LEGATO MERGER CORP. II Management report and analysis of the financial situation and operating results (form 10-Q)

References in this report (the “Quarterly Report”) to “we”, “us” or the “Company” refer to Legato Fusion Corp. II. References to our “management” or “management team” refer to our officers and directors. The following discussion and analysis of the financial condition and results of operations of the Company should be read in conjunction with the financial statements and related notes contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis presented below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This quarterly report 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 Exchange Act which are not historical facts. and involve risks and uncertainties. which could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q, including, without limitation, statements in this “Management’s Review and Analysis of the Financial Condition and Results of Operations “Regarding the financial condition, business strategy and plans and objectives of the Company’s 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 these forward-looking statements. These forward-looking statements relate to future events or future performance, but reflect the current beliefs of management, 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 described in forward-looking statements. For information identifying material factors that could cause actual results to differ materially from those anticipated in forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its initial public offering. savings deposited with the United States Securities Commission (the second “). The Company’s securities deposits are accessible in the EDGAR section of the DRY website at www.sec.gov. Unless expressly required by applicable securities laws, the Company disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

We are a blank check company incorporated under the laws of Delaware state to
July 14, 2021, for the purposes of carrying out a merger, a capital stock exchange, an acquisition of assets, a purchase of shares, a reorganization or a similar business combination with one or more companies. We intend to complete our business combination using cash from the proceeds of the initial public offering and sale of private shares, our share capital, our debt or a combination of ‘cash, stocks and debt.

We expect to continue to incur significant costs in pursuing our acquisition plans. We cannot assure you that our plans to raise capital or complete our first business combination will be successful.

Results of Operations

We have not engaged in any activity or generated any income to date. Our only activities through September 30, 2021 were organizational activities and those necessary for the preparation of the Initial Public Offer. We do not expect to generate any revenue until the completion of our business combination, at the earliest. We generate non-operating income in the form of interest income on marketable securities held in the trust account. We incur expenses for being a public company (for legal, financial, accounting and auditing compliance), as well as for due diligence expenses.

For the period of July 14, 2021 (creation) at September 30, 2021, we had a net loss of $ 549, consisting solely of general and administrative costs.

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Liquidity and capital resources

At November 24, 2021, the Company carried out the initial public offering of 24,000,000 units in $ 10.00 per Share, generating gross proceeds of $ 240,000,000
Simultaneously with the closing of the initial public offering, the Company concluded the sale of 1,045,000 units, at a price of $ 10.00 per unit within the framework of a private placement in favor of certain holders of founding shares of the Company (“initial shareholders”) and EarlybirdCapital, Inc., the representative of the underwriters in the initial public offering (“EBC”), generating gross proceeds of $ 10,450,000 (“Private units”). At November 29, 2021, the underwriters exercised their over-allotment option in full, resulting in the sale of December 1, 2021
3,600,000 additional shares issued for a total amount of $ 36,000,000. As part of the exercise by the underwriters of their over-allotment option, the Company also completed the sale of 126,000 additional private units to
$ 10.00 per unit, generating total proceeds of $ 1,260,000.

Following the initial public offering and the sale of the private shares, a total of 280 $ 140,000 was placed in the trust account and we had $ 1,716,429 cash held outside the trust account, after payment of initial public offering fees, and available for working capital purposes. we hired
$ 15,660,526 in transaction costs, including $ 5,520,000 in cash subscription fees, 9,660,000 in deferred subscription fees, and $ 480,526 other supply costs.

We intend to use substantially all of the funds held in the trust account (excluding deferred sales charges and interest to pay taxes) to acquire one or more target businesses and to pay our expenses. relating to it. To the extent that our common shares are used in whole or in part to affect our business combination, the remaining proceeds held in the trust account as well as any other unspent net proceeds will be used as working capital to fund our operations. the target company or companies.

Until a business combination is completed, the Company will use funds held outside the trust account to pay existing accounts payable, identify and assess potential acquisition candidates, perform business due diligence on potential target companies, travel to and from offices, factories or similar locations of potential target companies, review corporate documents and material agreements of potential target companies, select the target company to acquire and structure, negotiate and finalize the business combination. If the Company’s estimates of the costs of identifying a target business, exercising in-depth due diligence and negotiating a Business Combination are lower than the actual amount required to do so, the Company may dispose of insufficient funds to operate a business prior to a Combination. In addition, the Company may need to obtain additional financing either to complete a Business Combination or because it is obligated to buy back a significant number of its public shares when completing a Business Combination. , in which case the Company may issue additional securities or contract debts in connection with this business combination. In order to finance the transaction costs associated with a business combination, our officers, directors, original shareholders and their affiliates may, but are not obligated to, lend funds to us as required. If the Company carries out a Business Combination, the Company will reimburse the amounts loaned. In the event that a business combination is not closed, the Company may use any funds available to it outside the trust account to repay the amounts so loaned.

If the Company is unable to raise additional capital, it may need to take additional measures to conserve liquidity, which could include, but is not necessarily limited to, the suspension of the continuation of a potential transaction. The Company cannot guarantee that new financing will be available to it on commercially acceptable terms, if at all.

Off-balance sheet provisions

We had no off-balance sheet arrangements at September 30, 2021.

Contractual Obligations

We have no long-term debt, capital leases, operating leases or long-term liabilities.

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Critical Accounting Policies

The preparation of condensed financial statements and related information in accordance with generally accepted accounting principles in United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the revenues and expenses during the periods reported. Actual results could differ materially from these estimates. There have been no material changes in our critical accounting policies, as disclosed in Form 8-K and the final prospectus that we have filed with the SECOND to December 1, 2021 and 23 November 2021, respectively.

Recent Accounting Standards

In august 2020, the FASB published the update of accounting standards (“ASU”) n ° 2020-06, Debt – Debt with conversion and other options (sub-section 470-20) and Derivatives and hedging – Contracts in equity of the entity (sub-item 815-40): Recognition of convertible instruments and contracts in the equity of an entity (“ASU 2020-06”), which simplifies the recognition of convertible instruments by eliminating the main separation models required by current GAAP. ASU also removes certain terms of settlement that are required for equity-related contracts to qualify except for the scope of derivatives, and it simplifies the calculation of diluted earnings per share in certain areas. The Company adopted ASU 2020-06 on July 14, 2021 (creation) using a modified retrospective method for the transition. The adoption of ASU did not have an impact on the Company’s financial position, results of operations or cash flow.

Management of the Company does not believe that other accounting standards recently issued, but not yet in effect, if currently adopted, would have a material impact on the accompanying financial statements.

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