(1) All shares and the associated amounts have been retroactively restated to reflect a 1:1.25 stock split of each outstanding share of Class B common stock in February 2020 and a 1:1.2 stock split of each outstanding share of Class B common stock in March 2020 (see Note 4).
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
1. Organization and Business Operations
Incorporation
Flying Eagle Acquisition
Corp. (the “Company”) was incorporated as a Delaware corporation on January 15, 2020.
Sponsor
The Company’s
sponsor is Eagle Equity Partners II, LLC, a Delaware limited liability company (the “Sponsor”). Harry E. Sloan, the
Company’s Chief Executive Officer and Chairman, and Eli Baker, the Company’s President, Chief Financial Officer and
Secretary, are members of the Sponsor.
Fiscal Year End
The Company has selected
December 31 as its fiscal year end.
Business Purpose
The Company was formed
for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar
business combination with one or more operating businesses that it has not yet selected (“Business Combination”). The
Company has neither engaged in any operations nor generated significant revenue to date.
The Company’s
management has broad discretion with respect to the specific application of the net proceeds of its initial public offering of
Units (the “Public Offering”), although substantially all of the net proceeds of the Public Offering are intended to
be generally applied toward completing a Business Combination. Furthermore, there is no assurance that the Company will be able
to successfully complete a Business Combination.
Financing
The Sponsor intends
to finance a Business Combination in part with proceeds from the $690,000,000 Public Offering and an approximately $15,050,000
private placement (the “Private Placement”), see Notes 3 and 4. The registration statement for the Public Offering
was declared effective by the U.S. Securities and Exchange Commission (“SEC”) on March 5, 2020. The Company consummated
the Public Offering of 69,000,000 units, including the issuance of 9,000,000 units as a result of the underwriters’ exercise
of their over-allotment option in full (the “Units”), at $10.00 per Unit on March 10, 2020, generating gross proceeds
of $690,000,000. Simultaneously with the closing of the Public Offering, the Company consummated the Private Placement of an aggregate
of 10,033,333 warrants (the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant. Upon the
closing of the Public Offering and Private Placement, $690,000,000 from the net proceeds of the Public Offering and the Private
Placement was placed in a U.S.-based trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee
(the “Trust Account”).
Trust Account
The proceeds held
in the Trust Account were invested in permitted United States “government securities” within the meaning of Section
2(a)(16) of the Investment Company Act of 1940, as amended (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 that
invest only in direct U.S. government treasury obligations.
The Company’s
second amended and restated certificate of incorporation (the “Charter”) provides that, other than the withdrawal of
interest earned on the funds that may be released to the Company to fund working capital requirements (subject to an aggregate
limit of $1,000,000) and/or to pay taxes, none of the funds held in the Trust Account will be released until the earlier of: (i)
the completion of the Business Combination; (ii) the redemption of any of the shares of Class A common stock, par value $0.0001
per share (the “Class A Common Stock”) included in the Units sold in the Public Offering properly submitted in connection
with a stockholder vote to amend the Charter to modify the substance or timing of the Company’s obligation to redeem 100%
of the common stock included in the Units being sold in the Public Offering if the Company does not complete the Business Combination
within 24 months from the closing of the Public Offering or with respect to any other material provisions relating to stockholders’
rights or pre-initial Business Combination activity or (iii) the redemption of 100% of the shares of Class A Common Stock included
in the Units sold in the Public Offering if the Company is unable to complete a Business Combination within 24 months from the
closing of the Public Offering.
The Company, after
signing a definitive agreement for a Business Combination, will either (i) seek stockholder approval of the Business Combination
at a meeting called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether
they vote for or against the Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit
in the Trust Account calculated as of two business days prior to the consummation of the Business Combination, including interest
earned on the funds held in the Trust Account and not previously released to the Company to fund its working capital requirements
(subject to an aggregate limit of $1,000,000) and/or to pay taxes, or (ii) provide stockholders with the opportunity to sell their
shares to the Company by means of a tender offer for an amount in cash equal to their pro rata share of the aggregate amount then
on deposit in the Trust Account calculated as of two business days prior to commencement of the tender offer, including interest
earned on the funds held in the Trust Account and not previously released to the Company to fund its working capital requirements
and/or to pay taxes. However, in no event will the Company redeem its public shares in an amount that would cause its net tangible
assets to be less than $5,000,001 upon consummation of the Company’s initial Business Combination and after payment of underwriters’
fees and commissions. In such case, the Company would not proceed with the redemption of its public shares and the related Business
Combination, and instead may search for an alternate Business Combination.
If the Company holds
a stockholder vote in connection with a Business Combination, a public stockholder will have the right to redeem its shares for
an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account calculated as of two
business days prior to the consummation of the Business Combination, including interest earned on the funds held in the Trust Account
but not previously released to the Company to fund its working capital requirements (subject to an aggregate limit of $1,000,000)
and/or to pay taxes. As a result, such common stock will be recorded at redemption amount and classified as temporary equity upon
the completion of the Public Offering, in accordance with FASB, ASC 480, “Distinguishing Liabilities from Equity”.
The Company has 24
months from the closing of the Public Offering to complete its Business Combination (or until March 10, 2022). If the Company does
not complete a Business Combination within this period of time, it will (i) cease all operations except for the purposes of winding
up, (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the public shares for a per
share pro rata portion of the Trust Account, including interest, but less income taxes payable (less up to $100,000 of such net
interest to pay dissolution expenses) and (iii) as promptly as possible following such redemption, dissolve and liquidate the balance
of the Company’s net assets to its remaining stockholders, as part of its plan of dissolution and liquidation. The Sponsor
and the Company’s executive officers and independent directors (the “initial stockholders”) entered into a letter
agreement with the Company, pursuant to which they waived their rights to participate in any redemption with respect to their Founder
Shares (as defined below); however, if the initial stockholders or any of the Company’s officers, directors or affiliates
acquire shares of Class A Common Stock, they will be entitled to a pro rata share of the Trust Account upon the Company’s
redemption or liquidation in the event the Company does not complete a Business Combination within the required time period. 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 less than the initial public offering price per Unit in the Public Offering.
Emerging Growth Company
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 of 1933, as amended (the “Securities Act”)
registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of
1934, as amended (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 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, we, 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 accountant standards used.
2. Significant Accounting Policies
Basis of Presentation
These unaudited condensed
financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in
the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. The interim financial information
provided is unaudited, but includes all adjustments which management considers necessary for the fair presentation of the results
for the period ended March 31, 2020. Operating results for the period ended March 31, 2020 are not necessarily indicative of the
results that may be expected through December 31, 2020 and should be read in conjunction with the Company’s audited financial
statements and notes thereto included in the Company’s prospectus filed with the SEC on March 5, 2020, and the Company’s
audited balance sheet and notes thereto included in the Company’s Form 8-K filed with the SEC on March 10, 2020.
Net Income (Loss) Per Share
Net income (loss)
per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the
period. The Company has not considered the effect of the warrants sold in the Public Offering (including the over-allotment) and
private placement warrants to purchase approximately 17,250,000 and 10,033,333 shares of the Company’s Class A common stock,
respectively, in the calculation of diluted income per share, since their inclusion would be anti-dilutive under the treasury stock
method.
The
Company’s statement of operations includes a presentation of net income per share for common shares subject to
redemption in a manner similar to the two-class method of net income (loss) per share. Net income (loss) per common share for
basic and diluted for Class A common stock is calculated by dividing the interest income earned on the Trust Account of
$207,664, net of franchise taxes of $40,548, working capital up to an aggregate limit of $1,000,000, and income taxes of
$34,118, by the weighted average number of Class A common stock since issuance. Net loss per common share for basic and
diluted for Class B common stock is calculated by dividing the net loss, which excludes income attributable to Class A common
stock, by the weighted average number of Class B common stock outstanding for the period.
Concentration of Credit Risk
Financial instruments
that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which,
at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts
and management believes the Company is not exposed to significant risks on such accounts.
Fair Value of Financial Instruments
The fair value of
the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements
and Disclosures,” approximates the carrying amounts represented in the balance sheet.
Use of Estimates
The preparation of
financial statements in conformity with 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 financial statements and the reported
amounts of revenue and expenses during the reporting period. 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 conforming events. Actual results could differ
from those estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers
all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.
Class A Common Stock Subject to
Possible Redemption
As discussed in Note 1, all of the 69,000,000 shares of Class
A common stock sold as part of the Units in the Public Offering contain a redemption feature which allows for the redemption of
shares of Class A common stock under the Charter. In accordance with FASB ASC 480, redemption provisions not solely within the
control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve
the redemption and liquidation of all of the entity's equity instruments, are excluded from the provisions of FASB ASC 480. Although
the Company has not specified a maximum redemption threshold, its Charter provides that in no event will the Company redeem its
Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001.
The Company recognizes changes in redemption value immediately
as they occur and will adjust the carrying value at the end of each reporting period. Increases or decreases in the carrying amount
of redeemable shares of Class A common stock shall be affected by charges against additional paid in capital.
Accordingly, at March 31, 2020, 66,162,062 of the 69,000,000
shares of Class A common stock included in the Units were classified outside of permanent equity at approximately $10.00 per share.
Offering Costs
The Company complies
with the requirements of the ASC 340-10-S99-1. Offering costs of $38,586,442 consisting principally of underwriters' discounts of $37,950,000 (including $24,150,000 of which payment is deferred) and $636,442 of professional,
printing, filing, regulatory and other costs incurred
through March 31, 2020 that were related to the Public Offering were charged to additional paid-in capital upon completion of the
Public Offering.
Income Taxes
The Company complies
with the accounting and reporting requirements of Financial Accounting Standards Board Accounting Standard Codification, or FASB
ASC, 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for
income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases
of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.
There were no
unrecognized tax benefits as of March 31, 2020. FASB ASC 740 prescribes a recognition threshold and a measurement attribute
for the financial statement recognition and measurement of tax positions 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. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax
expense. No amounts were accrued for the payment of interest and penalties at March 31, 2020. The Company is currently not
aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company is subject to income tax examinations by major taxing authorities since inception. The Company's current taxable
income primarily consists of interest income on the Trust Account. The Company's general and administrative costs are
generally considered start-up costs and are not currently deductible. During the period from January 15, 2020 (inception)
through March 31, 2020, the Company recorded income tax expense of approximately $34,000.
Recent Accounting Pronouncements
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 financial statements.
3. Public Offering
Public Units
In the Public Offering,
which closed March 10, 2020, the Company sold 69,000,000 Units at a price of $10.00 per Unit. Each Unit consists of one share of
Class A Common Stock and one-fourth of one redeemable warrant (each whole warrant, a “Warrant”). Each whole Warrant
entitles the holder to purchase one share of Class A Common Stock at a price of $11.50 per share. Each Warrant will become exercisable
on the later of 30 days after the completion of our initial business combination and 12 months from the closing of the Public Offering.
The exercise price and number of shares of Class A Common Stock issuable upon exercise of the Warrants may be adjusted in certain
circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation.
The Company granted
the underwriters a 45-day option to purchase up to 9,000,000 additional Units to cover any over-allotment, at the Public Offering
price less the underwriting discounts and commissions. The Company issued 9,000,000 Units in connection with the underwriters’
exercise of the over-allotment option in full.
Underwriting Commissions
The Company paid an
underwriting discount of $13,800,000 ($0.20 per Unit sold) to the underwriters at the closing of the Public Offering on March 10,
2020, with an additional fee (“Deferred Discount”) of $24,150,000 ($0.35 per Unit sold) payable upon the Company’s
completion of an initial Business Combination. The Deferred Discount will become payable to the underwriters from the amounts held
in the Trust Account solely in the event the Company completes its initial Business Combination.
4. Related Party Transactions
Founder Shares
On January 15, 2020,
the Sponsor received 11,500,000 shares of Class B common stock (the “Founder Shares”) in exchange for a capital contribution
of $25,000, or approximately $0.002 per share.
The Founder Shares
are identical to the shares of Class A Common Stock included in the Units sold in the Public Offering except that the Founder Shares
are subject to certain transfer restrictions, as described in more detail below.
On February 10,
2020, the Company effected a 1:1.25 stock split of the Founder Shares, resulting in the Sponsor holding 14,375,000 Founder
Shares. On March 2, 2020, the Sponsor transferred 20,000 Founder Shares to each of Scott M. Delman and Joshua Kazam,
directors of the Company, (together with the Sponsor, the “initial stockholders”) for an aggregate purchase price
of $80 (the same per-share price initially paid by the Sponsor), resulting in the Sponsor holding 14,335,000 Founder Shares
and each of Messrs. Delman and Kazam holding 20,000 Founder Shares. On March 5, 2020, the Company effected a 1:1.2 stock
split of the Founder Shares, resulting in the Sponsor holding an aggregate of 17,210,000 Founder Shares and each of Messrs.
Delman and Kazam holding 20,000 Founder Shares, for a total of 17,250,000 Founder Shares outstanding. The shares and the
associated amounts have been retroactively restated to reflect the 1:1.25 stock split of each outstanding share of Class B
common stock in February 2020 and the 1:1.2 stock split in March 2020.
The initial stockholders
have agreed not to transfer, assign or sell any of their Founder Shares until the earlier of (A) one year after the completion
of the Company’s initial Business Combination, or earlier if, subsequent to the Company’s initial Business Combination,
the closing price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations,
reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150
days after the Company’s initial Business Combination, and (B) the date on which the Company completes a liquidation, merger,
capital stock exchange or other similar transaction after the initial Business Combination that results in all of the Company’s
stockholders having the right to exchange their common stock for cash, securities or other property.
Private Placement Warrants
In conjunction with
the Public Offering, the Sponsor purchased an aggregate of 10,033,333 Private Placement Warrants, at a price of $1.50 per warrant
(approximately $15,050,000 in the aggregate) in the Private Placement. Each Private Placement Warrant entitles the holder to purchase
one share of Class A Common Stock at $11.50 per share. A portion of the purchase price of the Private Placement Warrants was added
to the proceeds from the Public Offering to be held in the Trust Account such that at closing of the Public Offering, $690,000,000
was placed in the Trust Account.
The Private Placement
Warrants (including the shares of common stock issuable upon exercise of the Private Placement Warrants) are not transferable,
assignable or salable until 30 days after the completion of the initial Business Combination and they are non-redeemable for cash
so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted transferees. If the Private
Placement Warrants are held by someone other than the initial purchasers of the Private Placement Warrants or their permitted transferees,
the Private Placement Warrants will be redeemable for cash by the Company and exercisable by such holders on the same basis as
the warrants included in the Units sold in the Public Offering. Otherwise, the Private Placement Warrants have terms and provisions
that are identical to those of the Warrants sold as part of the Units in the Public Offering and have no net cash settlement provisions.
If the Company does
not complete a Business Combination, then the proceeds will be part of the liquidating distribution to the public stockholders
and the Warrants issued to the Sponsor will expire worthless.
Registration Rights
The holders of the
Founder Shares, Private Placement Warrants and Warrants that may be issued upon conversion of working capital loans (and any 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) are entitled to registration rights pursuant to a registration
rights agreement, requiring the Company to register such securities for resale. The holders of these securities are entitled to
make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain
“piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our
initial business combination. The Company will bear the expenses incurred in connection with the filing of any such registration
statements.
Sponsor Loans
The Sponsor agreed
to loan the Company up to an aggregate of $300,000 by the issuance of an unsecured promissory note (the “Note”) to
cover expenses related to the Public Offering. The Note was payable without interest on the earlier of December 31, 2020 or the
completion of the Public Offering. As of March 31, 2020, there was $230,885 outstanding under the Note.
Administrative Services Agreement
The Company entered
into an administrative services agreement in which the Company will reimburse an affiliate of the Sponsor for office space, utilities
and secretarial and administrative services provided to members of the Company’s management team in an amount not to exceed
$15,000 per month. For the period from January 15, 2020 (inception) through March 31, 2020, the Company incurred no administrative services expenses
under the arrangement. The administrative services fee will commence April 1, 2020.
Working Capital 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. Up to
$1,500,000 of such loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant
at the option of the lender. Such warrants would be identical to the private placement warrants. The terms of such loans have
not been determined and no written agreements exist with respect to such loans. To date, the Company had no borrowings under any
working capital loan.
5. Commitments and Contingencies
Underwriting
Agreement
The Company is committed
to pay the Deferred Discount totaling $24,150,000, or 3.5% of the gross offering proceeds of the Public Offering, to the underwriters
upon the Company’s consummation of a Business Combination. The underwriters will not be entitled to any interest accrued
on the Deferred Discount, and no Deferred Discount is payable to the underwriters if there is no Business Combination.
Risks and Uncertainties
Management is currently
evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the
virus could have a negative effect on the Company's, or its target’s, financial position, results of its operations and/or
completion of the Business Combination, the specific impact is not readily determinable as of the date of these financial statements.
The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
6. Trust Account
The fair value of
the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have
received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities,
the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the
use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following
fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in
order to value the assets and liabilities:
Level 1:
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
|
Level 2:
|
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
Level 3:
|
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The following table
presents information about the Company’s assets that are measured at fair value on a recurring basis at March 31, 2020 and
indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description
|
|
Level
|
|
|
March 31,
2020
|
|
Assets:
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account – U.S. Treasury Securities Money Market Fund
|
|
|
1
|
|
|
$
|
690,207,664
|
|
Transfers to/from Levels 1, 2, and 3 are recognized at the end
of the reporting period. There were no transfers between levels for the period from January 15, 2020 (inception) to March 31, 2020.
Level 1 instruments include investments in money market funds
and U.S. Treasury securities. The Company uses inputs such as actual trade data, benchmark yields, quoted market prices from dealers
or brokers, and other similar sources to determine the fair value of its investments.
7. Stockholders’ Equity
Class A Common
Stock - The Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of
$0.0001 per share. As of March 31, 2020, there were 69,000,000 shares of Class A common stock issued and outstanding of which,
66,162,062 were classified outside of permanent equity.
Class B Common
Stock - The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of
$0.0001 per share. Holders of the Company’s Class B common stock are entitled to one vote for each share. As of March 31,
2020, there were 17,250,000 shares of Class B common stock issued and outstanding.
Preferred stock - The
Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share. As of March 31, 2020,
there were no shares of preferred stock issued or outstanding.
Warrants — Public
Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the
Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a)
30 days after the completion of a Business Combination or (b) 12 months from the closing of the Public Offering; provided in each
case that the Company has an effective registration statement under the Securities Act covering the shares of Class A Common Stock
issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders
to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities
Act). 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, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the
Securities Act, of the shares of Class A Common Stock issuable upon exercise of the Public 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 Public Warrants in accordance with the provisions of the warrant agreement relating
to the Warrants. If a registration statement covering the shares of Class A Common Stock issuable upon exercise of the Warrants
is not effective by the sixtieth (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. The Public Warrants will expire five years after the completion of a Business Combination or earlier
upon redemption or liquidation.
The Private Placement
Warrants are identical to the Public Warrants underlying the Units sold in the Public Offering, except that the Private Placement
Warrants and the shares of Class A Common Stock issuable upon exercise of the Private Placement Warrants will not be transferable,
assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally,
the Private Placement Warrants will be non-redeemable so long as they are held by the initial purchasers or such purchasers’
permitted transferees. If the Private Placement Warrants are held by someone other than their initial purchasers or their permitted
transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis
as the Public Warrants.
The Company may call
the Warrants for redemption (except with respect to the Private Placement 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; and
|
|
·
|
if, and only if, the last reported 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.
|
Additionally, commencing
ninety days after the Warrants become exercisable, the Company may redeem its outstanding Warrants in whole and not in part, for
the number of Class A ordinary shares determined by reference to the table set forth in the Company’s prospectus relating
to the Public Offering based on the redemption date and the “fair market value” of the Class A Common Stock, upon a
minimum of 30 days’ prior written notice of redemption and if, and only if, the last sale price of the Class A ordinary shares
equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like)
on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders, if, and only if,
the Private Placement Warrants are also concurrently exchanged at the same price (equal to a number of shares of Class A Common
Stock) as the outstanding Warrants, as described above and if, and only if, there is an effective registration statement covering
the shares of Class A Common Stock issuable upon exercise of the Warrants and a current prospectus relating thereto available throughout
the 30-day period after written notice of redemption is given. The “fair market value” of the shares of Class A Common
Stock is the average last reported sale price of the Class A Common Stock for the 10 trading days ending on the third trading day
prior to the date on which the notice of redemption is sent to the holders of warrants.
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 warrant agreement.
The exercise price
and number of shares of Class A Common Stock issuable upon exercise of the Warrants may be adjusted in certain circumstances. If
the Company is unable to complete a Business Combination within the required time 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 Class A Common Stock or equity-linked securities for capital raising purposes in connection
with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of
Class A Common Stock (with such issue price or effective issue price to be determined in good faith by the Company’s board
of directors and, in the case of any such issuance to the initial stockholders or their affiliates, without taking into account
any Founder Shares held by the initial stockholders or such affiliates, as applicable, prior to such issuance), (y) the aggregate
gross proceeds from such issuances represent more than 50% of the total equity proceeds, and interest thereon, available for the
funding of the initial Business Combination, and (z) the volume weighted average trading price of the Class A Common Stock during
the 10 trading day period starting on the trading day after 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 Market Value, and the $18.00 per share redemption trigger price of the Warrants will
be adjusted (to the nearest cent) to be equal to 180% of the Market Value. However, if the Company does not complete its initial
Business Combination on or prior to March 10, 2022, the Warrants will expire at the end of such period.
8. Subsequent Events
The Company evaluated
subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were
issued.