The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS, LIQUIDITY
AND GOING CONCERN
Better World Acquisition Corp. (the “Company”)
was incorporated in Delaware on August 5, 2020. The Company is a blank check company formed for the purpose of entering into a merger,
share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or
more businesses or entities (the “Business Combination”).
Although the Company is not limited to a particular
industry or sector for purposes of consummating a Business Combination, the Company is focused on target businesses in the healthy living
industries that benefit from strong Environmental, Social and Governance (“ESG”) profiles. The Company is an early stage and
emerging growth company and, as such, the Company is subject to all the risks associated with early stage and emerging growth companies.
As of June 30, 2022, the Company had not commenced
any operations. All activity for the period from August 5, 2020 (inception) through June 30, 2022 relates to the Company’s formation,
the initial public offering (“Initial Public Offering”), which is described below, and identifying a target company for a
Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the
earliest. The Company generates non-operating income in the form of interest income from the marketable securities held in the Trust Account
(as defined below).
The registration statement for the Company’s
Initial Public Offering was declared effective on November 12, 2020. On November 17, 2020, the Company consummated the Initial Public
Offering of 11,000,000 units (the “Units” and, with respect to the shares of common stock included in the Units sold, the
“Public Shares”), at $10.00 per Unit, generating gross proceeds of $110,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 4,800,000 warrants (the “Private Warrants”) at a price of $1.00 per Private
Warrant in a private placement to BWA Holdings LLC (the “Sponsor”) and EarlyBirdCapital, Inc. (“EarlyBirdCapital”),
generating gross proceeds of $4,800,000, which is described in Note 4.
Following the closing of the Initial Public Offering
on November 17, 2020, an amount of $111,100,000 ($10.10 per Unit) from the net proceeds of the sale of the Units in the Initial Public
Offering and the sale of the Private Warrants was placed in a trust account (the “Trust Account”) located in the United States
and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as
amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds
itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined
by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust
Account, as described below.
On November 17, 2020, the underwriters notified
the Company of their intention to partially exercise their over-allotment option on November 19, 2020. As such, on November 19, 2020,
the Company consummated the sale of an additional 1,618,600 Units, at $10.00 per Unit, generating gross proceeds of $16,186,000, and the
sale of an additional 485,580 Private Warrants, at $1.00 per Private Warrant, generating gross proceeds of $485,580. A total of $16,347,860
of the net proceeds was deposited into the Trust Account on November 20, 2020, bringing the aggregate proceeds held in the Trust Account
to $127,447,860. On November 9, 2021, in connection with the first extension of the date by which the Company has to consummate a Business
Combination, a total of $1,261,860 was deposited into the Trust Account. On February 17, 2022, a total of $1,261,860 was deposited in
the Trust Account in connection with the second extension of the date by which the Company has to consummate a Business Combination to
May 17, 2022. On May 18, 2022, a total of $500,000 was deposited into the Trust Account in connection with a further extension of the
date by which the Company has to consummate a Business Combination to August 17, 2022.
Transaction costs amounted to $2,880,354 consisting
of $2,523,720 of underwriting fees and $356,634 of other offering costs.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Warrants, although
substantially all of the net proceeds are intended to be applied generally toward completing a Business Combination. The Company must
complete a Business Combination having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding
taxes payable on income earned on the Trust Account) at the time of the agreement to enter into an initial Business Combination. 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 complete a Business Combination
successfully.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
The Company will provide its holders of the outstanding
Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the
completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or
(ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct
a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public
Shares for a pro rata portion of the amount then in the Trust Account ($10.37 per Public Share as of June 30, 2022 and $10.20 per Public
Share as of December 31, 2021, 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). There will be no redemption rights upon the completion of a Business Combination with respect
to the Company’s warrants.
The Company will proceed with a Business Combination
if the Company has net tangible assets of at least $5,000,001 immediately prior to or upon such consummation of a Business Combination
and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder
vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company
will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”),
conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file
tender offer documents with the SEC containing substantially the same information as would be included in a proxy statement prior to completing
a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder
approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the
proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination,
the Sponsor has agreed to vote its Founder Shares (as defined in Note 5), Representative Shares (as defined in Note 8) and any Public
Shares purchased during or after the Initial Public Offering (a) in favor of approving a Business Combination and (b) not to redeem any
shares in connection with a stockholder vote to approve a Business Combination or sell any shares to the Company in a tender offer in
connection with a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares, irrespective of
whether they vote for or against the proposed Business Combination.
The Sponsor has agreed (a) to waive its redemption
rights with respect to the Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and
(b) not to propose an amendment to the Amended and Restated Certificate of Incorporation that would affect a public stockholders’
ability to convert or sell their shares to the Company in connection with a Business Combination or affect the substance or timing of
the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the
Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
On November 9, 2021, the Company’s board
of directors approved the first extension of the date by which the Company has to consummate a Business Combination from November 17,
2021 to February 17, 2022. In connection with the extension, the Sponsor deposited into the Trust Account $0.10 for each of the 12,618,600
shares issued in the Initial Public Offering, for a total of $1,261,860. The Company issued the Sponsor a non-interest bearing unsecured
promissory note in the principal amount of $1,261,860 which is payable by the Company upon the earlier of the consummation of the Business
Combination or the liquidation of the Company. The Note may be repaid in cash or convertible into Private Warrants at a price of $1.00
per Private Warrant. On February 16, 2022, the Company’s board of directors approved the second extension of the date by which the
Company has to consummate a Business Combination from February 17, 2022 to May 17, 2022. In connection with the second extension, the
Sponsor deposited into the Trust Account an additional $1,261,860 ($0.10 per Public Share) on February 17, 2022, and the Company amended
and restated the promissory note in its entirety solely to increase the principal amount thereunder from $1,261,860 to $2,523,720. On
May 12, 2022, the Company held a special meeting of stockholders in which a proposal to amend the Company’s amended and restated
certificate of incorporation to extend the date by which the Company must consummate a Business Combination from May 17, 2022 to August
17, 2022 (the “Combination Period”) was approved by the stockholders. In connection with this extension, the Company deposited
$500,000 into the Trust Account on May 18, 2022. The Company amended and restated the promissory note to increase the principal amount
thereunder from $2,523,720 to $3,223,720, which included a drawdown of $500,000 for the extension and a drawdown of $200,000 for working
capital needs.
If the Company is unable to complete a Business
Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem 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 taxes, divided by the number of then outstanding Public Shares, which redemption will completely
extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any),
subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s
remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
The Sponsor has agreed to waive its liquidation
rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However,
if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions
from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. In the event of such distribution,
it is possible that the per share value of the assets remaining available for distribution will be less than the amount of funds initially
deposited into the Trust Account (initially $10.10 per share, subsequently increased to $10.37 per share as of June 30, 2022 following
extensions).
In order to protect the amounts held in the Trust
Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products
sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce
the amount of funds in the Trust Account to below $10.10 per Public Share, except as to any claims by a third party who executed a valid
and enforceable agreement with the Company waiving any right, title, interest or claim of any kind they may have in or to any monies held
in the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of Initial Public Offering against
certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover,
in the event that an executed waiver is deemed to be unenforceable against a third party, the insiders will not be responsible to the
extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the insiders will have to indemnify
the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent
registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements
with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic and the military conflict in the Ukraine and has concluded that while it is reasonably possible that the virus and
the military conflict could have a negative effect on the Company’s financial position, results of its operations and/or search
for a target company, the specific impacts are not readily determinable as of the date of these financial statements. The financial statements
do not include any adjustments that might result from the outcome of these uncertainties.
Liquidity and Going Concern
As of June 30, 2022, the Company had $55,654 in
its operating bank accounts and $72,996,077 in securities held in the Trust Account to be used for a Business Combination or to repurchase
or redeem its common stock in connection therewith. As of June 30, 2022, $69,670 of the amount on deposit in the Trust Account represented
accrued interest income, which can be withdrawn to pay the Company’s tax obligations.
Until the consummation of a Business Combination,
the Company will use the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing
due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring,
negotiating and consummating the Business Combination.
The Company expects it will need to raise additional
capital through loans or additional investments from its Sponsor, stockholders, officers, directors, or third parties. The Company’s
officers, directors and the Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever
amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may
not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional
measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit
of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available
to it on commercially acceptable terms, if at all.
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,” management has determined
that the liquidity condition and the mandatory liquidation and subsequent dissolution, should the Company be unable to complete a business
combination by the liquidation date of August 17, 2022, raises substantial doubt about the Company’s ability to continue as a going
concern. On July 25, 2022, the Company filed a proxy statement for a special meeting of stockholders to be held on August 15, 2022 to
extend the date by which the Company must consummate a Business Combination from August 17, 2022 to February 17, 2023. No adjustments
have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after August 17, 2022.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain
information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or
omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information
and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management,
the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are
necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the period ended December 31, 2021, as
filed with the SEC on March 31, 2022. The interim results for the three and six months ended June 30, 2022 are not necessarily indicative
of the results to be expected for the year ending December 31, 2022 or for any future periods.
Reclassification of Prior Year Presentation
Certain prior year amounts have been reclassified
to conform to the current period presentation. These reclassifications had no effect on the reported results of operations. An adjustment
has been made to the balance sheet for December 31, 2021 to reclassify the deferred legal fees balance from accrued expenses to a separate
deferred legal fees line.
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of 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 independent registered public accounting
firm 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.
Use of Estimates
The preparation of the condensed financial statements
in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements.
Making estimates requires management to exercise
significant judgment. 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 financial statements, which management considered in formulating its estimate, could change in the near
term due to one or more future confirming events. Two of the more significant accounting estimates included in these financial statements
is the determination of the fair value of the warrant liabilities as well as the fair value of the convertible promissory note. Such estimates
may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from
those estimates.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
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 June 30, 2022 and December 31, 2021.
Cash and Marketable Securities Held in Trust
Account
At June 30, 2022 and December 31, 2021, respectively,
substantially all of the assets held in the Trust Account were held in U.S. Treasury securities. All of the Company’s investments
held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheets at fair value at
the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in the Trust Account are
included in interest earned on marketable securities held in the Trust Account in the accompanying condensed statements of operations.
The estimated fair values of investments held in the Trust Account are determined using available market information. As of June 30, 2022,
the Company has withdrawn $178,565 of interest income from the Trust Account to pay certain tax obligations.
Common Stock Subject to Possible Redemption
The Company accounts for its 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 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 is classified as stockholders’ equity. The Company’s common stock features
certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future
events. Accordingly, as of June 30, 2022 and December 31, 2021, respectively, common stock subject to possible redemption is presented
at redemption value as temporary equity, outside of the stockholders’ deficit section of the Company’s condensed balance sheets.
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting
period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital
and accumulated deficit.
At June 30, 2022 and December 31, 2021, the common
stock reflected in the condensed balance sheets are reconciled in the following table:
Gross proceeds | |
$ | 126,186,000 | |
Less: | |
| | |
Common stock issuance costs | |
| (2,868,790 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 5,392,510 | |
| |
| | |
Common stock subject to possible redemption – December 31, 2021 | |
$ | 128,709,720 | |
Less: | |
| | |
Redemption of shares | |
| (57,545,173 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 1,761,860 | |
| |
| | |
Common stock subject to possible redemption – June 30, 2022 | |
$ | 72,926,407 | |
Warrant Liabilities
The Company accounts for the Private Warrants
in accordance with the guidance contained in ASC 815-40-15-7D and 7F under which the Private Warrants do not meet the criteria for equity
treatment and must be recorded as liabilities. Accordingly, the Company classifies the Private Warrants as liabilities at their fair value
and adjusts the Private Warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet
date until exercised, and any change in fair value is recognized in our statements of operations. The Private Warrants for periods where
no observable traded price was available are valued using a binomial lattice simulation model.
Convertible Promissory Note – Related
Party
The Company accounts for its convertible promissory
note under ASC 815, Derivatives and Hedging (“ASC 815”). Under 815-15-25, the election can be at the inception of a financial
instrument to account for the instrument under the fair value option under ASC 825. The Company has made such election for its convertible
promissory note. Using fair value option, the convertible promissory note is required to be recorded at its initial fair value on the
date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the note are recognized as non-cash change
in the fair value of the convertible promissory note in the statements of operations. The fair value of the option to convert the convertible
promissory note into Private Warrants was valued by utilizing a binomial lattice model incorporating the Cox-Ross-Rubenstein methodology.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
Income Taxes
The Company accounts for income taxes under ASC
740, “Income Taxes.” ASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities for both the expected
impact of differences between the unaudited condensed financial statements 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. As of June 30, 2022 and
December 31, 2021, the Company’s deferred tax asset had a full valuation allowance recorded against it.
The Company’s effective tax rate was 0.47% and 0.00% for the
three months ended June 30, 2022 and 2021, respectively, and 0.17% and 0.00% for the six months ended June 30, 2022 and 2021, respectively.
The effective tax rate differs from the statutory tax rate of 21% for the three months and six months ended June 30, 2022 and 2021, due
to changes in fair value in warrant liability, changes in the fair value of the convertible promissory note and the valuation allowance
on the deferred tax assets.
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 June 30, 2022 and December 31, 2021. 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 is subject to income taxation by major taxing authorities since inception.
These 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.
Net Income (Loss) Per Common Share
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income (loss) per common share is computed by dividing net income
(loss) by the weighted average number of common shares outstanding for the period. Accretion associated with the redeemable shares of
common stock is excluded from income (loss) per common share as the redemption value approximates fair value.
The calculation of diluted income (loss) per share
does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement
since the exercise of the warrants is contingent upon the occurrence of future events. The warrants are exercisable to purchase 17,904,180
shares of common stock in the aggregate. As of June 30, 2022 and 2021, the Company did not have any dilutive securities or other contracts
that could, potentially, be exercised or converted into common stock and then participate in the earnings of the Company. As a result,
diluted net income (loss) per common share is the same as basic net income (loss) per common share for the periods presented.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
Reconciliation of Net Income (Loss) per
Common Share
The Company’s net income (loss) is adjusted
for the portion of income (loss) that is attributable to common stock subject to possible redemption, as these shares only participate
in the earnings of the Trust Account and not the income (loss) or losses of the Company. Accordingly, basic and diluted net income (loss)
per common share is calculated as follows:
| |
Three Months Ended June 30, 2022 | | |
Three Months Ended June 30, 2021 | | |
Six Months Ended June 30, 2022 | | |
Six Months Ended June 30, 2021 | |
| |
Redeemable Common Stock | | |
Non-Redeemable Common Stock | | |
Redeemable Common Stock | | |
Non-Redeemable Common Stock | | |
Redeemable Common Stock | | |
Non-Redeemable Common Stock | | |
Redeemable Common Stock | | |
Non-Redeemable Common Stock | |
Basic and diluted net income (loss) per common share | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Allocation of net income (loss), as adjusted | |
$ | 673,041 | | |
$ | 242,662 | | |
$ | (79,225 | ) | |
| (21,893 | ) | |
$ | 1,951,934 | | |
$ | 611,164 | | |
$ | 573,143 | | |
$ | 158,385 | |
Denominator: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 9,671,658 | | |
| 3,487,070 | | |
| 12,618,600 | | |
| 3,487,070 | | |
| 11,136,989 | | |
| 3,487,070 | | |
| 12,618,600 | | |
| 3,487,070 | |
Basic and diluted net income (loss) per common share | |
$ | 0.07 | | |
$ | 0.07 | | |
$ | (0.01 | ) | |
| (0.01 | ) | |
$ | 0.18 | | |
$ | 0.18 | | |
$ | 0.05 | | |
$ | 0.05 | |
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times may exceed the Federal
Deposit Insurance Corporation maximum coverage of $250,000. The Company has not experienced losses on these accounts.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying
amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature, except for warrant liabilities
(see Note 9).
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. 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).
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.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
Recent Accounting Standards
In August 2020, the Financial Accounting Standards
Board (“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’s Own Equity (Subtopic 815-40): Accounting
for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting
for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share
calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within
those fiscal years, with early adoption permitted. The Company assessed the potential impact of ASU 2020-06 and determined it would not
have a material impact on the condensed financial statements as presented.
Management does not believe that any other recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed
financial statements.
NOTE 3. PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company
sold 11,000,000 Units at a price of $10.00 per Unit. Each Unit consists of one share of common stock and one redeemable warrant (“Public
Warrant”). In connection with the underwriters’ partial exercise of the over-allotment option on November 19, 2020, the Company
sold an additional 1,618,600 Units, at a purchase price of $10.00 per Unit. Each Public Warrant entitles the holder to purchase one share
of common stock at an exercise price of $11.50 per share (see Note 8).
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, the Sponsor and EarlyBirdCapital purchased an aggregate of 4,800,000 Private Warrants at a price of $1.00 per Private
Warrant for an aggregate purchase price of $4,800,000. The Sponsor purchased 3,975,000 Private Warrants and EarlyBirdCapital purchased
825,000 Private Warrants. In connection with the underwriters’ partial exercise of the over-allotment option on November 19, 2020,
the Sponsor and EarlyBirdCapital purchased an additional 485,580 Private Warrants, at a purchase price of $1.00 per Private Warrant, for
an aggregate purchase price of $485,580. Each Private Warrant entitles the holder to purchase one share of common stock at a price of
$11.50 per full share, subject to adjustment (see Note 8). The proceeds from the Private Warrants were added to the proceeds from the
Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period,
the proceeds from the sale of the Private Warrants will be used to fund the redemption of the Public Shares (subject to the requirements
of applicable law).
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On August 5, 2020, the Sponsor paid $25,000 to
cover certain offering costs of the Company in consideration for 3,593,750 shares of common stock (the “Founder Shares”).
On November 9, 2020, the Sponsor returned to the Company for cancellation, at no cost, an aggregate of 718,750 Founder Shares, resulting
in an aggregate of 2,875,000 Founder Shares outstanding and held by the Sponsor. On November 12, 2020, the Company effected a stock dividend
of 0.1 shares for each share of common stock outstanding, resulting in an aggregate of 3,162,500 Founder Shares outstanding and held by
the Sponsor. The Founder Shares included, after giving retroactive effect to the share surrender and stock dividend, an aggregate of up
to 412,500 shares subject to forfeiture to the extent that the underwriters’ over-allotment was not exercised in full or in part,
so that the Sponsor would collectively own 20% of the Company’s issued and outstanding shares after the Initial Public Offering
(assuming the Sponsor did not purchase any Public Shares in the Initial Public Offering). In connection with the underwriters’ partial
exercise of the over-allotment option and the forfeiture of the remaining over-allotment option, 7,850 Founder Shares were forfeited and
404,650 Founder Shares are no longer subject to forfeiture resulting in an aggregate of 3,154,650 Founder Shares outstanding at June 30,
2022.
The Sponsor has agreed, subject to certain limited
exceptions, not to transfer, assign or sell any of the Founder Shares until (1) with respect to 50% of the Founder Shares, the earlier
of one year after the completion of a Business Combination and the date on which the closing price of the common stock equals or exceeds
$12.50 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 after a Business Combination and (2) with respect to the remaining 50% of the Founder Shares,
one year after the completion of a Business Combination, or earlier, in either case, if, subsequent to a Business Combination, the Company
completes a liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s stockholders
having the right to exchange their shares of common stock for cash, securities or other property.
Due from Sponsor
At the closing of the Initial Public Offering
on November 17, 2020, an aggregate amount of $25,038 was due to the Company. Such amount was paid by the Company to the Sponsor and was
included in the prepaid expenses and other current assets on the balance sheet at December 31, 2020. No balance remains outstanding as
of June 30, 2022.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
Administrative Support Agreement
The Company has agreed, commencing on November
12, 2020 through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay an affiliate of
the Company’s management a total of $10,000 per month for office space, utilities and secretarial support. For the three and six
months ended June 30, 2022, the Company incurred $30,000 and $60,000, respectively, in fees for these services, of which such amounts
are included in accrued expenses in the accompanying condensed balance sheets. For the three and six months ended June 30, 2021, the Company
incurred and paid $30,000 and $60,000, respectively, in fees for these services.
Promissory Note — Related Party
On August 5, 2020, the Company issued an unsecured
promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company could borrow up to an aggregate principal
amount of $300,000. The Promissory Note was non-interest bearing and payable on the earlier of (i) March 31, 2021, (ii) the consummation
of the Initial Public Offering or (iii) the date on which the Company determined not to proceed with the Initial Public Offering. The
outstanding balance under the Promissory Note was repaid subsequent to the Initial Public Offering. As of June 30, 2022 and December 31,
2021, respectively, no balance is outstanding under the Promissory Note. Borrowings under the Promissory Note are no longer available.
Related Party Loans
In addition, in order to finance transaction costs
in connection with a Business Combination, the Sponsor or certain of the Company’s officers and directors or their affiliates may,
but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Each loan would be evidenced
by promissory note. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion,
up to $1,500,000 of notes may be converted upon completion of a Business Combination into warrants at a price of $1.00 per warrant. Such
warrants would be identical to the Private Warrants. In the event that a Business Combination does not close, the Company may use a portion
of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used
to repay the Working Capital Loans.
On April 14, 2022 the Sponsor advanced to the
Company $100,000 to be used for working capital purposes.
Related Party Extension Loans
As discussed in Note 1, the Company previously
extended the period of time to consummate a Business Combination two times, each by an additional three months (to May 17, 2022 to complete
a Business Combination). In order to extend the time available for the Company to consummate a Business Combination, the Sponsor or its
affiliates or designees deposited into the Trust Account $1,261,860 ($0.10 per Public Share), on or prior to the date of the applicable
deadline, for each three month extension. Payments were made in the form of a non-interest bearing, unsecured promissory note to be paid
upon consummation of a Business Combination, or, at the relevant insider’s discretion, converted upon consummation of a Business
Combination into additional Private Warrants at a price of $1.00 per Private Warrant. The Sponsor and its affiliates or designees are
not obligated to fund the Trust Account to extend the time for the Company to complete a Business Combination. On May 12, 2022, the Company
held a special meeting of stockholders at which a proposal to amend the Company’s amended and restated certificate of incorporation
to extend the date by which the Company must consummate a Business Combination from May 17, 2022 to August 17, 2022 was approved by stockholders. On July 25, 2022, the Company filed a proxy statement for a special meeting on August 15, 2022 to extend the date by which the Company
must consummate a Business Combination from August 17, 2022 to February 17, 2023.
Convertible Promissory Note – Related
Party
On November 9, 2021, the Company issued a promissory
note in the principal amount of $1,261,860 to the Sponsor in connection with the Extension (“Convertible Promissory Note”)
(as defined below). On February 17, 2022, April 14, 2022 and May 18, 2022, the Company amended and restated the Convertible Promissory
Note to increase the principal amount thereunder from $1,261,860 to $3,223,720. The Note bears no interest and is due and payable upon
the earlier to occur of (i) the date on which the Company’s Business Combination is consummated and (ii) the liquidation of the
Company on or before August 17, 2022 or such later liquidation date as may be approved by the Company’s stockholders. On May 12,
2022, the Company held a special meeting of stockholders in which a proposal to amend the Company’s amended and restated certificate
of incorporation to extend the date by which the Company must consummate a Business Combination from May 17, 2022 to August 17, 2022 was
approved by stockholders. At the election of the Sponsor, up to $1,500,000 of the unpaid principal amount of the Note may be converted
into warrants of the Company, each warrant exercisable for one share of common stock of the Company upon the consummation of its Business
Combination, equal to: (x) the portion of the principal amount of the Note being converted, divided by (y) $1.00, rounded up to the nearest
whole number of warrants. As of June 30, 2022, there was a $3,223,720 balance outstanding under the Convertible Promissory Note. The Convertible
Promissory Note was valued using the fair value method. The fair value of the note as of June 30, 2022, was $1,914,000, which resulted
in a change in fair value of the convertible promissory note of $669,000 and $1,006,260 which was recorded in the statements of operations
for the three and six months ended June 30, 2022 (see Note 9).
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
Pursuant to a registration rights agreement entered
into on November 12, 2020, the holders of the Founder Shares and Representative Shares (as defined in Notes 5 and 8, respectively), as
well as the holders of the Private Warrants (and underlying securities) and any warrants issued in payment of Working Capital Loans made
to Company (and underlying securities) will be entitled to registration rights. The holders of a majority of these securities are entitled
to make up to two demands that the Company register such securities. The holders of the majority of the Founder Shares can elect to exercise
these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released
from escrow. The holders of a majority of the Representative Shares, Private Warrants and warrants issued in payment of working capital
loans made to the Company (or underlying securities) can elect to exercise these registration rights at any time after the Company consummates
a Business Combination. Notwithstanding anything to the contrary, EarlyBirdCapital may only make a demand on one occasion and only during
the five-year period beginning on the effective date of the registration statement of which this prospectus forms a part. In addition,
the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to consummation
of a Business Combination; provided, however, that EarlyBirdCapital may participate in a “piggy-back” registration only during
the seven-year period beginning on the effective date of the registration statement of which this prospectus forms a part. The registration
rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s
securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day
option from the date of the Initial Public Offering to purchase up to 1,650,000 additional Units to cover over-allotments, if any, at
the Initial Public Offering price less the underwriting discounts and commissions. On November 19, 2020, the underwriters partially
exercised their over-allotment option to purchase an additional 1,618,600 Units at $10.00 per Unit and forfeited the remaining over-allotment
option.
Business Combination Marketing Agreement
The Company has engaged EarlyBirdCapital as an
advisor in connection with a Business Combination to assist the Company in holding meetings with its stockholders to discuss the potential
Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing
the Company’s securities in connection with a Business Combination, assist the Company in obtaining stockholder approval for the
Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination. The
Company will pay EarlyBirdCapital a cash fee for such services upon the consummation of a Business Combination in an amount equal to 3.5%
of the gross proceeds of the Initial Public Offering, or $4,416,510, (exclusive of any applicable finders’ fees which might become
payable); provided that up to 30% of the fee may be allocated at the Company’s sole discretion to other FINRA members that assist
the Company in identifying and consummating a Business Combination.
Additionally, the Company will pay EarlyBirdCapital
a cash fee equal to 1.0% of the total consideration payable in a Business Combination if EarlyBirdCapital introduces the Company to the
target business with which the Company completes a Business Combination.
Legal Fee Agreements
The Company has engaged various law firms to provide
legal due diligence services and business combination services related to potential target companies. All fees and expenses related to
the various engagements will be deferred and are to be paid fully upon the closing of any Business Combination. The law firms will not
be entitled to any contingent fees or expense reimbursement if the Company does not consummate a Business Combination within its deadline.
Deferred fees of $1,320,171 and $1,009,868 related to these legal services have been accrued as of June 30, 2022 and December 31, 2021,
respectively.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
Trust Extension
On February 16, 2022, the Company issued a press
release announcing that its Sponsor has requested that the Company extend the date by which the Company has to consummate a Business Combination
from February 17, 2022 to May 17, 2022 (the “Extension”). The Extension is the second of two three-month extensions permitted
under the Company’s governing documents and provides the Company with additional time to complete its Business Combination. On February
18, 2022, the Company issued a press release announcing that the Sponsor had deposited an additional $1,261,860 (representing $0.10 per
public share) into the Trust Account for its public stockholders. On May 12, 2022, the Company held a special meeting of stockholders
in which a proposal to amend the Company’s amended and restated certificate of incorporation to extend the date by which the Company
must consummate a Business Combination from May 17, 2022 to August 17, 2022 was approved by the stockholders. In connection with this
extension, the Company deposited $500,000 into the Trust Account on May 18, 2022. In connection with the extension amendment, stockholders
holding approximately 5,586,910 shares of the Company’s redeemable common stock exercised their right to redeem such shares for
a pro rata portion of the funds in the Trust Account at a redemption price of approximately $10.30 per share. On July 25, 2022,
the Company filed a proxy statement for a special meeting on August 15, 2022 to extend the date by which the Company must consummate a
Business Combination from August 17, 2022 to February 17, 2023.
On November 16, 2021, the Company had previously issued a promissory
note (the “Note”) in the principal amount of $1,261,860 to the Company’s Sponsor. On February 17, 2022, April 14, 2022,
and May 18, 2022, the Company amended and restated the Note in its entirety to increase the principal amount thereunder from $1,262,860
to $3,233,720.
NOTE 7. STOCKHOLDERS’ DEFICIT
Preferred Stock — The Company
is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other
rights and preferences as may be determined from time to time by the Company’s board of directors. At June 30, 2022 and December
31, 2021, respectively, there were no shares of preferred stock issued or outstanding.
Common Stock — The Company
is authorized to issue 50,000,000 shares of common stock with a par value of $0.0001 per share. At June 30, 2022 and December 31, 2021,
there were 3,487,070 shares of common stock issued and outstanding, excluding 12,618,600 shares of common stock subject to possible redemption
which are presented as temporary equity. In connection with the extension on May 12, 2022, stockholders holding 5,586,910 shares of the
Company’s redeemable common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account
at a redemption price of approximately $10.30 per share.
NOTE 8. WARRANTS
The Public Warrants will become exercisable on
the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering.
No warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the shares of
common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of common stock. Notwithstanding
the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the Public Warrants is not effective
within a specified period following the consummation of a Business Combination, warrant holders may, until such time as there is an effective
registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise
warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption
is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless
basis. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
The Company may redeem the Public Warrants (excluding
the Private Warrants and any warrants underlying units issued upon conversion of the Working Capital Loans):
| ● | 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 to each warrant holder; and |
| | |
| ● | if, and only if, the last reported sale price of the 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 ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders. |
If the Company calls the Public Warrants for redemption,
management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,”
as described in the warrant agreement. The exercise price and number of shares of common stock issuable upon exercise of the warrants
may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation.
However, except as described below, the warrants will not be adjusted for issuance of common stock at a price below its exercise price.
Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business
Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not
receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held
outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
In addition, if (x) the Company issues additional
common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue
price or effective issue price of less than $9.20 per 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 Sponsor or its affiliates, without taking
into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance), (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
a Business Combination on the date of the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average
trading price of its common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates
its 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 greater of (i) Market Value or (ii) the price at which the Company issue
the additional shares of common stock or equity-linked securities.
The Private Warrants are identical to the Public
Warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants and the shares of common stock issuable
upon the exercise of the Private Warrants will not be transferable, assignable or saleable until after the completion of a Business Combination,
subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable for cash or on a cashless basis, at the
holder’s option, and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the
Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable
by the Company and exercisable by such holders on the same basis as the Public Warrants.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
Representative Shares
On August 5, 2020, the Company issued to EarlyBirdCapital
377,750 shares of common stock (the “Representative Shares”). On November 9, 2020, EarlyBirdCapital returned to the Company
for cancellation, at no cost, an aggregate of 75,550 Representative Shares, resulting in an aggregate of 302,200 Representative Shares
outstanding and held by EarlyBirdCapital. On November 12, 2020, the Company effected a stock dividend of 0.1 shares for each share of
common stock outstanding, resulting in EarlyBirdCapital holding an aggregate of 332,420 Representative Shares. The Company accounted for
the Representative Shares as an offering cost of the Initial Public Offering, with a corresponding credit to stockholders’ equity.
The Company estimated the fair value of Representative Shares to be $2,666 based upon the price of the Founder Shares issued to the Sponsor.
The holders of the Representative Shares have agreed not to transfer, assign or sell any such shares until the completion of a Business
Combination. In addition, the holders have agreed (i) to waive their redemption rights with respect to such shares in connection with
the completion of a Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect
to such shares if the Company fails to complete a Business Combination within the Combination Period.
The Representative Shares have been deemed compensation
by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the effective date of the registration
statement related to the Initial Public Offering pursuant to Rule 5110(g)(1) of FINRA’s NASD Conduct Rules. Pursuant to FINRA Rule
5110(g)(1), these securities will not be sold during the Initial Public Offering, or sold, transferred, assigned, pledged, or hypothecated,
or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the
securities by any person for a period of 180 days immediately following the effective date of the Initial Public Offering, except to any
underwriter and selected dealer participating in the Initial Public Offering and their bona fide officers or partners, provided that all
securities so transferred remain subject to the lockup restriction above for the remainder of the time period.
NOTE 9. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC 820 for
its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets
and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
|
Level 1: |
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
|
|
|
|
Level 2: |
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
|
|
|
|
Level 3: |
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
The following table presents information about
the Company’s assets that are measured at fair value on a recurring basis at June 30, 2022 and December 31, 2021, respectively,
and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description | |
Level | | |
June 30, 2022 | | |
December 31, 2021 | |
Assets: | |
| | |
| | |
| |
Marketable securities held in Trust Account | |
| 1 | | |
$ | 72,996,077 | | |
$ | 128,790,008 | |
| |
| | | |
| | | |
| | |
Liabilities: | |
| | | |
| | | |
| | |
Warrant liabilities – Private Warrants | |
| 3 | | |
$ | 316,828 | | |
$ | 2,641,204 | |
Convertible promissory note – related party | |
| 3 | | |
$ | 1,914,000 | | |
$ | 958,400 | |
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
Warrant Liabilities
The Private Warrants were accounted for as liabilities
in accordance with ASC 815-40 and are presented within warrant liabilities on the condensed balance sheets. The warrant liabilities are
measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant
liabilities in the condensed statements of operations.
The Private Warrants were valued using a binomial
lattice model. The Company allocated the proceeds received from (i) the sale of Units (which is inclusive of one share of common stock
and one Public Warrant) and (ii) the sale of Private Warrants, first to the warrants based on their fair values as determined at initial
measurement, with the remaining proceeds allocated to common stock subject to possible redemption. The Private Warrants were classified
as Level 3 at the initial measurement date due to the use of unobservable inputs.
The following are the inputs used by the Company
in establishing the fair value of its Private Warrants at June 30, 2022 and December 31, 2021.
Input | |
June 30, 2022 | | |
December 31, 2021 | |
Risk-free interest rate | |
| 2.97 | % | |
| 1.15 | % |
Trading days per year | |
| 252 | | |
| 252 | |
Expected volatility | |
| 1.4 | % | |
| 9.6 | % |
Exercise price | |
$ | 11.50 | | |
$ | 11.50 | |
Stock Price | |
$ | 10.33 | | |
$ | 10.17 | |
On December 31, 2021 and June 30, 2022, the Private Warrants were determined
to be $0.50 per warrant and $0.06 per warrant, respectively, for an aggregate value of $2.64 million and $0.03 million, respectively.
The following table presents the changes in the
fair value of the warrant liabilities:
| |
Private Placement | |
Fair value as of December 31, 2021 | |
$ | 2,641,204 | |
Change in valuation inputs or other assumptions | |
| (1,744,591 | ) |
Fair value as of March 31, 2022 | |
$ | 896,613 | |
Change in valuation inputs or other assumptions | |
| (579,785 | ) |
Fair value as of June 30, 2022 | |
$ | 316,828 | |
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
Convertible Promissory Note – Related
Party
The fair value of the option to convert the convertible
promissory note into Private Warrants was valued by utilizing a binomial lattice model incorporating the Cox-Ross-Rubenstein methodology.
The estimated fair value of the convertible promissory
note was based on the following significant inputs:
| |
June 30, 2022 | |
Risk-free interest rate | |
| 2.99 | % |
Time to Expiration (in years) | |
| 5.21 | |
Expected volatility | |
| 1.4 | % |
Exercise price | |
$ | 11.50 | |
Dividend yield | |
| 0.00 | % |
Stock Price | |
$ | 10.33 | |
Probability of transaction | |
| 60.00 | % |
The following table presents the changes in the
fair value of the Level 3 convertible promissory note:
Fair value as of January 1, 2021 | |
$ | 958,400 | |
Proceeds received through Convertible Promissory Note | |
| 1,261,860 | |
Change in fair value | |
| (337,260 | ) |
Fair value as of March 31, 2022 | |
$ | 1,883,000 | |
Proceeds received through Convertible Promissory Note | |
| 700,000 | |
Change in fair value | |
| (669,000 | ) |
Fair value as of June 30, 2022 | |
$ | 1,914,000 | |
There were no transfers in or out of Level 3
from other levels in the fair value hierarchy during the three and six months ended June 30, 2022 for the convertible promissory note.
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, 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.
Interest Withdrawal from the Trust Account
On July 1, 2022, the Company withdrew $66,751
of accrued interest from the Trust Account to pay certain tax obligations.