The accompanying notes are an integral part of
these unaudited condensed financial statements.
The accompanying notes are an integral part of
these unaudited condensed financial statements.
26 CAPITAL ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
Class A
Common Stock
|
|
|
Class B
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total
Stockholder ’
Equity
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
(Deficit)
|
|
Balance as of December 31, 2020 (audited)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
6,900,000
|
|
|
$
|
690
|
|
|
$
|
24,310
|
|
|
$
|
(1,018
|
)
|
|
$
|
23,982
|
|
Forfeiture of 25,000 shares by initial stockholders
|
|
|
-
|
|
|
|
-
|
|
|
|
(25,000
|
)
|
|
|
(2
|
)
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
Accretion for Class A common stock to redemption amount
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(24,312
|
)
|
|
|
(32,549,900
|
)
|
|
|
(32,574,212
|
)
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,790,042
|
|
|
|
1,790,042
|
|
Balance as of March 31, 2021
|
|
|
-
|
|
|
$
|
-
|
|
|
|
6,875,000
|
|
|
$
|
688
|
|
|
$
|
-
|
|
|
$
|
(30,760,876
|
)
|
|
$
|
(30,760,188
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,729,148
|
)
|
|
|
(5,729,148
|
)
|
Balance as of June 30, 2021
|
|
|
-
|
|
|
$
|
-
|
|
|
|
6,875,000
|
|
|
$
|
688
|
|
|
$
|
-
|
|
|
$
|
(36,490,024
|
)
|
|
$
|
(36,489,336
|
)
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,913,195
|
|
|
|
7,913,195
|
|
Balance as of September 30, 2021
|
|
|
-
|
|
|
$
|
-
|
|
|
|
6,875,000
|
|
|
$
|
688
|
|
|
$
|
-
|
|
|
$
|
(28,576,829
|
)
|
|
$
|
(28,576,141
|
)
|
|
|
Class A
Common Stock
|
|
|
Class B
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance as of August 24, 2020 (inception)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Class B common stock issued to Sponsor
|
|
|
-
|
|
|
|
-
|
|
|
|
6,900,000
|
|
|
|
690
|
|
|
|
24,310
|
|
|
|
-
|
|
|
|
25,000
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(761
|
)
|
|
|
(761
|
)
|
Balance as of September 30, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
6,900,000
|
|
|
$
|
690
|
|
|
$
|
24,310
|
|
|
$
|
(761
|
)
|
|
$
|
24,239
|
|
The accompanying notes are an integral part of
these unaudited condensed financial statements.
26 CAPITAL ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
|
|
For the
Nine
Months Ended
September 30,
2021
|
|
|
For the
Period from
August 24,
2020
(Inception) through
September 30,
2020
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
3,974,089
|
|
|
$
|
(761
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Interest earned on investments held in Trust Account
|
|
|
(11,574
|
)
|
|
|
-
|
|
Unrealized gain on change in fair value of warrants
|
|
|
(8,599,904
|
)
|
|
|
-
|
|
Offering expenses related to warrant issuance
|
|
|
1,021,001
|
|
|
|
-
|
|
Loss on sale of private placement warrants
|
|
|
2,422,739
|
|
|
|
-
|
|
Changes in current assets and current liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
(305,507
|
)
|
|
|
-
|
|
Due to related party
|
|
|
10,000
|
|
|
|
-
|
|
Accounts payable
|
|
|
397,451
|
|
|
|
761
|
|
Net cash used in operating activities
|
|
|
(1,091,705
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account
|
|
|
(275,000,000
|
)
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(275,000,000
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from Initial Public Offering, net of underwriters’ fees
|
|
|
269,500,000
|
|
|
|
-
|
|
Proceeds from private placement
|
|
|
7,500,000
|
|
|
|
-
|
|
Proceeds from issuance of promissory note to Sponsor
|
|
|
-
|
|
|
|
262,500
|
|
Repayment of promissory note to related party
|
|
|
(275,000
|
)
|
|
|
-
|
|
Payments of offering costs
|
|
|
(496,025
|
)
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
276,228,975
|
|
|
|
262,500
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
137,270
|
|
|
|
262,500
|
|
Cash, beginning of the period
|
|
|
174,193
|
|
|
|
-
|
|
Cash, end of the period
|
|
$
|
311,463
|
|
|
$
|
262,500
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of noncash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred underwriting commissions charged to additional paid-in capital
|
|
$
|
9,625,000
|
|
|
$
|
-
|
|
Deferred offering costs paid by Sponsor in exchange for issuance of Class B common stock
|
|
$
|
-
|
|
|
$
|
25,000
|
|
Deferred offering costs paid through promissory note – related party
|
|
$
|
-
|
|
|
$
|
12,500
|
|
The accompanying notes are an integral part of
these unaudited condensed financial statements.
26
CAPITAL ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 — Organization and Business
Operations
Organization and General
26 Capital Acquisition Corp. (the “Company”)
is a blank check company incorporated as a Delaware corporation on August 24, 2020. The Company was formed for the purpose of effecting
a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more
businesses (“Business Combination”).
As of September 30, 2021, the Company had not
commenced any operations. All activity for the period from August 24, 2020 (inception) through September 30, 2021 relates to the Company’s
formation and the initial public offering (“IPO”), which is described below, and, since the closing of the Initial Public
Offering (as defined below), the search for a prospective initial Business Combination. The Company will not generate any operating revenues
until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of
interest income on the proceeds derived from the IPO and will recognize changes in the fair value of warrant liability as other income
(expense).
The Company’s sponsor is 26 Capital Holdings
LLC, a Delaware limited liability company (the “Sponsor”).
Financing
The registration statement for the Company’s
IPO was declared effective on January 14, 2021 (the “Effective Date”). On January 20, 2021, the Company consummated the IPO
of 27,500,000 units (including 3,500,000 units subject to the underwriters’ over-allotment option) (the “Units” and,
with respect to the shares of common stock included in the Units being offered, the “Public Shares”), at $10.00 per Unit,
generating gross proceeds of $275,000,000, which is discussed in Note 3.
Simultaneously with the closing of the IPO, the
Company consummated the sale of 7,500,000 Private Placement Warrants (the “Private Placement Warrants”) at a price of $1.00
per Private Placement Warrant in a private placement to the Sponsor, generating total gross proceeds of $7,500,000.
Transaction costs amounted to $15,621,025 consisting
of $5,500,000 of underwriting discount, $9,625,000 of deferred underwriting discount, and $496,025 of other offering costs.
Trust Account
Following the closing of the IPO on January 20,
2021, $275,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO and the sale of the Private Placement
Warrants was placed in a Trust Account and may only be invested in United States “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
of Rule 2a-7 promulgated under the Investment Company Act which only in direct U.S. government treasury obligations. Except with respect
to interest earned on the funds held in the Trust Account that may be released to the Company to pay its tax obligations, the proceeds
deposited in the Trust Account will not be released from the Trust Account until the earliest of (a) the completion of the Company’s
initial Business Combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend
the Company’s amended and restated certificate of incorporation, and (c) the redemption of the Company’s public shares if
the Company is unable to complete the initial Business Combination within 24 months from the closing of the IPO (the “Combination
Period”), subject to applicable law. The proceeds deposited in the Trust Account could become subject to the claims of the Company’s
creditors which would have higher priority than the claims of the Company’s public stockholders.
Initial Business Combination
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the Private Warrants, although substantially
all of the net proceeds are intended to be generally applied toward consummating a Business Combination (less deferred underwriting commissions).
The Company’s Business Combination must
be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account
(net of taxes payable) at the time of the signing an agreement to enter into a Business Combination. However, the Company will only complete
a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of
the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide its public stockholders
with the opportunity to redeem all or a portion of their public shares upon the completion of the initial Business Combination either
(i) in connection with a stockholder meeting called to approve the initial Business Combination or (ii) by means of a tender offer. The
decision as to whether the Company will seek stockholder approval of a proposed initial Business Combination or conduct a tender offer
will be made by the Company, solely in its discretion. The stockholders will be entitled to redeem their shares for a pro rata share
of the aggregate amount then on deposit in the Trust Account (initially approximately $10.00 per share, plus any pro rata interest earned
on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
If the Company is unable to complete a Business
Combination within the Combination Period, the Company will redeem 100% of the public shares, at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and
not previously released to the Company to pay its taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the
number of then outstanding public shares, subject to applicable law and as further described in registration statement, and then seek
to dissolve and liquidate.
The Sponsor, officers and directors have agreed
to (i) waive their redemption rights with respect to their founder shares and public shares in connection with the completion of the
initial Business Combination, (ii) waive their redemption rights with respect to their founder shares and public shares in connection
with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation, (iii) waive
their rights to liquidating distributions from the Trust Account with respect to their founder shares if the Company fails to complete
the initial Business Combination within the Combination Period, and (iv) not sell any of their founder shares or public shares to the
Company in any tender offer the Company undertakes in connection with a proposed initial Business Combination.
The Company’s Sponsor has agreed that it
will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company,
or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement
or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per public share
and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less
than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply
to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust
Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters
of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act. However, the Company has
not asked its Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether its Sponsor
has sufficient funds to satisfy its indemnity obligations and believe that the Company’s Sponsor’s only assets are securities
of the Company. Therefore, the Company believes it is unlikely that its Sponsor would be able to satisfy those obligations.
Liquidity and Capital Resources
As of September 30, 2021, the Company had approximately
$0.3 million in its operating bank account, and working capital of approximately $0.3 million.
Prior to the completion of the Initial Public
Offering, the Company’s liquidity needs had been satisfied through a payment from the Sponsor of $25,000 (see Note 6) for the Founder
Shares to cover certain offering costs and the loan under an unsecured promissory note from the Sponsor of $275,000 (see Note 6). The
promissory note from the Sponsor was paid in full as of January 20, 2021. Subsequent to the consummation of the Initial Public Offering
and Private Placement, the Company’s liquidity needs have been satisfied through the proceeds from the consummation of the Private
Placement not held in the Trust Account.
In addition, in order to finance transaction
costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of the Company’s
officers and directors may, but are not obligated to, provide the Company Working Capital Loans, as defined below (see Note 6). As of
September 30, 2021, there were no amounts outstanding under any Working Capital Loans.
Based on the foregoing, management believes that
the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of
a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing
accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective
target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating
and consummating the Business Combination.
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart
our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not
being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make
comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an
emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.
Note 2 — Revision of Previously Issued Financial Statements
In connection with the preparation of the Company’s
financial statements as of September 30, 2021, management determined it should revise its previously reported financial statements.
The Company previously determined the Class A common stock subject to possible redemption to be equal to the redemption value of
$10.00 per Class A common stock while also taking into consideration its charter’s requirement that a redemption cannot result
in net tangible assets being less than $5,000,001. Upon review of its financial statements for the period ended September 30, 2021, the
Company reevaluate the classification of the Class A common stock and determined that the Class A common stock issued during the
Initial Public Offering and pursuant to the exercise of the underwriters’ overallotment can be redeemed or become redeemable subject
to the occurrence of future events considered outside the Company’s control under ASC 480-10-S99. Therefore, management concluded
that the carrying value should include all Class A common stock subject to possible redemption, resulting in the Class A common
stock subject to possible redemption being classified as temporary equity in its entirety. As a result, management has noted a reclassification
adjustment related to temporary equity and permanent equity. This resulted in an adjustment to the initial carrying value of the Class A
common stock subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated
deficit and Class A common stock.
In connection with the change in presentation
for the Class A common stock subject to redemption, the Company also revised its earnings per share calculation to allocate net income
(loss) evenly to Class A and Class B common stock. This presentation contemplates a Business Combination as the most likely outcome,
in which case, both classes of common stock share pro rata in the income (loss) of the Company.
There has been no change in the Company’s total assets,
liabilities or operating results.
The impact of the revision on the Company’s
financial statements is reflected in the following table.
|
|
As Previously
Reported
|
|
|
Adjustments
|
|
|
As Revised
|
|
Balance Sheet at January 20, 2021, as revised under Note 2 in the Form 10-Q filed with SEC on May 17, 2021
|
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemption
|
|
$
|
234,005,970
|
|
|
$
|
40,994,030
|
|
|
$
|
275,000,000
|
|
Class A common stock
|
|
|
410
|
|
|
|
(410
|
)
|
|
|
-
|
|
Class B common stock
|
|
|
688
|
|
|
|
-
|
|
|
|
688
|
|
Additional paid-in capital
|
|
|
8,443,720
|
|
|
|
(8,443,720
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(3,444,816
|
)
|
|
|
(32,549,900
|
)
|
|
|
(35,994,716
|
)
|
Total stockholders’ equity (deficit)
|
|
$
|
5,000,002
|
|
|
$
|
(40,994,030
|
)
|
|
$
|
(35,994,028
|
)
|
Number of shares subject to redemption
|
|
|
23,400,597
|
|
|
|
4,099,403
|
|
|
|
27,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet at March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemption
|
|
$
|
239,239,810
|
|
|
$
|
35,760,190
|
|
|
$
|
275,000,000
|
|
Class A common stock
|
|
|
358
|
|
|
|
(358
|
)
|
|
|
-
|
|
Class B common stock
|
|
|
688
|
|
|
|
-
|
|
|
|
688
|
|
Additional paid-in capital
|
|
|
3,209,932
|
|
|
|
(3,209,932
|
)
|
|
|
-
|
|
Retained earnings (Accumulated deficit)
|
|
|
1,789,024
|
|
|
|
(32,549,900
|
)
|
|
|
(30,760,876
|
)
|
Total stockholders’ equity (deficit)
|
|
$
|
5,000,002
|
|
|
$
|
(35,760,190
|
)
|
|
$
|
(30,760,188
|
)
|
Number of shares subject to redemption
|
|
|
23,923,981
|
|
|
|
3,576,019
|
|
|
|
27,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations for the three months ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A common stock
|
|
|
27,500,000
|
|
|
|
(5,805,556
|
)
|
|
|
21,694,444
|
|
Basic and diluted net income per share, Class A common stock
|
|
$
|
0.00
|
|
|
$
|
0.06
|
|
|
$
|
0.06
|
|
Weighted average shares outstanding of Class B common stock
|
|
|
6,583,333
|
|
|
|
-
|
|
|
|
6,583,333
|
|
Basic and diluted net income per share, Class B common stock
|
|
$
|
0.27
|
|
|
$
|
(0.21
|
)
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Cash Flows for the three months ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial value of Class A common stock subject to possible redemption
|
|
$
|
234,005,970
|
|
|
$
|
40,994,030
|
|
|
$
|
275,000,000
|
|
Change in value of Class A common stock subject to possible redemption
|
|
$
|
5,233,840
|
|
|
$
|
(5,233,840
|
)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet at June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemption
|
|
$
|
233,510,660
|
|
|
$
|
41,489,340
|
|
|
$
|
275,000,000
|
|
Class A common stock
|
|
|
415
|
|
|
|
(415
|
)
|
|
|
-
|
|
Class B common stock
|
|
|
688
|
|
|
|
-
|
|
|
|
688
|
|
Additional paid-in capital
|
|
|
8,939,025
|
|
|
|
(8,939,025
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(3,940,124
|
)
|
|
|
(32,549,900
|
)
|
|
|
(36,490,024
|
)
|
Total stockholders’ equity (deficit)
|
|
$
|
5,000,004
|
|
|
$
|
(41,489,340
|
)
|
|
$
|
(36,489,336
|
)
|
Number of shares subject to redemption
|
|
|
23,351,066
|
|
|
|
4,148,934
|
|
|
|
27,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations for the three months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A common stock
|
|
|
27,500,000
|
|
|
|
-
|
|
|
|
27,500,000
|
|
Basic and diluted net income (loss) per share, Class A common stock
|
|
$
|
0.00
|
|
|
$
|
(0.17
|
)
|
|
$
|
(0.17
|
)
|
Weighted average shares outstanding of Class B common stock
|
|
|
6,875,000
|
|
|
|
-
|
|
|
|
6,875,000
|
|
Basic and diluted net loss per share, Class B common stock
|
|
$
|
(0.83
|
)
|
|
$
|
0.66
|
|
|
$
|
(0.17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations for the six months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A common stock
|
|
|
27,500,000
|
|
|
|
(2,886,740
|
)
|
|
|
24,613,260
|
|
Basic and diluted net income (loss) per share, Class A common stock
|
|
$
|
0.00
|
|
|
$
|
(0.13
|
)
|
|
$
|
(0.13
|
)
|
Weighted average shares outstanding of Class B common stock
|
|
|
6,877,624
|
|
|
|
-
|
|
|
|
6,877,624
|
|
Basic and diluted net loss per share, Class B common stock
|
|
$
|
(0.57
|
)
|
|
$
|
0.44
|
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Cash Flows for the six months June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial value of Class A common stock subject to possible redemption
|
|
$
|
234,005,970
|
|
|
$
|
40,994,030
|
|
|
$
|
275,000,000
|
|
Change in value of Class A common stock subject to possible redemption
|
|
$
|
(495,310
|
)
|
|
$
|
495,310
|
|
|
$
|
-
|
|
Note 3 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial
statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America
(“U.S. GAAP”) for financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include
all of the information and footnotes required by U.S. GAAP. In the opinion of management, the unaudited condensed financial statements
reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results
for the periods presented. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of
the results that may be expected through December 31, 2021 or for any future interim periods.
The accompanying unaudited condensed financial
statements should be read in conjunction with the audited financial statements and notes thereto included in the Form 8-K, the final
prospectus, and the Form 10-Q, filed by the Company with the SEC on January 26, 2021, January 19, 2021, May 17, 2021 and August 16, 2021,
respectively.
Use of Estimates
The preparation of the unaudited condensed financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements.
Making estimates requires management to exercise
significant judgement. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the unaudited condensed financial statements, which management considered in formulating its estimate, could
change in the near term one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of September 30, 2021 and December 31, 2020.
Investments Held in Trust Account
At September 30, 2021, the Trust Account held $275,011,574 in
treasury funds.
Fair Value Measurements
Fair value is defined as the price that would
be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement
date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
|
●
|
Level 1,
defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
|
●
|
Level 2,
defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices
for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
|
●
|
Level 3,
defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
In some circumstances, the inputs used to measure
fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is
categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
The fair value of the Company’s certain
assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,”
approximates the carrying amounts represented in the balance sheet. The fair values of cash and cash equivalents, prepaid expenses, accounts
payable and accrued expenses are estimated to approximate the carrying values as of September 30, 2021 due to the short maturities of
such instruments.
The fair value of Private Placement Warrants
is based on a valuation model utilizing management judgment and pricing inputs from observable and unobservable markets with less volume
and transaction frequency than active markets. Significant deviations from these estimates and inputs could result in a material change
in fair value. The fair value of the Private Placement Warrants is classified as Level 3. See Note 7 for additional information on assets
and liabilities measured at fair value.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Depository Insurance Corporation of $250,000. At September 30, 2021 and December 31, 2020, the Company has not experienced losses on
this account and management believes the Company is not exposed to significant risks on such account.
Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock
subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480-10-S99
“Classification and Measurement of Redeemable Securities.” Conditionally redeemable common stock (including common stock
that features redemption rights that is 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 as temporary equity. At all other times, common stock are classified
as stockholders’ equity. The Company’s Class A common stock features certain redemption rights that is considered to be outside
of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at September 30, 2021, Class A common
stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ deficit
section of the Company’s balance sheet.
The Company recognizes changes in redemption
value immediately as they occur and adjusts the carrying value of redeemable Class A common stock to equal the redemption value at the
end of each reporting period.
At September 30, 2021, the Class A common stock
reflected in the condensed balance sheet are reconciled in the following table:
Gross proceeds
|
|
$
|
275,000,000
|
|
Less: proceeds allocated to Public Warrants
|
|
|
(17,974,188
|
)
|
Less: Class A common stock issuance costs
|
|
|
(14,600,024
|
)
|
Add: accretion of carrying value to redemption value
|
|
|
32,574,212
|
|
Class A common stock subject to possible redemption
|
|
|
275,000,000
|
|
Net Income Per Share of Common Stock
The Company has two classes of stock, which are
referred to as Class A common stock and Class B common stock. Earnings and losses are shared pro rata between the two classes of stock.
The 21,250,000 potential common stock for outstanding warrants to purchase the Company’s stock were excluded from diluted
earnings per share for the three and nine months ended September 30, 2021 because the warrants are contingently exercisable, and the
contingencies have not yet been met. As a result, diluted net income per common stock is the same as basic net income per common stock
for the periods presented. The table below presents a reconciliation of the numerator and denominator used to compute basic and
diluted net income per share for each class of common stock:
|
|
For the Three Months Ended September 30, 2021
|
|
|
For the Nine Months Ended September 30, 2021
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Class A
|
|
|
Class B
|
|
Basic and diluted net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net income
|
|
$
|
6,330,556
|
|
|
$
|
1,582,639
|
|
|
$
|
3,140,715
|
|
|
$
|
833,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding
|
|
|
27,500,000
|
|
|
|
6,875,000
|
|
|
|
25,680,147
|
|
|
|
6,814,103
|
|
Basic and diluted net income per share
|
|
$
|
0.23
|
|
|
$
|
0.23
|
|
|
$
|
0.12
|
|
|
$
|
0.12
|
|
Offering Costs associated with the Initial
Public Offering
The Company complies with the requirements of
the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - “Expenses of Offering”. Offering costs
consist principally of professional and registration fees incurred through the balance sheet date. Offering costs are allocated to the
separable financial instruments issued in the IPO based on a relative fair value basis compared to total proceeds received. Offering
costs associated with warrant liabilities is expensed, and offering costs associated with the Class A common stock are charged to the
stockholders’ equity.
Derivative Financial Instruments
The Company evaluates its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic
815, “Derivatives and Hedging”. Derivative instruments are recorded at fair value on the grant date and re-valued at each
reporting date, with changes in the fair value reported in the unaudited condensed statements of operations. Derivative assets and liabilities
are classified on the balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument
could be required within 12 months of the balance sheet date. The Company has determined the warrants are a derivative instrument.
FASB ASC 470-20, Debt with Conversion and Other
Options addresses the allocation of proceeds from the issuance of convertible debt into its equity and debt components. The Company applies
this guidance to allocate IPO proceeds from the Units between Class A common stock and warrants, using the residual method by allocating
IPO proceeds first to fair value of the warrants and then the Class A common stock.
Income Taxes
The Company accounts for income taxes under ASC
740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected
impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit
to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when
it is more likely than not that all or a portion of deferred tax assets will not be realized. Deferred tax assets were de minimis at
September 30, 2021.
ASC 740 also clarifies the accounting for uncertainty
in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process
for financial statement recognition and measurement of a tax position 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. ASC 740 also provides
guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest
and penalties as of September 30, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could
result in significant payments, accruals or material deviation from its position.
The Company has identified the United States
as its only “major” tax jurisdiction.
The Company may be subject to potential examination
by federal and state taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing
and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s
management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
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, results of its operations, cash flows and/or search for a target company, the specific impact is not readily determinable
as of the date of the condensed financial statements. The condensed financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Recent Accounting Pronouncements
Management does not believe that any other recently
issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s condensed
financial statements. In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06, Debt -debt with Conversion
and Other Options (Subtopic 470-20) and Derivatives and Hedging -- Contracts in Entity’ Own Equity (Subtopic 815-40): Accounting
for Convertible Instruments and Contracts in an Entity’ Own Equity (“ASU 2020-06”), which simplifies accounting for
convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions
that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per
share calculation in certain areas. Management is currently evaluating the new guidance but does not expect the adoption of this guidance
to have a material impact on the Company’s financial statements.
The Company's management does not believe that
any other recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material effect on the Company's
unaudited condensed financial statements.
Note 4 — Initial Public Offering
Pursuant to the IPO on January 20, 2021, the
Company sold 27,500,000 Units (including 3,500,000 units subject to the underwriters’ over-allotment option) at a purchase price
of $10.00 per Unit. Each Unit consists of one share of Class A common stock and one-half warrant to purchase one share of Class A common
stock (“Public Warrant”). Each Public Warrant entitles the holder to purchase one share of Class A common stock at a price
of $11.50 per share, subject to adjustment. Each Public Warrant will become exercisable on the later of 30 days after the completion
of the initial Business Combination or 12 months from the closing of the IPO and will expire five years after the completion of the initial
Business Combination, or earlier upon redemption or liquidation.
An aggregate of $10.00 per Unit sold in the IPO
was held in the Trust Account and will be held as cash or invested in United States “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
of Rule 2a-7 promulgated under the Investment Company Act which only in direct U.S. government treasury obligations. As of September
30, 2021, $275,000,000 of the IPO proceeds was held in the Trust Account.
Public Warrants
Each whole warrant entitles the holder to purchase
one share of the Company’s Class A common stock at a price of $11.50 per share, subject to adjustment as discussed herein. In addition,
if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection
with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class
A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors
and, in the case of any such issuance to the Company’s Sponsor or its affiliates, without taking into account any founder shares
held by the Company’s Sponsor or its affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”),
(y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available
for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions),
and (z) the volume weighted average trading price of the Company’s common stock during the 20 trading day period starting on the
trading day prior to the day on which the Company consummates the initial Business Combination (such price, the “Market Value”)
is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher
of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described below under “Redemption
of warrants” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued
Price.
The warrants will become exercisable on the later
of 12 months from the closing of the IPO or 30 days after the completion of its initial Business Combination and will expire five years
after the completion of the Company’s initial Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption
or liquidation.
The Company will not be obligated to deliver
any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise
unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants is
then effective and a prospectus relating thereto is current. No warrant will be exercisable, and the Company will not be obligated to
issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been
registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective
for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely
for the share of Class A common stock underlying such unit.
Once the warrants become exercisable, the Company
may call the Public Warrants for redemption:
|
●
|
in
whole and not in part;
|
|
●
|
at
a price of $0.01 per warrant;
|
|
●
|
upon
not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder;
and
|
|
●
|
if,
and only if, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like), for any 20 trading days within a 30-trading day period commencing
once the warrants become exercisable and ending three business days before the Company sends the notice of redemption to the warrant
holders.
|
If the Company calls the warrants for redemption
as described above, the management will have the option to require any holder that wishes to exercise its warrant to do so on a “cashless
basis.” If the management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering
their warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number
of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and
the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the
average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date
on which the notice of redemption is sent to the holders of warrants.
Note 5 — Private Placement
Simultaneously with the closing of the IPO, the
Sponsor purchased an aggregate of 7,500,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate
purchase price of $7,500,000, in a private placement (the “Private Placement”).
The Private Placement Warrants are identical
to the Public Warrants except that, so long as they are held by the Sponsor or its permitted transferees, (i) they will not be redeemable
by the Company, (ii) they (including the Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited
exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion of the Company’s initial Business
Combination, and (iii) they may be exercised by the holders on a cashless basis.
The Private Placement Warrants will be non-redeemable
and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants
are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company
and exercisable by the holders on the same basis as the Public Warrants.
The Company’s Sponsor has agreed to (i)
waive its redemption rights with respect to its founder shares and public shares in connection with the completion of the Company’s
initial Business Combination, (ii) waive its redemption rights with respect to its founder shares and public shares in connection with
a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation (A) to modify the
substance or timing of the Company’s obligation to offer redemption rights in connection with any proposed initial Business Combination
or to redeem 100% of the Company’s public shares if the Company does not complete its initial Business Combination within the Combination
Period or (B) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity,
(iii) waive its rights to liquidating distributions from the Trust Account with respect to its founder shares if the Company fails to
complete its initial Business Combination within the Combination Period, and (iv) not sell any of its founder shares or public shares
to the Company in any tender offer the Company undertakes in connection with a proposed initial Business Combination. In addition, the
Company’s Sponsor has agreed to vote any founder shares held by them and any public shares purchased during or after the IPO (including
in open market and privately negotiated transactions) in favor of the Company’s initial Business Combination.
Note 6 — Related Party Transactions
Founder Shares
In August 2020, the Sponsor paid $25,000 to cover
certain offering costs of the Company in consideration for 5,750,000 shares of Class B common stock. In January 2021, the Company effected
a stock dividend of 0.2 shares for each founder share outstanding, resulting in an aggregate of 6,900,000 founder shares outstanding
and held by the Sponsor (up to 900,000 of which are subject to forfeiture by the Sponsor if the underwriters’ over-allotment option
is not exercised in full). On January 20, 2021, the Sponsor forfeited 25,000 founder shares to the extent that the over-allotment option
was not exercised in full by the underwriters, resulting in an aggregate of 6,875,000 founder shares outstanding.
The Sponsor has agreed not to transfer, assign
or sell its founder shares until the earlier to occur of (A) one year after the completion of the Company’s initial Business Combination
or (B) subsequent to the Company’s initial Business Combination, (x) if the last sale price of the Company’s Class A common
stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like)
for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s initial Business Combination,
or (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction
that results in all of its stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Promissory Note — Related Party
On August 27, 2020, the Company issued an unsecured
promissory note to the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $300,000 to be used for
a portion of the expenses of the IPO. This loan is non-interest bearing, unsecured and due at the earlier of March 31, 2021 or the closing
of the IPO. The loan would be repaid upon the closing of the IPO out of offering proceeds not held in the Trust Account. On January 20,
2021, the Company repaid $275,000 to the Sponsor. As of September 30, 2021, there were no remaining amounts outstanding.
Related Party Loans
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 officers and directors may,
but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a
Business Combination, the Company 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
does not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans
but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of such Working Capital 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, including as to exercise price, exercisability and exercise period. At September 30, 2021 and December 31,
2020, no such Working Capital Loans were outstanding.
Administrative Service Fee
The Company has agreed to pay its Sponsor, commencing
on January 14, 2021, a total of $10,000 per month for office space, utilities and secretarial and administrative support. Upon completion
of the Company’s Business Combination or its liquidation, the Company will cease paying these monthly fees. As of September 30,
2021, the Company has recorded $30,000 and $86,452 for the three and nine months ended September 30, 2021. As of September 30, 2021,
the Company owed a balance of $10,000 to it Sponsor and its recorded on the balance sheet as due to related party.
Note 7 — Recurring Fair Value Measurements
The following table presents information about
the Company’s assets and liabilities that were measured at fair value on a recurring basis as of September 30, 2021, and indicates
the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
|
|
September 30,
|
|
|
Quoted
Prices In
Active
Markets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Other
Unobservable
Inputs
|
|
|
|
2021
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account
|
|
$
|
275,011,574
|
|
|
$
|
275,011,574
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability
|
|
$
|
19,297,023
|
|
|
$
|
11,470,250
|
|
|
$
|
-
|
|
|
$
|
7,826,773
|
|
Initial Measurement — Public Warrants
The estimated fair value of the Public Warrants
on January 20, 2021 was determined using Level 3 inputs. Inherent in a Monte-Carlo simulation model are assumptions related to expected
stock-price volatility (pre-merger and post-merger), expected term, dividend yield and risk-free interest rate. The Company
estimates the volatility of its common stock based on management’s understanding of the volatility associated with instruments
of other similar entities. The risk-free interest rate is based on the U.S. Treasury Constant Maturity similar to the expected remaining
life of the warrants. The expected life of the warrants is simulated based on management assumptions regarding the timing and likelihood
of completing a business combination. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.
Once the warrants become exercisable, the Company may redeem the outstanding warrants when the price per common stock equals
or exceeds $18.00. The assumptions used in calculating the estimated fair values represent the Company’s best estimate. However,
inherent uncertainties are involved. If factors or assumptions change, the estimated fair values could be materially different.
The key inputs into the Monte Carlo simulation
model for the Public Warrants were as follows at initial measurement:
Input
|
|
January 20, 2021
(Initial
Measurement)
|
|
Expected term (years)
|
|
|
5.58
|
|
Expected volatility
|
|
|
24.4
|
%
|
Risk-free interest rate
|
|
|
0.54
|
%
|
Fair value of the common stock price
|
|
$
|
9.23
|
|
Subsequent Measurement — Public
Warrants
The Public Warrants are measured at fair value
on a recurring basis. The subsequent measurement of the Public Warrants for the nine months ended September 30, 2021 is classified as
Level 1 due to the use of an observable market quote in an active market.
As of September 30, 2021, the aggregate value
of Public Warrants was $11,470,250.
Initial Measurement – Private Placement
Warrants
The estimated fair value of the Private Placement
Warrants on January 20, 2021 is determined using Level 3 inputs. Inherent in a Monte-Carlo simulation model are assumptions related
to expected stock-price volatility (pre-merger and post-merger), expected term, dividend yield and risk-free interest rate.
The Company estimates the volatility of its common stock based on management’s understanding of the volatility associated with
instruments of other similar entities. The risk-free interest rate is based on the U.S. Treasury Constant Maturity similar to the expected
remaining life of the warrants. The expected life of the warrants is simulated based on management assumptions regarding the timing and
likelihood of completing a business combination. The dividend rate is based on the historical rate, which the Company anticipates to
remain at zero. The assumptions used in calculating the estimated fair values represent the Company’s best estimate. However, inherent
uncertainties are involved. If factors or assumptions change, the estimated fair values could be materially different.
The key inputs into the Monte Carlo simulation
model for the Private Placement Warrants were as follows at initial measurement:
Input
|
|
January 20, 2021
(Initial
Measurement)
|
|
Expected term (years)
|
|
|
5.58
|
|
Expected volatility
|
|
|
24.4
|
%
|
Risk-free interest rate
|
|
|
0.54
|
%
|
Fair value of the common stock price
|
|
$
|
9.23
|
|
Subsequent Measurement – Private
Placement Warrants
The key inputs into the Monte Carlo simulation
model for the Private Placement Warrants were as follows at September 30, 2021:
Input
|
|
September 30,
2021
|
|
Expected term (years)
|
|
|
5.54
|
|
Expected volatility
|
|
|
17.3
|
%
|
Risk-free interest rate
|
|
|
1.07
|
%
|
Fair value of the common stock price
|
|
$
|
9.72
|
|
The following table sets forth a summary of the
changes in the fair value of the warrant liability for the nine months ended September 30, 2021:
|
|
Private Placement Warrant
|
|
|
Public Warrant
|
|
|
Warrant Liability
|
|
Fair value as of January 1, 2021
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Initial fair value of warrant liability upon issuance at IPO
|
|
|
9,922,739
|
|
|
|
17,974,188
|
|
|
|
27,896,927
|
|
Revaluation of warrant liability included in other expense within the unaudited condensed statements of operations for the nine months ended September 30, 2021
|
|
|
(2,095,966
|
)
|
|
|
(6,503,938
|
)
|
|
|
(8,599,904
|
)
|
Fair value as of September 30, 2021
|
|
$
|
7,826,773
|
|
|
$
|
11,470,250
|
|
|
$
|
19,297,023
|
|
Note 8 — Commitments and Contingencies
Registration Rights
The holders of the founder shares, Private Placement
Warrants, and warrants that may be issued upon conversion of Working Capital Loans 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 signed on January 14, 2021. These
holders will be entitled to make up to three demands, excluding short form registration demands, that the Company registers such securities
for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their
securities in other registration statements filed by the Company.
Underwriting Agreement
The underwriters had a 45-day option beginning
January 20, 2021 to purchase up to an additional 3,600,000 Units to cover over-allotments, if any.
On January 20, 2021, the underwriter partially
exercised the over-allotment option to purchase 3,500,000 Units, and paid a fixed underwriting discount in aggregate of $5,500,000. Additionally,
the underwriters were entitled to a deferred underwriting discount of 3.5% of the gross proceeds of the IPO held in the Trust Account,
or $9,625,000, upon the completion of the Company’s initial Business Combination subject to the terms of the underwriting agreement.
Note 9 — Stockholders’ Equity
Preferred Stock — The Company is authorized to
issue a total of 1,000,000 preferred shares at par value of $0.0001 each. At September 30, 2021 and December 31, 2020, there were no
shares of preferred stock issued or outstanding.
Class A Common Stock —
The Company is authorized to issue a total of 100,000,000 Class A common stock at par value of $0.0001 each. As of September 30,
2021 and December 31, 2020, there were no shares of Class A common stock issued and outstanding, excluding 27,500,000 and 0 shares
of Class A common stock subject to possible redemption, respectively.
Class B Common Stock —
The Company is authorized to issue a total of 10,000,000 Class B common stock at par value of $0.0001 each. In August 2020, the
Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 5,750,000 shares of Class B common stock.
In January 2021, the Company effected a stock dividend of 0.2 shares for each founder share outstanding, resulting in an aggregate
of 6,900,000 founder shares outstanding and held by the Sponsor (up to 900,000 of which were subject to forfeiture by the Sponsor if
the underwriters’ over-allotment option is not exercised in full). On January 20, 2021, the Sponsor forfeited 25,000 founder
shares to the extent that the over-allotment option was not exercised in full by the underwriters. As of September 30, 2021 and
December 31, 2020, there were 6,875,000 and 6,900,000 Class B common shares issued and outstanding, respectively.
The Company’s initial stockholders have
agreed not to transfer, assign or sell their founder shares until the earlier to occur of (A) one year after the completion of the Company’s
initial Business Combination or (B) subsequent to the Company’s initial Business Combination, (x) if the last reported sale price
of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s
initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization
or other similar transaction that results in all of its stockholders having the right to exchange their shares of common stock for cash,
securities or other property.
The shares of Class B common stock will automatically
convert into shares of the Company’s Class A common stock at the time of its 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 offered and related to the closing of the initial Business Combination, the ratio at which shares of Class B
common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding
shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number
of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an
as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the IPO plus
all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial Business Combination
(excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination and any
private placement-equivalent warrants issued to the Sponsor or its affiliates upon conversion of loans made to the Company).
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 Company’s stockholders,
with each share of common stock entitling the holder to one vote.
Note 10 — Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the condensed financial statements were issued. Other than as described
below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial
statements.
On October 15, 2021, the Company entered into
an Agreement and Plan of Merger and Share Acquisition (the “Merger and Share Acquisition Agreement”) with Tiger Resort Asia
Ltd., a Hong Kong private limited company (“TRA”), Tiger Resort, Leisure and Entertainment Inc., a Philippine corporation
and a subsidiary of TRA (“TRLEI”), Okada Manila International Inc., a Philippine corporation which is currently a subsidiary
of TRLEI (“OMI”), and Project Tiger Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of OMI (“Merger
Sub” and with TRA, TRLEI, and OMI, the “UEC Parties”).
The Merger and Share Acquisition Agreement provides
that, among other things and upon the terms and subject to the conditions thereof, the following transactions will occur (together with
the other agreements and transactions contemplated by the Merger and Share Acquisition Agreement, the “Transactions”), following
the Reorganization and the Subscription (each as defined below):
(a) at the closing of the transactions contemplated
by the Merger and Share Acquisition Agreement (the “Closing”), Merger Sub will merge with and into the Company, the separate
corporate existence of Merger Sub will cease and the Company will be the surviving corporation and a wholly-owned subsidiary of OMI (the
“Merger”); and
(b) as a result of the Merger, among other things,
all outstanding shares of common stock of the Company immediately prior to Closing (except with respect to certain specified shares)
will be converted into and shall for all purposes represent only the right to subscribe for and purchase, pursuant to the Subscription
Agreement (as defined herein) and a letter of transmittal and subscription confirmation, one validly issued, fully paid and non-assessable
American depository share of OMI upon the exercise of such subscription right. Each American depositary share of OMI will represent one
share of common stock of OMI.
Prior to the Closing, TRA will effect a reorganization
of parts of its business (the “Reorganization”) in accordance with the Merger and Share Acquisition Agreement. Pursuant to
the Reorganization, among other matters, OMI will become a direct subsidiary of TRA, TRLEI will become a wholly-owned direct subsidiary
of OMI, and intercompany receivables (other than ordinary course trade receivables) due from TRLEI to TRA and certain of its affiliates
will be contributed to OMI.
Prior to Closing, but after the redemption of
certain shares of the Company, the Company will, as agent acting on behalf of its stockholders, subscribe for OMI American depository
shares representing shares of common stock of OMI, at a price equal to their par value of 0.05 Philippine pesos, with the cash payment
for such American depositary shares being deemed made by and on behalf of the applicable stockholders of the Company (the “Subscription”).
In order to fund the cash payment on behalf the applicable stockholders, the Company will, prior to Closing, declare and pay a cash dividend
on the shares of common stock of the Company in the amount of 0.05 Philippine pesos per share of common stock of the Company, which amount
will either be paid by the Company to OMI in accordance with the Subscription Agreement or paid to holders of the Company’s shares
of common stock who elect not to participate in the Subscription (but have not elected to have their shares redeemed by the Company).
The Transactions are subject to the satisfaction
or waiver of certain customary closing conditions, including, among others, (a) the absence of any order by a governmental authority
of competent jurisdiction preventing the consummation of the Transactions, (b) the approval of the Merger, the Subscription and related
matters by the stockholders of the Company, (c) the effectiveness of the registration statement filed by OMI with the U.S. Securities
and Exchange Commission (the “SEC”) in connection with the Transactions, (d) the receipt of approval for listing of OMI’s
American depository shares on NASDAQ, (e) the completion of the Reorganization, (f) the amendment of OMI’s organizational documents
in accordance with the Merger and Share Subscription Agreement, and (g) the dividend to fund the Subscription shall have been declared,
or alternative financing for the Subscription arranged.
The Merger and Share Acquisition Agreement may
be terminated at any time prior to the Closing (a) by mutual written consent of the parties, (b) by either the Company or the UEC Parties
in certain other circumstances set forth in the Merger and Share Subscription Agreement, including, a breach by the other party or parties
of their representations and warranties or covenants that would prevent the satisfaction of certain closing conditions, and (c) by either
the Company or the UEC Parties (i) if any governmental authority shall have issued an order preventing consummation of the Transactions,
(ii) in the event the Closing does not occur by July 1, 2022, and (iii) stockholders of the Company do not approve the Transactions as
outlined in the Merger and Share Subscription Agreement.