References in this quarterly report on Form 10-Q (the "Quarterly Report") to
"we," "us" or the "Company" refer to ROC Energy Acquisition Corp. References to
our "management" or our "management team" refer to our officers and directors,
and references to the "Sponsor" refer to ROC Energy Holdings, LLC. The following
discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with the 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
All statements other than statements of historical fact included in this
Quarterly Report including, without limitation, statements under this "Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding our financial position, business strategy and the plans
and objectives of management for future operations, are forward- looking
statements. When used in this Report, words such as "anticipate," "believe,"
"estimate," "expect," "intend" and similar expressions, as they relate to us or
our management, identify forward-looking statements. Such forward-looking
statements are based on the beliefs of our management, as well as assumptions
made by, and information currently available to our management. Actual results
could differ materially from those contemplated by the forward-looking
statements as a result of certain factors detailed in our filings with the SEC.
All subsequent written or oral forward-looking statements attributable to us or
persons acting on our behalf are qualified in their entirety by this paragraph.
Overview
We are a blank check company formed under the laws of the State of Delaware on
September 2, 2021 for the purpose of entering into a merger, share exchange,
asset acquisition, share purchase, reorganization or similar Business
Combination with one or more target businesses. We intend to effectuate our
Business Combination using cash from the proceeds of the Initial Public Offering
and the sale of the Private Placement Unit, 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 (other than searching for an initial
Business Combination after our Initial Public Offering) nor generated any
revenues to date. Our only activities from September 2, 2021 (inception) through
September 30, 2022 were organizational activities, those necessary to prepare
for the Initial Public Offering, described below, and, subsequent to the Initial
Public Offering, identifying a target company for an initial Business
Combination. We do not expect to generate any operating revenues until after the
completion of our initial Business Combination. We expect to generate
non-operating income in the form of interest earned on investments 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, 2022, we had a net income of $326,264,
which consists of interest earned on investments held in the Trust Account of
$830,040, offset by general and administrative expenses of $339,968 and
provision for income taxes of $163,808.
For the nine months ended September 30, 2022, we had a net loss of $1,470, which
consists of general and administrative expenses of $905,288 and provision for
income taxes of $187,223, offset by interest earned on investments held in the
Trust Account of $1,091,041.
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Liquidity and Capital Resources
On December 6, 2021, we consummated the Initial Public Offering of 18,000,000
Units at $10.00 per Unit, generating gross proceeds of $180,000,000. An
additional $1,800,000 was funded by our Sponsor which resulted in a total
balance in the Trust Account of $181,800,000. Simultaneously with the closing of
the Initial Public Offering, we consummated the sale of 715,000 Private
Placement Units at a price of $10.00 per Private Placement Unit to the Sponsor
generating gross proceeds of $7,150,000.
On December 9, 2021, the underwriters fully exercised their over-allotment
option, resulting in an additional 2,700,000 Units issued for an aggregate
amount of $27,000,000. In connection with the underwriters' full exercise of
their over-allotment option, we also consummated the sale of an additional
81,000 Private Placement Units at $10.00 per Private Placement Unit, generating
total proceeds of $27,810,000. A total of $27,270,000 was deposited into the
Trust Account, bringing the aggregate proceeds held in the Trust Account to
$209,070,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Placement Units, a total of $181,800,000 was
placed in the Trust Account. We incurred $4,012,520 in Initial Public Offering
related costs, including $3,600,000 of underwriting fees and $412,520 of other
costs. In connection with the underwriters' full exercise of their
over-allotment option, we also consummated the sale of an additional 81,000
Private Placement Units at $10.00 per Private Placement Unit, generating total
proceeds of $27,810,000. A total of $27,270,000 was deposited into the Trust
Account, including an additional $540,000 of underwriting fees, bringing the
aggregate proceeds held in the Trust Account to $209,070,000.
For the nine months ended September 30, 2022, cash used in operating activities
was $1,108,878. Net loss of $1,470 was affected by interest earned on
investments held in the Trust Account of $1,091,041 and changes in operating
assets and liabilities, which used $16,367 of cash from operating activities.
As of September 30, 2022, we had cash and investments held in the Trust Account
of $210,111,564. We intend to use substantially all of the funds held in the
Trust Account, including any amounts representing interest earned on the Trust
Account to complete our Business Combination. We may withdraw interest to pay
taxes. During the period ended September 30, 2022, we withdraw $66,351 interest
income from the Trust Account to pay franchise and income taxes. To the extent
that our capital stock or debt is used, in whole or in part, as consideration to
complete our 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 September 30, 2022, we had $307,310 of cash held outside of the Trust
Account. 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.
In order to fund working capital deficiencies or finance transaction costs in
connection with an initial Business Combination, the Sponsor, or certain of our
officers and directors or their affiliates may, but are not obligated to, loan
us funds as may be required. If we complete an initial Business Combination, we
would repay such loaned amounts. 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. Up to $1,500,000 of such loans
may be convertible into Units at a price of $10.00 per unit, at the option of
the lender. The Units would be identical to the Private Placement Units.
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Going Concern
In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standard Board's Accounting Standards
Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability
to Continue as a Going Concern," the Company has until December 6, 2022,
twelve months from the closing of its Initial Public Offering, to consummate a
Business Combination. It is uncertain that the Company will be able to
consummate a Business Combination by this time. Additionally, the Company may
not have sufficient liquidity to fund the working capital needs of the Company
through the Company's liquidation date or one year from the issuance of these
financial statements. If a Business Combination is not consummated by the
liquidation date, there will be a mandatory liquidation and subsequent
dissolution of the Company. Management has determined that the liquidity
condition and mandatory liquidation, should a Business Combination not occur,
and potential subsequent dissolution, raises 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 liabilities should the Company be required
to liquidate after December 6, 2022. There can be no assurance that the Company
will be able to consummate any Business Combination by December 6, 2022.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 2022. We do not participate
in transactions that create relationships with unconsolidated entities or
financial partnerships, often referred to as variable interest entities, which
would have been established for the purpose of facilitating off-balance sheet
arrangements. We have not entered into any off-balance sheet financing
arrangements, established any special purpose entities, guaranteed any debt or
commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We entered into an agreement, commencing on December 1, 2021, through the
earlier of our consummation of an initial Business Combination and its
liquidation, to pay Fifth Partners, an affiliate of the Sponsor, a total of
$13,000 per month for general and administrative services including office
space, utilities and secretarial support.
The Company had granted the underwriters a 45-day option from the date of
Initial Public Offering to purchase up to 2,700,000 additional Units to cover
over-allotments, if any, at the Initial Public Offering price less the
underwriting discounts and commissions.
On December 9, 2021, the underwriter's elected to fully exercise the
over-allotment option to purchase an additional 2,700,000 Public Shares at a
price of $10.00 per public share.
We engaged EarlyBirdCapital as an advisor in connection with the initial
Business Combination to assist in holding meetings with the stockholders to
discuss the potential Business Combination and the target business' attributes,
introduce the us to potential investors that are interested in purchasing
securities in connection with the initial Business Combination, assist in
obtaining stockholder approval for the Business Combination and assist with
press releases and public filings in connection with the initial Business
Combination. We will pay EarlyBirdCapital a cash fee for such services upon the
consummation of the initial Business Combination in an amount equal to 3.5% of
the gross proceeds of the Initial Public Offering (exclusive of any applicable
finders' fees which might become payable). In addition, we will pay
EarlyBirdCapital a cash fee in an amount equal to 1.0% of the total
consideration payable to the target in the initial Business Combination if
EarlyBirdCapital introduces the target business with whom we complete the
initial Business Combination; provided that the foregoing fee will not be paid
prior to the date that is 60 days from the effective date of the Registration
Statement, unless such payment would not be deemed underwriters' compensation in
connection with the Initial Public Offering pursuant to FINRA Rule 5110.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
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Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Common stock subject to mandatory
redemption is classified as a liability instrument and is measured at fair
value. Conditionally redeemable common stock (including common stock that
features 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) is classified in temporary equity. At all other times,
common stock is classified as stockholders' equity. The Company's Public Shares
feature certain redemption rights that are considered to be outside of the
Company's control and subject to occurrence of uncertain future events.
Accordingly, at September 30, 2022 and December 31, 2021, the Public Shares are
presented at redemption value as temporary equity, outside of the stockholders'
equity section of the Company's balance sheets. We recognize changes in
redemption value immediately as they occur and adjusts the carrying value of the
common stock subject to possible redemption to equal the redemption value at the
end of each reporting period. This method would view the end of the reporting
period as if it were also the redemption date for the security.
Net Income (Loss) per Common Share
Net income (loss) per share of common stock is computed by dividing net income
(loss) by the weighted average number of shares of common stock outstanding for
the period. Accretion associated with the redeemable shares of common stock is
excluded from earnings per share as the redemption value approximates fair
value.
Recent Accounting Standards
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.
Factors That May Adversely Affect Our Results of Operations
Our results of operations and our ability to complete an initial Business
Combination may be adversely affected by various factors that could cause
economic uncertainty and volatility in the financial markets, many of which are
beyond our control. Our business could be impacted by, among other things,
downturns in the financial markets or in economic conditions, increases in oil
prices, inflation, increases in interest rates, supply chain disruptions,
declines in consumer confidence and spending, the ongoing effects of the
COVID-19 pandemic, including resurgences and the emergence of new variants, and
geopolitical instability, such as the military conflict in Ukraine. We cannot at
this time fully predict the likelihood of one or more of the above events, their
duration or magnitude or the extent to which they may negatively impact our
business and our ability to complete an initial Business Combination.
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