NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Sepetember
30, 2022
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 September 30, 2022, the Company had not
commenced any operations. All activity for the period from December 30, 2020 (inception) through September 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
(initially 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 September 30, 2022, the Company had approximately
$554,000 in its operating bank account and a working capital deficit of approximately $2.1 million, excluding the balance of working capital
related party, at fair value.
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 September 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 principal outstanding under the Working
Capital Loan at September 30, 2022. 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. The Working Capital Loan does not bear any interest
and will be repayable by the Company to the Sponsor, if not converted, on the effective date of a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination, involving the Company and one or more businesses.
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.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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.
Proposed Business Combination
On July 11, 2022, the Company (or “SPAC”
or “Acquiror”) 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 Falcon (“Pubco”), and Palm Merger Sub LLC, a Delaware limited liability company and a wholly owned
subsidiary of Pubco (“Merger Sub”),
Pursuant to the Merger Agreement, and subject
to the terms and conditions contained therein, the business combination will be effected in two steps: (a) Acquiror will merge with and
into Pubco (the “SPAC Merger”), with Pubco surviving as the sole owner of Merger Sub (sometimes referred to as the “Surviving
Corporation”), followed by a contribution by Pubco of all of its cash to Merger Sub to effectuate the “UP-C” structure;
and (b) on the date immediately following the SPAC Merger, Merger Sub will merge with and into Falcon (the “Acquisition Merger,”
and collectively with the SPAC Merger, the “Mergers”), with Falcon as the surviving entity of such merger. Following the consummation
of the transactions contemplated by the Merger Agreement (the “Closing,” and the date on which the Closing occurs, the “Closing
Date”), the direct interests in Falcon will be held by Pubco and the holders of common units of Falcon (the “Falcon Units”)
outstanding as of immediately prior to the Mergers.
The Merger Agreement provides that, among other
things and upon the terms and subject to the conditions thereof, the following transactions will occur:
(i) At
the effective time of the SPAC Merger, (a) each SPAC Unit outstanding immediately prior to the effective time of the SPAC Merger will
be automatically detached and the holder thereof will be deemed to hold one share of SPAC Class A Common Stock and one-quarter of a SPAC
Warrant; (b) each current share of SPAC Class A Common Stock will be automatically exchanged for the right to receive (x) 0.5 shares of
Pubco Class A Common Stock and 0.5 shares of the Series A Preferred Stock of Pubco (“Pubco Preferred Stock”) and (y) 50% of
the Additional SPAC Share Consideration; (c) each share of SPAC Class A Common Stock converted from the SPAC Class B Common Stock of FAST
Sponsor II LLC, a Delaware limited liability company (the “Sponsor”), pursuant to the Class B Exchange (described below) will
automatically be exchanged for one newly issued share of Pubco Class A Common Stock; and (d) each SPAC Warrant outstanding immediately
prior to the SPAC Merger effective time will be assumed by Pubco.
(ii) Immediately
prior to the effective time of the Acquisition Merger, following the SPAC Merger, the Surviving Corporation will contribute to Merger
Sub all of the Closing Surviving Corporation Cash.
(iii) At
the effective time of the Acquisition Merger, (a) each issued and outstanding Falcon Unit (other than the Cancelled Units and Falcon Financing
Units) will be converted into the right to receive (x) a number of shares of Pubco Class B Common Stock and a number of New Company Units,
in each case equal to the Acquisition Merger Exchange Number (the “Per Unit Consideration”) and (y) the applicable portion
of any Seller Earnout Shares (defined below); (b) each Falcon Unit issued in connection with the Falcon Financing (the “Falcon Financing
Units”) will be converted into the right to receive (x) the Per Unit Consideration and (y) a number of shares of Pubco Class B Common
Stock and a number of New Company Units, in each case equal to the Additional Consideration Number (the “Additional Falcon Financing
Unit Consideration”); (c) each Falcon Unit held in treasury of the Falcon as of immediately prior to the effective time of the Acquisition
Merger (collectively, the “Cancelled Units”) will be cancelled without any conversion and no payment or distribution will
be made with respect thereto; (d) the units of Merger Sub that are issued and outstanding will be converted into and become (x) a number
of New Company Units equal to the number of shares of Pubco Class A Common Stock outstanding immediately after the SPAC Merger, (y) a
number of Preferred Units equal to the number of shares of Pubco Preferred Stock outstanding immediately after the SPAC Merger and (z)
a number of Warrant Units equal to the number of Pubco Warrants outstanding immediately after the SPAC Merger, in each case of the foregoing
clauses (x) through (z) after giving effect to the redemption of any shares of SPAC Common Stock in connection with the Offer, the Class
B Exchange and the Conversion.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Holders of Falcon Units immediately before the
Closing also will be entitled to receive a pro rata portion of a total of up to (i) 40,000,000 New Company Units and 40,000,000 shares
of Class B Common Stock of Pubco (together, the “Seller Earnout Shares”), in each case that will be deposited into escrow
at the Closing and be earned, released and delivered upon satisfaction of certain milestones related to the volume weighted average closing
sale price of shares of Pubco Common Stock (“Pubco Common Share Price”) during the five-year period beginning on the one-year
anniversary of the Acquisition Merger Closing and ending on the six-year anniversary of the Closing Date (the “Earnout Period”).
15,000,000 of the Seller Earnout Shares will vest and be released from escrow if the Pubco Common Share Price is at least $20 for 20 trading
days during any 30-consecutive trading day period; another 15,000,000 of the Seller Earnout Shares will vest and be released from escrow
if the Pubco Common Share Price is at least $25 for 20 trading days during any 30-consecutive trading day period; and the final 10,000,000
of the Seller Earnout Shares will vest and be released from escrow if the Pubco Common Share Price is at least $30 for 20 trading days
during any 30-consecutive trading day period, in each case during the Earnout Period.
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%.
On September 13, 2022, the Company, Pubco
and Merger Sub entered into that certain Amendment No. 1 to the Merger Agreement (“Amendment No. 1”), pursuant to which the
parties thereto extended the date by which the Company is required to deliver to SPAC PCAOB Audited Financial Statements from August 15,
2022 to September 28, 2022, and the date on which SPAC could terminate the Merger Agreement if the PCAOB Audited Financial Statements
have not been delivered from September 14, 2022 to September 28, 2022.
In connection with the execution of the Merger
Agreement, the Sponsor, Falcon, Pubco and Acquiror entered into an agreement (the “Sponsor Support Agreement”), pursuant to
which the Sponsor has agreed to waive its conversion and anti-dilution rights with respect to its shares of SPAC Common Stock in connection
with the transactions contemplated by the Merger Agreement, vote (or cause to be voted), or execute and deliver a written consent (or
cause a written consent to be executed and delivered) covering, all of its SPAC Common Stock (i) in favor of the Mergers and each other
proposal related to the Mergers and the other transactions contemplated thereby, (ii) against any merger agreement or merger (other than
the Merger Agreement and the Mergers), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution,
liquidation or winding up of or by Acquiror, (iii) against any change in the business, management or the board of directors of Acquiror
(other than in connection with the Mergers and the other transactions contemplated by the Merger Agreement), and (iv) against any proposal,
action or agreement that would (w) impede, frustrate, prevent or nullify the Merger Agreement or any Merger, (x) result in a breach in
any respect of any covenant, representation, warranty or any other obligation or agreement of Acquiror or the Merger Sub under the Merger
Agreement, (y) result in any of the conditions set forth in the Merger Agreement not being fulfilled or (z) change in any manner the dividend
policy or capitalization of, including the voting rights of any class of capital stock of, Acquiror.
The Sponsor further agreed to, immediately prior
to the closing of the Acquisition Merger, deliver to Acquiror for cancellation and for no consideration the Sponsor Redemption Forfeited
Shares, which is calculated as 40% of Sponsor’s SPAC Class B Common Stock multiplied by the SPAC Redeemed Share Percentage, and
the Additional Incentive Forfeited Shares. Thereafter, the Sponsor Earnout Shares, which is 50% of the difference between (i) 40% of Sponsor’s
SPAC Class B Common Stock and (ii) the Sponsor Redemption Forfeited Shares, are to be deposited into one or more escrow accounts, and
will vest and be released from escrow to the Sponsor upon satisfaction of certain milestones related to the Pubco Common Share Price during
the Earnout Period. Any Sponsor Earnout Shares that do not so vest prior to the Earnout Period End Date will be delivered to Pubco and
cancelled for no consideration.
See the Company’s Current Reports on Form
8-K filed with the SEC on July 12, 2022 and September 16, 2022 including The Merger Agreement, amendment, and related supporting agreements.
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 interim 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 nine months ended September 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 September 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 September 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 September 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 September 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’ 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. Subsequently,
the Company recognized changes in the redemption value as an increase in redemption value of Class A common stock subject to possible
redemption as reflected on the accompanying unaudited condensed statements of changes in stockholders’ 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 September 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 and no amounts accrued for interest and penalties as of September 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 September 30, | |
| |
2022 | | |
2021 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income (loss) per common share: | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income (loss) | |
$ | (4,092,454 | ) | |
$ | (1,023,114 | ) | |
$ | 2,425,850 | | |
$ | 606,462 | |
| |
| | | |
| | | |
| | | |
| | |
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 (loss) per common share | |
$ | (0.18 | ) | |
$ | (0.18 | ) | |
$ | 0.11 | | |
$ | 0.11 | |
| |
For The Nine Months Ended September
30, | |
| |
2022 | | |
2021 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income per common share: | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income - basic | |
$ | 494,402 | | |
$ | 123,601 | | |
$ | 2,548,378 | | |
$ | 841,335 | |
Allocation of net income - diluted | |
$ | 494,402 | | |
$ | 123,601 | | |
$ | 2,529,220 | | |
$ | 860,493 | |
| |
| | | |
| | | |
| | | |
| | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic weighted average common shares outstanding | |
| 22,233,687 | | |
| 5,558,422 | | |
| 16,337,704 | | |
| 5,393,813 | |
Diluted weighted average common shares outstanding | |
| 22,233,687 | | |
| 5,558,422 | | |
| 16,337,704 | | |
| 5,558,422 | |
| |
| | | |
| | | |
| | | |
| | |
Basic net income per common share | |
$ | 0.02 | | |
$ | 0.02 | | |
$ | 0.16 | | |
$ | 0.16 | |
Diluted net income per common share | |
$ | 0.02 | | |
$ | 0.02 | | |
$ | 0.15 | | |
$ | 0.15 | |
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.
FAST
ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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.
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 September
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.
FAST ACQUISITION CORP.
II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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.
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 an additional $500,000 of Working Capital Loan
from the Sponsor and amended the convertible promissory note to increase the principal balance to $1.1 million. The Working Capital Loan
does not bear any interest, and will be repayable by the Company to the Sponsor, if not converted, on the effective date of a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving the Company and one
or more businesses.
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 September 30, 2022 and 2021, within general and administrative expense - related
party. The Company incurred approximately $135,000 and $105,000 in administrative expenses under the agreement, which is recognized in
the accompanying unaudited condensed statements of operations for the nine months ended September 30, 2022 and 2021, respectively, within
general and administrative expense - related party. As of September 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.
FAST ACQUISITION CORP.
II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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.
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 is recognized upon completion of the services by the Contractor.
Management estimated that the grant date fair value of the indirect economic interest in 25,000 Founder Shares was 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.
On August 16, 2022, the Inflation Reduction Act
of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise
tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded
foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its
shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased
at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the
fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition,
certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority
to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. Any share redemption or other
share repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject
to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination,
extension vote or otherwise will depend on a number of factors, including (i) the fair market value of the redemptions and repurchases
in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and
amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection
with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and
other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder,
the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available
on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.
FAST ACQUISITION CORP.
II
NOTES TO 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 September 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 as of December 31, 2021 | |
| 222,336,870 | |
Increase in redemption value of Class A common stock subject to possible redemption | |
| 708,012 | |
Class A common stock subject to possible redemption as of September 30, 2022 | |
$ | 223,044,882 | |
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 September 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 September 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).
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 September 30, 2022 and December 31, 2021, 5,558,422 shares of Class B common stock
were issued and outstanding, none subject to forfeiture.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 September 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.
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.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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; |
| ● | 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.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 September 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 September 30, 2022 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Assets | |
| | |
| | |
| | |
| |
Investments held in Trust Account - U.S. Treasury Securities (2) | |
$ | 223,413,750 | | |
$ | - | | |
$ | - | | |
$ | 223,413,750 | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Derivative warrant liabilities - Public warrants | |
| - | | |
| 2,890,380 | | |
| - | | |
| 2,890,380 | |
Derivative warrant liabilities - Private warrants | |
| - | | |
| - | | |
| 2,492,740 | | |
| 2,492,740 | |
Working capital loan—related party | |
| - | | |
| - | | |
| 1,284,524 | | |
| 1,284,524 | |
Total fair value | |
$ | 223,413,750 | | |
$ | 2,890,380 | | |
$ | 3,777,264 | | |
$ | 230,081,394 | |
| |
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 | |
$ | 227,216,421 | | |
$ | - | | |
$ | 3,825,060 | | |
$ | 231,041,481 | |
| (1) | Includes $1,099 in cash as of December 31, 2021. |
| | |
| (2) | Excludes $113,851 of cash held in the Trust Account. |
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 and remained at
Level 2 at September 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.
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 September 30, 2022, a Black-Scholes Merton formula and a Monte Carlo simulation analysis was employed to estimate
the fair value of Private Placement Warrants.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
For the three months ended September 30, 2022,
the Company recognized a loss of approximately $4.2 million from the increase 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 three months ended September 30, 2021, the Company recognized income of approximately $3.3 million 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. For the nine months ended September 30, 2022 and 2021, the Company recognized income of approximately
$3.3 million and $4.6 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. A significant
increase or decrease in volatility alone could have a significant impact on the valuation. 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 September 30, 2022 | | |
As of December 31, 2021 | |
Exercise price | |
$ | 11.50 | | |
$ | 11.50 | |
Stock price | |
$ | 9.82 | | |
$ | 9.72 | |
Option term (in years) | |
| 5.00 | | |
| 5.75 | |
Volatility | |
| 26.4 | % | |
| 16 | % |
Risk-free interest rate | |
| 4.06 | % | |
| 1.33 | % |
Implied Probability of Merger Success | |
| 23.80 | % | |
| N/A | |
The change in the fair value of the derivative
warrant liabilities measured with Level 3 inputs for the three and nine months ended September 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 | |
Change in fair value of derivative warrant liabilities | |
| 1,977,000 | |
Derivative warrant liabilities at September 30, 2022 - Level 3 | |
$ | 2,492,740 | |
| |
| | |
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 | |
Change in fair value of derivative warrant liabilities | |
| (1,418,280 | ) |
Derivative warrant liabilities at September 30, 2021 - Level 3 | |
$ | 3,954,000 | |
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 nine months ended September 30, 2022 is summarized as follows:
Fair value of working capital loans—related party, December 31, 2021 | |
$ | - | |
Issuance of working capital loan - related party | |
| 600,000 | |
Change in fair value of working capital loans - related party | |
| 10,648 | |
Fair value of working capital loans—related party, June 30, 2022 | |
$ | 610,648 | |
Issuance of working capital loan - related party | |
| 500,000 | |
Change in fair value of working capital loans - related party | |
| 173,876 | |
Fair value of working capital loans—related party, September 30, 2022 | |
$ | 1,284,524 | |
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 September 30, 2022 | |
Conversion price | |
$ | 1.50 | |
Stock price | |
$ | 9.82 | |
Maturity | |
| 0.34 | |
Volatility | |
| 26.4 | % |
Risk-free interest rate | |
| 4.04 | % |
Straight debt yield | |
| 5.99 | % |
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.