounts have been retroactively restated to reflect the share dividend (see Note 5).
   
For the Six Months
Ended June 30, 2022
  
For the period from
January 26, 2021
(inception) through
June 30, 2021
 
Cash Flows from Operating Activities:
         
Net income (loss)  $5,309,503  $(1,499) 
Adjustments to reconcile net income to cash used in operating activities:         
Change in fair value of derivative warrant liabilities   (5,632,850)   —   
Income from investments held in Trust Account   (308,793)   —   
Changes in operating assets and liabilities:         
Prepaid expenses   128,237   —   
Accrued offering costs and expenses   (33,467)   1,499 
          
Net cash used in operating activities
   (537,370)   0 
          
Cash Flows from Financing Activities:
         
Proceeds from note payable to related party   —     115,886 
Payment of deferred offering costs   —     (115,886) 
          
Net cash provided by financing activities
   —     —   
          
Net change in cash
   (537,370)   0 
Cash - beginning of the period
   696,759   —   
          
Cash - end of the period
  
$
159,389
 
 
$
0
 
          
Supplemental disclosure of noncash financing activities:
         
Prepaid expenses paid by Sponsor in exchange for issuance of Class B
common stock
  $—    $25,000 
Deferred offering costs included in accrued offering costs  $—    $458,548 
The accompanying notes are an integral part of thethese unaudited condensed financial statements.
3
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ARENA FORTIFY ACQUISITION CORP.
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
   
For the period from
January 26, 2021
(inception)
 
t
hrough
September 30, 2021
 
Cash flows from Operating Activities:
    
Net loss
  $(1,753) 
Changes in operating assets and liabilities:
     
Accrued offering costs and expenses
   1,753 
   
 
 
 
Net cash used in operating activities
  
 
0
 
 
 
 
 
 
Cash flows from Financing Activities:
     
Proceeds from issuance of promissory note to related party
   165,949 
Payment of deferred offering costs
   (165,949) 
   
 
 
 
Net cash provided by financing activities
  
 
0
 
   
 
 
 
Net change in cash
  
 
0  
 
   
 
 
 
Cash – Beginning
  
 
0  
 
   
 
 
 
Cash – Ending
  $0   
 
    
Supplemental disclosure of
non-cash
financing activities:
     
   
 
 
 
Deferred offering costs included in accrued offering costs
  $663,571 
   
 
 
 
Prepaid Expenses paid by Sponsor in exchange for issuance of Class B ordinary shares
  $25,000 
The accompanying notes are an integral part of the financial statements.
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ARENA FORTIFY ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 2022
Note 1 — Description of Organization and Business Operations
Arena Fortify Acquisition Corp. (the “Company”)
was incorporated in Delaware on January 26, 2021. The Company was 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 (the “Business Combination”).
The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of SeptemberJune 30, 2021,2022, the Company had not commenced any operations. All activity for the period from January 26, 2021 (inception) through SeptemberJune 30, 2021,2022 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”), described below.below, and since the Initial Public Offering, the search for a prospective initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generategenerates
non-operating
income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The Company’s sponsor is Arena Fortify Sponsor LLC, a Delaware limited liability company (the “Sponsor”).
On January 26, 2021, 5,750,000 shares of the Company’s Class B common stock (the “Founder Shares”) were issued to the Sponsor and Founders (as defined below) in exchange for the payment of $25,000 of deferred offering costs on behalf of the Company, or approximately $0.004 per share. In October 2021, the Company effected a share contribution back to capital resulting in the Sponsor and Founders holding 4,312,500 shares of Class B common stock. Up to 562,500 Founder Shares were subject to forfeiture to the extent that the over-allotment option iswas not exercised by the underwriters. On November 15, 2021, the underwriters fully exercised the over-allotment option; thus, no Founder Shares were forfeited and are no longer subject to forfeiture.such forfeiture provision.
The registration statement for the Company’s Initial Public Offering was declared effective on November 9, 2021 (the “Effective Date”). On November 15, 2021, the Company consummated its Initial Public Offering of 17,250,000 units (the “Units” and, with respect to the common stock included in the Units being offered, the “Public Shares”) at $10.00 per Unit (which included the full exercise of the underwriters’ over-allotment option), which is discussed in Note 3 (the “Public Offering”) and the sale of an aggregate of 5,450,000 warrants (the “Private Placement Warrants”) each 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 in a private placement to the Arena Fortify Sponsor LLC (the “Sponsor”), Cowen Investments II LLC (“Cowen”) and Intrepid Financial Partners, L.L.C. (“Intrepid” and collectively, the “Initial Stockholders” or “Founders”) that closed simultaneously with the Initial Public Offering.
The Company also issued promissory notes to each of the Initial Stockholders (collectively, the “Initial Stockholder Loan Notes”), generating aggregate gross proceeds to the Company of $3,450,000
.$3,450,000. The Initial Stockholder Loan Notes shall be repaid in cash or converted into warrants (the “Initial Stockholder Loan Warrants” and, collectively with the Private Placement Warrants, the “Warrants”)) at a purchase price of $
1.00
$1.00 per warrant, at each such lender’s sole direction. The Initial Stockholder Loan Warrants will beare identical to the Private Placement Warrants.
Transaction costs amounted to $4,702,460 consistingFollowing the closing of $3,450,000 of underwriting commissions and $1,252,460 of other cash offering costs. Of this amount, $4,443,825 was charged to
stockholders’ deficit and $
258,635 was allocated to the Warrants and expensed.
A total of $175,950,000 of the $177,950,000 in total gross proceeds, comprised of $172,500,000 of the net proceeds from the Initial Public Offering (includingon November 15, 2021, $175,950,000 ($10.20 per Unit) from the Over-allotment Units ($10.00 per Unit)) and $5,450,000
 ofnet proceeds sold in the Initial Public Offering, including proceeds of the sale of the Private Placement Warrants (including the Additional Private Placement Warrants) has beenand issuance of Initial Stockholder Loan Notes, was deposited in a U.S. based trust account (the “Trust(“Trust Account”), maintained by Continental Stock Transfer & Trust Company acting as the trustee and invested only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a trustee. maturity of 185 days or less or in money market funds meeting certain conditions under Rule
2a-7
promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations.
 
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Risks and Uncertainties
The proceeds held in the Trust Account were invested only in U.S. government securitiesExcept with a maturity of one hundred eighty-five (185) daysrespect to interest or less or in money market funds that meet certain conditions under Rule
2a-7
under the Investment Company Act of 1940, as amended, and that invest only in direct U.S. government treasury obligations, as determined by the Company, or a combination thereof. Funds will remain in the Trust Account until the earlier of (i) the consummation of the Initial Business Combination or (ii) the distribution of the Trust Account proceeds as described below. The remaining proceeds outside the Trust Account may be used to pay for business, legal and accounting due diligenceother income earned on prospective acquisitions and continuing general and administrative expenses.
The Company’s certificate of incorporation provides that, other than the withdrawal of interest to pay taxes (less up to $100,000 to pay winding up and dissolution expenses), none of the funds held in the Trust Account willthat may be released untilto the earliest of: (i)Company to pay its income taxes, if any, the amended and restated certificate of incorporation, as discussed below and subject to the requirements of law and regulation, provides that the proceeds from the Public Offering and the sale of the Private Placement Warrants held in the Trust Account will not be released from the Trust Account (1) to the Company, until the completion of the Initialinitial Business Combination; (ii)Combination, or (2) to the redemptionpublic stockholders, until the earliest of any(a) the completion of the initial Business Combination, and then only in connection with those shares of Class A common stock included inthat such stockholders properly elected to redeem, subject to the Units (the “Public Shares”) sold inlimitations described herein, (b) the Initial Public Offering that have beenredemption of any public shares properly tendered in connection with a stockholder vote to amend the Company’samended and restated certificate of incorporation (A) to affectmodify the substance or timing of itsthe Company’s obligation to provide holders of the shares of Class A common stock the right to have their shares redeemed in connection with the initial Business Combination or to redeem 100
%100% of such Public Sharesthe public shares if it hasthe Company does not consummated an Initialcomplete its initial Business Combination within 15 months from the closing of the Initial Public Offering;Offering by February 15, 2023 (the “Combination Period”) or (iii)(B) with respect to any other provision relating to the rights of holders of the shares of Class A common stock, and (c) the redemption of 100% of the Public Sharespublic shares if the Company is unable to complete an Initialhas not consummated the Business Combination within 15 months, February 15, 2023,the Combination Period, subject to applicable law. Public stockholders who redeem their shares of Class A common stock in connection with a stockholder vote described in clause (b) in the preceding sentence shall not be entitled to funds from the closing of the Initial Public Offering. The proceeds deposited in the Trust Account could become subjectupon the subsequent completion of an initial Business Combination or liquidation if the Company has not consummated an initial Business Combination within Combination Period, with respect to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s holders (the “Public Stockholders”) of the Public Shares. such Class A common stock so redeemed.
Initial Business Combination
While the Company’s management has broad discretion with respect to the specific application of the cash held outside of the Trust Account, substantially all of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company’s initial Business Combination must be with one or more target businesses that together have a fair market value equal to at least
80
%80% of the balance held in the Trust Account (excluding net of amounts disbursed to management for working capital purposes, if applicable,the taxes payable on the interest income earned fromon the Trust Account and the Marketing Fee)Account) at the time of thesigning a definitive agreement to enter intoin connection with the initial Business Combination. TheHowever, the Company will only complete athe initial Business Combination only if the post-transactionpost-Business Combination company ownsin which its public stockholders own shares will own or acquires 
50
%acquire 50% or more of the outstanding voting securities of the target or is otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Upon the closing of the Initial Public Offering, management has agreed that an amount equal to at least $10.20 per Unit sold in the Initial Public Offering will be held in the Trust Account. Proceeds of the Initial Public Offering, private placement warrants and Initial Stockholder Loans (see Note 5) held in the Trust Account will be 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 or (ii) the distribution of the Trust Account, as described below, except that interest earned on the Trust Account can be released to the Company to pay its tax obligations (“Permitted Withdrawals”). 
The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares in connection with aupon the completion of the initial Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The
discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require the Company to seek stockholder approval under applicable law or stock exchange listing requirement.
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The Company will provide its public stockholders will be entitledwith the opportunity to redeem their Public Shares forall or a pro rata portion of their shares of Class A common stock upon the completion of its initial Business Combination at a
per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account ($10.20calculated as of two business days prior to the consummation of the initial Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its income taxes, if any, divided by the number of then-outstanding public shares, subject to the limitations described herein. The amount in the Trust Account is initially $10.20 per Public Share, plus any pro rata interest, net of permitted withdrawals).public share. The
per-share
per share amount the Company will distribute to be distributed to public stockholdersinvestors who properly redeem their Public Sharesshares will not be reduced by the Marketing Feemarketing fee the Company will pay to the underwriters upon the completion of its initial Business Combination (as discussed in Note 6). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The Public Shares subject to redemption were recorded at redemption value and classified as temporary equity upon the completion of the
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Initial Public Offering in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Proposed Liabilities from Equity.”
The Company will not redeem Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001 (so that it does not then become subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our Business Combination. If the Company seeks stockholder approval of the Business Combination, In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the issued and outstanding shares voted are voted in favor of the Business Combination, or such other vote as required by law or stock exchange rule.Combination. If a stockholder vote is not required by law or stock exchange requirements and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor and Founders and its permitted transferees will agree to vote their Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
If the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.
The Sponsor and Founderseach member of the management team have entered into an agreement with the Company, pursuant to which they have agreed (a) to (i) waive their redemption rights with respect to their Founder Shares; (ii) waive their redemption rights with respect to their Founder Shares and Public Shares held by thempublic shares in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation (A) that would modify the substance or timing of the Company’s obligation to provide holders of the Class A common stock the right to have their shares redeemed in connection with the completion of ainitial Business Combination (b)or to redeem 100% of the public shares if the Company does not complete its initial Business Combination within the Combination Period or (B) with respect to any other provision relating to the rights of holders of the Company’s Class A common stock and (iii) waive their rights to liquidating distributions from the Trust Account with respect to theirany Founder Shares they hold if the Company fails to consummate a Businessan initial business combination within Combination within the Combination Window (as defined below) and (c) not to propose an amendment to the Company’s Amended and Restated Certificate of Incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their shares in conjunction with any such amendment.Period.
If the Company is unable to complete a Business Combination within 15 months from the closing of the Initial Public Offering, February 15, 2023 (the “Combination Window”),Combination Period, the Company 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, at a
per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest (net of permitted withdrawalsearned on the funds held in the Trust Account and not previously released to the Company to pay its income taxes, if any (less up to $
100,000$100,000 to pay winding up and 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
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stockholders and the Company’s board of directors (the “Board”), 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. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Window.Period.
The Sponsor and Founders have agreed to waive their right to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Window.Period. However, if the Sponsor and Founders acquire Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Window.Period. The underwriters have agreed to waive their rights to their Marketing Fee (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination WindowPeriod, and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).
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In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.20 per Public Share or (ii) the actual amount per Public Share held in the Trust Account as of the liquidation of the Trust Account, if less than $10.20 per Public Share due to reductions in the value of the trust assets,Trust Account, in each case net of permitted withdrawals. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Company due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and the Company believe that the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure you that the Sponsor would be able to satisfy those obligations. None of the Company’s officers or directors will indemnify the Company for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Going Concern Consideration, Liquidity and Capital Resources
On a routine basis, the Company assesses going concern considerations in accordance with FASB ASC
205-40
“Presentation of Financial Statements—Going Concern”. As of SeptemberJune 30, 2021,2022, the Company had 0 cash and a$159,389 in its operating bank account, $398,119 of working capital deficit, and $176,265,685 of $806,273.
The Company’s liquidity needs up to September 30, 2021, had been satisfied through a payment of $25,000 in prepaid expenses paid by the Sponsor in exchange for the Founder Shares (see Note 5), and borrowings under the promissory note of $165,949. The promissory note was fully repaid on November 17, 2021, from the proceeds of the Initial Public Offering (see Note 5).
Subsequent to the period covered by this quarterly report on Form
10-Q
(the “Quarterly Report”), the Company consummated its Initial Public Offering (see Note 3) and Private Placement (see Note 4). Of the net proceeds from the Initial Public Offering, associated Private Placement, and Initial Stockholder Loan Notes, $175,950,000 of cash was placedsecurities held in the Trust Account to be used for a Business Combination or to repurchase or redeem the Company’s common stock in connection therewith.
The Company believes that it will have sufficient working capital and $1,732,907 of cash was held outsideborrowing capacity to meet its needs through the earlier of the Trust Account andconsummation of a Business Combination or one year from this filing. However, there is available fora risk that the Company’s working capital purposes.
Inliquidity may not be sufficient, which raises substantial doubt about the Company’s ability to continue as a going concern. Additionally, 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, as defined below (see Note 5). As of SeptemberJune 30, 2021,2022, there were no0 amounts outstanding under any Working Capital Loans.
Based onThe Company has until February 15, 2023, to consummate a Business Combination. If a Business Combination is not consummated by this date and an extension is not requested by the foregoing, management believes thatSponsor there will be a mandatory liquidation and subsequent dissolution of the Company will have sufficient working capital and borrowing capacityCompany. Uncertainty related to meet its needs through the earlier of the consummation of a Business Combination raises substantial doubt about the Company’s ability to continue as a going concern. Management intends to complete an initial business combination on or one year from this filing. Over this time period,before February 15, 2023, however, it is uncertain whether management will succeed in doing so. No adjustments have been made to 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 target businesses, paying for travel expenditures, selecting the target businesscarrying amounts of assets or liabilities to merge with or acquire, and structuring, negotiating and consummating the Business Combination.reflect a required liquidation after February 15, 2023.
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Risks and Uncertainties
On January 30, 2020,Management is currently evaluating the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the
“COVID-19
outbreak”). In March 2020, the WHO classified the
COVID-19
outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the
COVID-19
outbreak continues to evolve. The impact ofpandemic and has concluded that while it is reasonably possible that the
COVID-19
outbreak pandemic could have a negative effect on the Company’s financial position, will depend on future developments, includingresults of its operations and/or search for a target company, the duration and spreadspecific impact is not readily determinable as of the outbreak and related advisories and restrictions. These developments and the impactdate of the
COVID-19
outbreak on thethese unaudited condensed financial markets and the overall economy are highly uncertain and cannot be predicted. If thestatements. The unaudited condensed financial markets and/or the overall economy are impacted for an extended period, the Company’s financial position may be materially adversely affected. Additionally, the Company’s ability to complete an initial Business Combination may be materially adversely affected due to significant governmental measures being implemented to contain the
COVID-19
outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential investors or affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate an initial Business Combination in a timely manner. The Company’s ability to consummate an initial Business Combination may also be dependent on the ability to raise additional equity and debt financing, which may be impacted by the
COVID-19
outbreak and the resulting market downturn. The financial statement doesstatements do not include any adjustments that might result from the outcome of this uncertainty.
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Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form
10-Q
and Article 8 of Regulation
S-X
of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Prospectus, which contains the initial audited financial statements and notes thereto Annual Report on Form
10-K
for the period from January 26, 2021 (inception) to March 2,December 31, 2021, as filed with the SEC on November 12, 2021, and the Company’s report on Form
8-K,
which contains the Company’s audited balance sheet and notes thereto as of November 15, 2021, as filed with the SEC on November 22, 2021.April 1, 2022. The interim results for the three monthsperiod ended SeptemberJune 30, 2021 and for the period from January 26, 2021 (inception) through September 30, 20212022 are not necessarily indicative of the results to be expected for the year ending December 31, 20212022 or for any future interim periods.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it 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 independent registered public accounting firm 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 stockholder 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 aan emerging growth 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. The Company has 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 public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
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Use of Estimates
The preparation of unaudited condensed financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of expenses during the reporting period.
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Making estimates requires management to exercise significant judgment. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liabilities. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000, and investments held in Trust Account. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such accounts.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did 0t have any cash equivalents as of June 30, 2022 and December 31, 2021.
Investments Held in the Trust Account
Following the closing of the Initial Public Offering on November 15, 2021, an amount of $175,950,000 from the net proceeds of the sale of the Units in the Initial Public Offering, the sale of the Private Placement Warrants, and the Initial Stockholder Loan Notes were placed in the Trust Account. The Company’s 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 the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s 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 sheet 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 on investments held in the Trust Account in the accompanying statement of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
The Trust Account is intended as a holding place for funds pending the earliest to occur of: (i) the completion of the initial Business Combination; (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (A) to modify the substance or timing of the Company’s obligation to redeem 100% of the public shares if the Company does not complete the initial Business Combination within the Combination Period or (B) with respect to any other provision relating to stockholders’ rights or
pre-initial
Business Combination activity; or (iii) absent an initial Business Combination within the Combination Period, the return of the funds held in the Trust Account to the public stockholders as part of redemption of the public shares.
Offering Costs associated with the Initial Public Offering
The Company complies with the requirements of theFASB ASC
340-10-S99-1.
Offering costs consisted of legal, accounting, and underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. The Company incurred offering costs amounting to $4,702,460$4,675,360 consisting of $3,450,000 of underwriting commissions and $1,252,460$1,225,360 of other cash offering costs. Of this amount, $4,443,825$4,416,724 was charged to stockholders’ deficit and $258,635 was allocated to the Warrants and expensed upon the completion of the Initial Public Offering.
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Class A Common Stock Subject to Possible Redemption
The Company accounts for its shares of Class A common stock subject to possible redemption in accordance with the guidance in FASB ASC Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable shares of common stock (including shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. The Company’s shares of Class A common stock sold in the Initial Public Offering feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of June 30, 2022 and December 31, 2021, 17,250,000 shares of Class A common stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheets. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Such changes are reflected in additional
paid-in
capital, or in the absence of additional capital, in accumulated deficit.
Share-based Compensation
The transfer of the Founder Shares to independent directors 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 the date the unaudited condensed financial statements were issued, the Company determined that a Business Combination is 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 completion 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) less the amount initially received for the purchase of the Founders Shares.
Income Taxes
The Company followsuses the asset and liability method of accounting for deferred income taxes under ASC 740, “Income Taxes.” Deferredtaxes. Under this method, deferred tax assets and liabilities are recognized for the estimatedexpected future tax consequences attributable toof temporary differences between the financial statements carrying amounts and the tax basis of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured usingat currently enacted tax rates expected to apply to taxable income in the years in which thoserates. These temporary differences are expectedprimarily relate to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date.net operating loss carryforwards available to offset future taxable income. Valuation allowances are established, whenif necessary, to reduce a deferred tax assetsasset to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must bethat will more likely than not tobe realized.
The Company recognizes tax liabilities from an uncertain tax position only if it is more likely than not that the tax position will not be sustained upon examination by the taxing authorities.authorities, based on the technical merits of the tax position. There are 0 uncertain tax positions that have been recognized in the accompanying financial statements. The Company recognizes accruedis required to file tax returns in the U.S. federal jurisdiction and in the state of New York. The Company’s policy is to recognize interest and penalties related to unrecognizeduncertain tax benefits, if any, as part of income tax expense. There were 0 unrecognized tax benefits and 0 amounts accrued forNaN such interest and penalties have been accrued as of SeptemberJune 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The provisionCompany’s effective tax rate for income taxesthe three and six months ended June 30, 2022, was deemed to be immaterial0.07% and 0.07%, respectively, and for the three months ended June 30, 2021, and for the period from January 26, 2021 (inception) through SeptemberJune 30, 2021.2021 was 0.00%. The Company’s effective tax rate differs from the statutory income tax rate of 21% primarily due to the recognition of gains or losses from the change in the fair value of warrant liabilities, which are not recognized for tax purposes, and recording a full valuation allowance on deferred tax assets. The Company has historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to income or loss for the reporting period. The Company has used a discrete effective tax rate method to calculate taxes for the three and six months ended June 30, 2022. The Company believes that, at this time, the use of the discrete method for the three and six months ended June 30, 2022 is more appropriate than the estimated annual effective tax rate method as the estimated annual effective tax rate method is not reliable due to a high degree of uncertainty in estimating annual pretax earnings.
Net LossIncome (Loss) Per Common Share of Common Stock
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has 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 (loss) per common share is calculated by dividing the net income (loss) 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 the Private Placement to purchase an aggregate of 14,075,000 shares of our Class A common stock in the calculation of diluted income (loss) per share, since their inclusion would be anti-dilutive under the treasury stock method. For the three-month period ended June 30, 2021 and the period from January 26, 2021 (inception)
Net
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through June 30, 2021, the number of weighted average shares of Class B common stock for calculating basic net income (loss) per share was reduced for the effect of an aggregate of 562,500 shares of Class B common stock that were subject to forfeiture if the over-allotment option was not exercised in full or part by the underwriters. Since the contingency was satisfied as of the beginning of the three-month period ended June 30, 2022 and
six-month
period ended June 30, 2022, diluted income per share of common stock is the same as basic income per share of common stock for the period. Additionally, for the three-month period ended June 30, 2021 and the period from January 26, 2021 (inception) through June 30, 2021, the calculation does not consider the effect of the shares subject to forfeiture as they would be anti-dilutive given the net loss position. As a result, for the three-month period ended June 30, 2021 and the period from January 26, 2021 (inception) through June 30, 2021, diluted loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, plus, to the extent dilutive, the incremental number of shares of common stock to settle warrants, as calculated using the treasury stock method. As of September 30, 2021, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company under the treasury stock method. As a result, diluted loss per share of common share is the same as basic loss per share of common stock are the same for the periods. Shares subject to forfeiture areperiod. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the calculationredemption value approximates fair value.
The table below presents a reconciliation of weighted average shares outstanding until the forfeiture restrictions lapse.numerator and denominator used to compute basic and diluted net income (loss) per share for each class of common stock:
 
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For the three months ended June 30,
2022
   
For the six months ended June 30,
2022
 
   
Class A
   
Class B
   
Class A
   
Class B
 
Basic and diluted net income per common stock:                    
Numerator:
                    
Allocation of net income - basic and diluted   1,591,754    397,939    4,247,602    1,061,901 
Denominator:
                    
Basic and diluted weighted average common stock outstanding   17,250,000    4,312,500    17,250,000    4,312,500 
Basic and diluted net income per common stock
   0.09    0.09    0.25    0.25 
   
   
For the three months ended June 30,
2021
   
For the period from January 26, 2021

(inception) through March 31, 2021
 
   
Class A
   
Class B
   
Class A
   
Class B
 
Basic and diluted net loss per common stock:                    
Numerator:
                    
Allocation of net loss - basic and diluted   —      567    —      1,499 
Denominator:
                    
Basic and diluted weighted average common stock outstanding   —      3,750,000    —      3,750,000 
Basic and diluted net loss per common stock
   —      0.00    —      0.00 
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet,sheets, primarily due to their short-term nature.
Warrant Liability
The Company will account for the 12,500,000 warrants (or 14,075,000 warrants if the underwriters’ over-allotment option is exercised in full) issued in connection with the Initial Public Offering and Private Placement in accordance with the guidance contained in FASB ASC 815 “Derivatives and Hedging” whereby under that provision the warrants do not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the Company will classify the warrant instrument as a liability at fair value and adjust the instrument to fair value at each reporting period. This liability will be
re-measured
at each balance sheet date until the warrants are exercised or expire, and any change in fair value will be recognized in the Company’s statement of operations. The fair value of warrants will be estimated using an internal valuation model. Our valuation model will utilize inputs such as assumed share prices, volatility, discount factors and other assumptions and may not be reflective of the price at which they can be settled. Such warrant classification is also subject to
re-evaluation
at each reporting period. NaN warrants are currently outstanding. On November 15, 2021, subsequent to the Initial Public Offering, the underwriters exercised the over-allotment option in full.
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The Company’s financial instruments are classified as either Level 1, Level 2, or Level 3. These tiers include:
 
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
 
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
 
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
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 FASB ASC Topic 815, “Derivatives and Hedging”. The Company’s derivative instruments are recorded at fair value on the balance sheet with changes in the fair value reported in the unaudited condensed statements of operations. Derivative assets and liabilities are classified on the balance sheet as current or
non-current
based on whether or not
net-cash
settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
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Concentration of Credit Risk
Warrant Liability
The Company accounts for the Warrants issued in connection with the Initial Public Offering in accordance with the guidance contained in FASB ASC
Financial instruments815-40.
Such guidance provides that potentially subjectbecause the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability. Accordingly, the Company will classify each warrant as a liability at its fair value. This liability is subject to
re-measurement
at each balance sheet date. With each such
re-measurement,
the warrant liability will be adjusted to concentrationsfair value, with the change in fair value recognized in the Company’s unaudited condensed statements of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.operations.
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”)FASB issued Accounting Standards Update (“ASU”)
2020-06,
“Debt — Debt with Conversion and Other Options (Subtopic
470-20)
and Derivatives and Hedging — Contracts in Entity’s Own Equity”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. The amendments are effective for smaller reporting companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company adopted ASU
2020-06
is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with earlyin 2021 upon incorporation. The impact of adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU
2020-06was not material.
would have on its financial position, results of operations or cash flows.
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
Note 3 — Initial Public Offering
The Company consummated its Initial Public Offering of 17,250,000 Units on November 15, 2021 (including the over-allotment Units). Each Unit consists of one Class A common stock and one half of one Public Warrant. Each whole Public Warrant entitles the holder to purchase 1 Class A common stock at an exercise price of $11.50 per share. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $172,500,000 and incurring $3,450,000 in underwriting fees.
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Note 4 — Private Placement
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased 4,360,000 warrants, which included the underwriters exercise of the full over-allotment option, each exercisable to purchase one share of Class A common stock at $11.50 per share, subject to adjustment, at a price of $1.00 per warrant and $4,360,000 in the aggregate, in a private placement which occurred concurrently with the closing of the Initial Public Offering. Additionally, Cowen purchased 545,000 private placement warrants, including 45,000 private placement warrants issued in connection with the exercise in full by the underwriters of their option to purchase additional Unit, with the same terms as the Sponsor in a private placement which occurred concurrently with the closing of the Initial Public Offering (the “Cowen Private Placement Warrants”). Additionally, Intrepid purchased 545,000 private placement warrants, including 45,000 private placement warrants issued in connection with the exercise in full by the underwriters of their option to purchase additional Units, with the same terms as the Sponsor in a private placement that occurred concurrently with the closing of the Initial Public Offering (the “Intrepid Private Placement Warrants”). The private placement resulted in an aggregate of 5,450,000 warrants and $5,450,000 in proceeds, a portion of which was placed in the Trust Account.
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Note 5 — Related Party Transactions
Founder Shares
In January 2021, the Sponsor and FoundersInitial Stockholders purchased an aggregate of 5,750,000 shares of the Company’s Class B common stock for an aggregate price of $25,000 (the “Founder Shares”). On March 19, 2021, the Sponsor transferred 25,000 shares to each of Marc McCarthy and James Crockard III, independent directors. In October 2021, the Company effected a share contribution back to capital resulting in the Sponsor and FoundersInitial Stockholders holding 4,312,500 shares of Class B common stock. The grant date fair value of the shares granted to the independent directors was estimated to be approximately $67,000 as adjusted for the share contribution back to capital. The Founder Shares includeincluded an aggregate of up to 562,500 shares subject to forfeiture to the extent that the underwriters’ over-allotment option iswas not exercised in full or in part, so that the Sponsor and Founders willwould own, on an
as-converted
basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering. On November 15, 2021, the underwriters fully exercised the over-allotment option; thus, Founder Shares are no longer subject to forfeiture.
The Sponsor and Founders have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination or (B) the date on which the Company completes a liquidation, merger, stock exchange, reorganization or similar transaction after a Business Combination that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, 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, the Founder Shares will be released from the
lock-up.
Promissory Note — Related Party
On February 22, 2021, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Promissory Note”). The Promissory Note iswas
non-interest
bearing and payable on the earlier of December 31, 2021 or the completion of the Initial Public Offering. As of September 30, 2021, there was an outstanding balanceThe Company borrowed $190,555 under the Note. The Company repaid the Promissory Note of $165,949. The promissory note was fully repaidin full on November 17, 2021 from the proceeds of the Initial Public Offering.2021.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company will repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. In the event that a Business Combination does not close, the Company 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 will be used to repay the Working Capital Loans. Except for the foregoing, the terms of such
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Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such 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 $1,500,000 of such Working Capital Loans may be convertible into warrants at a price of $1.00
per warrant. These warrants would be identical to the Private Placement Warrants. As of SeptemberJune 30, 2022 and December 31, 2021, the Company hadthere are 0 borrowings under theoutstanding Working Capital Loans.
Initial Stockholder Loans
The Sponsor and Founders have agreed to lendlent the Company an aggregate amount of $3,450,000 as ofon the closing date of this offeringthe Initial Public Offering (the “Initial Stockholder Loans”). The Initial Stockholder Loans will bear no interest. The proceeds of the Initial Stockholder Loans will bewere added to the Trust Account andto be used to fund the redemption of the Company’s public shares (subject to the requirements of applicable law). The Initial Stockholder Loans are beingshall be repaid in cash or converted into warrants (the “Initial Stockholder Loan Warrants”) at a conversion price of $1.00
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per warrant, at the Sponsor’s and Founders’ sole discretion. The Initial Stockholder Loan Warrants would be identical to the Private Placement Warrants sold in connection with the Initial Public Offering. The Initial Stockholder Loans were extended in order to ensure that the amount in the Trust Account is $10.20 per public share.share following the consummation of the Initial Public Offering. If the Company does not complete a Business Combination, the Company will not repay the Initial Stockholder Loans and their proceeds will be distributed to the Company’s public stockholders. The Sponsor and Founders have waived any claims against the trust account in connection with these loans. As of SeptemberJune 30, 2022 and December 31, 2021, there were 0 amounts outstanding under the Initial Stockholder Loans. As of the closing of the Initial Public Offering, $3,450,000 was outstanding under the Initial Stockholder Loans.
Note 6 — 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 or warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) will beare entitled to registration rights pursuant to a registration and shareholder rights agreement.agreement signed upon the consummation of the Initial Public Offering. The holders of these securities will beare entitled to make up to three demands, excluding short form registration demands, that the Company 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 the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering our securities. The Company will bear the expenses incurred in connection with the filing of any such registration statement.
Underwriting Agreement
The Company granted the underwriters a
45-day
option from the date of the Initial Public Offering to purchase up to 2,250,000 additional Units to cover over-allotments if any, at the Initial Public Offering price less the underwriting discounts and commissions. On November 15, 2021, the underwriters had fully exercised theirthe over-allotment option.
The underwriters were paid a cash underwriting discount of two percent (2%) of$0.20 per Unit, or $3,450,000 in the gross proceedsaggregate, at the closing of the Initial Public Offering and subsequent exercise of the over-allotment option, or $3,450,000.
Offering.
Business Combination Marketing Agreement
The Company has engaged underwriters as advisors in connection with our business combination to assist us in holding meetings with our stockholders to discuss the potential business combination and the target business’s attributes, introduce us to potential investors that are interested in purchasing our securities in connection with the potential business combination, assist us in obtaining stockholder approval for the business combination and assist us with our press releases and public filings in connection with the business combination. The Company will pay the Marketing Feemarketing fee for such services upon the consummation of our initial business combination in an amount equal to, in the aggregate, 3.5% of the gross proceeds of the Initial Public Offering including any proceeds fromor $6,037,500. NaN liability has been accrued in the fullJune 30, 2022 or partial exerciseDecember 31, 2021 balance sheets as the marketing fee is contingent upon an initial business combination that is not probable in nature under FASB ASC 450 “Contingencies”.
Note 7 — Warrants
The Company accounts for the 14,075,000 warrants issued in connection with the Initial Public Offering (8,625,000 Public Warrants and 5,450,000 Private Placement Warrants) in accordance with the guidance contained in FASB ASC
815-40.
Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability. Accordingly, the Company will classify each warrant as a liability at its fair value. This liability is subject to remeasurement at each balance sheet date. With each such remeasurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s unaudited condensed statements of the over-allotment option.operations.
 
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Note 7 — Warrants
Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable 30 days after the completion of a Business Combination and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available.
The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of itsthe initial Business Combination, it will use its commercially reasonable efforts to file with the SEC a post-effective amendment toregistration statement for the registration, statement or a new registration statement coveringunder the Securities Act, of the shares of Class A common stock issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause such registration statement to become effective within 60 business days after the closing of the initial Business Combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of the Company’s initial business combination,
warrant holders
may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above,agreement; provided that if the Company’s shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, itthe Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement, and inbut the event it does not so elect, itCompany will use its commercially reasonablereasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. The “fair market value” as used in this paragraph shall mean the volume weighted average price of the Class A common stock for the 10 trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent. If that exemption,a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption, and the Company will use its commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available, holders will not be ableavailable. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) less the exercise theirprice of the warrants by (y) the fair market value and (B) 0.361. The “fair market value” as used in this paragraph shall mean the volume weighted average price of the Class A common stock for the 10 trading days ending on a cashless basis.the trading day prior to the date on which the notice of exercise is received by the warrant agent.
Redemption of warrants when the price per Class
 A common stock equals or exceeds $18.00.
Once the warrants become exercisable, the Company may redeem the Public Warrants:
 
in whole and not in part;
 
at a price of $0.01 per warrant;
 
upon a minimum of 30 days’ prior written notice of redemption, or the
30-day
redemption period, to each warrant holder; and
if, and only if, the closing price of the Company’s Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a
30-trading
day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
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Redemption of warrants when the price per Class
 A common stock equals or exceeds $10.00.
Once the warrants become exercisable, the Company may redeem the Public Warrants:
 
in whole and not in part;
 
at a price of $0.10 per warrant;
 
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upon a minimum of 30 days’ prior written notice of redemption, or the
30-day
redemption period, to each warrant holder; and
if, and only if, the closing price of the Company’s Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations, and the like) for any 20 trading days within a
30-trading
day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger, or consolidation. However, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination WindowPeriod and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
The Private Placement Warrants will beare identical to the Public Warrants underlying the Units being sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Placement Warrants will not be transferable, assignable, or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be
non-redeemable
so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
Note 8 – Class A Common Stock Subject to Possible Redemption
The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events. The Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s Class A common stock are entitled to one vote for each share. As of June 30, 2022 and December 31, 2021, there were 17,250,000 shares of Class A common stock outstanding, all of which were subject to redemption.
As of June 30, 2022 and December 31, 2021, Class A common stock reflected on the balance sheet is reconciled on the following table:
Gross proceeds  $172,500,000 
Less:     
Proceeds allocated to Public Warrants   (9,487,500) 
Issaunce costs related to Class A common stock   (4,416,724) 
Share contribution back to capital transaction   (24,569) 
Plus:     
Accretion of carrying value to redemption value   17,378,793 
      
Class A common stock subject to possible redemption  $175,950,000 
      
Note 89 — Stockholders’ Equity
Preferred Stock
— The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s Board. As of SeptemberJune 30, 2022 and December 31, 2021, there were 0 shares of preferred stock issued or outstanding.
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Class
 A Common Stock
— The Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to
one vote
for each share. As of SeptemberJune 30, 2022 and December 31, 2021, there were 0 shares of Class A common stock issued or outstanding.outstanding (see Note 8).
Class
 B Common Stock
— The Company is authorized to issue 30,000,000 shares of Class B common stock with a par value of $0.0001 per share. In FebruaryAs of June 30, 2022 and December 31, 2021, the Sponsor and Founders purchased an aggregate of 5,750,000 shares of the Company’sheld 4,312,500 Class B common stock for an aggregate price of $25,000. Of these, an aggregate of up to 750,000 shares are subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that the Sponsor and Founders will collectively own 20% of the Company’swhich were all issued and outstanding common stock after the Initial Public Offering. On October 4, 2021, the Company effected a share contribution back to capital resulting in its initial stockholders holding 4,312,500 shares of Class B common stock (up to 562,500 shares of which are subject to forfeiture depending on the extent to which the underwriters’ over-allotment option is exercised). On November 15, 2021, the underwriters fully executed their over-allotment option; thus, no Founder Shares are subject to forfeiture.outstanding.
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Holders of Class B common stock will have the right to elect all of the Company’s directors prior to a Business Combination. Holders of Class A common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders except as required by law.
The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination on a
one-for-one
basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess ofconnection with the amounts sold in the Initial Public Offering and related to the closing of ainitial Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an
as-converted
basis, 20% of the total number of all shares of common stock outstanding upon completion of the Initial Public Offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination (netoutstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by Public Shareholders), including the total number of shares of Class A common stock redeemedissued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with aor in relation to the consummation of the initial Business Combination),Combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination in consideration for such seller’s interest in the business combination target and any Private Placement Warrants issued upon the conversion of Working Capital Loans made to the Company.
Note 10 — Derivative Financial Instruments
The Company accounts for the Public Warrants and Private Placement Warrants as liabilities in accordance with the guidance contained in ASC
815-40,
Derivatives and Hedging—Contracts in Entity’s Own Equity. Because the Company does not control the occurrence of events, such as a tender offer or exchange, that may trigger cash settlement of the warrants where not all of the stockholders also receive cash, the warrants do not meet the criteria for equity treatment thereunder, as such, the warrants must be recorded as a derivative liability.
Additionally, certain adjustments to the settlement amount of the Private Placement Warrants are based on a variable that is not an input to the fair value of a
“fixed-for-fixed”
option as defined under ASC
815-40,
and thus the Private Placement Warrants are not considered indexed to the Company’s own stock and not eligible for an exception from derivative accounting.
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
   
Fair Value Measured as of June 30, 2022
 
Description
  
Level 1
   
Level 2
   
Level 3
   
Total
 
Assets:
                    
Investments held in Trust Account - U.S. Treasury Securities  $176,265,685   $—     $—     $176,265,685 
Liabilities:
                    
Derivative warrant liabilities - Public warrants  $862,500   $—     $—     $862,500 
Derivative warrant liabilities - Private placement warrants  $—     $—     $542,150   $542,150 
  
   
Fair Value Measured as of December 31, 2021
 
Description
  
Level 1
   
Level 2
   
Level 3
   
Total
 
Assets:
                    
Investments held in Trust Account - U.S. Treasury Securities  $175,956,892   $—     $—     $175,956,892 
Liabilities:
                    
Derivative warrant liabilities - Public warrants  $—     $—     $4,312,500   $4,312,500 
Derivative warrant liabilities - Private placement warrants  $—     $—     $2,725,000   $2,725,000 
Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. The estimated fair value of Public Warrants transferred from a Level 3 measurement to a Level 1 measurement during the six months ended June 30, 2022 as the Public Warrants were separately listed for trading beginning in January 2022.
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There were no transfers to/from Levels 1, 2, and 3 in the period from January 26, 2021 (inception) through June 30, 2021.
The estimated fair value of the Private Placement Warrants and the Public Warrants was initially determined using Level 3 inputs. Subsequent to the separate listing and trading of the Public Warrants the fair value of the Public Warrants has been measured based on the observable listed prices for such warrants, a Level 1 measurement. Inherent in a Monte Carlo simulation and the Black-Scholes Option Pricing Model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock warrants based on implied volatility from the Company’s traded warrants and from historical volatility of select peer companies’ common stock that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero. For the period from January 1, 2022 to June 30, 2022, the Company recognized a non-cash gain resulting from a decrease in the fair value of liabilities of approximately
$5.6 million presented as change in fair value of derivative warrant liabilities on the accompanying unaudited condensed statements of operations.
   
June 30,
  
December 31,
 
  
2022
  
2021
 
Exercise price  $11.50  $11.50 
Stock price  $9.99  $9.87 
Volatility   5.20%   8.10% 
Term (years)   5.62   6.11 
Risk-free rate   2.97%   1.35% 
The following table provides quantitative information regarding Level 3 fair value measurements inputs related to the warrants:
Derivative liabilities as of December 31, 2021 - Level 3  $7,037,500 
Transfer of Public Warrants to Level 1 Measurement   (4,312,500) 
Change in fair value of derivative liabilities as of March 31, 2022 - Level 3   (1,380,570) 
      
Derivative liabilities as of March 31, 2022 - Level 3  $1,344,430 
Change in fair value of derivative liabilities as of June 30, 2022 - Level 3   (802,280) 
      
Derivative liabilities as of June 30, 2022 - Level 3   542,150 
      
Note 911 — Subsequent Events
Management has evaluated the impact of subsequent events to determine if events orand transactions occurringthat occurred through the date the unaudited condensed financial statements were issued require potential adjustment or disclosure inissued. Other than disclosed above, the financial statements andCompany did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements, except as noted below.statements.
Other than the events described in the Notes above, including the completion of the Initial Public Offering and additional offering, sale of the Private Placement Warrants, the contribution of Class B shares back to capital, and the Initial Stockholder Loans, management did not identify any other material subsequent events.
 
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ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this reportQuarterly Report on Form
10-Q
for the three months ended June 30, 2022 (the “Quarterly Report”) to “we,” “our,” “us” or the “Company” refer to Arena Fortify Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Arena Fortify Sponsor LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks, uncertainties and uncertainties.
assumptions. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. See “Cautionary Statement Regarding Forward-Looking Statements.” Also, see the risk factors and other cautionary statements described or referenced under the heading “Item 1A. Risk Factors.” We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,���” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public Offering (as defined below) filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated as a Delaware corporation on January 26, 2021 as a Delaware corporation and formed for the purpose of effectuatingeffecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this Quarterly Reportherein as our “initialinitial business combination.” We have not selected any specific business combination target. We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering (the “Initial Public Offering”), the initial stockholder loans,Initial Stockholder Loans, and the private placement of the Private Placement Warrants (as defined below), the proceeds of the sale of our shares in connection with our initial business combination (pursuant to forward purchase agreements or backstop agreements we may enter into following the consummation of the Initial Public Offering or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.
In February 2021, we issued 5,750,000 founder shares to our Sponsor for an aggregate purchase price of $25,000 in cash, or approximately $0.004 per share. In March 2021, our Sponsor sold 456,000 founder shares each to Cowen Investments II LLC (“Cowen”) and Intrepid Financial Partners, L.L.C. (“Intrepid” and with the Sponsor and Cowen, the “Initial Stockholders”). On March 19, 2021, our Sponsor transferred 25,000 shares to each of Marc McCarthy and James Crockard III. On October 4, 2021, we effected a share contribution back to capital resulting in our Initial Stockholders holding 4,312,500 shares of our Class B common stock.
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Results of Operations
We have neither engaged in any operations nor generated any operating revenues to date. Our only activities for the period from January 26, 2021 (inception) through September 30, 2021 were organizational activities, those necessary to prepare for the Initial Public Offering, described below. We do not expect to generate any operating revenues until after the completion of our initial business combination. We will generate
non-operating
income in the form of interest income on cash and cash equivalents held after the Initial Public Offering. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended September 30, 2021, we had a net loss of $254, which resulted entirely from the formation and operating costs.
For the period from January 26, 2021 (inception) through September 30, 2021, we had a net loss of $1,753, which also resulted entirely from formation and operating costs.
Liquidity and Capital Resources
For the period from January 26, 2021 (inception) through September 30, 2021, net cash used in operating activities was $0, which was due to our net loss of $1,753 offset by accrued offering costs and expenses of $1,753.
For the period from January 26, 2021 (inception) through September 30, 2021, net cash provided by financing activities was $0, which was due to the proceeds from the Promissory Note of $165,949, offset by the payment of deferred offering costs of $165,949.
As of September 30, 2021, we had $0 in our operating bank account.
On November 15, 2021, we consummated the Initial Public Offering of 17,250,000 units (including 2,250,000 units issued upon exercise in full by the underwriters of their option to purchase additional units), at $10.00 per unit, generating gross proceeds of $172,500,000. Each unit consistedconsists of one share of Class A common stock, (the “Public Shares”), $0.0001 par value, and
one-half
of one redeemable warrant (“Public Warrant”). Each Public Warrant entitles the holder to purchase one share of Class A common stock at an exercise price of $11.50 per whole share.
Certain of our Initial Stockholders lent us an aggregate amount of $3,450,000 as of the closing date of our Initial Public Offering at no interest pursuant to those certain promissory notes (collectively, the “Initial Stockholder Loan Notes”). The proceeds of the Initial Stockholder Loans were added to the trust account and will be used to fund the redemption of our public shares (subject to the requirements of applicable law). The Initial Stockholder Loans shall be repaid in cash or converted into warrants (the “Initial Stockholder Loan Warrants”) at a conversion price of $1.00 per warrant, at each Initial Stockholder’s sole discretion. The Initial Stockholder Loan Warrants would be identical to the Private Placement Warrants sold in connection with our Initial Public Offering.
Simultaneously with the closing of the Initial Public Offering, the Sponsor, Cowen Investments II LLC (“Cowen”) and Intrepid Financial Partners, L.L.C. (“Intrepid” and with the Sponsor and Cowen, the “Initial Stockholders”)our initial stockholders purchased an aggregate of 5,450,000 private placement warrants (including 450,000 private placement warrants issued in connection with the exercise in full by the underwriters of their option to purchase additional units), at a price of $1.00 per private placement warrant (the “Private Placement Warrants”) ($5,450,000 in the aggregate) in a private placement (the “Private Placement”). Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $11.50 per share. Simultaneously
Following our Initial Public Offering, the closing of the over-allotment option, the sale of the Private Placement Warrants, and the receipt of proceeds from the Initial Stockholder Loans, approximately $175.9 million was placed in a trust account located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule
2a-7
promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by us, until the earlier of: (i) the completion of a business combination and (ii) the distribution of the trust account.
If we are unable to complete an initial business combination within 15 months from the closing of our Initial Public Offering, or February 15, 2023, 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 100% of 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 franchise and income taxes (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 our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
Results of Operations
Our entire activity from inception through June 30, 2022 related to our formation, the preparation for our Initial Public Offering, and since the closing of the Initial Public Offering, the search for a prospective initial business combination. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our initial business combination. We will generate
non-operating
income in the form of interest income on cash and cash equivalents.
For the three months ended June 30, 2022, we alsohad net income of $1,989,693 which was comprised of the change in the fair value of our warrants of $2,071,850, interest earned on marketable securities held in the trust account of $182,614 and interest income of $6, partially offset by operating costs of $264,777. For the three months ended June 30, 2021, we had net loss of $567, which was comprised of operating costs of $567.
For the six months ended June 30, 2022, we had net income of $5,309,503 which was comprised of the change in the fair value of our warrants of $5,632,850, interest earned on marketable securities held in the trust account of $308,793 and interest income of $20, partially offset by operating costs of $632,160. For the period from January 26, 2021 (inception) through June 30, 2021, we had net loss of $1,499, which was comprised of operating costs of $1,499.
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Liquidity and Capital Resources and Going Concern
As of June 30, 2022, we had approximately $159,389 in our operating bank account, and working capital deficit of approximately $398,119. We intend to use the funds held outside the trust account primarily to pay existing accounts payable, identify and evaluate prospective initial business combination candidates, perform due diligence on prospective target businesses, pay for travel expenditures, select the target business or businesses to merge with or acquire and structure, negotiate and consummate a business combination.
Prior to the completion of our Initial Public Offering, our liquidity needs had been satisfied through a payment from our Sponsor of $25,000 for the founder shares to cover certain offering costs and the loan under an unsecured promissory note from our Sponsor of $300,000. On November 15, 2021, we consummated the Initial Public Offering of 17,250,000 units (including 2,250,000 units issued promissory notesupon exercise in full by the underwriters of their option to eachpurchase additional units) at a price of $10.00 per unit. Certain of our initial stockholders lent us an aggregate amount of $3,450,000 as of the closing date of our Initial Public Offering at no interest. The proceeds of the Initial Stockholder (collectively, the “Initial Stockholder Loan Notes”), generating aggregate gross proceedsLoans were added to the Companytrust account and will be used to fund the redemption of $3,450,000.our public shares (subject to the requirements of applicable law). The Initial Stockholder Loan NotesLoans shall be repaid in cash or converted into warrants (the “InitialInitial Stockholder Loan Warrants”)Warrants at a purchaseconversion price of $1.00 per warrant, at each such lender’sInitial Stockholder’s sole direction.discretion. The Initial Stockholder Loan Warrants will be identical to the Private Placement Warrants.Warrants sold in connection with our Initial Public Offering. Simultaneously with the closing of our Initial Public Offering, we consummated the sale of 5,450,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant in a private placement to our Initial Stockholders. Among these Private Placement Warrants, 4,360,000 were purchased by our Sponsor and 545,000 were purchased by each of Cowen and Intrepid.
TheFor the six months ended June 30, 2022, net cash used in operating activities was $537,370, consisting of net income of $5,309,503 which is affected by a change in fair value of warrant liabilities of $5,632,850 and interest earned on marketable securities held in the trust account of $308,793.
For the period from January 26, 2021 (inception) through June 30, 2021, net cash used in operating activities was $0, consisting of net loss of $1,499, and interest earned on marketable securities held in the trust account of $0. Changes in operating assets and liabilities provided $0 of cash from operating activities.
Following our Initial Public Offering, the closing of the over-allotment option, the receipt of proceeds from the Initial Stockholder Loans and the sale of the Private Placement Warrants, and the Initial Stockholder Loan Notes were added to the net proceeds from the Initial Public Offering helda total of $175,950,000 was placed in the trust account. If we do not
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TableWe incurred $4,675,360 in transaction costs, including $3,450,000 of Contents
completeunderwriting fees and $1,225,360 of other offering costs. The promissory note from our initial business combination within 15 months from the closing of the Initial Public Offering, the proceeds heldSponsor was paid in the trust account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law). There will be no redemption rights or liquidating distributions from the trust account with respect to the Private Placement Warrants.
We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earnedfull on the trust account (which interest shall be net of taxes payable and excluding deferred underwriting commissions) to complete our initial business combination. We may withdraw interest to pay taxes, if any. We estimate our annual franchise tax obligations, based on the number of shares of our common stock authorized and outstanding after the completion of this offering, to be $200,000, which is the maximum amount of annual franchise taxes payable by us as a Delaware corporation per annum, which we may pay from funds from this offering held outside of the trust account or from interest earned on the funds held in the trust account and released to us for this purpose. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. Any interest earned on the trust account may be used to pay our taxes, and to the extent such interest income is not sufficient, taxes would be paid from the Company’s working capital. To the extent that our common stock or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
November 17, 2021. Subsequent to our Initial Public Offering and prior to the completion of our Initial Public Offering, the closing of the over-allotment option, the receipt of proceeds from the Initial Stockholder Loans and the sale of the Private Placement Warrants, our liquidity needs have been satisfied through the 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 an intended initial business combination, we have available to us the $1,250,000 of proceeds held outside the trust account, as well as certain funds from loans from our Sponsor membersor an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, provide us working capital loans. To date, there were no amounts outstanding under any working capital loans.
Based on the foregoing, management team or anybelieves that we will have sufficient working capital and borrowing capacity to meet our needs through the earlier of their affiliates. We will use these funds to primarily identify and evaluate prospective partner businesses, perform business due diligence on prospective partner businesses, travel to and from the offices, plants or similar locationscompletion of prospective partner businesses or their representatives or owners, review corporate documents and material agreements of prospective partner businesses, and structure, negotiate and complete a business combination and to pay taxes toor one year from the extentdate of the interest earned on the trust account is not sufficient to pay our taxes.
filing of this Quarterly Report. We do not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating our business. However there is a risk that the company’s liquidity may not be sufficient, which raises substantial doubt about the Company’s ability to continue as a going concern. As indicated elsewhere in this Quarterly Report, we have until February 15, 2023 to consummate a business prior to the completion ofcombination. If our initial business combination, other than funds available from loans from our Sponsor, members of our management team or any of their affiliates. However, if our estimatesestimate of the costs of identifying a prospective partnertarget business, undertaking
in-depth
due diligence and negotiating an initiala business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to the completion of our initial business combination. Moreover, we may need to obtain additional financing to complete our initialFurthermore, if a business combination either because the transaction requires more cash than is available from the proceeds held innot consummated by this date and an extension is not requested by our trust account, or because we become obligated to redeemSponsor, there will be a significant number of our Public Shares upon completionmandatory liquidation and subsequent dissolution of the company. Uncertainty related to the consummation of a business combination in which case we may issue additional securitiesraises substantial doubt about the company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or incur debt in connection with such business combination.
In orderliabilities to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our Sponsor or an affiliate of our Sponsor or certain of our directors and officers may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we may repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans may be repaid only out of funds held outside the trust account. In the event that our initial business combination does not close, we may usereflect 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 to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible into warrants
required liquidation after February 15, 2023.
 
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at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants issued to our Sponsor. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
We expect our primary liquidity requirements during that period to include approximately $390,000 for legal, accounting, due diligence, travel and other expenses in connection with any business combinations; $100,000 for legal and accounting fees related to regulatory reporting requirements; $160,000 for continued exchange listing fees; and $600,000 for directors and officers insurance.
These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being placed in the trust account to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a
“no-shop”
provision (a provision designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a
“no-shop”
provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
Off-Balance
Sheet Arrangements
We diddo not currently have any
off-balanceoff-balance-sheet
sheetarrangements; however, we do have certain contractual arrangements that would require us to make payments if certain circumstances occur; we refer to these arrangements as contingent commitments. See Note 6, “Commitments and Contingencies,” to our financial statements included herein for further discussion of September 30, 2021.these matters.
Contractual Obligations
Promissory Note - Note—Related Party
On February 22, 2021, the Company issued an unsecured promissory note (the “Promissory Note”), pursuant to which the Company could borrow up to an aggregate of $300,000 to cover expenses related to the Initial Public Offering. The Promissory Note was
non-interest
bearing and was payable on the earlier of (i) December 31, 2021 or (ii) the consummation of the Initial Public Offering. As of September 30, 2021, there was $165,949 outstanding under the Promissory Note. On November 12, 2021, the Company repaid the outstanding balance under the Promissory Note.
Underwriting
Business Combination Marketing Agreement
The Company grantedunderwriters of the underwriters a
45-day
option to purchase up to 2,250,000 additional units to cover over-allotments at theCompany’s Initial Public Offering price, less the underwriting discounts and commissions.
The underwriters were paidare entitled to a cash underwriting discountfee of $0.20 per unit, or $3,450,000 in the aggregate, upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or $6,037,500 in the aggregate (the “Marketing Fee”), which will be payable to the underwriters pursuant to that certain Business Combination Marketing Agreement (the “Business Combination Marketing Agreement”). The Marketing Fee will become payable to the underwriters from the amounts held in the trust account solely in the event that the Company completes a business combination, subject to the terms of the Business Combination Marketing Agreement.
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Critical Accounting Policies and Significant Estimates
The preparation of unaudited condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of AmericaGAAP 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 unaudited condensed 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
:
policies:
Net LossIncome (Loss) Per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has 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 lossincome (loss) per share is computed by dividing net lossincome (loss) by the weighted average number of shares of common stock outstanding during the period. WeightedWe have not considered the effect of the warrants sold in the Initial Public Offering and the private placement to purchase an aggregate of 14,075,000 shares of our Class A common stock in the calculation of diluted income (loss) per share, since their inclusion would be anti-dilutive under the treasury stock method. For the three-month period ended June 30, 2021 and the period from January 26, 2021 (inception) through June 30, 2021, the number of weighted average shares wereof Class B common stock for calculating basic net income (loss) per share was reduced for the effect of an aggregate of 562,500 shares of Class B common stock that were subject to forfeiture if the over-allotment option was not exercised in full or part by the underwriters. At SeptemberSince the contingency was satisfied as of the beginning of the three-month period ended June 30, 2021, the Company did not have any dilutive securities2022 and other contracts that could, potentially, be exercised or converted into shares
six-month
period ended June 30, 2022, diluted income per share of common stock and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic income per share of common stock for the period. Additionally, for the three-month period ended June 30, 2021 and the period from January 26, 2021 (inception) through June 30, 2021, the calculation does not consider the effect of the shares subject to forfeiture as they would be anti-dilutive given the net loss position. As a result, for the three-month period ended June 30, 2021 and the period from January 26, 2021 (inception) through June 30, 2021, diluted loss per share of common stock and basic loss per share of common stock are the same for the period presented.period. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value.
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Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480,
Distinguishing Liabilities from Equity
(“ (“FASB ASC 480”) and FASB ASC 815,
Derivatives and Hedging
(“ (“FASB ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to FASB ASC 480, meet the definition of a liability pursuant to FASB ASC 480, and whether the warrants meet all of the requirements for equity classification under FASB ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all ofThe Public Warrants and the criteria for equity classification,Private Placement Warrants are recognized as derivative liabilities in accordance with FASB ASC 815. Accordingly, the warrants are required to be recordedCompany recognizes the warrant instruments as a component of additional
paid-in
capitalliabilities at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value onand adjusts the date of issuance, andinstruments to fair value at each balance sheet date thereafter.reporting period until exercised. Changes in the estimated fair value of the warrants are recognized as a
non-cash
gain or loss on the statement of operations. Upon consummating the Initial Public Offering on November 15, 2021, the Companycompany estimated the fair value of the warrant derivative liabilities to be $15,700,500. The fair value of the warrant derivative liabilities was estimated using a Binomial lattice model.model and subsequently measured using a Monte Carlo simulation and the Black-Scholes Option Pricing Model at
period-end.
Subsequently, derivative warrant liabilities are classified as
non-current
as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. The determination of fair value for the warrant liabilities represents a significant estimate made by management in the unaudited condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Class A Common Stock Subject to Possible Redemption
AsThe Company accounts for its shares of September 30, 2021, we were notClass A common stock subject to any marketpossible redemption in accordance with the guidance in FASB 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 common stock (including shares that feature redemption rights that are either within the control of the holder or interest rate risk.subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A shares of common stock are classified as shareholders’ equity. The Company’s shares of Class A common stock sold in the Initial Public Offering feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of June 30, 2022, 17,250,000 shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheets. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Such changes are reflected in additional
paid-in
capital, or in the absence of additional capital, in accumulated deficit.
JOBS Act
On April 5, 2012, the Jumpstart Our Business Startups Act of 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” 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, our 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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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 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 ensurewith the objective of ensuring that information required to be disclosed in our reports filed or submitted under Securitiesthe Exchange Act, such as this Quarterly Report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our principal executive officer and principal financial and accounting officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of June 30, 2022, pursuant to Rule
13a-15(b)
under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of June 30, 2022, our disclosure controls and procedures were not effective due to a material weakness related to our review controls over the financial reporting process and accounting for contingent fee arrangements.
In light of the material weakness, we have made control improvements, including enhancing the efficacy of our review processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to the treatment and reporting of contingent fee arrangements in our financial statements. Our plans at this time also include providing enhanced access to accounting literature, research materials and documents and increased communication among our management and third-party professionals with whom we consult regarding complex accounting applications, including relating to contingent fee arrangements. Furthermore, in light of this material weakness, we performed additional analysis as deemed necessary to ensure that our unaudited condensed financial statements were prepared in accordance with GAAP. Accordingly, management believes that the unaudited condensed financial statements included in this Quarterly Report present fairly in all material respects our financial position, results of operations and cash flows for the periods presented. We continue to evaluate steps to remediate the identified material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
 
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1934, as amended (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 our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief
Management’s Report on Internal Control Over Financial Officer, to allow timely decisions regarding required disclosure.Reporting
EvaluationThis Quarterly Report does not include a report of Disclosure Controls and Procedures
As requiredmanagement’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by Rules
13a-15
and
15d-15
under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluationrules of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2021. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in RulesSEC for newly public companies.
13a-15
(e) and
15d-15
(e) under the Exchange Act) were effective.
Changes in Internal Control Over Financial Reporting
During the most recently completed fiscal quarter,Except as noted above, there has beenwere no changechanges in our internal control over financial reporting (as such term is defined in Rules
13a-15(f)
and
15d-15(f)
underof the Exchange Act) during the most recent fiscal quarter that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.
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PART IIII. – 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 are any of the risks described in the “Risk Factors” section in Part I, Item 1A of our final prospectus Annual Report on Form
10-K
for our Initial Public Offering filed the year ended December 31, 2021 (the “2021 Form
10-K”)
with the SEC on November 12, 2021.April 1, 2022. 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. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in the 2021 Form
10-K,
except for the below risk factor.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our final prospectus forbusiness, including our Initial Public Offering filedability to negotiate and complete our initial 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, or our failure to comply with such applicable laws and regulations as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial business combination, and results of operations.
On March 30, 2022, the SEC on November 12, 2021.issued proposed rules relating to, among other items, enhancing disclosures in business combination transactions involving SPACs and private operating companies and increasing the potential liability of certain participants in proposed business combination transactions. These rules, if adopted, whether in the form proposed or in revised form, may materially increase the costs and time required to negotiate and complete an initial business combination and could potentially impair our ability to complete an initial business combination.
 
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Subsequent to the quarterly period covered by this report, onOn November 15, 2021, we consummated the Initial Public Offering of 17,250,000 units (including 2,250,000 units issued upon exercise in full by the underwriters of their option to purchase additional units), at $10.00 per unit, generating gross proceeds of $172,500,000. Each unit consisted of one Public Share and one Public Warrant. Each Public Warrant entitles the holder to purchase one share of Class A common stock at an exercise price of $11.50 per whole share.
Cowen and Company, LLC and Intrepid Partners, LLC served as underwriters for the Initial Public Offering. The securities sold in the Initial Public Offering were registered under the Securities Act on a registration statement on Form
S-1 (File
(File
No. 333-254532).
The SEC declared the registration statement effective on November 9, 2021.
Simultaneous with the closing of the Initial Public Offering, we consummated the Private Placement of an aggregate of 5,450,000 Private Placement Warrants (including 450,000 Private Placement Warrants issued in connection with the exercise in full by the underwriters of their option to purchase additional units) to the Initial Stockholders at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $5,450,000. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. Simultaneously with the closing of the Initial Public Offering, we also issued the Initial Stockholder Loan Notes to the Initial Stockholders, generating aggregate gross proceeds to the Company of $3,450,000. The Initial Stockholder Loan Notes shall be repaid in cash or converted into Initial Stockholder Loan Warrants at a purchase price of $1.00 per warrant, at each such lender’s sole direction. The Initial Stockholder Loan Warrants will be identical to the Private Placement Warrants. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $11.50 per share.
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From January 26, 2021 (inception) through the closing of the Initial Public Offering, we incurred approximately $8.1 million for costs and expenses related to the Initial Public Offering, including the Marketing Fee. In connection with the closing of the Initial Public Offering, we paid a total of approximately $3.5 million in underwriting discounts and commissions. In addition, the Marketing Fee of $0.35 per unit, or approximately $6.0 million in the aggregate, will be payable to the underwriters pursuant to the Business Combination Marketing Agreement. The Marketing Fee will become payable to the underwriters from the amounts held in the trust account solely in the event that the Company completes a business combination, subject to the terms of the Business Combination Marketing Agreement.
In connection with the Initial Public Offering, we incurred offering costs of approximately $8.1 million, inclusive of the Marketing Fee. Other incurred offering costs consisted principally of preparation fees related to the Initial Public Offering. After deducting the underwriting discounts and commissions (excluding the Marketing Fee, which amount will be payable upon consummation of a business combination) and the Initial Public Offering expenses, $175.95 million of the net proceeds from our Initial Public Offering, the Private Placement and the Initial Stockholder Loan Notes (or $10.20 per unit sold in the Initial Public Offering) was placed in the trust account. The net proceeds of the Initial Public Offering and certain proceeds from the Private Placement are held in the trust account and invested as described elsewhere in this Quarterly Report on Form
10-Q.
There has been no material change in the planned use of proceeds from the Initial Public Offering and the Private Placement as is described in our final prospectus related to the Initial Public Offering, filed with the SEC on November 12, 2021.
 
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None.
 
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
 
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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.
 
Exhibit
No.
  
Description
3.1  Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-41046), filed on November 15, 2021).
3.2  Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 001-41046), filed on November 15, 2021).
31.1*  Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuantpursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*  Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuantpursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**  Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuantpursuant to Section 906 of the Sarbanes- Oxley Act of 2002
32.2**  Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuantpursuant to Section 906 of the Sarbanes- Oxley Act of 2002
101.INS101.INS*  Inline XBRL Instance Document
101.SCH101.SCH*  Inline XBRL Taxonomy Extension Schema Document
101.CAL101.CAL*  Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF101.DEF*  Inline XBRL Taxonomy Extension Definition Document
101.LAB101.LAB*  Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE101.PRE*  Inline XBRL Taxonomy Extension Presentation Linkbase Document
EX-104104  Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
 
*
Filed herewith.
**
Furnished.
 
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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.
 
Date: December 22, 2021August 11, 2022 
Arena Fortify Acquisition Corp.
 By: 
/s/ Daniel Zwirn
  Daniel Zwirn
  Chief Executive Officer
Date: December 22, 2021August 11, 2022 
Arena Fortify Acquisition Corp.
 By: 
/s/ Kieran Goodwin
  Kieran Goodwin
 
Kieran Goodwin
Chief Financial Officer
 
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