References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Iron Spark I Inc. References to our "management" or our
"management team" refer to our officers and directors, and references to the
"Sponsor" refer to Iron Spark I 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 and uncertainties.
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 on January 22, 2021 as a Delaware
corporation and formed for the purpose of effectuating 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 report as our "initial business combination". We intend to effectuate
our initial business combination using cash from the proceeds of our initial
public offering (the "Initial Public Offering") and the private placement of the
Private Placement Shares (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.
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 22, 2021 (inception)
through March 31, 2022 were organizational activities, those necessary to
prepare for the Initial Public Offering, described below, and, after the Initial
Public Offering, identifying a target company for a business combination. We do
not expect to generate any operating revenues until after the completion of our
initial business combination. We generate non-operating income in the form of
interest income on 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 period from January 22, 2021 (inception) through March 31, 2021, we had
a net loss of $1,300, which resulted entirely from operating and formation
costs.
For the three months ended March 31, 2022, we had a net loss of $8,100,900,
which resulted from operating and formation costs of $8,056,357 and franchise
tax expense of $48,767, offset in part by interest income on the Trust Account
of $4,224.
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Proposed Business Combination
On April 3, 2022, the Company entered in a Business Combination Agreement with
Hypebeast Limited, a Cayman Islands exempted company with its shares publicly
traded with stock code "00150" on the Main Board of the HKSE and Hypebeast WAGMI
Inc., a Delaware corporation and wholly owned subsidiary of Hypebeast Limited.
Liquidity and Capital Resources
On June 11, 2021, we consummated the Initial Public Offering of 15,000,000
shares of Class A common stock (the "Public Shares") at $10.00 per Public Share,
generating gross proceeds of $150,000,000. Simultaneously with the closing of
the Initial Public Offering, the Sponsor purchased an aggregate of 1,090,000
shares of Class A common stock at a price of $10.00 per share (the "Private
Placement Shares"), generating gross proceeds of $10,900,000.
On June 16, 2021, the underwriters partially exercised their over-allotment
option and purchased an additional 1,680,000 shares (the "Over-Allotment
Shares"), and the sale of an additional 100,800 shares (the "Over-Allotment
Private Placement Shares") at $10.00 per share, generating total gross proceeds
of $1,008,000.
For the three months ended March 31, 2022, net cash used in operating activities
was $207,798, which was due to our net loss of $8,100,900 and interest income on
the Trust Account of $4,224, offset in part by changes in working capital of
$7,809,841 and the amortization of prepaid expenses and other assets of $87,485.
For the period from January 22, 2021 (inception) through March 31, 2021, net
cash used in operating activities was $2,112, which was due to our net loss of
$1,300 and changes in working capital of $812.
As of March 31, 2022, the Company had $286,895 in cash held outside of the Trust
Account and working capital deficit of $7,715,452. The Company has incurred and
expects to continue to incur significant costs in pursuit of its acquisition
plans. These conditions raise substantial doubt about the Company's ability to
continue as a going concern for a period of time within one year after the date
that the condensed financial statements are issued. Management plans to address
this uncertainty through the Business Combination as discussed above. There is
no assurance that the Company's plans to consummate the Business Combination
will be successful or successful within the Combination Period. The condensed
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
In order to finance transaction costs in connection with a Business Combination,
the Sponsor or an affiliate of the Sponsor or certain of the Company's directors
and officers may, but are not obligated to, loan us funds as may be required
("Working Capital Loans").
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of March 31, 2022 and
December 31, 2021.
Contractual Obligations
Due to Related Parties
An affiliate of the Sponsor and the Sponsor have paid $61,837 and $71,382 to
cover certain operating costs and offering costs on behalf of the Company as of
March 31, 2022 and December 31, 2021, respectively. As of March 31, 2022 and
December 31, 2021, the Company owed $60,000 to the Sponsor. As of March 31, 2022
and December 31, 2021, the Company owed $1,837 and $11,382 to an affiliate of
the Sponsor, respectively.
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Consulting Agreement
The Company entered into an agreement with a related party on January 26, 2021,
to pay the related party a total of $25,000 per month for research, financial
analysis, due diligence, bookkeeping and other administrative services from
formation through the completed business combination. For the three months ended
March 31, 2022 and for the period from January 22, 2021 (inception) through
March 31, 2021, the Company incurred $75,000 and $55,000 in fees for these
services, respectively. As of December 31, 2021, $25,000 related to this
agreement is recorded in due to related parties on the condensed balance sheets.
As of March 31, 2022, these amounts were fully paid by the Company.
Administrative Support Agreement
The Company entered into an agreement, commencing on the effective date of the
Initial Public Offering, to pay the Sponsor a total of $10,000 per month for
office space, administrative and support services. Upon the completion of the
Business Combination or the Company's liquidation, the Company will cease paying
these monthly fees. For the three months ended March 31, 2022 and for the period
from January 22, 2021 (inception) through March 31, 2021, the Company incurred
$30,000 and $0 in fees for these services, respectively. As of March 31, 2022
and December 31, 2021, $97,333 and $67,333 related to this agreement is recorded
in due to related parties on the condensed balance sheets, respectively.
Registration Rights
The holders of the Founder Shares and Private Placement Shares that may be
issued upon conversion of Working Capital Loans will have registration rights to
require the Company to register a sale of any of its securities held by them
pursuant to a registration rights agreement. The holders of these securities are
entitled to make up to three demands, excluding short form 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. The Company will bear
the expenses incurred in connection with the filing of any such registration
statements.
Underwriting Agreement
The Company granted the underwriter a 45-day option to purchase up to 2,250,000
additional shares of Class A common stock to cover over-allotments at the
Initial Public Offering price, less the underwriting discounts and commissions.
On June 16, 2021, the underwriters partially exercised the over-allotment option
and purchased an additional 1,680,000 Over-Allotment Shares for an aggregate
purchase price of $16,800,000. The remaining 570,000 shares were not exercised
by the underwriter and expired on July 26, 2021.
The underwriter was paid a cash underwriting fee of $0.20 per share, or
$3,336,000 in the aggregate, upon the closing of the Initial Public Offering. In
addition, $0.35 per share, or $5,838,000 in the aggregate will be payable to the
underwriter for deferred underwriting commissions. The deferred fee will become
payable to the underwriter 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 underwriting agreement.
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the 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:
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Common stock subject to possible redemption
All of the 16,680,000 shares of Class A common stock sold as part of the Units
in the Initial Public Offering contain a redemption feature which allows for the
redemption of such Public Shares in connection with the Company's liquidation,
if there is a shareholder vote or tender offer in connection with the Business
Combination and in connection with certain amendments to the Company's Amended
and Restated Certificate of Incorporation. In accordance with SEC and its
staff's guidance on redeemable equity instruments, which has been codified in
Accounting Standards Codification ("ASC") 480-10-S99, redemption provisions not
solely within the control of the Company require common stock subject to
redemption to be classified outside of permanent equity. Therefore, all Class A
common stock has been classified outside of permanent equity.
The Company recognizes changes in redemption value immediately as they occur and
adjusts the carrying value of redeemable common stock to equal the redemption
value at the end of each reporting period. Increases or decreases in the
carrying amount of redeemable common stock are affected by charges against
additional paid in capital and accumulated deficit.
Net Loss Per Common Share
Net loss per common share is computed by dividing net loss by the weighted
average number of shares of common stock outstanding during the period,
excluding shares of common stock subject to forfeiture. As the Public Shares are
considered to be redeemable at fair value, and a redemption at fair value does
not amount to a distribution different than other stockholders, Class A and
Class B common stock are presented as one class of stock in calculating net loss
per share. As a result, the calculated net loss per share is the same for Class
A and Class B shares of common stock. At March 31, 2022, the Company did not
have any dilutive securities and other contracts that could, potentially, be
exercised or converted into shares of common stock and then share in the
earnings of the Company. As a result, diluted loss per share is the same as
basic loss per share for the period presented.
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IRON SPARK I INC. 
