Item 1. Condensed Financial Statements (Unaudited)
FAST ACQUISITION CORP. II
CONDENSED BALANCE SHEETS
| |
June 30,
2022 | | |
December 31,
2021 | |
| |
(Unaudited) | | |
| |
Assets: | |
| | |
| |
Current assets: | |
| | |
| |
Cash | |
$ | 397,495 | | |
$ | 584,216 | |
Prepaid expenses | |
| 270,581 | | |
| 378,247 | |
Total current assets | |
| 668,076 | | |
| 962,463 | |
Investments held in Trust Account | |
| 222,507,532 | | |
| 222,380,591 | |
Total Assets | |
$ | 223,175,608 | | |
$ | 223,343,054 | |
| |
| | | |
| | |
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit: | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 1,331,148 | | |
$ | 165,909 | |
Accrued expenses | |
| 124,325 | | |
| 141,216 | |
Franchise tax payable | |
| 20,050 | | |
| 200,000 | |
Income tax payable | |
| 13,077 | | |
| - | |
Due to related party | |
| - | | |
| 15,000 | |
Working capital loan - related party, at fair value | |
| 610,648 | | |
| - | |
Total current liabilities | |
| 2,099,248 | | |
| 522,125 | |
Derivative warrant liabilities | |
| 1,182,750 | | |
| 8,660,890 | |
Deferred underwriting commissions in connection with the initial public offering | |
| 7,781,790 | | |
| 7,781,790 | |
Total Liabilities | |
| 11,063,788 | | |
| 16,964,805 | |
| |
| | | |
| | |
Commitments and Contingencies | |
| | | |
| | |
| |
| | | |
| | |
Class A common stock; $0.0001 par value; 22,233,687 shares subject to possible redemption at redemption value of $10.00 per share as of June 30, 2022 and December 31, 2021 | |
| 222,336,870 | | |
| 222,336,870 | |
| |
| | | |
| | |
Stockholders’ Deficit: | |
| | | |
| | |
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding | |
| - | | |
| - | |
Class A common stock, $0.0001 par value; 380,000,000 shares authorized; no non-redeemable shares issued or outstanding at June 30, 2022 and December 31, 2021 | |
| - | | |
| - | |
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 5,558,422 shares issued and outstanding at June 30, 2022 and December 31, 2021 | |
| 556 | | |
| 556 | |
Additional paid-in capital | |
| - | | |
| - | |
Accumulated deficit | |
| (10,225,606 | ) | |
| (15,959,177 | ) |
Total stockholders’ deficit | |
| (10,225,050 | ) | |
| (15,958,621 | ) |
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit | |
$ | 223,175,608 | | |
$ | 223,343,054 | |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
FAST ACQUISITION CORP. II
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
| |
For The Three Months Ended
June 30, | | |
For The Six Months Ended
June 30, | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
| |
| | |
| | |
| | |
| |
General and administrative costs | |
$ | 1,570,737 | | |
$ | 281,517 | | |
$ | 1,807,735 | | |
$ | 308,325 | |
Administrative expenses - related party | |
| 45,000 | | |
| 45,000 | | |
| 90,000 | | |
| 60,000 | |
Franchise tax expense | |
| 50,735 | | |
| 49,863 | | |
| 100,050 | | |
| 99,130 | |
Loss from operations | |
| (1,666,472 | ) | |
| (376,380 | ) | |
| (1,997,785 | ) | |
| (467,455 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other income (expense): | |
| | | |
| | | |
| | | |
| | |
Change in fair value of derivative warrant liabilities | |
| 2,069,810 | | |
| 1,028,600 | | |
| 7,478,140 | | |
| 1,281,310 | |
Change in fair value of working capital loan | |
| (10,648 | ) | |
| - | | |
| (10,648 | ) | |
| - | |
Offering cost - derivative warrant liabilities | |
| - | | |
| - | | |
| - | | |
| (455,643 | ) |
Gain (loss) from investments held in Trust Account | |
| 337,020 | | |
| 6,383 | | |
| 276,941 | | |
| (811 | ) |
Income before income tax expense | |
| 729,710 | | |
| 658,603 | | |
| 5,746,648 | | |
| 357,401 | |
| |
| | | |
| | | |
| | | |
| | |
Income tax expense | |
| 13,077 | | |
| - | | |
| 13,077 | | |
| - | |
Net income | |
$ | 716,633 | | |
$ | 658,603 | | |
$ | 5,733,571 | | |
$ | 357,401 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding of Class A common stock, basic and diluted | |
| 22,233,687 | | |
| 22,233,687 | | |
| 22,233,687 | | |
| 13,238,101 | |
Basic and diluted net income per share, Class A common stock | |
$ | 0.03 | | |
$ | 0.02 | | |
$ | 0.21 | | |
$ | 0.02 | |
Weighted average shares outstanding of Class B common stock, basic and diluted | |
| 5,558,422 | | |
| 5,558,422 | | |
| 5,558,422 | | |
| 5,307,767 | |
Basic and diluted net income per share, Class B common stock | |
$ | 0.03 | | |
$ | 0.02 | | |
$ | 0.21 | | |
$ | 0.02 | |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
FAST ACQUISITION CORP. II
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ DEFICIT
| |
For The Three and Six Months Ended June 30, 2022 | |
| |
Class B Common Stock | | |
Additional
Paid-In | | |
Accumulated | | |
Total
Stockholders’ | |
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance - December 31, 2021 | |
| 5,558,422 | | |
$ | 556 | | |
$ | - | | |
$ | (15,959,177 | ) | |
$ | (15,958,621 | ) |
Net income | |
| - | | |
| - | | |
| - | | |
| 5,016,938 | | |
| 5,016,938 | |
Balance - March 31, 2022 (Unaudited) | |
| 5,558,422 | | |
$ | 556 | | |
| - | | |
$ | (10,942,239 | ) | |
$ | (10,941,683 | ) |
Net income | |
| - | | |
| - | | |
| - | | |
| 716,633 | | |
| 716,633 | |
Balance - June 30, 2022 (Unaudited) | |
| 5,558,422 | | |
$ | 556 | | |
| - | | |
$ | (10,225,606 | ) | |
$ | (10,225,050 | ) |
| |
For The Three and Six Months Ended June 30, 2021 | |
| |
Class B Common Stock | | |
Additional Paid-In | | |
Accumulated | | |
Total Stockholders’ | |
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance - December 31, 2020 | |
| - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
Issuance of Class B common stock to Sponsor | |
| 5,750,000 | | |
| 575 | | |
| 24,425 | | |
| - | | |
| 25,000 | |
Excess cash received over the fair value of the private warrants | |
| - | | |
| - | | |
| 515,738 | | |
| - | | |
| 515,738 | |
Forfeiture of Class B common stock | |
| (191,578 | ) | |
| (19 | ) | |
| 19 | | |
| - | | |
| - | |
Accretion of Class A common stock subject to possible redemption amount | |
| | | |
| | | |
| (540,182 | ) | |
| (19,462,251 | ) | |
| (20,002,433 | ) |
Net loss | |
| - | | |
| - | | |
| - | | |
| (301,202 | ) | |
| (301,202 | ) |
Balance - March 31, 2021 (Unaudited) | |
| 5,558,422 | | |
| 556 | | |
| - | | |
| (19,763,453 | ) | |
| (19,762,897 | ) |
Net loss | |
| - | | |
| - | | |
| - | | |
| 658,603 | | |
| 658,603 | |
Balance - June 30, 2021 (Unaudited) | |
| 5,558,422 | | |
$ | 556 | | |
$ | - | | |
$ | (19,104,850 | ) | |
$ | (19,104,294 | ) |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
FAST ACQUISITION CORP. II
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
| |
For The Six Months Ended
June 30, | |
| |
2022 | | |
2021 | |
Cash Flows from Operating Activities: | |
| | |
| |
Net income | |
$ | 5,733,571 | | |
$ | 357,401 | |
Adjustments to reconcile net income to net cash used in operating activities: | |
| | | |
| | |
Gain (loss) from investments held in Trust Account | |
| (276,941 | ) | |
| 811 | |
Change in fair value of derivative warrant liabilities | |
| (7,478,140 | ) | |
| (1,281,310 | ) |
Change in fair value of working capital loan | |
| 10,648 | | |
| - | |
Offering cost - derivative warrant liabilities | |
| - | | |
| 455,643 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| 107,666 | | |
| (566,183 | ) |
Accounts payable | |
| 1,165,239 | | |
| 136,412 | |
Accrued expenses | |
| (16,891 | ) | |
| 20,555 | |
Franchise tax payable | |
| (179,950 | ) | |
| 98,680 | |
Income tax payable | |
| 13,077 | | |
| - | |
Due to related party | |
| (15,000 | ) | |
| - | |
Net cash used in operating activities | |
| (936,721 | ) | |
| (777,991 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities | |
| | | |
| | |
Cash deposited in Trust Account | |
| - | | |
| (222,336,870 | ) |
Withdrawal from Trust Account | |
| 150,000 | | |
| - | |
Net cash provided by (used in) investing activities | |
| 150,000 | | |
| (222,336,870 | ) |
| |
| | | |
| | |
Cash Flows from Financing Activities: | |
| | | |
| | |
Proceeds from issuance of working capital loan to related party | |
| 600,000 | | |
| 100,000 | |
Repayment of note payable to related party | |
| - | | |
| (100,000 | ) |
Proceeds received from initial public offering, gross | |
| - | | |
| 222,336,870 | |
Proceeds received from private placement | |
| - | | |
| 6,446,738 | |
Offering costs paid | |
| - | | |
| (4,880,666 | ) |
Net cash provided by financing activities | |
| 600,000 | | |
| 223,902,942 | |
| |
| | | |
| | |
Net increase (decrease) in cash | |
| (186,721 | ) | |
| 788,081 | |
| |
| | | |
| | |
Cash - beginning of the period | |
| 584,216 | | |
| - | |
Cash - end of the period | |
$ | 397,495 | | |
$ | 788,081 | |
| |
| | | |
| | |
Supplemental disclosure of noncash activities: | |
| | | |
| | |
Offering costs paid by Sponsor in exchange for issuance of Class B common stock | |
$ | - | | |
$ | 25,000 | |
Offering costs included in accrued expenses | |
$ | - | | |
$ | 100,000 | |
Deferred underwriting commissions in connection with the initial public offering | |
$ | - | | |
$ | 7,781,790 | |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
FAST ACQUISITION CORP.
II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 - Description of Organization, Business
Operations and Liquidity
Organization and General
FAST Acquisition Corp. II (the “Company”)
is a blank check company incorporated in Delaware on December 30, 2020. The Company was formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses
(the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to all of the
risks associated with emerging growth companies.
As of June 30, 2022, the Company had not commenced
any operations. All activity for the period from December 30, 2020 (inception) through June 30, 2022 relates to the Company’s formation,
the initial public offering (the “Initial Public Offering”), and since the Initial Public Offering, the search for an 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 from the proceeds derived from the Initial
Public Offering.
The Company’s sponsor is FAST Sponsor II
LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public
Offering was declared effective on March 15, 2021. On March 18, 2021, the Company consummated its Initial Public Offering of 20,000,000
units (the “Units” and, 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 $200.0 million, and incurring offering costs of approximately $11.6 million, inclusive
of $7.0 million in deferred underwriting commissions (see Note 5). The Company granted the underwriter in the Initial Public Offering
(the “underwriter”) a 45-day option to purchase up to 3,000,000 additional units at the Initial Public Offering price to
cover over-allotments, if any. The underwriter exercised the over-allotment option in part and, on March 26, 2021, the Company consummated
the sale of additional 2,233,687 units at the Initial Public Offering price at $10.00 per Unit, generating additional gross proceeds
of approximately $22.3 million (the “Over-Allotment”), and incurring additional offering costs of approximately $1.2 million,
inclusive of approximately $0.8 million in deferred underwriting commissions.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the private placement (“Private Placement”) of 4,000,000 warrants (each, a “Private
Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant
to the Sponsor, generating proceeds of $6.0 million. The Company consummated a second closing (the “Second Closing”) of the
Private Placement simultaneously with the closing of the Over-Allotment on March 26, 2021, for an additional 297,825 Private Placement
Warrants at a price of $1.50 per Private Placement Warrant, generating proceeds of approximately $0.4 million (see Note 4).
Upon the closing of the Initial Public Offering,
the Over-Allotment and the Private Placement, $222.3 million ($10.00 per Unit) of the net proceeds were placed in a trust account (“Trust
Account”) located in the United States at JP Morgan Chase Bank, N.A. with Continental Stock Transfer & Trust Company acting
as trustee, and are invested only in U.S. “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 which invest only in direct U.S. government
treasury obligations, 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 Initial Public Offering and the sale of Private Placement Warrants,
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 net assets held in the Trust Account (excluding
the amount of any deferred underwriting discount held in Trust) 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 business sufficient for it not to be required
to register as an investment company under the Investment Company Act.
FAST ACQUISITION CORP.
II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Company will provide the holders (the “Public
Stockholders”) of the Company’s Public Shares with the opportunity to redeem all or a portion of their Public Shares upon
the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination
or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or
conduct a tender offer will be made by the Company, solely in its discretion, subject to applicable law and stock exchange listing requirements.
The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account
(at $10.00 per Public Share). The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be
reduced by the deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 5). These Public Shares
were recorded at a redemption value and classified as temporary equity in accordance with the Financial Accounting Standards Board’s
(“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
The Company will proceed with a Business Combination only if a majority of the shares voted are voted in favor of the Business Combination.
The Company will not redeem the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. 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 Amended and Restated Certificate of Incorporation (the “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 law, or the Company decides to obtain stockholder approval for business or legal reasons,
the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the
tender offer rules. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for
or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the initial
stockholders (as defined below) agreed to vote their Founder Shares (as defined below in Note 4) and any Public Shares purchased during
or after the Initial Public Offering in favor of a Business Combination or don’t vote at all. In addition, the initial stockholders
agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a
Business Combination.
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 Public Shares, without the
prior consent of the Company.
The Sponsor and the Company’s officers
and directors (the “initial stockholders”) agreed not to propose an amendment to the Certificate of Incorporation to modify
the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business
Combination within the initial Combination Period (as defined below) or with respect to any other material provisions relating to stockholders’
rights or pre-initial Business Combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem
their Public Shares in conjunction with any such amendment.
If the Company is unable to complete a Business
Combination within 24 months from the closing of the Initial Public Offering, or March 18, 2023 (as such period may be extended by the
Company’s stockholders in accordance with the Certificate of Incorporation, the “Combination Period”), the Company
will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business
days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
Trust Account, including interest earned on the funds held in the Trust Account (net of permitted withdrawals and 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), and (iii) as promptly
as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, liquidate
and dissolve, 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.
FAST ACQUISITION CORP.
II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The initial stockholders agreed to waive their
rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business
Combination within the Combination Period. However, if the initial stockholders acquire Public Shares in or after the Initial Public
Offering, 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 underwriter agreed to waive its rights to the deferred underwriting
commission (see Note 5) 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 $10.00 or potentially less. In order to protect the
amounts held in the Trust Account, the Sponsor agreed to be liable to the Company if and to the extent any claims by a third party (except
for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective
target business with which the Company has entered into a letter of intent, confidentiality or other similar agreement or business combination
agreement (a “Target”), reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share
and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less
than $10.00 per Public Share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will
not apply to any claims by a third party or Target that executed a waiver of any and all rights to the monies held in the Trust Account
(whether or not such waiver is enforceable) not will it apply to any claims under the Company’s indemnity of the underwriter of
the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities
Act”). 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 (other than the Company’s independent registered public accounting
firm), prospective target businesses and other entities with which the Company does business, execute agreements with the Company waiving
any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Going Concern Consideration
As of June 30, 2022, the Company had approximately
$397,000 in its operating bank account and a working capital deficit of approximately $1.4 million.
The Company’s liquidity needs prior to
the consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor to cover for certain offering
costs on the Company’s behalf in exchange for issuance of Founder Shares (as defined in Note 4), and loan proceeds from the Sponsor
of $100,000 under the Promissory Note (the “Note”). The Company repaid the Note in full upon closing of the Initial Public
Offering. Subsequent to the consummation of the Initial Public Offering, the Company’s liquidity through June 30, 2022 has been
satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside of the
Trust Account and the proceeds from the Working Capital Loan of $600,000 (as defined in Note 4). In July 2022, the Company received another
$500,000 under the Working Capital Loan from the Sponsor, for a total of $1.1 million Working Capital Loan outstanding. At any time on
or prior to the consummation of the Business Combination, at the option of the lender, any outstanding amount of the Working Capital
Loan may be converted into warrants of the post-Business Combination entity at a price of $1.50 per warrant. The warrants would be identical
to the Private Placement Warrants.
In connection with the Company’s assessment
of going concern considerations in accordance with FASB ASC 205-40, “Presentation of Financial Statements - Going Concern,”
management has determined that mandatory liquidation, liquidity condition and subsequent dissolution raise substantial doubt about the
Company’s ability to continue as a going concern. Management intends to complete the proposed Business Combination with Falcon
(see Note 10) prior to the liquidation date, March 18, 2023. The Sponsor continues to have cash on hand that could be available for loans
to the Company. The Sponsor has no obligation to provide further funding to the Company. Management believes it could obtain additional
funding from the Sponsor.
No adjustments have been made to the carrying
amounts of assets or liabilities should the Company be required to liquidate after March 18, 2023. The unaudited condensed financial
statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.
FAST ACQUISITION CORP.
II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial
statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America
(“GAAP”) for financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include
all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect
all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the
period presented. Operating results for the three and six months ended June 30, 2022, are not necessarily indicative of the results that
may be expected through December 31, 2022, or any future period.
The accompanying unaudited condensed financial
statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form
10-K filed by the Company with the SEC on March 29, 2022.
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”),
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public
accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote
on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that 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 statement 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.
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 limits of $250,000. As of June 30, 2022 and December 31, 2021, the Company has not experienced
losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
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 no cash equivalents held outside
the Trust Account as of June 30, 2022 and December 31, 2021.
FAST ACQUISITION CORP.
II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Investments Held in Trust Account
The Company’s portfolio of investments
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 is included in income (loss) from investments held in the Trust Account in the accompanying
condensed statement of operations. The estimated fair values of investments held in the Trust Account are determined using available
market information.
Use of Estimates
The preparation of unaudited condensed 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 unaudited condensed financial statements and the reported
amounts of income and expenses during the reporting periods.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the unaudited condensed financial statements, which management considered in formulating its estimate, could
change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from
those estimates.
Fair Value of Financial Instruments
The carrying value of the Company’s assets
and liabilities which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” equals
or approximates the fair values for such assets and liabilities either because the short-term nature of the instruments or because the
instrument is recognized at fair value (See Note 8).
Fair Value Measurements
Fair value is defined as the price that would
be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement
date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of:
| ● | Level 1, defined as observable
inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | Level 2, defined as inputs other
than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments
in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3, defined as unobservable
inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived
from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In some circumstances, the inputs used to measure
fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is
categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Working Capital Loan – Related
Party
The Company has elected
the fair value option to account for its working capital loan—related party with its Sponsor as defined and more fully described
in Note 4. As a result of applying the fair value option, the Company records each draw at fair value with a gain or loss recognized at
issuance, and subsequent changes in fair value are recorded as change in the fair value of working capital loan—related party on
the statements of operations. The fair value is based on prices or valuation techniques that require inputs that are both unobservable
and significant to the overall fair value measurement. These inputs reflect management’s and, if applicable, an independent third-party
valuation firm’s own assumption about the assumptions a market participant would use in pricing the asset or liability.
Derivative Warrant Liabilities
The Company does not use derivative instruments
to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives,
pursuant to ASC 480 and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). 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 accounts for the warrants issued in
connection with its Initial Public Offering and the Private Placement Warrants as derivative warrant liabilities in accordance with ASC
815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value
at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in
fair value is recognized in the Company’s statement of operations. The fair value of the Public Warrants issued in connection with
the Initial Public Offering and Private Placement Warrants were initially measured at fair value using a Monte Carlo simulation model
and subsequently, the fair value of the Private Placement Warrants was estimated using a Monte Carlo simulation model each measurement
date, and as of June 30, 2022, a Black-Scholes Merton model and Monte Carlo Simulation analysis has been employed. The fair value of Public
Warrants issued in connection with the Initial Public Offering have subsequently been measured based on the listed market price of such
warrants. The determination of the fair value of the warrant liabilities may be subject to change as more current information becomes
available and accordingly, the actual results could differ significantly. Derivative warrant liabilities are classified as non-current
liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Offering Costs Associated with the Initial Public Offering
Offering costs consisted of legal, accounting,
underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering.
Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value
basis, compared to total proceeds received. Offering costs associated with warrant liabilities are expensed as incurred, presented as
non-operating expenses in the accompanying statement of operations. Offering costs associated with the Class A common stock issued were
charged against the carrying value of the shares of Class A common stock upon the completion of the Initial Public Offering and Over-Allotment.
The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to
require the use of current assets or require the creation of current liabilities.
Class A Common Stock Subject to Possible
Redemption
Class A common stock subject to mandatory redemption
(if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including
shares of Class A common stock that feature redemption rights that are either within the control of the holder or subject to redemption
upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other
times, Class A common stock are classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption
rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events, Accordingly,
at June 30, 2022 and December 31, 2021, 22,233,687 shares of Class A common stock subject to possible redemption are presented at redemption
value as temporary equity, outside of the stockholders’ equity (deficit) section of the Company’s condensed balance sheets.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Under ASC 480-10-S99, the Company has elected
to recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security 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.
Effective with the closing of the Initial Public
Offering (including the exercise of the over-allotment option), the Company recognized the accretion from initial book value to redemption
amount value, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit.
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for
the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of June 30, 2022 and December
31, 2021, the Company had deferred tax assets with a full valuation allowance against them.
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.
There were no unrecognized tax benefits as of June 30, 2022 and December 31, 2021. The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. 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.
Share Based Compensation
Share-based payment awards issued to employees and nonemployees are
measured at grant-date fair value of the awards and recognized as expense on a straight-line basis over the requisite service period of
the award. For awards that have a performance condition, compensation cost is measured based on the grant date fair value and recognized
when the performance condition becomes probable. The Company assesses the probability of the performance conditions being met on a continuous
basis. Forfeitures are recognized when they occur. No compensation expense for share-based payment awards has been recognized to-date.
Net Income (Loss) Per Share of Common Stock
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as
Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income (loss)
per share of common stock is calculated by dividing the net income (loss) by the weighted average shares of common stock outstanding for
the respective period.
The calculation of diluted net income per share
of common stock does not consider the effect of the warrants issued in connection with the Initial Public Offering (including exercise
of the over-allotment option) and the Private Placement to purchase an aggregate of 9,856,247 shares of common stock in the calculation
of diluted income (loss) per share, because their exercise is contingent upon future events. The Company has considered the effect of
Class B shares of common stock that were excluded from the weighted average number of basic shares outstanding as they were contingent
on the exercise of over-allotment option by the underwriters. Accretion associated with the redeemable Class A common stock is excluded
from earnings per share as the redemption value approximates fair value.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The following table reflects the calculation of
basic and diluted net income per share of common stock:
| |
For The Three Months Ended June 30, | |
| |
2022 | | |
2021 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income per common share: | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income | |
$ | 573,306 | | |
$ | 143,327 | | |
$ | 526,882 | | |
$ | 131,721 | |
| |
| | | |
| | | |
| | | |
| | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average common shares outstanding | |
| 22,233,687 | | |
| 5,558,422 | | |
| 22,233,687 | | |
| 5,558,422 | |
| |
| | | |
| | | |
| | | |
| | |
Basic and diluted net income per common share | |
$ | 0.03 | | |
$ | 0.03 | | |
$ | 0.02 | | |
$ | 0.02 | |
| |
For The Six Months Ended June 30, | |
| |
2022 | | |
2021 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income per common share: | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income | |
$ | 4,586,857 | | |
$ | 1,146,714 | | |
$ | 255,114 | | |
$ | 102,287 | |
| |
| | | |
| | | |
| | | |
| | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average common shares outstanding | |
| 22,233,687 | | |
| 5,558,422 | | |
| 13,238,101 | | |
| 5,307,767 | |
| |
| | | |
| | | |
| | | |
| | |
Basic and diluted net income per common share | |
$ | 0.21 | | |
$ | 0.21 | | |
$ | 0.02 | | |
$ | 0.02 | |
Recent Accounting Pronouncements
Management does not believe that any recently
issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statement.
Note 3 - Initial Public Offering
On March 18, 2021, the Company consummated its
Initial Public Offering of 20,000,000 Units at $10.00 per Unit, generating gross proceeds of $200.0 million, and incurring offering costs
of approximately $11.6 million, inclusive of $7.0 million in deferred underwriting commissions.
Each Unit consists of one share of Class A common
stock, and one-quarter of one 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 8).
The Company granted the underwriter a 45-day option
from the date of the final prospectus relating to the Initial Public Offering to purchase up to 3,000,000 additional Units to cover over-allotments,
if any, at the Initial Public Offering price, less underwriting discounts and commissions. The underwriter exercised the over-allotment
option in part, and on March 26, 2021, purchased additional 2,233,687 units at the Initial Public Offering price at $10.00 per Unit, generating
additional gross proceeds of approximately $22.3 million, and incurring additional offering costs of approximately $1.2 million, inclusive
of approximately $0.8 million in deferred underwriting commissions.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 4 - Related Party Transactions
Founder Shares
On January 6, 2021, the Sponsor purchased
5,750,000 shares of the Company’s Class B common stock, par value $0.0001 per share, (the “Founder Shares”) for an
aggregate price of $25,000. The initial stockholders agreed to forfeit up to 750,000 Founder Shares to the extent that the
over-allotment option was not exercised in full by the underwriter, so that the Founder Shares would represent 20.0% of the
Company’s issued and outstanding shares after the Initial Public Offering. On March 26, 2021, the underwriter exercised the
option to purchase 2,233,687 additional units, for a total of 22,233,687 Units; thus, the initial stockholders forfeited 191,578
shares of Class B common stock accordingly. As of June 30, 2022 and December 31, 2021, there were 5,558,422 shares of Class B common stock
outstanding, none subject to forfeiture.
The initial stockholders agreed, subject to limited
exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (i) one year after the completion
of the initial Business Combination and (ii) the date following the completion of the initial Business Combination on which the Company
completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders
having the right to exchange their common stock for cash, securities or other property. Notwithstanding the foregoing, if (1) the last
reported sales price of the Class A 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 initial Business Combination or (2) if the Company consummates a transaction after the initial Business Combination which results
in the Company’s stockholders having the right to exchange their shares for cash, securities or other property, the Founder Shares
will be released from the lock-up.
Private Placement Warrants
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the Private Placement of 4,000,000 Private Placement Warrants at a price of $1.50 per Private
Placement Warrant to the Sponsor, generating proceeds of $6.0 million. On March 26, 2021, the Sponsor purchased an additional 297,825
Private Placement Warrants at a price of $1.50 per Private Placement Warrant in a Second Closing, generating proceeds of approximately
$0.4 million.
Each whole Private Placement Warrant is exercisable
for one whole share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement
Warrants to the Sponsor was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not
complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement
Warrants will be non-redeemable for cash and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted
transferees.
The Sponsor and the Company’s officers and
directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days
after the completion of the initial Business Combination.
Related Party Loans
On January 6, 2021, the Sponsor agreed to loan
the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to the Note. This loan was
non-interest bearing and payable upon the completion of the Initial Public Offering. The Company borrowed $100,000 under the Note and
repaid the Note in full upon closing of the Initial Public Offering. Upon closing of the Initial Public Offering, the loan was no longer
available.
In addition, in order to fund working capital
deficiencies or 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 may 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.
The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lenders’ discretion, up
to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50
per warrant. The warrants would be identical to the Private Placement Warrants.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
On May 4, 2022, the Sponsor provided a $600,000
Working Capital Loan to the Company in the form of a convertible promissory note that is due upon the completion of a Business Combination.
At any time on or prior to the consummation of the Business Combination, at the option of the lender, any outstanding amount of the Working
Capital Loan may be converted into warrants of the post-Business Combination entity at a price of $1.50 per warrant. The warrants would
be identical to the Private Placement Warrants. On July 20, 2022, the Company borrowed another $500,000 of Working Capital Loan from the
Sponsor and amended the convertible promissory note to increase the principal balance to $1.1 million.
Administrative Service Agreement
Commencing on the date that the Company’s
securities were first listed on the New York Stock Exchange and continuing until the earlier of the Company’s consummation of a
Business Combination and the Company’s liquidation, to the Company agreed to pay the Sponsor a total of $15,000 per month for office
space, utilities, secretarial and administrative support services provided to members of the Company’s management team. The Company
incurred approximately $45,000 in administrative expenses under the agreement, which is recognized in the accompanying unaudited condensed
statements of operations for each of the three months ended June 30, 2022 and 2021, within general and administrative expense - related
party. The Company incurred approximately $90,000 and $60,000 in administrative expenses under the agreement, which is recognized in the
accompanying unaudited condensed statements of operations for the six months ended June 30, 2022 and 2021, respectively, within general
and administrative expense - related party. As of June 30, 2022 and December 31, 2021, $0 and $15,000 reported in accounts payable with
related party was outstanding in the accompanying condensed balance sheets, respectively.
The Sponsor, officers and directors, or any of
their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s
behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations. The Company’s
audit committee will review on a quarterly basis all payments that were made to the Sponsor, officers or directors, or their affiliates.
Note 5 - Commitments and Contingencies
Registration Rights
The holders of Founder Shares, Private Placement
Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any (and any shares of Class A common stock issuable
upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon
conversion of the Founder Shares), were entitled to registration rights pursuant to a registration rights agreement. These holders were
entitled to certain demand and “piggyback” registration rights. The Company will bear the expenses incurred in connection
with the filing of any such registration statements.
Underwriting Agreement
The underwriter was entitled to an underwriting
discount of $0.20 per unit, or $4.0 million in the aggregate, paid upon the closing of the Initial Public Offering. $0.35 per unit, or
$7.0 million in the aggregate will be payable to the underwriter for deferred underwriting commissions. The deferred fee will become payable
to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject
to the terms of the underwriting agreement.
In connection with the consummation of the Over-Allotment
on March 26, 2021, the underwriter was entitled to an additional fee of approximately $447,000 paid upon closing, and an approximately
$782,000 in deferred underwriting commissions.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Consulting Agreement
On June 13, 2022, the Company engaged a contractor
(the “Contractor”) to perform technical diligence in exchange for a cash consideration of $125,000, with $50,000 paid upon
execution and $75,000 payable upon the consummation of the Business Combination, and the Sponsor’s agreement to issue membership
interest in the Sponsor that, in aggregate, represent an indirect economic interest in 25,000 Founder Shares, upon completion of the services.
The grant date fair value of the Sponsor membership interests issued to the Contractor is compensation expense for the Company, and a
contribution from the Sponsor to the Company for the same amount and would be recognized upon completion of the services by the Contractor.
As of June 30, 2022, management estimated that the fair value of the indirect economic interest in 25,000 Founder Shares is de minimis.
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic on the industry and concludes that while it is reasonably possible that the virus could have a negative effect on
the Company’s financial position, results of its operations, and/or search for a target business, the specific impact is not readily
determinable as of the date of these unaudited condensed financial statements. These 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 are not determinable as of the date of these unaudited condensed financial statements and 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.
Note 6 - Common Stock Subject to Possible Redemption
The Company’s Class A common stock features
certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events.
The Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s
Class A common stock are entitled to one vote for each share. As of June 30, 2022 and December 31, 2021, there were 22,233,687 shares
of Class A common stock issued and outstanding, which were all subject to redemption and are classified outside of permanent equity in
the condensed balance sheets.
Class A common stock subject to possible redemption
reflected on the accompanying condensed balance sheets is reconciled on the following table:
Gross proceeds | |
$ | 222,336,870 | |
Less: | |
| | |
Fair value of Public Warrants at issuance | |
| (7,670,620 | ) |
Offering costs allocated to Class A common stock subject to possible redemption | |
| (12,331,812 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 20,002,432 | |
Class A common stock subject to possible redemption | |
$ | 222,336,870 | |
Note 7 - Stockholders’ Deficit
Preferred Stock - The Company is
authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights
and preferences as may be determined from time to time by the Company’s board of directors. As of June 30, 2022 and December 31,
2021, there were no shares of preferred stock issued or outstanding.
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 June 30, 2022 and December
31, 2021, there were 22,233,687 shares of Class A common stock issued and outstanding, all subject to possible redemption and therefore
classified as temporary equity on the accompanying condensed balance sheets (See Note 6).
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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. On March 26, 2021,
the underwriter exercised the option to purchase 2,233,687 additional units, for a total of 22,233,687 Units; thus, the initial
stockholders forfeited 191,578 shares of Class B common stock accordingly. At June 30, 2022 and December 31, 2021, 5,558,422 shares of Class B
common stock were issued and outstanding, none subject to forfeiture.
Stockholders of record are entitled to one vote
for each share held on all matters to be voted on by stockholders. Holders of shares of Class A common stock and holders of shares of
Class B common stock will vote together as a single class on all matters submitted to a vote of the stockholders except as required by
law.
The Class B common stock will automatically convert
into Class A common stock at the time of the initial Business Combination on a one-for-one basis, subject to adjustment for stock splits,
stock dividends, reorganizations, recapitalizations and the like. In the case that additional shares of Class A common stock or equity-linked
securities are issued or deemed issued in connection with the initial Business Combination, the number of shares of Class A common stock
issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares
of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by
Public Stockholders), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion
or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the
consummation of the initial Business Combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable
for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial Business Combination and
any Private Placement Warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans, provided that such
conversion of Founder Shares will never occur on a less than one-for-one basis.
Note 8 - Warrants
As of June 30, 2022 and December 31, 2021, there
were 5,558,422 Public Warrants and 4,297,825 Private Warrants outstanding. Public Warrants may only be exercised in whole and only 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 and (b)
12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement
under the Securities Act covering the issuance of 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 agreed that as soon as practicable, but
in no event later than 15 business days after the closing of the initial Business Combination, the Company will use its best efforts to
file with the SEC and have an effective registration statement covering the shares of Class A common stock issuable upon exercise of the
warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed.
If a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the 60th
business 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. Notwithstanding the above,
if the Company’s shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities
exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company
may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance
with Section 3(a)(9) of the Securities Act and, in the event the Company so elect, it will not be required to file or maintain in effect
a registration statement, and in the event the Company does not so elect, it will use its best efforts to register or qualify the shares
under applicable blue sky laws to the extent an exemption is not available. The Public Warrants will expire five years after the completion
of a Business Combination or earlier upon redemption or liquidation.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The warrants have an exercise price of $11.50
per share, subject to adjustments. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities
for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price
of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by
the board of directors and, in the case of any such issuance to the 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) (the “Newly Issued
Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest
thereon, available for the funding of the initial Business Combination on the date of the consummation of the Company’s initial
Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Class A common stock during the 20
trading day period starting on the trading day after 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 higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described
below under “Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00” will be adjusted
(to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption
trigger price described under “Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00”
will be adjusted (to the nearest cent) to be equal to the higher.
The Private Placement Warrants are identical to
the Public Warrants, 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 Sponsor
or its permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its 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.
Redemption of warrants when the price per share
of Class A common stock equals or exceeds $18.00
Once the warrants become exercisable, the Company
may redeem the outstanding warrants for cash (except as described herein 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 sale price (the “closing price”) of the Class A common stock equals or exceeds $18.00 per share (as adjusted) 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. |
The “fair market value” per share
of Class A common stock for the above purpose shall mean the volume-weighted average price per share of Class A common stock during the
ten trading days ending on the third trading day immediately following the date on which the notice of redemption is sent to the holders
of warrants. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 shares of Class
A common stock per warrant (subject to adjustment).
Redemption of warrants when the price per share
of Class A common stock equals or exceeds $10.00:
Once the warrants become exercisable, the Company
may redeem the outstanding warrants:
|
● |
in whole and not in part; |
|
● |
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption, provided that holders will be able to exercise their warrants, but only on a cashless basis, prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” of Class A common stock; |
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
|
● |
if, and only if, the closing price of Class A common stock equals or exceeds $10.00 per share (as adjusted) for any 20 trading days within the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders; and |
|
● |
if the closing price of Class A common stock 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 is less than $18.00 per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above. |
In no event will the Company be required to net
cash settle any warrant. 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.
Note 9 - Fair Value Measurements
The following table presents information about
the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2022 and December
31, 2021 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
| |
Fair Value Measured as of June 30, 2022 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Assets | |
| | |
| | |
| | |
| |
Investments held in Trust Account - U.S. Treasury Securities (1) | |
$ | 222,507,532 | | |
$ | - | | |
$ | - | | |
$ | 222,507,532 | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Derivative warrant liabilities - Public warrants | |
| - | | |
| 667,010 | | |
| - | | |
| 667,010 | |
Derivative warrant liabilities - Private warrants | |
| - | | |
| - | | |
| 515,740 | | |
| 515,740 | |
Working capital loan—related party | |
| - | | |
| - | | |
| 610,648 | | |
| 610,648 | |
Total fair value measurements | |
$ | 223,174,542 | | |
$ | - | | |
$ | 1,126,388 | | |
$ | 224,300,930 | |
|
|
Fair Value Measured as of December 31, 2021 |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account - U.S. Treasury Securities (1) |
|
$ |
222,380,591 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
222,380,591 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative warrant liabilities - Public warrants |
|
|
4,835,830 |
|
|
|
- |
|
|
|
- |
|
|
|
4,835,830 |
|
Derivative warrant liabilities - Private warrants |
|
|
- |
|
|
|
- |
|
|
|
3,825,060 |
|
|
|
3,825,060 |
|
Total fair value measurements |
|
$ |
227,216,421 |
|
|
$ |
- |
|
|
$ |
3,825,060 |
|
|
$ |
231,041,481 |
|
| (1) | Includes $4,423 and $1,099 in cash as of June 30, 2022
and December 31, 2021, respectively. |
Transfers to/from Levels 1, 2, and 3 are recognized
at the beginning of the reporting period. The fair value measurement of the derivative warrant liabilities - Public warrants transferred from a Level 1 measurement to a Level 2
measurement during the three months ended June 30, 2022 due to low volume of trading. The fair
value measurement of the derivative warrant liabilities - Public warrants transferred from a Level 3 measurement to a Level 1 measurement
as they became separately listed and traded in May 2021.
Level 1 assets include investments mainly in U.S.
Treasury Bills. The Company uses inputs such as actual trade data, quoted market prices from dealers or brokers, and other similar sources
to determine the fair value of its investments.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Derivative Warrant Liabilities
For periods where no observable traded price is
available, the fair value of the Public Warrants and Private Placement Warrants has been estimated using a Monte-Carlo simulation to estimate
the fair value of the warrants at each reporting period, with changes in fair value recognized in the statements of operations. The estimated
fair value of the Private Placement Warrants, and the Public Warrants prior to being separately listed and traded, was determined using
Level 3 inputs. As of June 30, 2022, a Black-Scholes Merton formula and a Monte Carlo simulation analysis was employed to estimate the
fair value of Private Placement Warrants.
For the three months ended June 30, 2022 and 2021,
the Company recognized income of approximately $2.1 million and $1.0 million, respectively, from decreases in the fair value of the derivative
warrant liabilities, presented as change in fair value of derivative warrant liabilities on the accompanying unaudited condensed statements
of operations. For the six months ended June 30, 2022 and 2021, the Company recognized income of approximately $7.5 million and $1.3 million,
respectively, from a decrease in the fair value of the derivative warrant liabilities, presented as change in fair value of derivative
warrant liabilities on the accompanying unaudited condensed statements of operations.
Inherent in the Monte Carlo simulations and Black-Scholes
Merton formula are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield.
If factors or assumptions change, the estimated fair values could be materially different. The Company estimates the volatility of its
common stock warrants based on implied volatility from the Company’s traded warrants and from historical volatility of select peer
company’s common stock that matches the expected remaining life of the warrants. 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 warrants. The expected
life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate,
which the Company anticipates remaining at zero.
The following table provides quantitative information
regarding the Level 3 fair value measurements inputs at their measurement dates:
| |
As of June 30,
2022 | | |
As of
December 31,
2021 | |
Exercise price | |
$ | 11.50 | | |
$ | 11.50 | |
Stock Price | |
$ | 9.76 | | |
$ | 9.72 | |
Option term (in years) | |
| 5.25 | | |
| 5.75 | |
Volatility | |
| 1.7 | % | |
| 16 | % |
Risk-free interest rate | |
| 3.01 | % | |
| 1.33 | % |
The change in the fair value of the derivative
warrant liabilities measured with Level 3 inputs for the three and six months ended June 30, 2022 and 2021, is summarized as follows:
Derivative warrant liabilities at January 1, 2022 - Level 3 | |
$ | 3,825,060 | |
Change in fair value of derivative warrant liabilities | |
| (2,406,780 | ) |
Derivative warrant liabilities at March 31, 2022 - Level 3 | |
| 1,418,280 | |
Change in fair value of derivative warrant liabilities | |
| (902,540 | ) |
Derivative warrant liabilities at June 30, 2022 - Level 3 | |
$ | 515,740 | |
| |
| | |
Derivative warrant liabilities at January 1, 2021 | |
$ | 12,420,000 | |
Change in fair value of derivative warrant liabilities | |
| 928,910 | |
Derivative warrant liabilities at March 31, 2021 - Level 3 | |
| 13,348,910 | |
Transfer of Public Warrants to Level 1 measurement | |
| (7,503,870 | ) |
Change in fair value of derivative warrant liabilities | |
| (472,760 | ) |
Derivative warrant liabilities at June 30, 2021 - Level 3 | |
$ | 5,372,280 | |
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Working Capital Loan
There were
no Working Capital Loan outstanding as of December 31, 2021. The change in the fair value of the working capital loan—related
party measured with Level 3 inputs for the three and six months ended June 30, 2022 is summarized as follows:
Fair value of working capital loan—related party, December 31, 2021 | |
$ | - | |
Issuance of working capital loan and subsequent change in fair value | |
| 610,648 | |
Fair value of working capital loan—related party, June 30, 2022 | |
$ | 610,648 | |
The estimated fair value of the Working Capital
Loan was estimated utilizing a simulation model similar to the one employed in the Private Placement Warrant valuation with Level 3 inputs.
The following table provides the quantitative information regarding the inputs utilized for the fair value measurement of the Working
Capital Loan as of their measurement dates:
| |
As of
June 30,
2022 | |
Conversion price | |
$ | 1.50 | |
Stock price | |
$ | 9.76 | |
Estimated time to transaction | |
| 0.25 | |
Volatility | |
| 25.0 | % |
Risk-free interest rate | |
| 1.72 | % |
Straight debt yield | |
| 4.92 | % |
Note 10 - Subsequent Events
The Company evaluated subsequent events and transactions
that occurred up to the date unaudited condensed financial statements were issued. Based upon this review, the Company did not identify
any subsequent events that have occurred that would require adjustment or disclosures in the unaudited condensed financial statements,
except as noted below.
Additional Working Capital Loan
On July 20, 2022, the Company the Company borrowed
another $500,000 of Working Capital Loan from the Sponsor and amended the convertible promissory note to increase the principal balance
to $1.1 million.
Proposed Business Combination
On July
11, 2022, the Company entered into an agreement and plan of merger (as amended, the “Merger Agreement”) with Falcon’s
Beyond Global, LLC, a Florida limited liability company (“Falcon”), Palm Holdco, Inc., a Delaware corporation and a wholly
owned subsidiary of the Company (“Pubco”), and Palm Merger Sub LLC, a Delaware limited liability company and a wholly owned
subsidiary of Pubco (“Merger Sub”), as fully disclosed in a Current Report on Form 8-K as filed with the SEC by
the Company on July 12, 2022.
The obligations
of the parties to consummate the transactions contemplated by the Merger Agreement (together with the other agreements and transactions
contemplated by the Business Combination Agreement, the “Merger”) are subject to the satisfaction or waiver of certain customary
closing conditions. Either party may terminate the Merger under certain circumstances. Upon termination of the Merger Agreement, in certain
circumstances, Falcon will pay to the Company a termination fee equal to (i) $12,500,000 if the Company’s redeemed public share
percentage is less than 90% or is unknown or (ii) $6,250,000 if the Company’s redeemed public share percentage is known and is equal
to or greater than 90%.
Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations
References to the “Company,” “Fast
Acquisition Corp. II,” “our,” “us” or “we” refer to Fast Acquisition Corp. II. The following
discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited
interim condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange
Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking
statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of
activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements
expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such
as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,”
“believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors
that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
Overview
We are a blank check company incorporated in Delaware
on December 30, 2020. We were formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination with one or more businesses (the “Business Combination”). We are an emerging
growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
Our sponsor is FAST Sponsor II LLC, a Delaware
limited liability company (the “Sponsor”). The registration statement for our Initial Public Offering was declared effective
on March 15, 2021. On March 18, 2021, we consummated its Initial Public Offering of 20,000,000 units (the “Units” and, 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 $200.0 million, and incurring offering costs of approximately $11.6 million, inclusive of $7.0 million in deferred underwriting
commissions. We granted the underwriter a 45-day option to purchase up to 3,000,000 additional Units at the Initial Public Offering price
to cover over-allotments, if any. The underwriter exercised the over-allotment option in part and, on March 26, 2021, we consummated the
sale of 2,233,687 Private Placement Units at the Initial Public Offering price at $10.00 per Unit, generating additional gross proceeds
of approximately $22.3 million (the “Over-Allotment”), and incurring additional offering costs of approximately $1.2 million,
inclusive of approximately $0.8 million in deferred underwriting commissions.
Simultaneously with the closing of the Initial
Public Offering, we consummated the private placement (“Private Placement”) of 4,000,000 warrants (each, a “Private
Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant
to the Sponsor, generating proceeds of $6.0 million. We consummated a second closing of the Private Placement simultaneously with the
closing of the Over-Allotment on March 26, 2021, for an additional 297,825 Private Placement Warrants at a price of $1.50 per Private
Placement Warrant, generating proceeds of approximately $0.4 million.
Upon the closing of the Initial Public Offering,
the Over-Allotment and the Private Placement, $222.3 million ($10.00 per Unit) of the net proceeds were placed in a trust account (“Trust
Account”) located in the United States at JP Morgan Chase Bank, N.A. with Continental Stock Transfer & Trust Company acting
as trustee, and will be invested only in U.S. “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 which invest only in direct U.S. government treasury
obligations, 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.
Our management has broad discretion with respect
to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially
all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that we
will be able to complete a Business Combination successfully. We must complete one or more initial Business Combinations having an aggregate
fair market value of at least 80% of the net assets held in the Trust Account (excluding the amount of any deferred underwriting discount
held in Trust) at the time of the agreement to enter into the initial Business Combination. However, we 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 business sufficient for it not to be required to register as an investment company under
the Investment Company Act.
If we are unable to complete a Business Combination
within 24 months from the closing of the Initial Public Offering, or March 18, 2023 (as such period may be extended by our stockholders
in accordance with the Certificate of Incorporation, the “Combination Period”), we 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 (net of permitted withdrawals and 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), and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of the remaining stockholders and the board of directors, liquidate and dissolve, 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.
Proposed Business Combination
On July
11, 2022, we entered into an agreement and plan of merger (as amended, the “Merger Agreement”) with Falcon’s
Beyond Global, LLC, a Florida limited liability company (“Falcon”), Palm Holdco, Inc., a Delaware corporation and a wholly
owned subsidiary of the Company (“Pubco”), and Palm Merger Sub LLC, a Delaware limited liability company and a wholly owned
subsidiary of Pubco (“Merger Sub”), as fully disclosed in a Current Report on Form 8-K as filed with the SEC by
the Company on July 12, 2022.
The obligations
of the parties to consummate the transactions contemplated by the Merger Agreement (together with the other agreements and transactions
contemplated by the Business Combination Agreement, the “Merger”) are subject to the satisfaction or waiver of certain customary
closing conditions. Either party may terminate the Merger under certain circumstances. Upon termination of the Merger Agreement, in certain
circumstances, Falcon will pay to us a termination fee equal to (i) $12,500,000 if our redeemed public share percentage is less than 90%
or is unknown or (ii) $6,250,000 if our redeemed public share percentage is known and is equal to or greater than 90%.
Going Concern Consideration
As of June 30, 2022, we had approximately $397,000
in its operating bank account and a working capital deficit of approximately $1.4 million.
Our liquidity needs prior to the consummation
of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor to cover for certain offering costs on the
Company’s behalf in exchange for issuance of Founder Shares (as defined in Note 4), and loan proceeds from the Sponsor of $100,000
under the Note (as defined in Note 4). We repaid the Note in full upon closing of the Initial Public Offering. Subsequent to the consummation
of the Initial Public Offering, our liquidity through June 30, 2022 has been satisfied through the net proceeds from the consummation
of the Initial Public Offering and the Private Placement held outside of the Trust Account and the proceeds from the Working Capital Loan
of $600,000. In July 2022, we received another $500,000 under the Working Capital Loan from our Sponsor, for a total of $1.1 million Working
Capital Loan outstanding. At any time on or prior to the consummation of the Business Combination, at the option of the lender, any outstanding
amount of the Working Capital Loan may be converted into warrants of the post-Business Combination entity at a price of $1.50 per warrant.
The warrants would be identical to the Private Placement Warrants.
In connection with our management’s assessment
of going concern considerations in accordance with FASB ASC 205-40, “Presentation of Financial Statements - Going Concern,”
management has determined that mandatory liquidation, liquidity condition and subsequent dissolution raise substantial doubt about our ability to continue
as a going concern. Our management intends to complete the proposed Business Combination with Falcon
prior to the liquidation date, March 18, 2023. Our Sponsor continues to have cash on hand
that could be available for loans to us. Our Sponsor has no obligation to provide further funding to us. Our management believes we could
obtain additional funding from our Sponsor.
No adjustments have been made to the carrying
amounts of assets or liabilities should we be required to liquidate after March 18, 2023. The unaudited condensed financial statements
do not include any adjustment that might be necessary if we are unable to continue as a going concern.
Risks and Uncertainties
Our management continues to evaluate the impact
of the COVID-19 pandemic and has concluded that 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 are not determinable as of the date of these unaudited condensed financial statements and the specific impact on our
financial condition, results of operations, and cash flows is also not determinable as of the date of these unaudited condensed financial
statements.
Results of Operations
Our entire activity since inception up to June
30, 2022 was in preparation for our formation and the Initial Public Offering, and since the Initial Public Offering our search for an
initial Business Combination. We will not be generating any operating revenues until the closing and completion of our initial Business
Combination, at the earliest.
For the three months ended June 30, 2022, we had
an income of approximately $717,000, which consisted of approximately $2.1 million of non-operating gain resulting from the change in
fair value of derivative warrant liabilities, and approximately $337,000 in gain from investments held in Trust Account, partially offset
by approximately $1.6 million of general and administrative expenses, $45,000 of general and administrative expenses - related party,
approximately $51,000 for franchise tax expenses and approximately $11,000 of change in fair value of working capital loan.
For the three months ended June 30, 2021, we had
net income of approximately $659,000, which consisted of approximately $6,400 net income on investments held in the Trust Account, approximately
$1,029,000 gain from change in fair value of warrant liabilities, which was partially offset by approximately $282,000 in general and
administrative expenses, approximately $45,000 in general and administrative expenses for costs incurred with our Sponsor and approximately
$50,000 of franchise tax expense.
For the six months ended June 30, 2022, we had
an income of approximately $5.7 million, which consisted of approximately $7.5 million of non-operating gain resulting from the change
in fair value of derivative warrant liabilities, and approximately $277,000 in gain from investments held in Trust Account, partially
offset by approximately $1.8 million of general and administrative expenses, $90,000 of general and administrative expenses - related
party, approximately $100,000 for franchise tax expenses and approximately $11,000 of change in fair value of working capital loan.
For the six months ended June 30, 2021, we had
net income of approximately $357,000, which consisted of an approximate $1,281,000 gain from change in fair value of warrant liabilities,
which was partially offset by approximately $308,000 in general and administrative expenses, approximately $60,000 in general and administrative
expenses for costs incurred with our Sponsor, approximately $99,000 of franchise tax expense, approximately $456,000 of financing cost
- derivative warrant liability and an approximate $800 net loss on investments held in the Trust Account.
Contractual Obligations
Registration Rights
The holders of Founder Shares, Private Placement
Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any (and any shares of Class A common stock issuable
upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon
conversion of the Founder Shares), were entitled to registration rights pursuant to a registration rights agreement. These holders were
entitled to certain demand and “piggyback” registration rights. We will bear the expenses incurred in connection with the
filing of any such registration statements.
Underwriting Agreement
The underwriter was entitled to an underwriting
discount of $0.20 per unit, or $4.0 million in the aggregate, paid upon the closing of the Initial Public Offering. $0.35 per unit, or
$7.0 million in the aggregate will be payable to the underwriter for deferred underwriting commissions. The deferred fee will become payable
to the underwriter from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to
the terms of the underwriting agreement.
In connection with the consummation of the Over-Allotment
on March 26, 2021, the underwriters were entitled to an additional fee of approximately $447,000 paid upon closing, and an approximately
$782,000 in deferred underwriting commissions.
Consulting Agreement
On June 13, 2022, we engaged a contractor (the “Contractor”)
to perform technical diligence in exchange for a cash consideration of $125,000, with $50,000 paid upon execution and $75,000 payable
upon the consummation of the Business Combination, and our Sponsor’s agreement to issue membership interest in the Sponsor that,
in aggregate, represent an indirect economic interest in 25,000 Founder Shares of our company, upon completion of the services. The grant
date fair value of the Sponsor membership interests issued to the Contractor is compensation expense for us, and a contribution from our
Sponsor to us for the same amount and would be recognized upon completion of the services by the Contractor. As of June 30, 2022, our
management estimated that the fair value of the indirect economic interest in 25,000 Founder Shares is de minimis.
Critical Accounting Policies
The preparation of unaudited condensed financial
statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets
and liabilities at the date of the unaudited condensed financial statements, and income and expenses during the periods reported. Actual
results could materially differ from those estimates. We have identified the following critical accounting policies:
Investments Held in Trust Account
Our portfolio of investments 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 investments held in the Trust Account are comprised of U.S. government securities, the investments
are classified as trading securities. When the 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 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 is included in income
(loss) from investments held in Trust Account in the accompanying statement of operations. The estimated fair values of investments held
in the Trust Account are determined using available market information.
Working Capital Loan – Related Party
We have elected the fair
value option to account for its working capital loan—related party with our Sponsor. As a result of applying the fair value option,
we record each draw at fair value with a gain or loss recognized at issuance, and subsequent changes in fair value are recorded as change
in the fair value of working capital loan—related party on the statements of operations. The fair value is based on prices or valuation
techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect
management’s and, if applicable, an independent third-party valuation firm’s own assumption about the assumptions a market
participant would use in pricing the asset or liability.
Derivative Warrant Liabilities
We do not use derivative instruments to hedge
exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase
warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480
ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). 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.
We account for the warrants issued in connection
with its Initial Public Offering and the Private Placement Warrants as derivative warrant liabilities in accordance with ASC 815. Accordingly,
we recognize the warrant instruments as liabilities at fair value and adjust the instruments to fair value at each reporting period. The
liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the
statement of operations. The fair value of the Public Warrants issued in connection with the Initial Public Offering and Private Placement
Warrants were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement
Warrant was estimated using a Monte Carlo simulation model each measurement date, and as of June 30, 2022, a Black-Scholes Merton model
and Monte Carlo Simulation analysis has been employed. The fair value of Public Warrants issued in connection with the Initial Public
Offering have subsequently been measured based on the listed market price of such warrants. The determination of the fair value of the
warrant liability may be subject to change as more current information becomes available and accordingly the actual results could differ
significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected
to require the use of current assets or require the creation of current liabilities.
Class A Common Stock Subject to Possible Redemption
Class A common stock subject to mandatory redemption
(if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including
shares of Class A common stock that feature redemption rights that are either within the control of the holder or subject to redemption
upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A
common stock are classified as stockholders’ equity. Our Class A common stock feature certain redemption rights that are considered
to be outside of our control and subject to occurrence of uncertain future events, Accordingly, at June 30, 2022 and December 31, 2021,
22,233,687 shares of Class A common stock subject to possible redemption at the redemption amount were presented at redemption value as
temporary equity, outside of the stockholders’ equity section of our balance sheet.
Under ASC 480-10-S99, we have elected to recognize
changes in the redemption value immediately as they occur and adjust the carrying value of the security 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.
Effective with the closing of the Initial Public
Offering and the exercise of the over-allotment, we 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.
Net Income (Loss) Per Share of Common Stock
We comply with accounting and disclosure requirements
of FASB ASC Topic 260, “Earnings Per Share.” We have two classes of shares, which are referred to as Class A common stock
and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income (loss) per common share
is calculated by dividing the net income (loss) by the weighted average shares of common stock outstanding for the respective period.
The calculation of diluted net income (loss) per
common stock does not consider the effect of the warrants issued in connection with the Initial Public Offering (including exercise of
the over-allotment option) and the Private Placement to purchase an aggregate of 9,856,247 shares of common stock in the calculation of
diluted income (loss) per share, because their exercise is contingent upon future events. We have considered the effect of Class B shares
of common stock that were excluded from the weighted average number of basic shares outstanding as they were contingent on the exercise
of over-allotment option by the underwriters. Since the contingency was satisfied, we have included these shares in the weighted average
number as of the beginning of the period to determine the dilutive impact of these shares. Accretion associated with the redeemable Class
A common stock is excluded from earnings per share as the redemption value approximates fair value.
Recent Accounting Pronouncements
Management does not believe that any recently
issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying unaudited condensed
financial statements.
JOBS Act
The Jumpstart Our Business Startups Act of 2012
(the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements for qualifying public
companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or
revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which
adoption of such standards is required for non-emerging growth companies. As a result, the condensed financial statements may not be comparable
to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating
the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth
in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to
Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank
Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory
audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements
(auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive
compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply
for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth
company,” whichever is earlier.