Item 1. Financial Statements.
GLASS HOUSES ACQUISITION CORP.
UNAUDITED CONDENSED BALANCE SHEET
|
|
June 30,
2021
|
|
|
|
|
|
Assets
|
|
|
|
Current assets:
|
|
|
|
Cash
|
|
$
|
1,497,919
|
|
Prepaid expenses
|
|
|
471,541
|
|
Total current assets
|
|
|
1,969,460
|
|
Prepaid expenses, non-current
|
|
|
325,663
|
|
Marketable securities held in Trust Account
|
|
|
220,480,265
|
|
Total Assets
|
|
$
|
222,775,388
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accrued expenses
|
|
$
|
188,839
|
|
Total current liabilities
|
|
|
188,839
|
|
Warrant liability
|
|
|
20,078,903
|
|
Deferred underwriting discount
|
|
|
7,716,553
|
|
Total liabilities
|
|
|
27,984,295
|
|
|
|
|
|
|
Commitments and Contingencies (Note 6)
|
|
|
|
|
Class A common stock subject to possible redemption, 18,979,109 shares at redemption value of $10.00 per share
|
|
|
189,791,090
|
|
|
|
|
|
|
Stockholders’ Equity:
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
-
|
|
Class A common stock, $0.0001 par value; 400,000,000 shares authorized; 3,068,184 shares issued and outstanding (excluding 18,979,109 shares subject to possible redemption)
|
|
|
307
|
|
Class B common stock, $0.0001 par value; 40,000,000 shares authorized; 5,511,823 shares issued and outstanding
|
|
|
551
|
|
Additional paid-in capital
|
|
|
4,704,530
|
|
Accumulated deficit
|
|
|
294,615
|
|
Total stockholders’ equity
|
|
|
5,000,003
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
222,775,388
|
|
The accompanying notes are an integral part of
these unaudited condensed financial statements.
GLASS HOUSES ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
|
|
For the three
months
ended
June 30,
2021
|
|
|
For the
Period
from
January 19,
2021
(Inception) through
June 30,
2021
|
|
Formation and operating costs
|
|
$
|
466,428
|
|
|
$
|
550,806
|
|
Loss from operations
|
|
|
(466,428
|
)
|
|
|
(550,806
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
Warrant issuance costs
|
|
|
-
|
|
|
|
(812,974
|
)
|
Other expense relating to fair value exceeding amount paid for warrants
|
|
|
-
|
|
|
|
(2,363,027
|
)
|
Interest earned on marketable securities held in Trust Account
|
|
|
7,335
|
|
|
|
7,335
|
|
Change in fair value of warrant liability
|
|
|
4,186,087
|
|
|
|
4,014,087
|
|
Total other income
|
|
|
4,193,422
|
|
|
|
845,421
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
3,726,994
|
|
|
$
|
294,615
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding of Class A, common stock subject to redemption
|
|
$
|
18,606,409
|
|
|
$
|
11,727,023
|
|
Basic and diluted net income per share of Class A, common stock subject to redemption
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding of Class A and B, non-redeemable common stock
|
|
$
|
8,952,707
|
|
|
$
|
7,695,590
|
|
Basic and diluted net income per share of Class A and B, non-redeemable common stock
|
|
$
|
0.42
|
|
|
$
|
0.04
|
|
The accompanying notes are an integral part of
these unaudited condensed financial statements.
GLASS HOUSES ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY
|
|
Class A Common
Stock
|
|
|
Class B
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance as of January 19, 2021
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Class B common stock issued to Sponsor
|
|
|
-
|
|
|
|
-
|
|
|
|
5,750,000
|
|
|
|
575
|
|
|
|
24,425
|
|
|
|
-
|
|
|
|
25,000
|
|
Sale of 20,000,000 Units on March 25, 2021 through IPO
|
|
|
20,000,000
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
199,998,000
|
|
|
|
-
|
|
|
|
200,000,000
|
|
Sale of 2,047,293 Units on March 30, 2021 through over-allotment
|
|
|
2,047,293
|
|
|
|
205
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,472,725
|
|
|
|
-
|
|
|
|
20,472,930
|
|
Sale of 7,609,459 Private Placement Warrants to Sponsor in private placement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,609,459
|
|
|
|
-
|
|
|
|
7,609,459
|
|
Underwriting fee
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,409,459
|
)
|
|
|
-
|
|
|
|
(4,409,459
|
)
|
Deferred underwriting fee
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(7,716,553
|
)
|
|
|
-
|
|
|
|
(7,716,553
|
)
|
Offering costs charged to the stockholders’ equity
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(567,910
|
)
|
|
|
-
|
|
|
|
(567,910
|
)
|
Initial classification of warrant liability
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(21,729,963
|
)
|
|
|
-
|
|
|
|
(21,729,963
|
)
|
Reclassification of offering costs related to warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
812,974
|
|
|
|
-
|
|
|
|
812,974
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,432,379
|
)
|
|
|
(3,432,379
|
)
|
Change in Class A common stock subject to possible redemption
|
|
|
(18,606,409
|
)
|
|
|
(1,861
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(186,062,229
|
)
|
|
|
-
|
|
|
|
(186,064,090
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2021
|
|
|
3,440,884
|
|
|
$
|
344
|
|
|
|
5,750,000
|
|
|
$
|
575
|
|
|
$
|
8,431,469
|
|
|
$
|
(3,432,379
|
)
|
|
$
|
5,000,009
|
|
Forfeiture of Class B common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(238,177
|
)
|
|
|
(24
|
)
|
|
|
24
|
|
|
|
-
|
|
|
|
-
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,726,994
|
|
|
|
3,726,994
|
|
Change in Class A common stock subject to possible redemption
|
|
|
(372,700
|
)
|
|
|
(37
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,726,963
|
)
|
|
|
-
|
|
|
|
(3,727,000
|
)
|
Balance as of June 30, 2021
|
|
|
3,068,184
|
|
|
|
307
|
|
|
|
5,511,823
|
|
|
|
551
|
|
|
|
4,704,530
|
|
|
|
294,615
|
|
|
|
5,000,003
|
|
The accompanying notes are an integral part of
these unaudited condensed financial statements.
GLASS HOUSES ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
|
|
For the
Period
from
January 19,
2021
(Inception)
through
June 30,
2021
|
|
|
|
|
|
Cash flows from Operating Activities:
|
|
|
|
Net income
|
|
$
|
294,615
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
Interest earned on marketable securities held in Trust Account
|
|
|
(7,335
|
)
|
Change in fair value of warrants
|
|
|
(4,014,087
|
)
|
Warrant issuance costs
|
|
|
812,974
|
|
Other expense relating to fair value exceeding amount paid for warrants
|
|
|
2,363,027
|
|
Changes in current assets and current liabilities:
|
|
|
|
|
Prepaid expenses
|
|
|
(797,204
|
)
|
Accrued expenses
|
|
|
288,199
|
|
Net cash used in operating activities
|
|
|
(1,059,811
|
)
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
Cash held in Trust Account
|
|
|
(220,472,930
|
)
|
Net cash used in investing activities
|
|
|
(220,472,930
|
)
|
|
|
|
|
|
Cash flows from Financing Activities:
|
|
|
|
|
Proceeds from Initial Public Offering, net of underwriter’s fees
|
|
|
216,063,471
|
|
Proceeds from private placement
|
|
|
7,609,459
|
|
Proceeds from issuance of founder shares
|
|
|
25,000
|
|
Repayment to promissory note to related party
|
|
|
(99,360
|
)
|
Payments of offering costs
|
|
|
(567,910
|
)
|
Net cash provided by financing activities
|
|
|
223,030,660
|
|
|
|
|
|
|
Net change in cash
|
|
|
1,497,919
|
|
Cash, beginning of the period
|
|
|
-
|
|
Cash, end of the period
|
|
$
|
1,497,919
|
|
|
|
|
|
|
Supplemental disclosure of noncash investing and financing activities:
|
|
|
|
|
Deferred underwriting commissions charged to additional paid in capital
|
|
$
|
7,716,553
|
|
Initial value of Class A common stock subject to possible redemption
|
|
$
|
168,418,850
|
|
Change in value of Class A common stock subject to possible redemption
|
|
$
|
21,372,240
|
|
Initial classification of warrant liability
|
|
$
|
21,729,963
|
|
Deferred offering costs paid by Sponsor loan
|
|
$
|
99,360
|
|
Forfeiture of Class B common stock
|
|
$
|
24
|
|
The accompanying notes are an integral part of
these unaudited condensed financial statements.
GLASS HOUSES ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 — Organization and Business
Operations
Organization and General
Glass Houses Acquisition Corp. (the “Company”)
is a blank check company incorporated as a Delaware corporation on January 19, 2021. 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”). The Company has not selected any specific Business Combination target.
Although the Company is not limited to a particular
industry or geographic region for purposes of consummating a Business Combination, the Company intends to search for a target business
that provides critical resources and/or services to the technologies powering the 21st century industrial economy. The Company is an early
stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth
companies.
The Company has selected December 31 as its fiscal
year end.
As of June 30, 2021, the Company had not commenced
any operations. All activity for the period from January 19, 2021 (inception) through June 30, 2021 relates to the Company’s formation,
the initial public offering (“IPO”), which is described below, and, since the closing of the IPO, a search for a Business
Combination candidate. The Company will not generate any operating revenues until after the completion of its initial Business Combination,
at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from 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 Glass Houses Sponsor
LLC, a Delaware limited liability company (the “Sponsor”).
Financing
The registration statement for the Company’s
IPO was declared effective on March 22, 2021 (the “Effective Date”). On March 25, 2021, the Company consummated the IPO of
20,000,000 units (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 $200,000,000, which is discussed in Note 3.
Simultaneously with the closing of the IPO, the
Company consummated the sale of 7,200,000 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 $7,200,000.
Transaction costs amounted to $11,567,910 consisting
of $4,000,000 of underwriting discount, $7,000,000 of deferred underwriting discount, and $567,910 of other offering costs.
The Company granted the underwriter in the IPO
a 45-day option to purchase up to 3,000,000 additional Units to cover over-allotments, if any. On March 30, 2021, the underwriter partially
exercised the over-allotment option to purchase 2,047,293 Units (the “Over-allotment Units”), generating an aggregate of gross
proceeds of $20,472,930, and the Company incurred $409,459 in cash underwriting fees and $716,553 in deferred underwriting fees. Simultaneously
with the closing of the over-allotment option, the Company sold an additional 409,459 Private Placement Warrants to the Sponsor at a price
of $1.00 per share.
Trust Account
Following the closing of the IPO on March 25,
2021 and the closing of the underwriter’s partial exercise of over-allotment option on April 1, 2021, $220,472,930 ($10.00 per Unit)
from the net proceeds of the sale of the Units in the IPO and over-allotment and the sale of the Private Placement Warrants was placed
in a Trust Account, which 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 under Rule 2a-7
promulgated under the Investment Company Act which invest 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 franchise and income taxes, the
proceeds from the IPO and the sale of the Private Placement Warrants will not be released from the Trust Account until the earliest to
occur of: (a) the completion of the initial Business Combination; (b) the redemption of any public shares properly tendered in connection
with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (i) to modify the substance or
timing of the Company’s obligation to redeem 100% of the Company’s public shares if the Company does not complete the initial
Business Combination within 24 months from the closing of the IPO (the “Combination Period”), or (ii) with respect to any
other provisions relating to the rights of holders of the Class A common stock; and (c) the redemption of the Company’s public shares
if the Company is unable to complete the Business Combination within the Combination Period, subject to applicable law.
Initial Business Combination
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 net balance in the Trust Account
(excluding the amount of deferred underwriting discounts held and taxes payable on the income earned on the Trust Account) 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 of 1940, as amended (the “Investment Company Act”). There is no assurance that the Company will be able to successfully
effect a Business Combination.
The Company will provide public stockholders with
the opportunity to redeem all or a portion of their public shares of Class A common stock upon the completion of the initial 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 proposed 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).
The shares of common stock subject to redemption
are recorded at a redemption value and classified as temporary equity upon the completion of the IPO, in accordance with Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed
with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination
and, if the Company seeks stockholder approval, a majority of the issued and outstanding shares voted are voted in favor of the Business
Combination.
If the Company is unable to complete the initial
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 no more than ten business days thereafter subject to lawfully available funds therefor, 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 the franchise and income taxes
(less up to $100,000 of interest to pay dissolution expenses), 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 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.
The Sponsor, officers and directors have agreed
(i) to waive their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion
of the Company’s initial Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account
with respect to any founder shares held by them if the Company fails to complete the initial Business Combination within the Combination
Period, although they will be entitled to liquidating distributions from the Trust Account with respect to any public shares they hold
if the Company fails to complete the Business Combination within the Combination Period.
The Company’s Sponsor has agreed that it
will 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 by
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 (i) $10.00 per public share or (ii) such lesser amount per public share held in the Trust Account as of the
date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which
may be withdrawn to pay the franchise and income taxes. This liability will not apply with respect to any claims by a third party who
executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the indemnity of the underwriter
of the IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver
is deemed to be unenforceable against a third party, then the Sponsor will not be responsible to the extent of any liability for such
third-party claims. To the Company’s knowledge, the Sponsor’s only assets are securities of the Company. The Company has not
asked the Sponsor to reserve for such indemnification obligations. None of the Company’s officers will indemnify the Company for
claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Liquidity and Capital Resources
As of June 30, 2021,
the Company had approximately $1.5 million in its operating bank account, and working capital of approximately $1.8 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 5) for the Founder
Shares to cover certain offering costs and the loan under an unsecured promissory note from the Sponsor of $99,160 (see Note 5). The promissory
note from the Sponsor was paid in full on March 26, 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 an intended initial 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 5). To date, 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.
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.
Note 2 — 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 (“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 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 period presented. Operating
results for the three months ended June 30, 2021 and for the period from January 19, 2021 (inception) through June 30, 2021 are not necessarily
indicative of the results that may be expected through December 31, 2021.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company’s prospectus for its Initial Public Offering as filed with the SEC on
March 24, 2021.
Emerging Growth Company Status
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
the Company’s 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.
Use of Estimates
The preparation of the unaudited condensed financial
statements in conformity with US 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 balance sheet. Actual results could differ from
those estimates.
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.
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 held cash of $1,497,919 and did not
have any cash equivalents as of June 30, 2021.
Cash and Securities Held in Trust Account
At June 30, 2021, the assets held in the Trust
Account consisted of $220,480,204 held in mutual funds invested in U.S. Treasury securities and $61 held in cash.
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). 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. See Note 7 for details.
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, and accrued expenses are estimated to approximate the carrying values as of June 30, 2021 due to the short maturities
of such instruments.
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 Coverage of $250,000. At June 30, 2021, 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 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 (if any) is classified as a liability instrument and is measured
at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that are either within the
control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control)
is classified 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 the occurrence
of uncertain future events. Accordingly, as of June 30, 2021, common stock subject to possible redemption of 18,979,109 shares of Class
A common stock is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s
balance sheet.
Net Income Per Share of Common Stock
Net income per share of common stock is computed
by dividing net income by the weighted average number of shares of common stock outstanding for each of the periods. The calculation of
diluted income per share of common stock does not consider the effect of the warrants issued in connection with the (i) IPO, (ii) exercise
of overallotment and (iii) Private Placement since the exercise of the warrants are contingent upon the occurrence of future events and
the inclusion of such warrants would be anti-dilutive. The warrants are exercisable to purchase 18,633,106 shares of common stock in the
aggregate.
The Company’s statements of operation include
a presentation of income per share for common stock subject to possible redemption in a manner similar to the two-class method of income
per share of common stock. Net income per share of common stock, basic and diluted, for redeemable common stock is calculated by dividing
the interest income earned on the Trust Account, by the weighted average number of redeemable shares of common stock outstanding since
original issuance. Net income per share of common stock, basic and diluted, for non-redeemable common stock is calculated by dividing
the net income, adjusted for income attributable to redeemable common stock, by the weighted average number of non-redeemable shares of
common stock outstanding for the periods. Non-redeemable common stock includes the founder shares as these ordinary shares do not have
any redemption features and do not participate in the income earned on the Trust Account.
|
|
For the three
months
ended
June 30,
2021
|
|
|
For the
Period
from
January 19,
2021
(Inception)
through
June 30,
2021
|
|
Class A common stock subject to possible redemption
|
|
|
|
|
|
|
Numerator: net income allocable to Class A common stock subject to possible redemption amortized interest income on marketable securities held in trust
|
|
$
|
6,314
|
|
|
$
|
6,314
|
|
Less: interest available to be withdrawn for payment of taxes
|
|
|
(6,314
|
)
|
|
|
(6,314
|
)
|
Net income allocable to Class A common stock subject to possible redemption
|
|
$
|
-
|
|
|
$
|
-
|
|
Denominator: weighted average redeemable Class A common stock redeemable common stock, basic and diluted
|
|
|
18,606,409
|
|
|
|
11,727,023
|
|
Basic and diluted net income per share, redeemable Class A common stock
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Non-redeemable Class A and Class B common stock
|
|
|
|
|
|
|
|
|
Numerator: net income minus redeemable net earnings for Class A and Class B common stock
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
3,726,994
|
|
|
$
|
294,615
|
|
Redeemable net earnings
|
|
|
-
|
|
|
|
-
|
|
Non-redeemable net income for Class A and Class B common stock
|
|
$
|
3,726,994
|
|
|
$
|
294,615
|
|
Denominator: weighted average non-redeemable common stock basic and diluted weighted average shares outstanding, Class A and Class B common stock
|
|
|
8,952,707
|
|
|
|
7,695,590
|
|
Basic and diluted net income per share, Class A and Class B common stock
|
|
$
|
0.42
|
|
|
$
|
0.04
|
|
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 that are related to the IPO. Accordingly,
as of June 30, 2021, offering costs of $12,693,922 (consisting of $4,409,459 of underwriting commissions, $7,716,553 of deferred underwriters’
commission, and $567,910 other cash offering costs) have been incurred. 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. Accordingly, $812,974
of offering costs associated with warrant liabilities is expensed in the statement of operations for the period from January 19, 2021
(inception) through June 30, 2021.
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 statements of operations. Derivative assets and liabilities are classified
on the balance sheet 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.
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.
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, 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 tax examinations
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.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 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. The ASU also removes
certain settlement conditions that are required for equity-linked contracts to qualify for scope exception, and it simplifies the diluted
earnings per share calculation in certain areas. The Company adopted ASU 2020-06 on January 19, 2021. Adoption of the ASU
did not impact the Company’s financial position, results of operations or cash flows.
Note 3 — Initial Public Offering
Pursuant to the IPO on March 25, 2021, the Company
sold 20,000,000 Units at a purchase price of $10.00 per Unit. Each Unit consists of one share of Class A common stock, and one-half of
one redeemable warrant. Each whole 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 warrant will become exercisable 30 days after the completion of the initial Business Combination and
will expire five years after the completion of the initial Business Combination, or earlier upon redemption or liquidation.
On March 30, 2021, the underwriter partially exercised
the over-allotment option to purchase 2,047,293 units.
Following the closing of the IPO on March 25,
2021 and the closing of the underwriter’s partial exercise of the over-allotment option on April 1, 2021, $220,472,930 ($10.00 per
Unit) from the net proceeds of the sale of the Units in the IPO and over-allotment and the sale of the Private Placement Warrants was
placed in a Trust Account, which 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 under
Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations.
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 the initial Business Combination at an issue price or effective issue price of less than $9.20 per share of the Class
A common stock (with such issue price or effective issue price to be determined in good faith by the 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) (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 Class A 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 When the Price per Share of Class A Common Stock
Equals or Exceeds $18.00” and “Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $10.00”
will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00
per share redemption trigger price described below under “Redemption of Warrants When the Price per Share of Class A Common Stock
Equals or Exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued
Price.
The warrants will become exercisable 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, subject to the Company’s satisfying its obligations described below with respect to
registration, or a valid exemption from registration is available. No warrant will be exercisable and the Company will not be obligated
to issue a share of Class A common stock upon exercise of a warrant unless the 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 the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant,
the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. 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.
Redemption of Warrants When the Price per Share of Class A Common
Stock Equals or Exceeds $18.00
Once the warrants become exercisable, the Company may redeem the outstanding
warrants:
|
●
|
in whole and not in part;
|
|
●
|
at a price of $0.01 per warrant;
|
|
●
|
upon a minimum of 30 days’ prior written notice of redemption (the “30-day redemption period”); and
|
|
●
|
if, and only if, the last reported sales price (the “closing price”) of the Class A common stock equals or exceeds $18.00 per share 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.
|
Redemption of Warrants When the Price per Share of Class A Common
Stock Equals or Exceeds $10.00
Once the warrants become exercisable, the Company may redeem the outstanding
warrants:
|
●
|
in whole and not in part;
|
|
●
|
upon a minimum of 30 days’ prior written notice of redemption; and
|
|
●
|
if, and only if, the closing price of the Class A common stock equals or exceeds $10.00 per share for any 20 trading days within the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders.
|
If a registration statement covering the shares
of Class A common stock issuable upon exercise of the warrants is not effective by the 60th day after the closing of the initial Business
Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company
will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with
Section 3(a)(9) of the Securities Act or another exemption, but the Company will use its commercially reasonable efforts to register or
qualify the shares under applicable blue sky laws to the extent an exemption is not available. In such event, each holder would pay the
exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the lesser of (A) the quotient
obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess
of the “fair market value” (defined below) less the exercise price of the warrants by (y) the fair market value and (B) 0.361.
The “fair market value” as used in this paragraph shall mean the volume weighted average price of the Class A common stock
for the 10 trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent.
Note 4 — Private Placement
Simultaneously with the closing of the IPO, the
Sponsor purchased an aggregate of 7,200,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate
purchase price of $7,200,000, in a private placement (the “Private Placement”).
Pursuant to the underwriter’s partial exercise
of the over-allotment option on March 30, 2021, on April 1, 2021 the Sponsor purchased an additional 409,459 Private Placement Warrants
at a price of $1.00 per warrant.
Each Private Placement Warrant entitles the holder
to purchase one share of the Class A common stock at a price of $11.50 per share. 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
in all redemption scenarios and exercisable by the holders on the same basis as the warrants included in the Units being sold in the IPO.
The Private Placement Warrants (including the
Class A common stock issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or saleable until
30 days after the completion of the initial Business Combination.
The Sponsor has agreed (i) to waive its redemption
rights with respect to any founder shares and any public shares held by it in connection with the completion of the Company’s initial
Business Combination and (ii) to waive its rights to liquidating distributions from the Trust Account with respect to any founder shares
held by it if the Company fails to complete the initial Business Combination within the Combination Period, although the Sponsor will
be entitled to liquidating distributions from the Trust Account with respect to any public shares it hold if the Company fails to complete
the Business Combination within the Combination Period.
Note 5 — Related Party Transactions
Founder Shares
On January 19, 2021, 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. The founder shares include
an aggregate of up to 750,000 shares subject to forfeiture if the over-allotment option is not exercised by the underwriter in full. On
February 7, 2021, the Sponsor transferred 20,000 founder shares to each of the Company’s independent directors and chief financial
officer (which shares will not be subject to forfeiture in the event the underwriter’s over-allotment is not exercised).
On March 30, 2021, the underwriter partially exercised
the over-allotment option to purchase 2,047,293 Units. As a result, 238,177 founder shares were forfeited on April 1, 2021.
With certain limited exceptions, the founder shares
will not be transferable, assignable by the Sponsor until the earlier of: (A) one year after the completion of the initial Business Combination;
or (B) subsequent to the initial Business Combination, (x) if the closing price of the 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 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 the stockholders having
the right to exchange their shares of common stock for cash, securities or other property.
Promissory Note — Related Party
The Company’s Sponsor agreed to loan the
Company an aggregate of up to $300,000 to be used for a portion of the expenses of the IPO. The loan was non-interest bearing, unsecured
and due at the earlier of December 31, 2021 or the closing of the IPO. As of March 25, 2021, the Company had an outstanding balance of
$99,160 under the promissory note. The promissory note from the Sponsor was paid in full on March 26, 2021.
Related Party Loans
In order to finance transaction costs in connection
with an intended initial 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 (the “Working Capital Loans”). If the Company
completes an initial Business Combination, the Company would repay the Working Capital Loans. In the event that the initial 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 June 30, 2021, no such Working Capital Loans
were outstanding.
Administrative Support Agreement
Pursuant to an administrative support agreement
effective on March 22, 2021, the Company agreed to pay the Sponsor a total of $25,000 per month for office space, utilities and professional,
secretarial and administrative support. Upon completion of the initial Business Combination or the Company’s liquidation, the Company
will cease paying these monthly fees. The Company recorded administrative support fees of $75,000 and $81,452 for the three months ended
June 30, 2021 and for the period from March 22, 2021 through June 30, 2021.
Note 6 — Commitments and Contingencies
Registration and Shareholder Rights
The holders of the founder shares, Private Placement
Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock issuable upon
the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion
of the founder shares) will be entitled to registration rights pursuant to a registration rights and stockholder agreement signed on March
22, 2021, requiring the Company to register such securities for resale (in the case of the founder shares, only after conversion to the
Class A common stock). The holders of the majority of these securities are entitled to make up to three demands, excluding short form
demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights
with respect to registration statements filed subsequent to the completion of the initial Business Combination and rights to require the
Company to register for resale such securities pursuant to Rule 415 under the Securities Act.
Underwriters Agreement
The underwriter had a 45-day option from the date
of the IPO to purchase up to an additional 3,000,000 Units to cover over-allotments, if any.
On March 25, 2021, the Company paid a fixed underwriting
discount in aggregate of $4,000,000. Additionally, the underwriter will be entitled to a deferred underwriting discount of 3.5% of the
gross proceeds of the IPO held in the Trust Account, or $7,716,553, upon the completion of the Company’s initial Business Combination
subject to the terms of the underwriting agreement.
On March 30, 2021, the underwriter partially exercised
the over-allotment option to purchase 2,047,293 Units. In connection therewith, the Company paid additional underwriting fees of $409,459.
Note 7 — Fair Value Measurements
The following table presents
information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of June 30, 2021,
and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
|
|
June 30,
|
|
|
Quoted
Prices In
Active
Markets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Other
Unobservable
Inputs
|
|
|
|
2021
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(Level 1)
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(Level 2)
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(Level 3)
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Assets:
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Marketable securities held in Trust Account
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$
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220,480,265
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|
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$
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220,480,265
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|
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$
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-
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|
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$
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-
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|
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|
$
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220,480,265
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|
|
$
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220,480,265
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|
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$
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-
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|
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$
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-
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|
|
|
|
|
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Liabilities:
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|
|
|
|
|
|
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|
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|
|
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Warrant Liability – Public Warrants
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$
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11,023,647
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$
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11,023,647
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$
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-
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|
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$
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-
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Warrant Liability – Private Placement Warrants
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9,055,256
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-
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-
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9,055,256
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$
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20,078,903
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|
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$
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11,023,647
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|
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$
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-
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|
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$
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9,055,256
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|
The fair value of the Public Warrants at June
30, 2021 is classified as Level 1 due to the use of an observable market quote in an active market. As of June 30, 2021, the aggregate
value of Public Warrants was $11,023,647.
The fair value of the
Private Placement Warrants is based on a valuation model utilizing management judgment and pricing inputs from observable and unobservable
markets with less volume and transaction frequency than active markets. Significant deviations from these estimates and inputs could result
in a material change in fair value. The valuation model utilizes inputs such as assumed share prices, volatility, discount factors and
other assumptions and may not be reflective of the price at which they can be settled at Level 3.
The following table provides quantitative information
regarding Level 3 fair value measurements as of June 30, 2021:
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Private Placement Warrants
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Expected term (years)
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|
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5.88
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Expected volatility
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15.00
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%
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Risk-free interest rate
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1.02
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%
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Fair value of the common stock price
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$
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9.63
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|
The following table sets
forth a summary of the changes in the fair value of the Level 3 warrant liability for the period from January 7, 2021 (inception) through
June 30, 2021:
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Warrant Liability
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Fair value as of January 19, 2021 (inception)
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$
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—
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Initial fair value of warrant liability on March 22, 2021
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22,232,000
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Initial fair value of warrant liability on March 31, 2021
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1,860,990
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Transfer out of Level 3 to Level 1
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(11,023,647
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)
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Change in valuation inputs or other assumptions
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(4,014,087
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)
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Fair value as of June 30, 2021
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$
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9,055,256
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Note 8 — 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 June 30, 2021, there were no shares
of preferred stock issued or outstanding.
Class A Common Stock —
The Company is authorized to issue a total of 400,000,000 shares of Class A common stock at par value of $0.0001 each. As of June
30, 2021, there were 3,068,184 shares of Class A common stock issued and outstanding, excluding 18,979,109 shares of Class A
common stock subject to possible redemption.
Class B Common Stock —
The Company is authorized to issue a total of 40,000,000 shares of Class B common stock at par value of $0.0001 each. On January 19, 2021,
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.
The founder shares included an aggregate of up to 750,000 shares subject to forfeiture if the over-allotment option was not exercised
by the underwriter in full. On March 30, 2021, the underwriter partially exercised the over-allotment option to purchase 2,047,293 Units.
As a result, 238,177 founder shares were forfeited on April 1, 2021. As of June 30, 2021, there were 5,511,823 shares of Class B common
stock issued and outstanding.
With certain limited exceptions, the founder shares
will not be transferable, assignable by the Sponsor until the earlier of: (A) one year after the completion of the initial Business Combination;
or (B) subsequent to the initial Business Combination, (x) if the closing price of the 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 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 the 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 the Company’s 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 in the registration statement 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 Business Combination).
Holders of founder shares may also elect to convert
their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided above,
at any time.
Holders of the Class A common stock and holders
of the Class B common stock will vote together as a single class on all matters submitted to a vote of the stockholders, except as required
by law.
Note 9 — Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the unaudited condensed financial statements were available to be issued.
The Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial
statements.
ITEM 2. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References to the “Company,” “Glass
Houses Acquisition Corp.” “our,” “us” or “we” refer to Glass Houses Acquisition Corp. The following
discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited
condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion
and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections
about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that
may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels
of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as “may,” “should,” “could,” “would,” “expect,”
“plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of
such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to,
those described in our other Securities and Exchange Commission (“SEC”) filings.
Overview
We are a blank check company incorporated as a
Delaware corporation and 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, which we refer to herein as our initial business combination. We have not
selected any specific business combination target. We intend to effectuate our initial business combination using cash from the proceeds
of this offering and the private placement of the private placement warrants, our capital stock, debt or a combination of cash, stock
and debt.
We expect to continue to incur significant costs
in the pursuit of our acquisition plans. We cannot assure you that our plans to complete our initial business combination will be successful.
Results of Operations
Our entire activity since inception up to June
30, 2021 relates to our formation, the Initial Public Offering and, since the closing of the Initial Public Offering, a search for a Business
Combination candidate. We will not be generating any operating revenues until the closing and completion of our initial Business Combination,
at the earliest.
For the three months ended June 30, 2021, we had
net income of $3,726,994, which was comprised of change in fair value of warrants of $4,186,087 and interest earned on marketable securities
held in trust account of $7,335, partially offset by operating costs of $466,428.
For the period from January 19, 2021 through June
30, 2021, we had net income of $294,615, which was comprised of change in fair value of warrants of $4,014,087 and interest earned on
marketable securities held in trust account of $7,335, partially offset by operating costs of $550,806, warrant issuance costs of $812,974,
and other expense relating to fair value exceeding amount paid for warrants of $2,363,027.
Liquidity and Capital Resources
As of June 30, 2021,
we had approximately $1.5 million in our operating bank account, and working capital of approximately $1.8 million.
Prior to the completion of the IPO, our liquidity
needs had been satisfied through a payment from the Sponsor of $25,000 for the founder shares to cover certain offering costs and the
loan under an unsecured promissory note from the Sponsor of $99,160. On March 25, 2021, we consummated the IPO of 20,000,000 Units at
a price of $10.00 per Unit. On March 30, 2021, the underwriter partially exercised the over-allotment option, purchasing an additional
2,047,293 Units, at $10.00 per Unit, on April 1, 2021. In aggregate, gross proceeds of $220,472,930 were generated. Simultaneously with
the closing of the Initial Public Offering, we consummated the sale of 7,200,000 Private Placement Warrants at a price of $1.00 per Private
Placement Warrant in a private placement to our Sponsor. On April 1, 2021, simultaneously with the closing of the over-allotment option,
we sold an additional 409,459 Private Placement Warrants to our Sponsor at a price of $1.00 per share. In aggregate, gross proceeds of
$7,609,459 were generated.
Following the Initial Public Offering, the closing
of the over-allotment option and the sale of the Private Placement Warrants, a total of $220,472,930 was placed in the Trust Account.
We incurred $12,693,922 in transaction costs, including $4,409,459 of underwriting fees, $7,716,553 of deferred underwriting fees and
$567,910 of other offering costs. The promissory note from the Sponsor was paid in full on March 26, 2021. Subsequent to the consummation
of the Initial Public Offering and Private Placement, our 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 an intended initial Business Combination, our Sponsor or an affiliate of the Sponsor or certain of our officers and
directors may, but are not obligated to, provide us Working Capital Loans. To date, there were no amounts outstanding under any Working
Capital Loans.
Based on the foregoing,
management believes that we will have sufficient working capital and borrowing capacity to meet our needs through the earlier of the consummation
of a Business Combination or one year from this filing. Over this time period, we 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.
Critical Accounting Policies and Estimates
The preparation of the unaudited condensed financial
statements in conformity with US 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 and the
reported amounts of expenses during the reporting period. Actual results could differ from those estimates. We have identified the following
as our critical accounting policies:
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 (if any) is classified as a liability instrument and is measured
at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that are either within the
control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control)
is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common
stock feature certain redemption rights that is considered to be outside of the Company’s control and subject to the occurrence
of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity,
outside of the stockholders’ equity section of the Company’s balance sheet.
Net Income Per Share of Common Stock
Net income per share of common Stock is computed
by dividing net income by the weighted average number of shares of common Stock outstanding for each of the periods. The calculation of
diluted income per share of common Stock does not consider the effect of the warrants issued in connection with the (i) IPO, (ii) exercise
of overallotment and (iii) Private Placement since the exercise of the warrants are contingent upon the occurrence of future events and
the inclusion of such warrants would be anti-dilutive. The warrants are exercisable to purchase 18,633,106 shares of Class A Common Stock
in the aggregate.
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 statements of operations. Derivative assets and liabilities are classified
on the balance sheet 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.
Off-Balance Sheet Arrangements
As of June 30, 2021, we did not have any off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Contractual Obligations
We do not have any long-term debt, capital lease
obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly
fee of $25,000 for office space and administrative support to the Company. We began incurring these fees on March 22, 2021 and will continue
to incur these fees monthly until the earlier of the completion of the Business Combination and the Company’s liquidation.
The underwriter is entitled to a deferred fee
of $0.35 per Unit, or $7,716,553 in the aggregate. Subject to the terms of the underwriting agreement, (i) the deferred fee will be placed
in the Trust Account and released to the underwriters only upon the completion of a Business Combination and (ii) the deferred fee will
be waived by the underwriters in the event that we do not complete a Business Combination.
JOBS Act
On April 5, 2012, the JOBS Act was signed into
law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies.
We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements
based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such
standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that
comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating
the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth
in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to
Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank
Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory
audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements
(auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive
compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation. These
exemptions will apply for a period of five years following the completion of this offering or until we are no longer an “emerging
growth company,” whichever is earlier.