NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1
- Description of Organization and Business Operations
Social
Leverage Acquisition Corp I (the “Company”) is a blank check company incorporated in Delaware on December 1, 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 early stage and emerging
growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As
of June 30, 2022, the Company had not commenced any operations. All activity for the period from December 1, 2020 (inception) through
June 30, 2022, relates to the Company’s formation and the initial public offering (the “Initial Public Offering”).
The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest.
The Company will generate non-operating income in the form of interest and other income on investments of the proceeds derived from the
Initial Public Offering.
The
Company’s sponsor is Social Leverage Acquisition Sponsor I LLC, a Delaware limited liability company (the “Sponsor”).
The registration statement for the Company’s Initial Public Offering was declared effective on February 11, 2021. On February 17,
2021, the Company consummated its Initial Public Offering of 34,500,000 units (the “Units” and, with respect to the Class
A common stock included in the Units being offered, the “Public Shares”), including the exercise of the underwriters’
option to purchase 4,500,000 additional Units (the “Option Units”), at $10.00 per Unit, generating gross proceeds of $345.0
million, and incurring offering costs of approximately $19.7 million, of which approximately $12.1 million and approximately $152,000
was for deferred underwriting commissions and deferred legal fees, respectively (Note 5).
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 6,000,000
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 $9.0 million (Note 4).
Upon
the closing of the Initial Public Offering and the Private Placement, $345.0 million ($10.00 per Unit) of the net proceeds of the Initial
Public Offering and certain of the proceeds of the Private Placement was placed in a trust account (“Trust Account”) located
in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. government securities
with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company
Act of 1940, as amended (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 its initial Business Combination with one or more operating businesses or assets having an aggregate fair market
value of at least 80% of the net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable
on the income earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the
Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting
securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to
register as an investment company under the Investment Company Act.
SOCIAL LEVERAGE ACQUISITION CORP I
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
Company will provide the holders (the “Public Stockholders”) of the 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 anticipated to be $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 underwriters (as discussed in Note 5). These Public Shares will be recorded at a redemption value and classified as temporary
equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”)
Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”).
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 or any
greater net tangible asset or cash requirement that may be contained in the agreement relating to the Business Combination. 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 SEC and file tender offer documents with
the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by applicable law
or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business or other reasons, the Company
will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer
rules. 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 will provide 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 Public Shares with respect to more than
an aggregate of 15% 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 allow redemptions in connection with its initial Business Combination or 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 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 February
17, 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 (1) cease all operations except for the purpose of winding up; (2) 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 in the trust account (net
of taxes payable and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and outstanding
Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to
receive further liquidating distributions, if any); and (3) as promptly as reasonably possible following such redemption, subject to
the approval of the remaining stockholders and the Company’s 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.
SOCIAL LEVERAGE ACQUISITION CORP I
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 underwriters agreed
to waive their 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 in the Trust Account 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 discussed entering into a transaction 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) nor will
it apply to any claims under the Company’s indemnity of the underwriters 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, Targets 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.
Liquidity
and Going Concern
As of June 30, 2022, the Company had approximately
$134,000 in its operating bank account and working capital deficit of approximately $1.8 million (not taking into account approximately
$145,000 of taxes that may be paid using interest income from the Trust Account).
In
connection with the Company’s assessment of going concern considerations in accordance with FASB Accounting Standards Update (“ASU”)
2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined
that the liquidity, the mandatory liquidation and the subsequent dissolution raise substantial doubt about the Company’s ability
to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be
required to liquidate after February 17, 2023. The condensed financial statements do not include any adjustment that might be necessary
if the Company is unable to continue as a going concern. Management plans to consummate a Business Combination prior to the mandatory
liquidation date.
Risks
and Uncertainties
Management
is currently evaluating the impact of the COVID-19 global pandemic and has concluded that while it is reasonably possible that the virus
could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company,
the specific impact is not readily determinable as of the date of these condensed financial statement. The 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 financial statements. The specific impact on the Company’s
condensed financial condition, results of operations, and cash flows is also not determinable as of the date of these condensed financial
statements.
Note
2 - Basis of Presentation and 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 with the instructions to Form 10-Q
and Article 8 of Regulation S-X 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 periods 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.
SOCIAL LEVERAGE ACQUISITION CORP I
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K
for the year ended December 31, 2021, as filed with the SEC on March 31, 2022, which contains the audited condensed financial statements
and notes thereto. The financial information as of December 31, 2021 is derived from the audited condensed financial statements presented
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 31, 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 statements with another
public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition
period difficult or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant
judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed
at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to
one or more future confirming events. Actual results could differ from those estimates.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. 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 as of June 30, 2022 and December 31, 2021.
Investments
Held in the 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 on investments held in the Trust Account
in the accompanying unaudited condensed statements of operations. The estimated fair values of investments held in the Trust Account
are determined using available market information.
SOCIAL LEVERAGE ACQUISITION CORP I
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities which qualify as financial instruments under the FASB ASC Topic 820, “Fair
Value Measurements” equals or approximate the carrying amounts represented in the condensed balance sheets.
Fair
Value Measurements
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices
for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
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 were 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 derivative warrant
liabilities were expensed as incurred and presented as non-operating expenses in the condensed statements of operations. Offering costs
associated with the Class A common stock issued were charged against the carrying value of the Class A common stock subject to possible
redemption upon the completion of the Initial Public Offering and exercise of the over-allotment option. 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.
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 FASB 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.
SOCIAL LEVERAGE ACQUISITION CORP I
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
8,625,000 warrants issued in connection with the Initial Public Offering (the “Public Warrants”) and the 6,000,000 Private
Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes 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. For periods where no observable traded price is available, the Company
utilized a Monte-Carlo simulation to estimate the fair value of the Public Warrants and used the Black-Scholes option pricing model to
estimate the fair value of the Private Placement Warrants. 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
The
Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Class A common stock subject to mandatory redemption (if any) is classified as liability instruments
and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption
rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within
the Company’s control) are classified as temporary equity. At all other times, Class A common stock is 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 the occurrence of uncertain future events. Accordingly, 34,500,000 shares of Class A common stock subject to possible
redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s
condensed balance sheets. There was no non-redeemable Class A common stock issued or outstanding as of June 30, 2022 and December 31,
2021.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of the Class A common stock subject
to possible redemption to equal the redemption value at the end of each reporting period. Effective with the closing of the Initial Public
Offering (including exercise of the over-allotment option), the Company recognized the remeasurement from initial book value to redemption
amount, 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 Topic 740, “Income Taxes” (“ASC
740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences
between the condensed 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.
ASC
740 prescribes a recognition threshold and a measurement attribute for the condensed 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 2021.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued
for the payment of interest and penalties as of June 30, 2022 and December 31, 2021. The Company is currently not aware of any issues
under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income
tax examinations by major taxing authorities since inception.
Net
Income (Loss) Per 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 common stock is calculated by dividing the net income (loss) by the weighted
average shares of common stock outstanding for the respective period.
SOCIAL LEVERAGE ACQUISITION CORP I
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
calculation of diluted net income (loss) does not consider the effect of the warrants underlying the Units sold in the Initial Public
Offering (including the consummation of the over-allotment) and the private placement warrants to purchase an aggregate of 14,625,000
Class A common stock in the calculation of diluted income (loss) per share, because their exercise is contingent upon future events and
their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income (loss) per share is the same
as basic net income (loss) per share for the three and six months ended June 30, 2022 and 2021. Remeasurement associated with the redeemable
Class A common stock is excluded from earnings per share as the redemption value approximates fair value.
The
table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per share
of common stock:
| | |
For The Three Months Ended
June 30, 2022 | | |
For The Three Months Ended
June 30, 2021 | |
| | |
Class A | | |
Class B | | |
Class A | | |
Class B | |
| Basic and diluted net income per common stock: | |
| | |
| | |
| | |
| |
| Numerator: | |
| | |
| | |
| | |
| |
| Allocation of net income | |
$ | 1,533,979 | | |
$ | 383,495 | | |
$ | 1,561,415 | | |
$ | 390,354 | |
| | |
| | | |
| | | |
| | | |
| | |
| Denominator: | |
| | | |
| | | |
| | | |
| | |
| Basic and diluted weighted average common stock outstanding | |
| 34,500,000 | | |
| 8,625,000 | | |
| 34,500,000 | | |
| 8,625,000 | |
| | |
| | | |
| | | |
| | | |
| | |
| Basic and diluted net income per common stock | |
$ | 0.04 | | |
$ | 0.04 | | |
$ | 0.05 | | |
$ | 0.05 | |
| | |
For The Six Months Ended
June 30, 2022 | | |
For The Six Months Ended
June 30, 2021 | |
| | |
Class A | | |
Class B | | |
Class A | | |
Class B | |
| Basic and diluted net income (loss) per common stock: | |
| | |
| | |
| | |
| |
| Numerator: | |
| | |
| | |
| | |
| |
| Allocation of net income (loss) | |
$ | 6,208,987 | | |
$ | 1,552,247 | | |
$ | (437,437 | ) | |
$ | (142,713 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Denominator: | |
| | | |
| | | |
| | | |
| | |
| Basic and diluted weighted average common stock outstanding | |
| 34,500,000 | | |
| 8,625,000 | | |
| 25,541,436 | | |
| 8,332,873 | |
| | |
| | | |
| | | |
| | | |
| | |
| Basic and diluted net income (loss) per common stock | |
$ | 0.18 | | |
$ | 0.18 | | |
$ | (0.02 | ) | |
$ | (0.02 | ) |
Recent
Accounting Pronouncements
In
June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale
Restrictions”. The ASU amends ASC 820 to clarify that a contractual sales restriction is not considered in measuring an equity
security at fair value and to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that
are measured at fair value. The ASU applies to both holders and issuers of equity and equity-linked securities measured at fair value.
The amendments in this ASU are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within
those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made
available for issuance. The Company is still evaluating the impact of this pronouncement on the condensed financial statements.
The
Company’s management does not believe that any other recently issued, but not yet effective, accounting standards if currently
adopted would have a material effect on the accompanying unaudited condensed financial statements.
SOCIAL LEVERAGE ACQUISITION CORP I
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 3
- Initial Public Offering
On
February 17, 2021, the Company consummated its Initial Public Offering of 34,500,000 Units, including the exercise of the underwriters’
option to purchase 4,500,000 Option Units, at $10.00 per Unit, which generated gross proceeds of $345.0 million, and incurring offering
costs of approximately $19.7 million, of which approximately $12.1 million and approximately $152,000 was for deferred underwriting commissions
and deferred legal fees, respectively.
Each
Unit consists of one share of Class A common stock, and one-fourth of one redeemable warrant (each, a “Public Warrant”).
Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to
adjustment (see Note 7).
Note
4 - Related Party Transactions
Founder
Shares
On
December 11, 2020, the Sponsor paid $25,000 to cover certain offering costs on behalf of the Company in exchange for issuance of 7,187,500
shares of the Company’s Class B common stock, par value $0.0001 per share, (the “Founder Shares”). On January 20, 2021,
the Company effected a 1:1.2 stock split of Class B common stock, resulting in an aggregate of 8,625,000 shares of Class B common stock
outstanding. The Sponsor agreed to forfeit up to 1,125,000 Founder Shares to the extent that the over-allotment option was not exercised
in full by the underwriters, so that the Founder Shares would represent 20.0% of the Company’s issued and outstanding shares after
the Initial Public Offering. On February 17, 2021, the underwriter fully exercised its option to purchase additional; thus, these 1,125,000
Founder Shares were no longer 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: (1) one year after the completion of the initial Business Combination; and (2) subsequent to the initial Business Combination
(x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any 20-trading days within any 30-trading day period commencing at least
150 days after the initial Business Combination or (y) the date on which the Company completes a liquidation, merger, capital stock exchange,
reorganization or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares
of Class A common stock for cash, securities or other property.
Private
Placement Warrants
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the Private Placement of 6,000,000 Private Placement Warrants
at a price of $1.50 per Private Placement Warrant to the Sponsor, generating proceeds of $9.0 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, subject to
adjustment. A portion of the proceeds from the sale of the Private Placement Warrants 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 (except in certain limited circumstances)
and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.
SOCIAL LEVERAGE ACQUISITION CORP I
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
December 11, 2020, 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 a promissory note (the “Note”). This loan was non-interest bearing and payable upon the completion of
the Initial Public Offering. As of February 17, 2021, the Company borrowed approximately $178,000 under the Note. On February 19, 2021,
the Company repaid the Note in full. Subsequent to the repayment, the facility was no longer available to the Company.
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.
In
March 2022, the Company executed a Working Capital Loan (the “March 2022 Working Capital Loan”), bearing interest of 10%
annually, providing the Company the ability to borrow up to $1.5 million. As of June 30, 2022 and December 31, 2021, the Company had
$300,000 and $0 in borrowings under the March 2022 Working Capital Loan. As of June 30, 2022 and 2021, the Company had approximately
$9,000 and $0 in interest earned on the March 2022 Working Capital Loan. The March 2022 Working Capital Loan has a conversion feature
that is considered an embedded derivative, but the value is de minimus, as such, the March 2022 Working Capital Loan is presented at
fair value on the accompanying condensed balance sheets.
In June 2022, the Sponsor and the Company executed
another Working Capital Loan (the “June 2022 Working Capital Loan”), bearing interest of 10% annually, providing the Company
the ability to borrow up to $400,000. As of June 30, 2022 and December 31, 2021, the Company had $61,540 and $0 in borrowings under the
June 2022 Working Capital Loan. As of June 30, 2022 and 2021, the Company has approximately $0 and $0 in interest earned on the June
2022 Working Capital Loan.
Administrative
Support Agreement and Certain Other Payments
Commencing
on the date that the Company’s securities were first listed on the New York Stock Exchange through the earlier of consummation
of the initial Business Combination and the Company’s liquidation, the Company agreed to pay the Sponsor a total of $10,000 per
month for office space, support and administrative services. For the three months ended June 30, 2022 and 2021, the Company incurred
expenses of approximately $0 and $25,000 under this agreement, included as general and administrative expenses, related party in the
unaudited condensed statements of operations, respectively. For the six months ended June 30, 2022 and 2021, the Company incurred expenses
of approximately $0 and $43,000 under this agreement, included as general and administrative expenses, related party in the unaudited
condensed statements of operations, respectively. As of June 30, 2022 and December 31, 2021, the Company had accrued approximately $60,000,
for services in connection with such agreement on the accompanying condensed balance sheets. In April 2022, the Sponsor terminated this
agreement.
The
Sponsor, executive 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, executive officers or directors, or the Company’s or their affiliates.
SOCIAL LEVERAGE ACQUISITION CORP I
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
Company granted the underwriters a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase
up to 4,500,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price, less underwriting discounts
and commissions. On February 17, 2021, the underwriter fully exercised its option to purchase additional Units.
The
underwriters were entitled to an underwriting discount of $0.20 per Unit, or $6.9 million in the aggregate, paid upon the closing of
the Initial Public Offering. In addition, $0.35 per Unit, or approximately $12.1 million in the aggregate will be payable to the underwriters
for deferred underwriting commissions. The deferred fee will become payable to the underwriters 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.
Deferred
Legal Fees
The
Company engaged a legal counsel firm for legal advisory services, and the legal counsel agreed to defer their fees in excess of $225,000
(“Deferred Legal Fees”). The deferred fee will become payable in the event that the Company completes a Business Combination.
As of June 30, 2022 and December 31, 2021, there are deferred legal fees of approximately $152,000, recognized in connection with such
services on the accompanying unaudited condensed balance sheets.
Note 6
- Class A Common Stock Subject to Possible Redemption
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 the occurrence of future events. The Company is authorized to issue 100,000,000 shares of Class A common stock with a
par value of $0.0001 per share. Holder 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 34,500,000 shares of Class A common stock outstanding, all of which were subject to possible
redemption and are classified outside of permanent equity in the condensed balance sheets.
The
Class A common stock subject to possible redemption reflected on the condensed balance sheets is reconciled on the following table:
| Gross proceeds from Initial Public Offering | |
$ | 345,000,000 | |
| Less: | |
| | |
| Fair value of Public Warrants at issuance | |
| (9,660,000 | ) |
| Offering costs allocated to Class A common stock subject to possible redemption | |
| (19,132,240 | ) |
| Plus: | |
| | |
| Remeasurement of Class A common stock subject to possible redemption amount | |
| 28,792,240 | |
| Class A common stock subject to possible redemption, December 31, 2021 | |
| 345,000,000 | |
| Remeasurement of Class A common stock subject to possible redemption amount | |
| 76,540 | |
| Class A common stock subject to possible redemption, June 30, 2022 | |
$ | 345,076,540 | |
SOCIAL LEVERAGE ACQUISITION CORP I
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 80,000,000 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 34,500,000 shares of Class A common stock issued and outstanding. All shares
of Class A common stock subject to possible redemption have been classified as temporary equity (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. As of February 17, 2021, there were 8,625,000 shares of Class B common stock outstanding, which amount have been retroactively
restated to reflect the stock split as discussed in Note 4. Of these, up to 1,125,000 shares of Class B common stock were subject to
forfeiture, to the Company by the Sponsor for no consideration to the extent that the underwriters’ over-allotment option was not
exercised in full or in part, so that the number of shares of Class B common stock outstanding would collectively equal 20% of the Company’s
issued and outstanding common stock after the Initial Public Offering. On February 17, 2021, the underwriter fully exercised its option
to purchase additional Units; thus, these 1,125,000 shares of Class B common stock were no longer subject to forfeiture. There were 8,625,000
shares issued and outstanding as of June 30, 2022 and December 31, 2021.
Holders
of Class A common stock and holders of Class B common stock will vote together as a single class, with each share entitling the holder
to one vote; provided, however that, prior to the closing of the Company’s initial Business Combination, only holders of Class
B common stock will have the right to elect or remove the Company’s directors.
The
Class B common stock will automatically convert into Class A common stock at the time of the initial Business Combination, or earlier
at the option of the holder, on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations
and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked
securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and related to the closing of
the initial Business Combination, the ratio at which the shares of Class B common stock will convert into shares of Class A common stock
will be adjusted (unless the holders of a majority of the issued and outstanding shares of Class B common stock agree to waive such anti-dilution
adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion
of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of all shares of common
stock issued and outstanding upon the completion of the Initial Public Offering plus all shares of Class A common stock and equity-linked
securities issued or deemed issued in connection with the initial Business Combination, excluding any shares or equity-linked securities
issued, or to be issued, to any seller in the initial Business Combination.
SOCIAL LEVERAGE ACQUISITION CORP I
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
8 - Warrants
As
of June 30, 2022 and December 31, 2021, the Company had 8,625,000 Public Warrants and 6,000,000 Private Placement 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 commercially reasonable 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 commercially reasonable 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 adjustment. 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 Sponsor or
its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance)
(the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity
proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the completion of the initial
Business Combination (net of redemptions), and (z) the volume weighted average trading price of the shares of Class A common stock during
the 20-trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination
(such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest
cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 and $10.00 per share redemption
trigger prices described under “Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00”
and “Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00” will be adjusted (to
the nearest cent) to be equal to 180% and 100%, respectively, of the higher of the Market Value and the Newly Issued Price.
The
Private Placement Warrants will be 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, except in certain limited circumstances. 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 (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 to each warrant holder; and |
| | ● | if, and only if, the last reported sale 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 (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like). |
SOCIAL LEVERAGE ACQUISITION CORP I
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
Company will not redeem the warrants as described above unless a registration statement under the Securities Act covering the issuance
of the shares of Class A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those
shares of common stock is available throughout the 30-day redemption period.
Except
as described below, none of the Private Placement Warrants will be redeemable by us so long as they are held by the Sponsor or its permitted
transferees.
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 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; and |
| |
● |
if, and only if, the Reference
Value equals or exceeds $10.00 per share as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the
like); and |
| | ● | if the Reference Value is less than $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like), the Private Placement Warrants must also concurrently be called for redemption on the same terms as the outstanding Public Warrants, as described above. |
The
“fair market value” of Class A common stock shall mean the volume-weighted average price of Class A common stock for the
10 trading days 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).
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 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.
| June 30, 2022 |
| Description | |
Quoted Prices
in Active
Markets
(Level 1) | | |
Significant Other
Observable Inputs
(Level 2) | | |
Significant Other
Unobservable
Inputs
(Level 3) | |
| Assets: | |
| | |
| | |
| |
| Investments held in Trust Account - Money market funds | |
$ | 345,524,198 | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | |
| Liabilities: | |
| | | |
| | | |
| | |
| Derivative warrant liabilities - Public warrants | |
$ | 1,293,750 | | |
$ | - | | |
$ | - | |
| Derivative warrant liabilities - Private placement warrants | |
$ | - | | |
$ | 900,000 | | |
$ | - | |
| December 31, 2021 |
| Description | |
Quoted Prices
in Active
Markets
(Level 1) | | |
Significant Other
Observable Inputs
(Level 2) | | |
Significant Other
Unobservable
Inputs
(Level 3) | |
| Assets: | |
| | |
| | |
| |
| Investments held in Trust Account - Money market funds | |
$ | 345,034,062 | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | |
| Liabilities: | |
| | | |
| | | |
| | |
| Derivative warrant liabilities - Public warrants | |
$ | 7,158,750 | | |
$ | - | | |
$ | - | |
| Derivative warrant liabilities - Private placement warrants | |
$ | - | | |
$ | 4,980,000 | | |
$ | - | |
SOCIAL LEVERAGE ACQUISITION CORP I
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Transfers
to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. The estimated fair value of the Public Warrants was
transferred from a Level 3 measurement to a Level 1 measurement, when the Public Warrants were separately listed and traded in an active
market in April 2021. The estimated fair value of the Private Placement Warrants was transferred from a Level 3 measurement to a Level
2 measurement in April 2021, as the transfer of Private Placement Warrants to anyone who is not a permitted transferee would result in
the Private Placement Warrants having substantially the same terms as the Public Warrants, the Company determined that the fair value
of each Private Placement Warrant is equivalent to that of each Public Warrant. There were no transfers to/from Levels 1, 2, and 3 during
the six months ended June 30, 2022.
For
periods where no observable traded price is available, the Company utilized a Monte-Carlo simulation to estimate the fair value of the
Public Warrants and used the Black-Scholes option pricing model to estimate the fair value of the Private Placement Warrants. For periods
subsequent to the detachment of the Public Warrants from the Units, the fair value of the Public Warrants is based on the observable
listed price for such warrants. The estimated fair value of the Public and Private Placement Warrants, prior to the Public Warrants being
traded in an active market, was determined using Level 3 inputs. Inherent in a binomial lattice model are assumptions related to the
Unit price, expected volatility, risk-free interest rate, term to expiration, and dividend yield. The Unit price is based on the publicly
traded price of the Units as of the measurement date. The Company estimated the volatility for the Public and Private Placement Warrants
based on the implied volatility from the traded prices of warrants issued by other special purpose acquisition companies. The risk-free
interest rate is based on interpolated U.S. Treasury rates, commensurate with a similar term to the Public and Private Placement Warrants.
The term to expiration was calculated as the contractual term of the Public and Private Placement Warrants, assuming one year to a Business
Combination from the IPO date. Finally, the Company does not anticipate paying a dividend. Any changes in these assumptions can change
the valuation significantly. For the three months ended June 30, 2022 and 2021, the Company recognized a gain/(loss) resulting from changes
in the fair value of derivative warrant liabilities of approximately $3.7 million and $2.2 million, which is presented in the accompanying
statements of operations, respectively. For the six months ended June 30, 2022 and 2021, the Company recognized a gain/(loss) resulting
from changes in the fair value of derivative warrant liabilities of approximately $9.9 million and $0.4 million, which is presented in
the accompanying statements of operations, respectively.
The following
table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement dates:
| | |
Initial Fair
Value | |
| Exercise price | |
$ | 11.50 | |
| Stock price | |
$ | 9.72 | |
| Volatility | |
| 17.6 | % |
| Term (in years) | |
| 6.5 | |
| Risk-free rate | |
| 0.85 | % |
There
were no changes in fair value of the derivative warrant liabilities, measured using Level 3 inputs, for the six months ended June 30,
2022. The change in the fair value of the derivative warrant liabilities, measured using Level 3 inputs, for the six months ended June
30, 2021 is summarized as follows:
| Derivative warrant liabilities at January 1, 2021 | |
$ | - | |
| Issuance of Public and Private Warrants | |
| 16,380,000 | |
| Change in fair value of derivative warrant liabilities | |
| 1,755,000 | |
| Derivative warrant liabilities at March 31, 2021 | |
$ | 18,135,000 | |
| Transfer of Public Warrants to Level 1 | |
| (10,695,000 | ) |
| Transfer of Private Warrants to Level 2 | |
| (7,440,000 | ) |
| Derivative warrant liabilities at June 30, 2021 | |
$ | - | |
Note
10 - Subsequent Events
The
Company has evaluated subsequent events and transactions that occurred up to the date the condensed financial statements were issued.
Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed
financial statements.
Proposed Business Combination
On July 31, 2022, the Company entered into a business
combination agreement, by and among the Company, SLAC Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”),
and W3BCLOUD Holdings Inc. (“W3BCLOUD”) (as it may be amended, supplemented or otherwise modified from time to time, the “Business
Combination Agreement”). The Business Combination Agreement and the business combination were unanimously approved by the Company’s
board of directors on July 8, 2022. If the Business Combination Agreement is approved by the Company's stockholders and the transactions
contemplated by the Business Combination Agreement are consummated, Merger Sub will merge with and into W3BCLOUD (the “Merger”),
with W3BCLOUD surviving the Merger as a wholly owned subsidiary of New W3BCLOUD (as defined below). In addition, upon the effectiveness
of the Proposed Charter, the Company will be renamed W3BCLOUD, Inc. and is referred to herein as “New W3BCLOUD” following
the consummation of the transactions (collectively, the “Business Combination”).
Refer to the Form 8-K, as filed with the Securities
and Exchange Commission on August 1, 2022 for additional information.
