NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022 (UNAUDITED)
Note 1 — Description of Organization and Business Operations
Athena Consumer Acquisition
Corp. (the “Company”) was incorporated in Delaware on June 4, 2021. 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 (a “Business Combination”).
The Company is not limited
to a particular industry or geographic region for purposes of consummating a Business Combination. 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.
As of September 30, 2022, the
Company had not commenced any operations. All activity through September 30, 2022, relates to the Company’s formation and Initial
Public Offering (“IPO”), which is described below and, since the offering, the search for a prospective initial Business Combination.
The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest.
The Company generates non-operating income in the form of interest income earned on investments from the proceeds derived from the IPO.
The registration statement
for the Company’s IPO was declared effective on October 19, 2021. On October 22, 2021, the Company consummated the IPO and overallotment
option (“Overallotment Units”) of 23,000,000 units (“Units”) with respect to the Class A common stock included
in the Units being offered (the “Public Shares”) at $10.00 per Unit generating gross proceeds of $230,000,000, which is discussed
in Note 3.
Simultaneously with the closing
of the IPO, the Company consummated the sale of 1,060,000 units (“Private Placement Units”) at a price of $10.00 per Private
Placement Unit in a private placement to the Company’s sponsor, Athena Consumer Acquisition Sponsor LLC (the “Sponsor”)
generating gross proceeds of $10,600,000, which is described in Note 4.
Offering costs for the IPO
and the exercise of the underwriters’ over-allotment option amounted to $13,116,818, consisting of $4,000,000 of underwriting fees,
$8,650,000 of deferred underwriting fees payable (which are held in the Trust Account (defined below) and $466,818 of other costs. As
described in Note 6, the $8,650,000 of deferred underwriting fee payable is contingent upon the consummation of a Business Combination,
subject to the terms of the underwriting agreement.
Following the closing of the
IPO and exercise of the over-allotment, $234,600,000 ($10.20 per Unit) from the net proceeds of the sale of the Units in the IPO and the
Private Placement Units was placed in a Trust Account (“Trust Account”) 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 paragraphs (d)(2), (d)(3) and (d)(4) 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 Trust Account, as described
below.
The Company’s management
has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale of the Private Placement Units,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial
Business Combinations having an aggregate fair market value of at least 80% of the assets held in the Trust Account excluding the deferred
underwriting commissions and taxes payable on income earned on the Trust Account at the time of the agreement to enter into the initial
Business Combination. However, the Company will only complete a Business Combination if the post-transaction 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 the Company will be
able to successfully effect a Business Combination.
The Company will provide the
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. The Public Stockholders will be entitled to redeem their Public Shares
for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.20 per Public Share, plus any pro rata
interest then in the Trust Account, net of taxes payable). There will be no redemption rights with respect to the Company’s warrants.
All of the Public Shares contain
a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, if there
is a stockholder vote or tender offer in connection with the Company’s Business Combination and in connection with certain amendments
to the Company’s amended and restated certificate of incorporation. In accordance with Accounting Standards Codification (“ASC”) 480-10-S99, redemption provisions not
solely within the control of a company require Class A common stock subject to redemption to be classified outside of permanent equity.
Given that the Public Shares will be issued with other freestanding instruments (i.e., public warrants), the initial carrying value of
Class A common stock classified as temporary equity will be the allocated proceeds determined in accordance with ASC 470-20. The Class
A common stock are subject to ASC 480-10-S99. If it is probable that the equity instrument will become redeemable, the Company has the
option to either (i) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes
probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or (ii) recognize changes
in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the
end of each reporting period. The Company has elected to recognize the changes immediately. While redemptions cannot cause the Company’s
net tangible assets to fall below $5,000,001, the Public Shares are redeemable and are classified as such on the balance sheet until such
date that a redemption event takes place.
Redemptions of the Company’s
Public Shares may be subject to the satisfaction of conditions, including minimum cash conditions, pursuant to an agreement relating to
the Company’s Business Combination. If the Company seeks stockholder approval of the Business Combination, the Company will proceed
with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination, or such other vote as required
by law or stock exchange rule. If a stockholder vote is not required by applicable law or stock exchange listing requirements and the
Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Certificate of Incorporation,
conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (the “SEC”) and
file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction
is required by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business
or other 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) and any Public Shares purchased during or after the IPO in favor of approving
a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting, and if they do vote,
irrespective of whether they vote for or against the proposed transaction.
Notwithstanding the foregoing,
the Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person
with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate
of 15% or more of the Class A common stock sold in the IPO, without the prior consent of the Company.
The Company’s Sponsor,
officers and directors (the “Initial Stockholders”) have agreed not to propose an amendment to the Certificate of Incorporation
that would 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 shares of Class
A common stock in conjunction with any such amendment.
If the Company is unable to
complete a Business Combination by January 22, 2023, 15 months from the closing of the IPO (“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 us to pay the Company’s
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 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.
The Initial Stockholders have
agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within
the Combination Period. However, if the Initial Stockholders should acquire Public Shares in or after the IPO, they will be entitled to
liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination
within the Combination Period. The underwriters have agreed to waive their rights to its deferred underwriting commission (see Note 6)
held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period, and, in such
event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the
Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for
distribution (including Trust Account assets) will be only $10.20 per shares held in the Trust Account. 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. This liability will not apply with respect to any claims by a third party
who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims
under the Company’s indemnity of the underwriters of the IPO 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 Sponsor 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 Sponsor 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 waiving any right, title, interest or claim of any kind in
or to monies held in the Trust Account.
Risks and Uncertainties
In March 2020, the World
Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic which continues to spread
throughout the United States and the world. As of the date the financial statements were issued, there was considerable uncertainty
around the expected duration of this pandemic. Management continues to evaluate the impact of the COVID-19 pandemic, and the Company
has concluded that while it is reasonably possible that COVID-19 could have a negative effect on completing the IPO and subsequently
identifying a target company for a Business Combination, the specific impact is not readily determinable as of the date of the
unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
In February 2022, the
Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations,
including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of
this action and related sanctions on the world economy is not determinable as of the date of these unaudited condensed financial
statements. The specific impact on the Company’s financial condition, results of operations, and cash flows is also not
determinable as of the date of these unaudited condensed financial statements.
On August 16, 2022, President Biden signed into law the Inflation Reduction
Act of 2022 (the “IR Act”), which, among other things, imposes a new 1% U.S. federal excise tax on certain repurchases of
stock by “covered corporations” (which include publicly traded domestic (i.e., U.S.) corporations) beginning in 2023, with
certain exceptions (the “Excise Tax”). The Excise Tax is imposed on the repurchasing corporation itself, not its stockholders
from which the stock is repurchased. Because the Company is a Delaware corporation and its securities are trading on the NYSE, the Company
is a “covered corporation” for this purpose. The amount of the Excise Tax is generally 1% of the fair market value of the
shares repurchased at the time of the repurchase. However, for purposes of calculating the Excise Tax, repurchasing corporations are permitted
to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable
year. In addition, certain exceptions apply to the Excise Tax. The U.S. Department of the Treasury has authority to provide regulations
and other guidance to carry out, and prevent the abuse or avoidance of the Excise Tax; however, no guidance has been issued to date. It
is uncertain whether, and/or to what extent, the Excise Tax could apply to any repurchase by the Company of its common stock or in the
event of liquidation, in each instance after December 31, 2022, including any redemptions in connection with its initial Business Combination
or in the event the Company does not consummate the initial Business Combination.
Whether and to what extent the Company would be subject to the Excise
Tax on a redemption of shares of Class A common stock or other stock issued by the Company would depend on a number of factors, including
(i) whether the redemption is treated as a repurchase of stock for purposes of the Excise Tax, (ii) the fair market value of the redemption
treated as a repurchase of stock in connection with the initial Business Combination, an extension or otherwise, (iii) the structure of
the initial Business Combination, (iv) the nature and amount of any “PIPE” or other equity issuances in connection with the
initial Business Combination (or otherwise issued not in connection with the initial Business Combination but issued within the same taxable
year of a redemption treated as a repurchase of stock) and (v) the content of regulations and other guidance from the U.S. Department
of the Treasury. As noted above, the Excise Tax would be payable by the Company and not by the redeeming holder. The imposition of the
Excise Tax could cause a reduction in the cash available on hand to complete the initial Business Combination or for effecting redemptions
and may affect the Company’s ability to complete the initial Business Combination. In addition, the Excise Tax could cause a reduction
in the per share amount payable to the public stockholders in the event the Company liquidates the trust account due to a failure to complete
the initial Business Combination within the requisite time frame.
Going Concern and Capital Resources
As of September 30, 2022,
the Company had $259,269 in its operating bank accounts, $235,904,801 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 and working capital deficit of $1,463,466. As of September
30, 2022, approximately $1,399,254 of the amount on deposit in the Trust Account represented interest and dividend income, which is available
to pay the Company’s tax obligations.
Until the consummation of
a Business Combination, the Company will be using 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 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 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.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of
time, which is considered to be one year from the issuance date of the financial statements. These condensed financial statements do
not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be
necessary should the Company be unable to continue as a going concern.
In connection with the Company’s assessment of going concern
considerations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”)
2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until
January 22, 2023 to consummate the proposed Business Combination. It is uncertain that the Company will be able to consummate the proposed
Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and
subsequent dissolution of the Company. Management has determined that the mandatory liquidation, should a Business Combination not occur,
and potential subsequent dissolution and liquidity condition, raises substantial doubt about the Company’s ability to continue as
a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate
after January 22, 2023. The Company intends to complete the proposed Business Combination before the mandatory liquidation date. However,
there can be no assurance that the Company will be able to consummate any Business Combination by January 22, 2023.
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited
condensed financial statements of the Company are presented in conformity with accounting principles generally accepted in the United
States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC. Certain information or footnote disclosures
normally included in financial statements prepared in accordance with U.S. 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, as filed
with the SEC on March 24, 2022. The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative
of the results to be expected for the year ending December 31, 2022 or for any future interim periods.
Emerging Growth Company
The Company is an emerging
growth company as defined in Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), which
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 an emerging
growth 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 an 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 that is neither an emerging growth company nor an emerging growth
company that 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 condensed
financial statements in conformity with U.S. 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 condensed financial
statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates. Making
estimates requires management to exercise significant judgment. Such estimates may be subject to change as more current information becomes
available and accordingly the actual results could differ significantly from those estimates. 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. Actual results
could differ from those estimates.
Cash and Cash Equivalents
The Company considers all
short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had $259,269
and $850,615 of cash as of September 30, 2022 and December 31, 2021, respectively, and no cash equivalents.
Investments Held in Trust Account
The Company's portfolio of investments held in the Trust Account is
comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity
of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable
fair value, or a combination thereof. When the Company's investments held in the Trust Account are comprised of U.S. government securities,
the investments are classified as trading securities. When the Company's investments held in the Trust Account are comprised of money
market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on
the condensed balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value
of these securities are included in income on investments held in Trust Account in the accompanying unaudited condensed statements of
operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
As of September 30, 2022 and
December 31, 2021, the Company had $235,904,801 and $234,604,169 in investments held in Trust Account, respectively.
Offering Costs associated with the Initial
Public Offering
Offering costs consist principally
of legal, accounting, underwriting fees and other costs directly related to the IPO. 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. Total offering cost amounted
to $13,116,818, out of which $12,245,042 was charged against the carrying value of Class A common stock upon the completion of the IPO.
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 coverage limit of $250,000. At September 30, 2022 and December 31, 2021, 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 the FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying
amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
Income Taxes
The Company accounts for income taxes under ASC 740, “Income
Taxes.” ASC 740 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 September 30, 2022 and December 31, 2021, the Company’s
deferred tax asset had a full valuation allowance recorded against it.
ASC 740-270-25-2 requires that an annual effective tax rate be determined
and such annual effective rate applied to year to date income in interim periods under ASC 740-270-30-5. The Company’s effective
tax rate was 57.46% and 0.00% for the three months ended September 30, 2022 and 2021, respectively, and 18.87% and 0.00% for the nine
months ended September 30, 2022 and for the period from June 4, 2021 to September 2021, respectively. The effective tax rate differs from
the statutory tax rate of 21% for the three and nine months ended September 30, 2022 and the three months ended September 30, 2021 and
for the period from June 4, 2021 to September 30, 2021, primarily due to the valuation allowance on the deferred tax assets.
Derivative
Liabilities
The Company evaluates its financial
instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC
480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities
or as equity, is re-assessed at the end of each reporting period. The Company has determined forward purchase agreements are derivative
instruments.
ASC 740 also clarifies the accounting for uncertainty in income taxes
recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial
statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized,
a tax position must be more likely than not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued
interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts
accrued for interest and penalties as of September 30, 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.
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible
redemption in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity.” Shares of Class A common
stock subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally
redeemable Class A common stock (including Class A common stock that features redemption rights that are either within the control of
the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified
as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. The Company’s Class A
common stock sold in the IPO and over-allotment 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 September 30, 2022 and December 31, 2021, 23,000,000
shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ deficit
section of the Company’s condensed balance sheets.
Under ASC 480-10-S99, the
Company has elected to recognize changes in redemption value immediately as they occur and adjust the carrying value of the Class A common
stock subject to possible redemption to equal the redemption value at the end of each reporting period. This method would view the end
of the reporting period as if it were also the redemption date for the security. Immediately upon the closing of the Initial Public Offering,
the Company recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in
capital (to the extent available) and accumulated deficit.
Immediately upon the closing
of the IPO and over-allotment, the Company recognized the accretion from the initial book value to redemption amount value. This method
would view the end of the reporting period as if it were also the redemption date of the security. Immediately upon the closing of the
IPO, the Company recognized the accretion from initial book value to redemption amount value. The change in the carrying value of redeemable shares
of Class A common stock resulted in charges against additional paid-in capital and accumulated deficit.
As of September 30, 2022 and
December 31, 2021, the shares of Class A common stock subject to possible redemption reflected on the condensed balance sheets are reconciled
on the following table:
Gross proceeds | |
$ | 230,000,000 | |
Less: | |
| | |
Fair value of Public Warrants at issuance | |
| (15,310,355 | ) |
Class A shares issuance costs | |
| (12,245,042 | ) |
Add: Accretion of carrying value to redemption value | |
| 32,155,397 | |
Class A common stock subject to possible redemption at December 31, 2021 | |
| 234,600,000 | |
Add: Accretion of carrying value to redemption value | |
| 1,001,219 | |
Class A common stock subject to possible redemption at September 30, 2022 | |
$ | 235,601,219 | |
Net Loss per Common Share
The Company has two classes
of shares, which are referred to as Class A common stock and Class B common stock (the “Founder Shares”). Earnings and losses
are shared pro rata between the two classes of shares. On September 30, 2022, the Company did not have any dilutive securities and other
contracts that could, potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company.
As a result, diluted loss per common share is the same as basic loss per common share for the period presented. The table below presents
a reconciliation of the numerator and denominator used to compute basic and diluted net loss per share for each class of stock.
| |
For the three months ended September 30, 2022 | |
| |
Class A common stock | | |
Class B common stock | |
Basic and diluted net loss per share: | |
| | |
| |
Numerator: | |
| | |
| |
Allocation of net loss | |
$ | (404,021 | ) | |
$ | (135,178 | ) |
| |
| | | |
| | |
Denominator: | |
| | | |
| | |
Weighted average shares outstanding | |
| 24,060,000 | | |
| 8,050,000 | |
| |
| | | |
| | |
Basic and diluted net loss per share | |
$ | (0.02 | ) | |
$ | (0.02 | ) |
| |
For the nine months ended September 30, 2022 | |
| |
Class A
common stock | | |
Class B
common stock | |
Basic and diluted net loss per share: | |
| | |
| |
Numerator: | |
| | |
| |
Allocation of net loss | |
$ | (1,208,501 | ) | |
$ | (404,340 | ) |
| |
| | | |
| | |
Denominator: | |
| | | |
| | |
Weighted average shares outstanding | |
| 24,060,000 | | |
| 8,050,000 | |
| |
| | | |
| | |
Basic and diluted net loss per share | |
$ | (0.05 | ) | |
$ | (0.05 | ) |
| |
For the three months ended September 30, 2021 | |
| |
Class A
common stock | | |
Class B
common stock | |
Basic and diluted net loss per share: | |
| | |
| |
Numerator: | |
| | |
| |
Allocation of net loss | |
$ | - | | |
$ | (2,416 | ) |
| |
| | | |
| | |
Denominator: | |
| | | |
| | |
Weighted average shares outstanding | |
| - | | |
| 7,000,000 | |
| |
| | | |
| | |
Basic and diluted net loss per share | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
| |
For the period from June 4, 2021
(inception) through September 30, 2021 | |
| |
Class A common stock | | |
Class B common stock | |
Basic and diluted net loss per share: | |
| | |
| |
Numerator: | |
| | |
| |
Allocation of net loss | |
$ | - | | |
$ | (3,416 | ) |
| |
| | | |
| | |
Denominator: | |
| | | |
| | |
Weighted average shares outstanding | |
| - | | |
| 7,000,000 | |
| |
| | | |
| | |
Basic and diluted net loss per share | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
Accounting for Warrants
The Company accounts for warrants
as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable
authoritative guidance in ASC 480 and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the instruments
are free standing financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments
meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s
own common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside
of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional
judgment, was conducted at the time of warrant issuance and as of each subsequent period end date while the instruments are outstanding.
Management has concluded that the Public Warrants and Placement Warrants (defined below) issued pursuant to the warrant agreements qualify
for equity accounting treatment.
Recent Accounting Pronouncements
The Company’s management
does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material
effect on the Company’s condensed financial statements.
Franchise Taxes
The Company is subject to
a franchise tax administered by the Delaware Division of Corporations. The Company estimates its franchise tax liability for the year
ended December 31, 2022, to be $200,000. As of September 30, 2022, the Company has $150,000 accrued for franchise taxes. During the three
months ended September 30, 2022, the Company received a refund for the prior tax year ended December 31, 2021, in the amount of $22,476.
The current period franchise tax is recorded net of the refund received.
Note 3 — Initial Public Offering and
Over-Allotment
Pursuant to the IPO, and including
the underwriters’ exercise of their over-allotment option, the Company sold 23,000,000 Units at a price of $10.00 per Unit. Each
Unit consists of one share of Class A common stock (such shares of Class A common stock included in the Units being offered, the “Public
Shares”), and one-half a redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles the holder to purchase
one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7).
Note 4 — Private Placement
On October 22, 2021, simultaneously
with the consummation of the IPO and the underwriters’ exercise of their over-allotment option, the Company consummated the issuance
and sale (“Private Placement”) of 1,060,000 Private Placement Units in a private placement transaction at a price of $10.00
per Private Placement Unit, generating gross proceeds of $10,600,000. Each whole Private Placement Unit will consist of one share of Class
A common stock (“Placement Share”) and one-half of a redeemable warrant (“Placement Warrant”). Each whole Placement
Warrant will be exercisable to purchase one share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from
the Private Placement Units will be added to the proceeds from the IPO to be 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 Placement Units will be used to fund the
redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Units and all underlying securities
will be worthless.
Note 5 — Related Party Transactions
Founder Shares
On June 4, 2021, the Sponsor
was issued 5,900,000 shares of Class B common stock. Subsequently, on June 24, 2021, the Sponsor paid certain costs totaling $25,000 on
behalf of the Company as consideration for 5,900,000 issued on June 4, 2021. On September 23, 2021, the Company effected a 1.36440678
for 1 stock split of its common stock so that the Sponsor owns an aggregate of 8,050,000 Founder Shares. The Sponsor paid approximately
$0.003 per share for the Founder Shares. The Founder Shares will automatically convert into shares of Class A common stock at the time
of the Company’s initial Business Combination and are subject to certain transfer restrictions, as described in Note 7. 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, at any time. The Initial Stockholders had agreed to forfeit up to 1,050,000 Founder Shares to the extent that the
over-allotment option is not exercised in full by the underwriters. Since the underwriters exercised the over-allotment option in full,
the Sponsor did not forfeit any Founder Shares.
Subject to limited exceptions,
each holder of Founder Shares has agreed that, during the period from July 28, 2022 through the earlier to occur of (the “Termination
Date”) (a) the closing of the e.Go Transaction (as such term is defined in Note 6) (the “Closing”), (b) such date and
time as the Business Combination Agreement (as such term is defined in Note 6) is validly terminated in accordance with its terms and
(c) the mutual written agreement of the parties to that certain Sponsor Letter Agreement (as such term is defined in Note 6), except as
contemplated by such Sponsor Letter Agreement and the Business Combination Agreement, it shall not, and shall cause its affiliates not
to, without the prior written consent of e.GO and the Company (which consent may be given or withheld by e.GO and the Company in their
sole discretion), (i) offer for sale, sell (including short sales), transfer, tender, pledge, convert, encumber, assign or otherwise dispose
of, directly or indirectly (including by gift, merger, tendering into any tender offer or exchange offer or otherwise) (collectively,
a “Transfer”), or enter into any contract, option, derivative, hedging or other agreement or arrangement or understanding
(including any profit-sharing arrangement) with respect to, or consent to, a Transfer of, any or all of its Founder Shares; (ii) grant
any proxies or powers of attorney with respect to any or all of its Founder Shares held by it (except in connection with voting by proxy
at a meeting of shareholders of the Company); or (iii) permit to exist any mortgage, pledge, security interest, encumbrance, lien, license
or sub-license, charge or other similar encumbrance or interest (including, in the case of any equity securities, any voting, transfer
or similar restrictions) (a “Lien”) with respect to any or all of its Founder Shares, other than those created by the Sponsor
Letter Agreement; provided that any Lien with respect to the Founder Shares that would not prevent, impair or delay its ability
to comply with the terms and conditions of the Sponsor Letter Agreement shall be permitted and will not be deemed to violate the restrictions
contained above.
Additionally, subject to limited
exceptions, each holder of Founder Shares has agreed that for a period from the Closing through the date that is 180 days thereafter,
it shall not, and shall cause its affiliates not to, Transfer, or enter into any contract, option, derivative, hedging or other agreement
or arrangement or understanding (including any profit-sharing arrangement) with respect to, or consent to, a Transfer of, any or all of
its TopCo Covered Shares. “TopCo Covered Shares” means (i) with respect to the Sponsor, 75% of the TopCo Ordinary Shares to
be issued to the Sponsor pursuant to the Business Combination Agreement (it being understood that the terms of this paragraph shall not
apply to the remaining 25% of such TopCo Ordinary Shares) and (ii) with respect to the Athena Insiders (as such term is defined in
Note 6), all of the TopCo Ordinary Shares to be issued pursuant to the Business Combination Agreement.
Related Party Loans
On June 4, 2021, the Sponsor
agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the IPO pursuant to a promissory note (the “Note”).
This loan was non-interest bearing and payable on the earlier of December 31, 2021, or the completion of the IPO. $117,994 was borrowed
under the Note and repaid on October 22, 2021. There was no balance outstanding as of September 30, 2022 and December 31, 2021. This facility
is no longer available.
In addition, in order to finance
transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s
officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”).
If the Company completes a Business Combination, the Company will repay the Working Capital Loans out of the proceeds of the Trust Account
released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the
event that a Business Combination does not close, the Company may use a portion of 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. Except for the foregoing,
the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans.
The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s
discretion, up to $1.5 million of such Working Capital Loans may be convertible into Units of the post Business Combination entity at
a price of $10.00 per Unit. The Units would be identical to the Private Placement Units. As of September 30, 2022 and December 31, 2021,
there were no Working Capital Loans outstanding.
Support Services
The Company intends to pay an entity affiliated with the Sponsor a fee
of approximately $10,000 per month following the consummation of the IPO until the earlier of the consummation of the Business Combination
or liquidation for office space and administrative support services. As of September 30, 2022, $90,000 has been incurred under this agreement.
For the three and nine months ended September 30, 2022, $30,000 and $90,000, respectively, have been paid under this agreement. As of
September 30, 2021, $0 has been incurred under this agreement. For the three months ended September 30, 2021 and for the period from June
4, 2021 through September 30, 2021, $0 has been paid under this agreement.
Note 6 — Commitments and Contingencies
Registration Rights
The holders of Founder Shares,
Private Placement Units and warrants that may be issued upon conversion of Working Capital Loans, if any, will be entitled to registration
rights (in the case of the Founder Shares, only after conversion of such shares to shares of Class A common stock) pursuant to a registration
rights agreement to be signed on or before the date of the prospectus for the IPO. These holders will be entitled to certain demand and
“piggyback” registration rights. However, the registration rights agreement provides that the Company will not permit any
registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the
securities to be registered. 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 final prospectus relating to the IPO to purchase up to 3,000,000 additional Units to cover over-allotments, if
any, at the IPO price less the underwriting discounts and commissions. On October 22, 2021, the underwriters elected to fully exercise
the over-allotment option purchasing 3,000,000 Units.
The underwriters were paid a cash underwriting discount of $0.20 per
unit on the offering not including the Units issued with the underwriter’s exercise of their over-allotment option, or $4,000,000
in the aggregate at the closing of the IPO. The underwriters have agreed to defer the cash underwriting discount of $0.20 per share related
to the over-allotment to be paid upon completion of a Business Combination ($600,000 in the aggregate). In addition, the underwriters
are entitled to a deferred underwriting commissions of $0.35 per unit, or $8,050,000 from the closing of the IPO. The total deferred fee
is $8,650,000 consisting of the $8,050,000 deferred portion and the $600,000 cash discount agreed to be deferred until completion of a
Business Combination. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely if the
Company completes a Business Combination, subject to the terms of the underwriting agreement.
Business Combination Agreement
On July 28, 2022, the
Company entered into a Business Combination Agreement (as amended by that certain first amendment to the Business Combination
Agreement on September 29, 2022, and as it may be further amended, supplemented or otherwise modified from time to time, the
“Business Combination Agreement”), by and among the Company, Next.e.GO Mobile SE, a German company (“e.GO”),
Next.e.GO B.V., a Dutch private limited liability company and a wholly owned subsidiary of e.GO (“TopCo”), and Time is
Now Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of TopCo (“Merger Sub”), for the
Company’s initial Business Combination (the “e.GO Transaction”). Pursuant to the Business Combination Agreement,
among other things, (i) TopCo will issue to the e.GO’s equity securities (the “e.GO Shareholders”) and convertible
loan lenders of e.GO (the “Lenders”) an aggregate of up to 79,019,608 TopCo Ordinary Shares, representing aggregate
consideration to the e.GO Shareholders of $800,000,000, 30,000,000 of such shares will be unvested and subject to an earn-out (the
“Earn-Out Shares”), in exchange for the contribution by the e.GO Shareholders of all of the paid up no-par value shares
of e.GO to TopCo and the convertible loans held by the Lenders, assuming that all e.GO Shareholders and Lender participate in the
exchange; (ii) each issued and outstanding share of the Company’s Class A common stock will be automatically cancelled and
extinguished and converted into one share of common stock, par value $0.0001 per share, of the Surviving Company (the
“Surviving Company Common Stock”), (iii) each issued and outstanding share of the Company’s Class B common stock
will be automatically cancelled and extinguished and converted into a number of shares of Surviving Company Common Stock calculated
as the sum of (x) one plus (y) the lower of (a) the total amount funded under the credit agreement, dated September 29, 2022,
between e.GO, Brucke Funding LLC, Brucke Agent LLC and certain lenders party thereto (the “Bridge Financing”), divided
by $15,000,000 and multiplied with one-fifth and (b) one-fifth; (iv) TopCo will change its legal form from a Dutch private limited
liability company (besloten vennootschap met beperkte aansprakelijkheid) to a Dutch public limited liability company
(naamloze vennootschap); (v) Merger Sub will merge with and into the Company, with the Company being the Surviving Company
and, after giving effect to the merger, becoming a direct, wholly owned subsidiary of TopCo; (vi) each share of the Company’s
common stock will be converted into one share of the Surviving Company Common Stock; (vii) immediately thereafter, each of the
resulting shares of Surviving Company Common Stock will be automatically exchanged for one TopCo Ordinary Share; and (viii) each
outstanding warrant to purchase a share of the Company’s Class A common stock will be converted into a warrant to purchase a
TopCo Ordinary Share on the same contractual terms and conditions as were in effect with respect to each warrant prior to the e.GO
Transaction.
Sponsor Letter Agreement
On July 28, 2022, the Company,
the Sponsor, e.GO, TopCo and certain of the Company’s officers and directors (the “Athena Insiders”) entered into a
Sponsor Letter Agreement, which was amended on September 29, 2022 (as it may be further amended, supplemented or otherwise modified from
time to time, the “Sponsor Letter Agreement”), pursuant to which, among other things, the Sponsor and the Athena Insiders
have agreed to (i) vote all of its, his or her shares of the Company’s Class A common stock to approve and adopt the Business Combination
Agreement and the e.GO Transaction, (ii) waive its, his or her redemption rights with respect to its, his or her shares of the Company’s
Class A common stock in connection with the e.GO Transaction, (iii) not transfer any of its, his or her shares of the Company’s
Class A common stock until the Closing or termination of the Business Combination Agreement (except in limited circumstances), (iv) not
transfer (a) with respect to the Sponsor, 75% of its TopCo shares and (b) with respect to all other Athena Insiders any of its, his or
her TopCo ordinary shares until the date that is 180 days after the Closing (except in limited circumstances), (v) waive any adjustment
to the conversion ratio set forth in the Company’s amended and restated certificate of incorporation or any other anti-dilution
or similar protection with respect to the shares of the Company’s Class B common stock held by the Sponsor or the Athena Insiders,
in each case, subject to the terms and conditions contemplated by the Sponsor Letter Agreement.
Pursuant to the Sponsor Letter
Agreement, TopCo will indemnify the Sponsor from and against certain liabilities relating to the e.GO Transaction for a period of six
years after the Closing and subject to an aggregate maximum indemnity of $4,000,000.
Forward Purchase Agreement
On September 29, 2022, the
Company, TopCo, e.GO and Vellar Opportunity Fund SPV LLC – Series 3 (“Vellar”) entered into a Forward Purchase Agreement
(the “Forward Purchase Agreement”) for an OTC equity prepaid share forward transaction (the “Forward Purchase Transaction”).
Vellar has agreed to waive any redemption rights with respect to any shares of the Company and shares of TopCo following the Closing of
the e.GO Transaction (collectively, the “Shares”) in connection with the e.GO Transaction.
Pursuant to the terms of the
Forward Purchase Agreement, Vellar intends, but is not obligated, to purchase through a broker in the open market from Public Stockholders
who have redeemed or indicated an intention to redeem, or from the Company, up to an aggregate amount of 15,000,000 shares of Class A
common stock (the “Forward Purchase Shares”). Vellar may not beneficially own greater than 9.9% of the Shares on a post-combination
pro forma basis. Upon Closing, or upon the date any assets from the Company’s Trust Account are disbursed in connection with the
e.GO Transaction, Vellar shall be paid directly, out of the funds held in the Trust Account, an amount equal to (a) (i) the redemption
price of shares of the Company’s Class A common stock redeemed by the Public Stockholders and purchased by Vellar, minus (ii) 10%
of such amount and (b) the product of 1,500,000 multiplied by the redemption price of shares of the Company’s Class A common stock
indicated to the Public Stockholders prior to the redemption deadline (as consideration for having purchased Class A common stock prior
to Closing). From time to time following the Closing, Vellar, in its discretion, may sell the Forward Purchase Shares (such shares sold,
the “Vellar Terminated Shares”) without payment obligation to TopCo until such time as the proceeds from the sales equal (i)
10% of the product of the number of the Forward Purchase Shares and the redemption price per share indicated to investors ahead of the
Company’s redemption notice deadline or (ii) in the case of an event of default under the Bridge Financing, all amounts that are
due to Vellar under such financing.
Upon the second anniversary
of the Closing, TopCo is obligated to pay to Vellar an amount equal to the product of (a) (x) 15,000,000 less (y) the number of Vellar
Terminated Shares multiplied by (b) $2.50. Vellar may freely transfer or assign its rights under the Forward Purchase Agreement if the
number of the Forward Purchase Shares it acquires would exceed 9.9% on a post-e.GO Transaction basis.
Note 7 — Stockholders’ Deficit
Class A Common Stock—The
Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of September 30, 2022
and December 31, 2021, there were 1,060,000 shares of Class A common stock issued and outstanding (excluding 23,000,000 shares subject
to possible redemption).
Pursuant to the e.Go Transaction, if approved by the Company’s
stockholders, at Closing, each issued and outstanding share of the Company’s Class A common stock will be automatically cancelled
and extinguished and converted into one share the Surviving Company Common Stock.
Class B Common Stock —
The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B
common stock are entitled to one vote for each share. As of September 30, 2022 and December 31, 2021, there were 8,050,000 shares of Class
B common stock outstanding.
Holders of Class A common
stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders except as
required by law.
The Company’s amended
and restated certificate of incorporation provides that the shares of Class B common stock will automatically convert into shares of Class
A common stock at the time of the initial Business Combination on a one-for-one basis, subject to adjustment. 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 IPO 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, approximately 26.0% of the
sum of the total number of all shares of common stock outstanding upon the completion of the IPO plus all shares of Class A common stock
and equity-linked securities issued or deemed issued in connection with the initial Business Combination (excluding any shares or equity-linked
securities issued, or to be issued, to any seller in the initial Business Combination and any private placement-equivalent warrants issued
to the Sponsor or its affiliates upon conversion of loans made to the Company). Holders of 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.
Pursuant to the e.Go Transaction,
if approved by the Company’s stockholders, at Closing, each issued and outstanding shares of Class B common stock will be automatically
cancelled and extinguished and converted into a number of shares of Surviving Company Common Stock calculated as the sum of (x) one plus
(y) the lower of (a) the total amount funded under the Bridge Financing divided by $15,000,000 and multiplied with one-fifth and (b) one-fifth,
and, immediately thereafter, each of the resulting shares of Surviving Company Common Stock will be exchanged for one TopCo Ordinary Share.
Preferred Stock—The
Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per shares with such designations, voting
and other rights and preferences as may be determined from time to time by the Company’s board of directors. For the periods presented,
there were no shares of preferred stock issued or outstanding.
Warrants—As of
September 30, 2022 and December 31, 2021, the Company has 11,500,000 Public Warrants and 530,000 Placement Warrants outstanding (together,
the “Warrants”). Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise
of the Warrants. The Warrants will become exercisable on the later of (a) the completion of a Business Combination and (b) 12 months from
the closing of the IPO. The Warrants will expire five years from the completion of a Business Combination or earlier upon redemption or
liquidation.
The Company will not be obligated
to deliver any shares of 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 common stock underlying the Warrants is then effective
and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No Warrant
will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise
their Warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state
of the exercising holder, or an exemption is available.
The Company has agreed that
as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, it will use its best
efforts to file, and within 60 business days following a Business Combination to have declared effective, a registration statement covering
the offer and sale of the shares of common stock issuable upon exercise of the Warrants. The Company will use its best efforts to cause
the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto,
until the expiration of the Warrants in accordance with the provisions of the warrant agreements. No Warrants will be exercisable for
cash unless the Company has an effective and current registration statement covering the offer and sale of 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 offer and sale of the shares of common stock issuable upon exercise of the 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.
Once the Warrants become exercisable,
the Company may redeem the Warrants:
|
● |
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 reported last sale price of the shares of common stock equals or exceeds $18.00 per share (as adjusted for share subdivisions, share consolidations, share capitalizations, rights issuances, 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 the Company sends the notice of redemption to the Warrant holders. |
If and when the Warrants become
redeemable by the Company, the Company may not exercise its redemption right if the issuance of shares upon exercise of the Warrants is
not exempt from registration or qualification under applicable state blue sky laws or the Company is unable to effect such registration
or qualification.
If the Company calls the Warrants
for redemption, management will have the option to require all holders that wish to exercise the Warrants to do so on a “cashless
basis,” as described in the Public Warrant agreement and Private 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 share dividend, or recapitalization,
reorganization, merger or consolidation. However, except as described below, the Warrants will not be adjusted for issuances of shares
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 shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of its
initial Business Combination at an issue price or effective issue price of less than $9.20 per share of 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) (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 Company’s initial Business Combination
on the date of the consummation of such initial Business Combination (net of redemptions), and (z) the volume weighted average trading
price of the Company’s shares of common stock during the 20 trading day period starting on the trading day prior to the day on which
the Company consummates its 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 greater of the Market Value and the Newly Issued
Price.
The Placement Warrants are
identical to the Public Warrants underlying the Units being sold in the IPO, except that the Placement Warrants and the shares of common
stock issuable upon the exercise of the Placement Warrants will not be transferable, assignable or saleable until 30 days after the completion
of a Business Combination, subject to certain limited exceptions. Additionally, the Placement Warrants will be exercisable at the election
of the holder on a “cashless basis”.
Neither the Placement Warrants
nor the Public Warrants contain any provision that change dependent upon the characteristics of the holder of the Warrant.
Note 8 — Fair Value Measurements
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 assessment of the assumptions that market participants would use in pricing the asset or liability.
At September 30, 2022 and
December 31, 2021, the assets held in the Trust Account were held in treasury funds. All of the Company’s investments held in the
Trust Account are classified as trading securities.
The following tables present
information about the Company’s liabilities that are measured at fair value on a recurring basis at September 30, 2022 and December
31, 2021 and indicate the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| |
| |
Quoted Prices in | | |
Significant Other | | |
Significant Other | |
| |
| |
Active Markets | | |
Observable Inputs | | |
Unobservable Inputs | |
September 30, 2022 | |
Level | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
Assets: | |
| |
| | |
| | |
| |
Marketable securities held in Trust Account | |
1 | |
$ | 235,904,801 | | |
| — | | |
| — | |
| |
| |
| | | |
| | | |
| | |
Liabilities: | |
| |
| | | |
| | | |
| | |
Derivative liability – Forward Purchase Agreement | |
3 | |
| — | | |
| — | | |
$ | 1,560,000 | |
| |
| | |
Quoted Prices in | | |
Significant Other | | |
Significant Other | |
| |
| | |
Active Markets | | |
Observable Inputs | | |
Unobservable Inputs | |
December 31, 2021 | |
Level | | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
Assets: | |
| | |
| | |
| | |
| |
U.S. Treasury Securities | |
| 1 | | |
$ | 234,604,169 | | |
| — | | |
| — | |
The
Company utilizes a Put Model Option to value its forward purchase agreement at each reporting period, with changes in fair value recognized
in the unaudited condensed statements of operations. The estimated fair value of the forward purchase agreement liabilities is determined
using Level 3 inputs. Inherent in put options pricing model are assumptions related to expected share-price volatility, expected life
and risk-free interest rate. The Company estimates the volatility of its ordinary shares based on historical volatility that matches the
expected remaining life of the forward purchase agreement. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield
curve on the grant date for a maturity similar to the expected remaining life of the forward purchase agreement. The expected life of
the forward purchase agreement is assumed to be equivalent to their remaining contractual term.
For the nine months ended
September 30, 2022 and December 31, 2021, there were no transfers between Levels 1, 2 or 3.
The
following table provides quantitative information regarding Level 3 fair value measurements:
| |
September 29,
2022 | | |
September 30,
2022 | |
Risk-free interest rate | |
| 4.20 | % | |
| 4.20 | % |
Term | |
| 2.51 | | |
| 2.50 | |
Expected volatility | |
| 69.80 | % | |
| 71.50 | % |
Exercise price | |
$ | 2.50 | | |
$ | 2.50 | |
Stock Price | |
$ | 10.06 | | |
$ | 10.06 | |
Probability of transaction | |
| 50 | % | |
| 50.0 | % |
The
following table presents the changes in the fair value of Forward Purchase Agreement:
| |
Forward | |
| |
Purchase | |
| |
Agreement | |
Fair value as of September 29, 2022 | |
$ | 1,430,000 | |
Change in valuation inputs or other assumptions | |
| 130,000 | |
Fair value as of September 30, 2022 | |
| 1,560,000 | |
Note 9 — Subsequent
Events
The Company evaluated subsequent
events and transactions that occurred after the condensed balance sheet date up to the date that the condensed financial statements were
issued. Based on this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in
the condensed financial statements.