UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer |
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(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: |
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| Accelerated 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.
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As of August 4, 2022, the registrant had
KIMBELL TIGER ACQUISITION CORPORATION
FORM 10-Q
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION | ||
2 | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 | |
19 | ||
19 | ||
PART II – OTHER INFORMATION | ||
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20 | ||
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PART I – FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
KIMBELL TIGER ACQUISITION CORPORATION
CONSOLIDATED BALANCE SHEETS
| June 30, 2022 |
| December 31, 2021 | |||
(unaudited) | ||||||
ASSETS |
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Current assets |
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Cash |
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Prepaid expenses |
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Investments held in trust |
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Deferred offering costs associated with proposed public offering |
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Total current assets |
| $ | | $ | | |
LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current liabilities |
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Accounts payable to related party |
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Accrued expenses |
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Total current liabilities |
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Deferred underwriting compensation |
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Total liabilities |
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Class A common stock subject to possible redemption, |
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Commitments and contingencies (Note 5) |
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Stockholders' deficit: |
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Preferred stock, $ |
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Class B common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total Kimbell Tiger Acquisition Corporation equity |
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Non-controlling interest in subsidiary |
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Total stockholders' deficit |
| ( |
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Total liabilities and stockholders' deficit |
| $ | | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
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KIMBELL TIGER ACQUISITION CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended | Period from | Six Months Ended | Period from | |||||||||
General and administrative expenses |
| $ | | $ | | $ | | $ | | |||
Loss from operations |
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Other income: |
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Interest earned on securities held in Trust Account |
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Other income, net |
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Net loss |
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Net loss attributable to non-controlling interest in subsidiary |
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Net loss attributable to Kimbell Tiger Acquisition Corporation | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Weighted average shares outstanding of Class A common stock |
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Basic and diluted net loss per share, Class A | ( | ( | ( | ( | ||||||||
Weighted average shares outstanding of Class B common stock |
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Basic and diluted net loss per share, Class B | ( | ( | ( | ( |
The accompanying notes are an integral part of these consolidated financial statements.
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KIMBELL TIGER ACQUISITION CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(Unaudited)
Total | ||||||||||||||||||||||
Class A Common Stock | Class B Common Stock |
| Additional |
| Accumulated |
| Noncontrolling |
| Stockholder's | |||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-in Capital |
| Deficit |
| Interest |
| Equity | |||||||
Balance - January 1, 2022 |
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| $ | — |
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| $ | |
| $ | |
| $ | ( |
| $ | ( | $ | ( | |
Sale of Private Placement Warrants classified as equity |
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Accretion of Class A common stock to redemption |
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Net loss |
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Balance at March 31, 2022 | | — | | | — | ( | ( | ( | ||||||||||||||
Accretion of Class A common stock to redemption value and offering costs | — | — | — | — | — | ( | — | ( | ||||||||||||||
Net loss | — | — | — | — | — | ( | ( | ( | ||||||||||||||
Balance - June 30, 2022 |
| | $ | — |
| | $ | | $ | — | $ | ( | $ | ( | $ | ( |
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KIMBELL TIGER ACQUISITION CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT — (Continued)
(Unaudited)
Total | ||||||||||||||||||||||
Class A Common Stock | Class B Common Stock |
| Additional |
| Accumulated |
| Noncontrolling |
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| Shares |
| Amount |
| Shares |
| Amount |
| Paid-in Capital |
| Deficit |
| Interest |
| Equity | |||||||
Balance - May 12, 2021 | | $ | — | | $ | | $ | | $ | ( | $ | ( | $ | ( | ||||||||
Net loss |
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Balance June 30, 2021 |
| | $ | — |
| | $ | | $ | | $ | ( | $ | ( | $ | ( |
The accompanying notes are an integral part of these consolidated financial statements
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KIMBELL TIGER ACQUISITION CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended | Period from | |||||
Cash Flows from Operating Activities |
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Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to cash used in operating activities: |
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Interest earned on securities held in Trust Account |
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Changes in operating assets and liabilities: |
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Prepaid expenses |
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Deferred offering costs associated with proposed public offering |
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Accounts payable to related party and accrued expenses |
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Net cash used in operating activities |
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Cash Flows from Investing Activities |
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Investments of cash in Trust Account |
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Net cash used in investing activities |
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Cash Flows from Financing Activities |
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Proceeds from sale of units and underwriter discounts |
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Proceeds from sale of Private Placement Warrants |
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Payment of offering costs |
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Net cash provided by financing activities |
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Net change in cash |
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Cash - beginning of the period |
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Cash - end of the period | $ | | $ | | ||
Supplemental disclosure of noncash financing activities: |
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Deferred offering costs | $ | | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
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KIMBELL TIGER ACQUISITION CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1—DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS AND BASIS OF PRESENTATION
Kimbell Tiger Acquisition Corporation is a blank check company incorporated in Delaware on April 9, 2021. As used herein, “the Company” or “TGR” refer to Kimbell Tiger Acquisition Corporation and its majority-owned and controlled operating subsidiary, Kimbell Tiger Operating Company, LLC (“Opco”), unless the context indicates otherwise. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with
The period ended June 30, 2021 includes the activity from May 13, 2021 to June 30, 2021 and relates to the Company's formation and the proposed initial public offering described below. As of June 30, 2022, the Company had not commenced any operations. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents and amounts held in trust from the proceeds derived from the IPO (as defined below). The Company has selected December 31 as its fiscal year end.
The Company’s sponsor is Kimbell Tiger Acquisition Sponsor, LLC, a Delaware limited liability company (the “Sponsor”). In May 2021, the Sponsor paid $
The registration statement for the Company’s IPO was declared effective on February 4, 2022. On February 8, 2022, the Company consummated its initial public offering (the “IPO”) of
Simultaneously with the closing of the IPO, the Company consummated the private placement (the “Private Placement”) of
Following the IPO, the Public Stockholders (as defined below) hold a direct economic equity ownership interest in TGR in the form of shares of Class A common stock, and an indirect ownership interest in Opco through TGR’s ownership of Class A units of Opco. By contrast, the Initial Stockholders of the Company (as defined below) own direct economic interests in Opco in the form of Class B units and a corresponding non-economic voting equity interest in TGR in the form of shares of Class B common stock.
Upon the closing of the IPO and the Private Placement, $
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The Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale of the Private Placement Warrants, although substantially all of the net proceeds 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 must complete
The Company will provide the holders (the “Public Stockholders”) of the Company’s outstanding shares of Class A common stock sold in the IPO (the “Public Shares”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. Unless otherwise stated herein, the term “Public Shares” includes the
The Amended and Restated Charter 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
If the Company is unable to complete a Business Combination within
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The Sponsor and the Company’s officers and directors (the “Initial Stockholders”) have agreed (i) that any Founder Shares and Sponsor Shares held by them will not be entitled to redemption rights, and they will waive any such redemption rights for any Public Shares held by them, in connection with the completion of the initial Business Combination, (ii) that any Founder Shares and Sponsor Shares held by them will not be entitled to redemption rights, and they will waive any such redemption rights for any Public Shares held by them, in connection with a stockholder vote to amend our Amended and Restated Charter in a manner that would affect the substance or timing of the Company’s obligation to redeem
The underwriter has agreed to waive its rights to the deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and subsequently liquidates 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 residual assets remaining available for distribution (including Trust Account assets) will be only $
Liquidity and Capital Resources
As of June 30, 2022, the Company had $
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q, are unaudited, and do not include all the information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. All adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim period are not necessarily indicative of results of operations for a full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Commission on March 31, 2022. The effect of these reclassifications had no impact on previously reported stockholder’s equity or net income. All significant intercompany balances and transactions have been eliminated in consolidation.
Emerging Growth Company
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 an 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 an election to opt out is irrevocable. The
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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.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, and/or search for a target company, the specific impact is not readily determinable as of the date of the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Financial Statement Presentation
The consolidated financial statements include the accounts of the Company and its majority-owned and controlled operating subsidiary after elimination of all intercompany transactions and balances as of June 30, 2022. The ownership interest of noncontrolling participants in the operating subsidiary is included as a separate component of stockholders’ equity.
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 balance sheet primarily due to their short-term nature.
Fair Value Measurement
ASC 820 establishes a fair value hierarchy that prioritizes and ranks the level of observability of inputs used to measure investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment, characteristics specific to the investment, market conditions and other factors. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements).
Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets will typically have a higher degree of input observability and a lesser degree of judgment applied in determining fair value.
The three levels of the fair value hierarchy under ASC 820 are as follows:
● | Level I—Quoted prices (unadjusted) in active markets for identical investments at the measurement date are used. |
● | Level II—Pricing inputs are other than quoted prices included within Level I that are observable for the investment, either directly or indirectly. Level II pricing inputs include quoted prices for similar investments in active markets, quoted prices for identical or similar investments in markets that are not active, inputs other than quoted prices that are observable for the investment, and inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
● | Level III—Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment. The inputs used in determination of fair value require significant judgment and estimation. In some cases, the inputs used to measure fair value might fall within different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the investment is categorized in its entirety is determined based on the lowest level input that is significant to the investment. Assessing the significance of a particular input to the valuation of an investment in its entirety requires judgment and considers factors specific to the investment. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the perceived risk of that investment. |
The Company’s Permitted Investments, which were invested on February 9, 2022 are classified as Level 1.
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Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. 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 consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Cash
Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less. The Company did
Trust Account
Upon the closing of the IPO and the Private Placement, $
The Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses from changes in fair value, and dividends and interest relating to these investments are included in Interest earned on securities held in Trust Account in the accompanying statement of operations.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times may exceed the federal depository insurance coverage.
Offering Costs
The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A “Expenses of Offering”. The Company incurred offering costs in connection with the IPO. These costs, together with the underwriter discount and deferred underwriting commissions, were charged to additional paid-in capital upon completion of the Public Offering.
Stock Compensation Expense
The Company accounts for stock-based compensation expense in accordance with ASC 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 and recognized over the requisite service period. To the extent a stock-based award is subject to a performance condition, the amount of expense recorded in a given period, if any, reflects an assessment of the probability of achieving such performance condition, with compensation recognized once the event is deemed probable to occur. The fair value of equity awards has been estimated using a market approach. Forfeitures are recognized as incurred.
The Class B common stock and the Class B units of Opco were granted subject to a performance condition, namely the occurrence of a Business Combination. This market condition is considered in determining the grant date fair value of these instruments using a closed form barrier option model. Compensation expense related to the Class B common stock and Class B units of Opco is recognized only when the performance condition is probable of occurrence, or more specifically when a Business Combination is consummated. Therefore,
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets
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and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected 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. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
FASB 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 be more likely than not to be sustained upon examination by taxing authorities. There were
As of June 30, 2022, there was a deferred tax asset of $
Recent Accounting Pronouncements
The Company does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements.
NOTE 3—INITIAL PUBLIC OFFERING
On February 8, 2022, the Company consummated its IPO of
NOTE 4—RELATED PARTY TRANSACTIONS
Founder Shares
In May 2021, the Sponsor paid $
Also in May 2021, TGR paid $
The Company refers to the
The Class B units of Opco will convert into Class A units of Opco in connection with the initial Business Combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like and subject to further adjustment as provided herein. The Founder Shares consist of Class B units of Opco (and any Class A units of Opco into which such Class B units are converted) and a corresponding number of shares of Class B common stock, which together will be exchangeable for shares of Class A common stock after the time of the initial Business Combination on a one-for-one basis (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like), and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts sold in the IPO and related to the closing of the Business Combination, the number of Class A units of Opco into which the Class B units of Opco will convert may be adjusted (unless the holders of a majority of the outstanding Founder Shares agree to waive such
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adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon exchange of all Founder Shares will equal, in the aggregate, on an as-exchanged basis,
The Initial Stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares held by them (and any shares of Class A common stock acquired upon exchange of Founder Shares) until
Private Placement Warrants
Simultaneously with the closing of the IPO, the Company consummated the Private Placement of
With certain limited exceptions, the Private Placement Warrants and the securities underlying such warrants will
Related Party Loans
On July 20, 2021, the Company executed an unsecured promissory note (the “Note”) with our Sponsor pursuant to which the Sponsor agreed to loan the Company up to $
In addition, The Company believes it has sufficient liquidity to operate its business through the Combination Period. In the event additional resources are needed to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination is not consummated, 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 would be used to repay the Working Capital Loans The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, a portion of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $
The Sponsor, officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations. The Company’s audit committee will review on a quarterly basis all payments that were made to the Sponsor, officers or directors, or their affiliates.
Administrative Support Agreement
Commencing on the date the Company’s securities were first listed on New York Stock Exchange, the Company agreed to pay the Sponsor a total of $
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of the management team. Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees.
NOTE 5—COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares), are entitled to registration rights pursuant to a registration rights agreement. The holders of these securities are entitled to make up to
Underwriting Agreement
The Company granted the underwriter a
Risks and Uncertainties
Management is currently evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of this consolidated financial statement. The consolidated financial statement does not include any adjustments that might result from the outcome of this uncertainty.
NOTE 6—STOCKHOLDERS’ EQUITY
Class A Common Stock
The Company is authorized to issue
Class B Common Stock
The Company is authorized to issue
Holders of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of the stockholders, except as required by law. Each share of common stock will have
Preferred Stock
The Company is authorized to issue
Warrants
Public Warrants may only be exercised for a whole number of shares. The Public Warrants will become exercisable
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them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later than
The warrants have an exercise price of $
Redemption of warrants when our Class A common stock equals or exceeds $
Once the warrants become exercisable, the Company may redeem the outstanding warrants for cash:
● | in whole and not in part; |
● | at a price of $ |
● | upon a minimum of |
● | if, and only if, the last sale price of the Class A common stock equals or exceeds $ |
The Company will not redeem the warrants for cash unless a registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A common stock is available throughout the
In no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period 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.
NOTE 7—SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of financial condition and results of operations should be read together in conjunction with our interim consolidated financial statements and notes thereto presented in this Quarterly Report on Form 10-Q (this “Quarterly Report”), as well as our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”).
Cautionary Statement Regarding Forward-Looking Statements
Some of the statements contained in this Quarterly Report may constitute “forward-looking statements” for purposes of the federal securities laws. 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 Quarterly Report may include, but are not limited to, for example, statements about:
● | our being a blank check company with no operating history and no revenues; |
● | our ability to select an appropriate target business or businesses; |
● | our ability to complete our initial business combination; |
● | our expectations around the performance of a 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; |
● | actual and potential conflicts of interest relating to KRP, our sponsor and other entities in which members of our management team are involved; |
● | our potential ability to obtain additional financing to complete our initial business combination including from our sponsor, KRP or other third parties; |
● | our pool of prospective target businesses, including the location and industry of such target businesses; |
● | our ability to consummate an initial business combination due to the uncertainty resulting from the COVID-19 pandemic, the ongoing conflict between Ukraine and Russia and other events (such as terrorist attacks, military actions, natural disasters or a significant outbreak of other infectious diseases); |
● | the ability of our officers and directors to generate a number of potential business combination opportunities; |
● | our public securities’ potential liquidity and trading; |
● | the lack of a market for our securities; |
● | the use of proceeds not held in the trust account (“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. |
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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. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in our 2021 Form 10-K. 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. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements.
Overview
We are a blank check company incorporated in Delaware on April 9, 2021 formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. We intend to effectuate our initial business combination using cash derived from the proceeds of our initial public offering (the “IPO”) and the sale of the private placement warrants our capital stock, debt or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a business combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities for the three and six months ended June 30, 2022 and the period from May 13, 2021 to June 30, 2021 (the “2021 Period”) were organizational activities, those necessary to prepare for the IPO, described below, and identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our business combination. We generate non-operating income in the form of interest income on investments held in the Trust Account. 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 and six months ended June 30, 2022, we had a net loss of approximately $0.6 million and $1.2 million, respectively, which consisted of formation and operating expenses, offset by interest income earned on the amounts held in the Trust Account. For the 2021 Period, we had a net loss of approximately $0.2 million which consisted of formation and operating expenses.
Liquidity and Capital Resources
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned 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 from the Trust Account to pay taxes, if any. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete an 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. As of June 30, 2022, we had cash on hand of $0.8 million, excluding the amounts held in the Trust Account and working capital of $0.4 million.
We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete an initial business combination.
The Company believes it has sufficient liquidity to operate its business through the Combination Period. In the event additional resources are needed to fund working capital deficiencies or finance transaction costs in connection with an initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may loan us funds as may be required. If we complete an initial business combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that an initial business combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. Upon completion of a business combination, up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant, at the option of the lender. The warrants would be identical to the private placement warrants.
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We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt in connection with such initial business combination.
We have until May 8, 2023 to consummate an initial business combination. If we anticipate that we may not be able to consummate our initial business combination within 15 months, the sponsor may cause us to extend the available time to consummate our initial business combination by three months. In order to exercise the extension option, our sponsor must deposit into the Trust Account $0.10 per public share (a total of $2,300,000) on or prior to the date of the applicable deadline. The sponsor may exercise the extension option up to two times, allowing for up to an additional six months (for a total of 21 months) to complete an initial business combination. It is uncertain that we will be able to consummate an initial business combination by this time. If an initial business combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution.
Off-Balance Sheet Financing Arrangements
As of June 30, 2022, we did not have any off-balance sheet arrangements, as defined in Item 303 (a)(4)(ii) of Regulation S-K, and did not have any commitments or contractual obligations.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay KRP and certain of its subsidiaries a total of $25,000 per month for administrative and support services. We began incurring these fees on February 4, 2022 and will continue to incur these fees monthly until the earlier of the completion of the business combination and our liquidation.
The underwriter is entitled to a deferred fee of $0.35 per unit, or $8,050,000 in the aggregate. 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 Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policy:
Stock Compensation Expense
The Company accounts for stock-based compensation expense in accordance with ASC 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 and recognized over the requisite service period. To the extent a stock-based award is subject to a performance condition, the amount of expense recorded in a given period, if any, reflects an assessment of the probability of achieving such performance condition, with compensation recognized once the event is deemed probable to occur. The fair value of equity awards has been estimated using a market approach. Forfeitures are recognized as incurred.
The Class B common stock and the Class B units of Opco were granted subject to a performance condition, namely the occurrence of a business combination. This market condition is considered in determining the grant date fair value of these instruments using a closed form barrier option model. Compensation expense related to the Class B common stock and Class B units of Opco is recognized only when the performance condition is probable of occurrence, or more specifically when a business combination is consummated. Therefore, no stock-based compensation expense has been recognized during the three and six months ended June 30, 2022.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of June 30, 2022, we were not subject to any market or interest rate risk. Following the consummation of our IPO, the net proceeds of our IPO, including amounts in the Trust Account, have been invested 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. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
We have not engaged in any hedging activities since our inception and we do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.
Item 4. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Controller, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision of our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2022. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2022.
Changes in Internal Control over Financial Reporting
There have not been any changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
As of June 30, 2022, to the knowledge of our management, there was no material litigation, arbitration or governmental proceeding pending against us or any members of our management team in their capacity as such, and we and the members of our management team have not been subject to any such proceeding.
Item 1A. Risk Factors
In addition to the risks and uncertainties discussed in this Quarterly Report, including those disclosed in Part I, Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations, you should carefully consider the risks under the heading “Risk Factors” in Part I, Item 1A. Risk Factors in our 2021 Form 10-K. These risks are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may materially adversely affect our business, financial condition or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On February 8, 2022, the Company consummated IPO of 23,000,000 units (each, a “Unit” and collectively, the “Units”), including 3,000,000 additional Units that were issued pursuant to the underwriter’s exercise in full of its over-allotment option (the “Over-Allotment Units”) at $10.00 per Unit, each of which consists of one share of Class A common stock and one-half of one public warrant, generating gross proceeds of approximately $230,000,000, and incurring offering costs of approximately $12,650,000, inclusive of $8,050,000 in deferred underwriting commissions. USB Investment Bank acted as the sole book-running manager of the IPO. The warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of an initial business combination or earlier upon redemption or liquidation. The securities in the IPO were registered under the Securities Act of 1933, as amended, on a registration statement on Form S-1 (File No. 333-258260). The registration statement for the Company’s IPO was declared effective on February 4, 2022.
Simultaneously with the closing of the IPO, the Company consummated the private placement (the “Private Placement”) of 14,100,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to our sponsor, Kimbell Tiger Acquisition Sponsor, LLC, a Delaware limited liability company, at a price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company of $14,100,000. Each Private Placement Warrant is exercisable to purchase for $11.50 one share of TGR’s Class A common stock, par value $0.0001 per share (the “Class A common stock”), or, in certain circumstances, one Class A unit of Opco together with a corresponding number of shares of TGR’s non-economic Class B common stock, par value $0.0001 per share (the “Class B common stock”).
Upon the closing of the IPO and the Private Placement, $236,900,000 of the net proceeds of the sale of the Units and the sale of the Private Placement Warrants were placed in a Trust Account located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and will be 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 the Company, until the earlier of: (i) the completion of a business combination and (ii) the distribution of the Trust Account.
For a description of the use of proceeds generated in the Company’s IPO, refer to Note 1 within “Notes to Consolidated Financial Statements” within Item 1 of Part I of this Quarterly Report.
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Item 6. Exhibits
Exhibit |
| Description |
3.1 |
| |
3.2 |
| |
3.3 |
| |
4.4 |
| |
31.1* | Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a). | |
31.2* | Certification of the Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a). | |
32.1** | ||
32.2** | ||
101.INS* | Inline XBRL Instance Document. | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* | —filed herewith |
** | —furnished herewith |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
| KIMBELL TIGER ACQUISITION CORPORATION | |||
Date: August 4, 2022 | By: | /s/ Zachary M. Lunn | ||
Name: | Zachary M. Lunn | |||
Title: | President & Chief Executive Officer | |||
Date: August 4, 2022 | By: | /s/ Blayne Rhynsburger | ||
Name: | Blayne Rhynsburger | |||
Title: | Controller |
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