☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
_____
Delaware | 001-39955 | 85-2856616 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
110 East 59th Street New York, NY | 10022 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
The registrant was not incorporated as of
shares on the New York Stock Exchange on June 30, 2021), was approximately $503,500,000.
Auditor Firm ID: 688 | Auditor Name:Marcum LLP | Auditor Location:Hartford, CT |
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CERTAIN TERMS
Unless otherwise stated in this Annual Report on Form 10-K (this “Report”), references to:
“we,” “us,” “company” or “our company” are to Mason Industrial Technology, Inc.;
“common stock” are to our Class A common stock and our Class B common stock, collectively;
“forward purchase agreement” are to the forward purchase agreement providing for the saleTable of forward purchase units by us to our sponsor in a private placement that will close concurrently with the closing of our initial business combination;
“forward purchase securities” are to the forward purchase shares and forward purchase warrants;
“forward purchase shares” are to the shares of Class A common included in the forward purchase units;
“forward purchase units” are to the units to be issued to the sponsor pursuant to the forward purchase agreement;
“forward purchase warrants” are to the warrants to purchase shares of our Class A common stock included in the forward purchase units;
“founder shares” are to shares of our Class B common stock initially purchased by our sponsor in a private placement prior to our initial public offering, and the shares of our Class A common stock issued upon the conversion thereof as provided herein;
“initial stockholders” are to holders of our founder shares prior to our initial public offering;
“initial public offering” is to the initial public offering of 50,000,000 units, including the issuance of 5,000,000 units as a result of the underwriters’ partial exercise of their over-allotment option, which offering was consummated on February 2, 2021;
“management” or our “management team” are to our directors and officers;
“Mason Capital” are to Mason Capital Management LLC, an affiliate of the managing member of our sponsor;
“private placement warrants” are to the warrants issued to our sponsor in a private placement simultaneously with the closing of our initial public offering;
“public shares” are to shares of our Class A common stock sold as part of the units in our initial public offering (whether they were purchased in our initial public offering or thereafter in the open market);
“public stockholders” are to the holders of our public shares, including our initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder’s and member of our management team’s status as a “public stockholder” shall only exist with respect to such public shares; and
“sponsor” are to Mason Industrial Sponsor, LLC, a Delaware limited liability company.
Each unit consists of one share of Class A common stock and one-third of one redeemable warrant for each unit purchased. Each whole warrant entitles the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as described in this Report, and only whole warrants are exercisable. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least three units, you will not be able to receive or trade a whole warrant.
Registered trademarks referred to in this Report are the property of their respective owners.
ITEM 1. | BUSINESS |
Our Chief Executive Officer and Director, Edward A. Rose III, was the architect, President, and Executive Vice President
Philip B. Whitehead is the Vice-Chairman of our board of directors. He is a Vice President at the Danaher Corporation (“Danaher”), a global science and technology company, and Chairman Emeritus of Danaher’s European Board. Since joining Danaher in 1992, Mr. Whitehead has held a number of executive and operational roles beginning with Managing Director of Veeder Root Europe, a division of Danaher. In his current position, he leads Danaher’s mergers and acquisition activity in Europe and supports the corporation’s growth initiatives in selected high growth markets. Earlier in his career, Mr. Whitehead worked in senior sales and marketing roles, including Brand Manager at the Proctor & Gamble Company from 1971 to 1975, Deputy National Sales Manager at Hovis Marketing from 1976 to 1978 and Product and Sales Manager at Unilever from 1978 to 1984. He also operated Whitehead Associates Consultants, his own management consultancy business, from 1984 to 1988. Mr. Whitehead is currently a director of ATS Automation (TSX: ATS) and served as
was a Partner at the law firm of Cadwalader, Wickersham & Taft LLP, having joined the firm as a Special Counsel in 1984. From 1982 to 1984, she served as the Chief of the Securities and Commodities Fraud Task Force in the United States Attorney’s Office of the Southern District of New York. Ms. Chepiga graduated from Fordham College in 1970 and Fordham University School of Law in 1973.
an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm with respect to the satisfaction of such criteria. While we consider it unlikely that our board will not be able to make an independent determination of the fair market value of a target business or businesses, it may be unable to do so if the board is less familiar or experienced with the target company’s business, there is a significant amount of uncertainty as to the value of the company’s assets or prospects, including if such company is at an early stage of development, operations or growth, or if the anticipated transaction involves a complex financial analysis or other specialized skills and the board determines that outside expertise would be helpful or necessary in conducting such analysis. Since any opinion, if obtained, would merely state that the fair market value of the target business meets the 80% of assets threshold, unless such opinion includes material information regarding the valuation of a target business or the consideration to be provided, it is not anticipated that copies of such opinion would be distributed to our stockholders. However, if required under applicable law, any proxy statement that we deliver to stockholders and file with the SEC in connection with a proposed transaction will include such opinion.
Certain of our directors and officers currently have, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity subject to his or her fiduciary duties. If any of our directors or officers becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or
Financial Position
As of December 31, 2020, the Company had $167,224 in cash and a working capital deficiency of $332,776. With funds available for a business combination in the amount of $500,000,000, (1) exclusive of funds held outside the trust account to meet our expected working capital requirements, (2) after payment of the expenses of our initial public offering including underwriting fees, (3) before the payment of $17,500,000 of deferred underwriting fees, (4) before fees and expenses associated with our initial business combination, and (5) excluding up to $80,000,000 in proceeds from the sale of forward purchase units, we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able to complete our business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third party financing and there can be no assurance it will be available to us.
independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA, or from an independent accounting firm, with respect to the satisfaction of such criteria. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. Subject to this requirement, our management has virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we are not permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations.
Type of Transaction | Whether Stockholder Approval is Required | |||
Purchase of assets | No | |||
Purchase of stock of target not involving a merger with the company | No | |||
Merger of target into a subsidiary of the company | No | |||
Merger of the company with a target | Yes |
who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules.
approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. If we structure a business combination transaction with a target company in a manner that requires stockholder approval, we will not have discretion as to whether to seek a stockholder vote to approve the proposed business combination. We intend to conduct redemptions without a
outstanding shares of common
of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our business combination
each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where
Legal Proceedings
There is no material litigation, arbitration or governmental proceeding currently pending against us or any members
RISKS RELATING TO OUR SEARCH FOR, AND CONSUMMATION OF OR INABILITY TO CONSUMMATE, A BUSINESS COMBINATION
hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to approve our initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. In the event that a stockholder fails to comply with these or any other procedures, its shares may not be redeemed.
We do not believe that our principal activities are subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule
Our amended and restated certificate of incorporation authorizes the issuance of up to 450,000,000 shares of common stock, consisting of 400,000,000 shares of Class A common stock, par value $0.0001 per share, and 50,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share. Immediately after our initial public offering, there were 350,000,000 and 37,500,000 authorized but unissued shares of Class A common stock and Class B common stock, respectively, available for issuance, which amount does not take into account the shares of Class A common stock reserved for issuance upon exercise of any outstanding warrants, the forward purchase shares or the shares of Class A common stock issuable upon conversion of Class B common stock. There are no shares of preferred stock issued and outstanding. Shares of Class B common stock are convertible into shares of our Class A common stock initially at a
an independent investment banking firm that is a member of FINRA, or from an independent accounting firm, regarding the fairness to our company from a financial point of view of an initial business with one or more domestic or international businesses affiliated with our directors, officers, or current stockholders, potential conflicts of interest still may exist and, as a result, the terms of our initial business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
business combination or the terms of negotiated transactions to purchase shares in connection with our initial business combination, we may be required to seek additional financing or to abandon the proposed business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, plus any pro rata interest earned on the funds held in the trust account and not previously released to us to pay our taxes on the liquidation of our trust account and our warrants will expire worthless. In addition, even if we do not need additional financing to complete our business combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection with or after our initial business combination.
Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form
RISKS RELATING TO THE POST-BUSINESS COMBINATION COMPANY
RISKS RELATING TO ACQUIRING AND OPERATING A BUSINESS IN FOREIGN COUNTRIES
RISKS RELATING TO OUR MANAGEMENT TEAM
RISKS RELATING TO OUR SECURITIES
net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws and there is no applicable exemption available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or
working capital loans can demand that we register such warrants or the Class A common stock issuable upon exercise of such warrants, and all of the foregoing holders can demand that we register any of our other equity securities that they may hold from time to time. In addition, pursuant to the forward purchase agreement, we will agree that we will use our commercially reasonable efforts to (i) within 30 days after the closing of the initial business combination, file a registration statement with the SEC for a secondary offering of (A) the forward purchase shares, (B) the Class A common stock issuable upon exercise of the forward purchase warrants and (C) any other Class A common stock acquired by the Sponsor, including any acquisitions after we complete our initial business combination, (ii) cause such
exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants. None of the private placement warrants will be redeemable by us so long as they are held by our sponsor or its permitted transferees.
GENERAL RISK FACTORS
security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial loss.
(b)
(c)
(d) the foreseeable future.
(e)
(f) Recent Sales
We closed our Initial Public Offering of 50,000,000 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 on February 2, 2021, generating gross proceeds of $500.0 million. Simultaneously with the closing of the Initial Public Offering, we consummated a private sale of 8,813,334 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”)2021.
The issuance of additional shares ofconcentrate our stockefforts in a Business Combination, including the forward purchase securities:
may significantly dilute the equity interest of investors, which dilution would increase if the anti-dilution provisionsidentifying businesses in the Class B common stock resulted in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class B common stock;
may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock;
could cause a change in control if a substantial number of shares of our common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignationindustrial technology, advanced materials or removal of our present directors and officers;
may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and
may adversely affect prevailing market prices for our Classspecialty chemicals industries (collectively, “Advanced Industrials”). A common stock and/or warrants.
Similarly, iftheme across these sectors is the application of technology to make industrial processes more profitable, faster, more sustainable, less capital-intensive and less complex. Specifically, we issue debt instruments or otherwise incur significant debtintend to bank or other lenders or ownersidentify businesses that apply innovative technology to engineering, production, assembly and manufacturing. These innovations include a wide range of automation, analytics and productivity tools, as well as control systems, high precision technologies, sustainability technologies, high performance computing and robotics. These technologies enable companies to confront numerous challenges inherent in their daily operations, such as rising wage rates, globalization, increased regulation, higher quality standards, heightened focus on sustainability and tighter timelines. We are also interested in companies that participate in market segments that are adjacent to Advanced Industrials. We believe that there are many potential targets within Advanced Industrials that could become attractive public companies. These potential targets exhibit a target, it could result in:
defaultbroad range of business models and foreclosure on our assets if our operatingfinancial characteristics, with enterprise values ranging between $1 billion and $3 billion. They span a wide continuum that includes both high growth emerging companies and mature businesses with established growth profiles, recurring revenues after our initial business combinationand strong cash flows. They are insufficient to repay our debt obligations;
acceleration of our obligations to repay the indebtedness even if we make all principalgenerally characterized by strong intellectual property, differentiated product offerings, compelling customer value propositions and interest payments when due if we breach certain covenantscorporate cultures that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
our immediate payment of all principalare data-driven and accrued interest, if any, if the debt security is payable on demand;
our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
our inability to pay dividends on our common stock;
using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and
other purposes and other disadvantages compared to our competitors who have less debt.
We expect to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital orare not, however, required to complete our initial business combination will be successful.
with an Advanced Industrials business and, as a result, we may pursue a business combination outside of this industry. We are seeking to acquire a mature businesses that we believe are fundamentally sound, yet which could benefit from additional financial, operational, strategic or managerial resources to achieve maximum value potential. We are also targeting earlier stage, yet established, companies that exhibit the potential to disrupt the market segments in which they participate through innovation and which offer the potential of sustained high levels of revenue growth.
derivative FPA, and $29,521 of interest income on marketable securities held in the Trust Account. This was partially offset by $1,423,720 of general and administrative expenses, $1,321,353 of issuance costs attributable to derivative liabilities, and $186,031 of franchise tax expense.
On February 2, 2021, we consummatedhad cash of $975,393 held outside the Initial Public OfferingTrust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of 50,000,000 Units at $10.00 per Unit, generating gross proceedsprospective target businesses or their representatives or owners, review corporate documents and material agreements of $500.0 million. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 8,813,334 Private Placement Warrants, atprospective target businesses, and structure, negotiate and complete a purchase price of $1.50 per Private Placement Warrant, generating gross proceeds of approximately $13.2 million. Following the closing of the Initial Public Offering, $500.0 million of the net proceeds of the sale of the Units and the Private Placement Warrants were placed in a trust account with Continental Stock Transfer & Trust Company.
Our liquidity needs have been satisfied prior to the completion of the Initial Public Offering through a capital contribution of our sponsor of $25,000 for the founder shares. In addition, our sponsor has provided a loan of $300,000 under an unsecured and non-interest bearing promissory note. Business Combination.
$500,029,521. We intend to use substantially all of the funds held in the trust account,Trust Account, including any amounts representing interest earned on the trust accountTrust Account (less taxes payable and deferred underwriting commissions), and the proceeds from the sale of the forward purchase units, to complete our initial Business Combination. We may withdraw interest
August 31, 2020 | ||||||||||||
Year Ended | (inception) through | |||||||||||
December 31, 2021 | December 31, 2020 | Change | ||||||||||
Net cash used in operating activities | $ | (1,858,013 | ) | $ | (8,334 | ) | $ | (1,849,679 | ) | |||
Net cash used in investing activities | $ | (500,000,000 | ) | $ | — | $ | (500,000,000 | ) | ||||
Net cash provided by financing activities | $ | 502,666,182 | $ | 175,558 | $ | 502,490,624 |
liabilities provided $75,000 of cash used in operating activities. Cash provided by financing activities was $175,558 for the period from August 31, 2020 (inception) through December 31, 2020, and was impacted by $300,000 of proceeds from issuance of a related party note, $25,000 of proceeds from issuance of Class B common stock partially offset by $149,442 in payments of deferred offering costs.
loaned amounts. In the event that our initial Business Combination does not close, we may use a portion of the working capital held outside the trust accountTrust Account to repay such loaned amounts but no proceeds from our trust accountTrust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the private placement warrants,Private Placement Warrants, including as to exercise price, exercisability and exercise period. The termsAs of December 31, 2021, we had no such loans by our directors and officers, if any, have not been determined and no written agreements existoutstanding.
We do not believe we will need to raise additional fundswhatever amount they deem reasonable in their sole discretion, to meet the expenditures required for operating our business. However, if our estimatesCompany’s working capital needs.
Off-balance sheet financing arrangements
We did not have any off-balance sheet arrangements as of December 31, 2020.
Contractual obligations
Other than the Sponsor loan in the amount of $300,000 which was repaid in full on February 16, 2021, we do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities as of December 31, 2020.
The underwriters are entitled to deferred fee of 3.5% of the gross proceeds of the Initial Public Offering, or $17.5 million. The deferred fee will become payable to the underwriters from the amounts held in the trust account solely in the event that we complete our initial business combination.
related party transactions.
The preparation of and Estimates
Recent accounting standards
Management does not believe that any recently issued, but not yet effective,included elsewhere in this report for a discussion of recent accounting pronouncements would have a materialand their anticipated effect on our business.
ItemQuantitative and Qualitative Disclosures about Market RiskAs of December 31, 2020, we were not subject to any market or interest rate risk. Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering and the sale of the private placement warrants held in the trust account will be invested in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
This information appears following Item 15 Statements” on page
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSURE
Disclosure
detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.
Management’s Report on Internal Controls Over Financial Reporting
This Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition periodbased on the criteria for effective internal control over financial reporting established by rulesthe Committee of Sponsoring Organization of the SEC for newly public companies.
ChangesTreadway Commission (COSO) in Internal Control – Integrated Framework (2013). Based on its assessment, management has concluded that our internal control over Financial Reporting
Duringfinancial reporting was not effective as of December 31, 2021, due to the most recently completed fiscal quarter,material weaknesses described below.
Name | Age | Position | ||
Edward A. Rose III | Chief Executive Officer and Director | |||
Derek Satzinger | Chief Financial Officer and Director | |||
Michael E. Martino | Chairman of the Board | |||
Philip B. Whitehead | Vice Chairman of the Board | |||
Diane M. Parisi | Director | |||
James L. Bauman | Director | |||
William B. Plummer | Director | |||
Marshall Clement “Mark” Sanford, Jr. | Director | |||
Pamela Chepiga | Director |
board or our officers may be required to present potential business combinations to other entities to whom they have fiduciary duties before they present such opportunities to us. Any knowledge or presentation of such opportunities may therefore present conflicts of interest. Members of our investment and advisory team that are direct or indirect owners of our sponsor are obligated to present to us opportunities in the Advanced Industrials sector of which they become aware, prior to pursuing them in any other capacity.
Name and Address of Beneficial Owner(1) | Number of Shares Beneficially Owned(2) | Percentage of Shares of Outstanding Common Stock | ||||||
Mason Industrial Sponsor, LLC (our sponsor) (3) | 12,190,625 | 19.5 | % | |||||
Edward A. Rose III | 84,375 | * | ||||||
Derek Satzinger | 0 | — | ||||||
Michael E. Martino (3) | 12,190,625 | 19.5 | % | |||||
Philip B. Whitehead | 56,250 | * | ||||||
Diane M. Parisi | 56,250 | * | ||||||
James L. Bauman | 56,250 | * | ||||||
William B. Plummer | 56,250 | * | ||||||
Marshall Clement “Mark” Sanford, Jr. | 0 | — | ||||||
Pamela Chepiga | 0 | — | ||||||
All directors and executive officers as a group (9 individuals) | 12,500,000 | 20.0 | % |
Class B common stock | Class A common stock | |||||||||||||||||||
Name of Beneficial Owners(1) | Number of Shares Beneficially Owned (2) | Approximate Percentage of Class | Number of Shares Beneficially Owned | Approximate Percentage of Class | Approximate Percentage of Voting Control | |||||||||||||||
Mason Industrial Sponsor, LLC (our sponsor) (3) | 12,190,625 | 97.53 | % | — | — | 19.5 | % | |||||||||||||
Glazer Capital, LLC (4) | — | — | 3,208,316 | 6.42 | % | 5.13 | % | |||||||||||||
Adage Capital Partners, L.P. (5) | — | — | 3,037,500 | 6.08 | % | 4.86 | % | |||||||||||||
Edward A. Rose III | 84,375 | * | — | — | * | |||||||||||||||
Derek Satzinger | — | — | — | — | — | |||||||||||||||
Michael E. Martino (3) | 12,190,625 | 97.53 | % | — | — | — | ||||||||||||||
Philip B. Whitehead | 56,250 | * | — | — | — | |||||||||||||||
Diane M. Parisi | 56,250 | * | — | — | — | |||||||||||||||
James L. Bauman | 56,250 | �� | * | — | — | — | ||||||||||||||
William B. Plummer | 56,250 | * | — | — | * | |||||||||||||||
Marshall Clement “Mark” Sanford, Jr | — | — | — | — | * | |||||||||||||||
Pamela Chepiga | — | — | — | — | * | |||||||||||||||
All officers and directors as a group (nine individuals) | 12,500,000 | 97.53 | % | 6,245,816 | 12.5 | % | 29.49 | % |
* | Less than one percent. |
(1) | Unless otherwise noted, the business address of our |
(2) | Interests shown consist solely of founder shares, classified as shares of Class B common stock. Such shares are convertible into shares of Class A common stock on a one-for-one basis, subject |
(3) | Mason Management LLC and Mason Capital Master Fund, LP are members of Mason Industrial Sponsor, LLC. Mason Management LLC is the managing member of our sponsor and an affiliate of Mason Capital Management LLC (“Mason Capital”). Michael E. Martino and Kenneth M. Garschina are the managing principals of Mason Capital Management LLC and the sole members of Mason Management LLC. Mason Capital Management LLC, Mr. Martino and Mr. Garschina may be deemed to have indirect voting and dispositive power over the foregoing shares held by Mason Industrial Sponsor, LLC. Each of Mason Management LLC, Mason Capital Master Fund, LP, Mason Capital Management LLC, Mr. Martino and Mr. Garschina disclaims beneficial ownership over any securities owned by our sponsor in which they do not have any pecuniary interest. |
Mason Management LLC is the managing member of our sponsor and an affiliate of Mason Capital Management LLC (“Mason Capital”). Michael E. Martino and Kenneth M. Garschina are the managing principals of Mason Capital Management LLC and the sole members of Mason Management LLC. Mason Capital Management LLC, Mr. Martino and Mr. Garschina may be deemed to have indirect voting and dispositive power over the foregoing shares held by Mason Industrial Sponsor, LLC. Each of Mason Management LLC, Mason Capital Master Fund, LP, Mason Capital Management LLC, Mr. Martino and Mr. Garschina disclaims beneficial ownership over any securities owned by our sponsor in which they do not have any pecuniary interest.
(4) | Based on a Schedule 13G filed on February 14, 2022 by Glazer Capital, LLC, a Delaware limited liability company (“Glazer Capital”) and Paul J. Glazer, 110 East 59th Street, New York, NY. Glazer Capital may be deemed to be the beneficial owner of 3,208,316 Class A common stock, over which it has shared investment and voting power. |
(5) | Based on a Schedule 13G filed on February 10, 2022 by Adage Capital Partners, L.P., a Delaware limited partnership (“Adage Capital”), Adage Capital Partners GP, L.L.C., Adage Capital Advisors, L.L.C., Robert Atchinson and Phillip Gross, 200 Clarendon Street, 52nd Floor, Boston, Massachusetts 02116. Adage Capital may be deemed to be the beneficial owner of 3,037,500 Class A common stock, over which it has shared investment and voting power. |
the shares of Class A common stock included in the units sold in our initial public offering, except that they will be subject to transfer restrictions and registration rights, as described herein. The forward purchase warrants will have the same terms as the private placement warrants so long as they are held by our sponsor or its permitted assignees and transferees.
such registration statement and to ensure the registration statement does not contain a material omission or misstatement, including by way of amendment or other update, as required, until the earlier of (A) the date on which the Sponsor ceases to hold the securities covered thereby and (B) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act and without the requirement to be in compliance with Rule 144(c)(1) under the Securities Act, subject to certain conditions and limitations set forth in the forward purchase agreement.
Our audit committee reviews on a quarterly basis all payments that were made to our sponsor, directors or officers, or our or their affiliates.
Tax Fees. We did not pay Marcum for tax planning2021 and tax advice for the period from August 31, 2020 (inception) through December 31, 2020.
ITEM 15. | EXHIBIT AND FINANCIAL STATEMENT SCHEDULES |
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We hereby file as part of
101.INS* | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded in the Inline XBRL document. | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104* | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* | Filed herewith. |
(1) | Incorporated by reference to the registrant’s Registration Statement on Form S-1, filed with the SEC on January 12, 2021. |
(2) | Incorporated by reference to the registrant’s Current Report on Form 8-K, filed with the SEC on February 2, 2021. |
ItemForm FORM SummaryNot applicable.
MASON INDUSTRIAL TECHNOLOGY, INC. | ||
/s/ Edward A. Rose III | ||
Name: | Edward A. Rose III | |
Title: | Chief Executive Officer and Director |
Name | Position | Date | ||
/s/ Edward A. Rose III Edward A. Rose III | Chief Executive Officer and Director (Principal Executive Officer) | March | ||
/s/ Derek Satzinger Derek Satzinger | Chief Financial Officer and Director (Principal Financial Officer) | March | ||
/s/ Michael E. Martino Michael E. Martino | Chairman of the Board | March | ||
/s/ Philip B. Whitehead Philip B. Whitehead | Vice Chairman of the Board | March | ||
/s/ Diane M. Parisi Diane M. Parisi | Director | March | ||
/s/ James L. Bauman James L. Bauman | Director | March | ||
/s/ William B. Plummer William B. Plummer | Director | March | ||
/s/ Marshall Clement Sanford, Jr. Marshall Clement Sanford, Jr. | Director | March | ||
/s/ Pamela Chepiga Pamela Chepiga | Director | March |
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December 31, 2020 | ||||
Assets: | ||||
Current assets: | ||||
Cash | $ | 167,224 | ||
Deferred offering costs associated with initial public offering | 274,442 | |||
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Total assets | $ | 441,666 | ||
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Liabilities and Stockholder’s Deficiency: | ||||
Current liabilities: | ||||
Accrued expenses | $ | 75,000 | ||
Accrued deferred offering costs | 125,000 | |||
Note payable – related party | 300,000 | |||
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Total liabilities | 500,000 | |||
Commitments and Contingencies (Note 5) | ||||
Stockholder’s Deficiency: | ||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | |||
Class A common stock, $0.0001 par value; 400,000,000 shares authorized; none issued and outstanding | — | |||
Class B common stock, $0.0001 par value; 50,000,000 shares authorized; 12,937,500 shares issued and outstanding(1) | 1,294 | |||
Additional paid-in capital | 23,706 | |||
Accumulated deficit | (83,334 | ) | ||
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Total Stockholder’s Deficiency | (58,334 | ) | ||
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Total Liabilities and Stockholder’s Deficiency | $ | 441,666 | ||
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December 31, | ||||||||
2021 | 2020 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 975,393 | $ | 167,224 | ||||
Prepaid expenses | 522,200 | — | ||||||
Total current assets | 1,497,593 | 167,224 | ||||||
NONCURRENT ASSETS | ||||||||
Cash held in trust account | 500,029,521 | — | ||||||
Other assets | 43,517 | — | ||||||
Derivative forward purchase agreement | 102,643 | — | ||||||
Deferred offering costs | — | 274,442 | ||||||
Total noncurrent assets | 500,175,681 | 274,442 | ||||||
TOTAL ASSETS | $ | 501,673,274 | $ | 441,666 | ||||
LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ DEFICIT | ||||||||
CURRENT LIABILTIES | ||||||||
Accounts payable and accrued expenses | $ | 206,424 | $ | 75,000 | ||||
Accrued deferred offering costs | — | 125,000 | ||||||
Franchise tax payable | 186,031 | — | ||||||
Note payable – related party | — | 300,000 | ||||||
Total current liabilities | 392,455 | 500,000 | ||||||
LONG-TERM LIABILTIES | ||||||||
Deferred underwriting commissions | 17,500,000 | — | ||||||
Derivative liabilities | 16,816,800 | — | ||||||
Total liabilities | 34,709,255 | 500,000 | ||||||
Commitments and Contingencies | 0 | 0 | ||||||
Class A common stock subject to possible redemption; 50,000,000 and 0 shares as of December 31, 2021 and December 31, 2020, respectively, at redemption value of $10.00 per share | 500,000,000 | — | ||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 0 shares issued and outstanding as of December 31,2021 and December 31, 2020, respectively | 0— | — | ||||||
Class A common stock, $0.0001 par value; 400,000,000 shares authorized; 0 shares issued and outstanding (excluding 50,000,000 and 0 shares subject to possible redemption) as of December 31, 2021 and December 31, 2020, respectively | 0 | — | ||||||
Class B common stock, $0.0001 par value; 50,000,000 shares authorized; 12,500,000 and 12,937,500 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively (1) | 1,250 | 1,294 | ||||||
Additional paid-in capital | — | 23,706 | ||||||
Accumulated deficit | (33,037,231 | ) | (83,334 | ) | ||||
Total Stockholders’ Deficit | (33,035,981 | ) | (58,334 | ) | ||||
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ DEFICIT | $ | 501,673,274 | $ | 441,666 | ||||
(1) |
As of December 31, 2020, this number includes up to 1,687,500 shares of Class B common stock subject to forfeiture if the over-allotment option |
For the Period from August 31, 2020 (inception) through December 31, 2020 | ||||
General and administrative expenses | $ | 83,334 | ||
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Net loss | $ | (83,334 | ) | |
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Weighted average shares outstanding, basic and diluted(1) | 11,250,000 | |||
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Basic and diluted net loss per share | $ | (0.01 | ) | |
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August 31, 2020 | ||||||||
Year Ended | (inception) through | |||||||
December 31, 2021 | December 31, 2020 | |||||||
OPERATING EXPENSES | ||||||||
General and administrative expenses | $ | 1,423,720 | $ | 83,334 | ||||
Franchise tax expense | 186,031 | 0 | ||||||
Total operating expenses | 1,609,751 | 83,334 | ||||||
OTHER INCOME (EXPENSE) | ||||||||
Interest income on marketable securities held in Trust Account | 29,521 | 0 | ||||||
Underwriting discounts and offering costs attributed to derivative liabilities | (1,321,353 | ) | 0 | |||||
Change in fair value of derivative liabilities | 20,102,701 | 0 | ||||||
Change in fair value of derivative forward purchase agreement | 430,057 | 0 | ||||||
Total other income | 19,240,926 | 0 | ||||||
INCOME (LOSS) BEFORE INCOME TAX | 17,631,175 | (83,334 | ) | |||||
Income tax expense (benefit) | 0 | 0 | ||||||
NET INCOME (LOSS) | $ | 17,631,175 | $ | (83,334 | ) | |||
Basic and diluted weighted average shares outstanding, Class A common stock | 45,616,438 | 0 | ||||||
Basic and diluted net income (loss) per share, Class A common stock | $ | 0.30 | $ | 0 | ||||
Basic and diluted weighted average shares outstanding, Class B common stock (1) | 12,533,562 | 11,250,000 | ||||||
Basic and diluted net income (loss) per share, Class B common stock | $ | 0.30 | $ | (0.01 | ) |
(1) |
The weighted average shares outstanding for the period from August 31, 2020 (inception) through December 31, 2020 excludes an aggregate of up to 1,687,500 Class B common stock subject to forfeiture if the over-allotment option |
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholder’s Deficiency | |||||||||||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance—August 31, 2020 (inception) | — | $— | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||
Issuance of Class B common stock to Sponsor(1) | — | — | 12,937,500 | 1,294 | 23,706 | — | 25,000 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (83,334 | ) | (83,334 | ) | |||||||||||||||||||
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Balance—December 31, 2020 | — | $ | — | 12,937,500 | $ | 1,294 | $ | 23,706 | $ | (83,334 | ) | $ | (58,334 | ) | ||||||||||||||
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Class B Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | |||||||||||||||||
Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
Balance—August 31, 2020 (inception) | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||
Issuance of Class B stock to Sponsor (1) | 12,937,500 | 1,294 | 23,706 | — | 25,000 | |||||||||||||||
Net loss | — | — | (83,334 | ) | (83,334 | ) | ||||||||||||||
Balance—December 31, 2020 | 12,937,500 | 1,294 | 23,706 | (83,334 | ) | (58,334 | ) | |||||||||||||
Forfeiture of Founder Shares(2) | (437,500 | ) | (44 | ) | 44 | — | — | |||||||||||||
Initial classification of derivative forward purchase agreement | — | — | (327,414 | ) | — | (327,414 | ) | |||||||||||||
Remeasurement of Class A common stock subject to possible redemption | — | — | 303,664 | (50,585,072 | ) | (50,281,408 | ) | |||||||||||||
Net income | — | — | — | 17,631,175 | 17,631,175 | |||||||||||||||
Balance—December 31, 2021 | 12,500,000 | $ | 1,250 | $ | 0 | $ | (33,037,231 | ) | $ | (33,035,981 | ) | |||||||||
(1) | This number includes an aggregate of up to 1,687,500 Class B common stock subject to forfeiture if the over-allotment option |
(2) | On January 29, 2021 the Sponsor forfeited 437,500 Founder Shares as a result of the underwriters election to partially exercise their overallotment option. |
For the Period from August 31, 2020 (inception) through December 31, 2020 | ||||
Cash Flows from Operating Activities: | ||||
Net loss | $ | (83,334 | ) | |
Changes in operating assets and liabilities: | ||||
Accrued expenses | 75,000 | |||
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Net cash used in operating activities | (8,334 | ) | ||
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Cash Flows from Financing Activities: | ||||
Payments for deferred offering costs | (149,442 | ) | ||
Proceeds from issuance of Class B common stock | 25,000 | |||
Proceeds from issuance of note payable – related party | 300,000 | |||
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Net cash provided by financing activities | 175,558 | |||
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Net increase in cash | 167,224 | |||
Cash—beginning of the period | — | |||
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Cash—ending of the period | $ | 167,224 | ||
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Supplemental disclosure of noncash activities: | ||||
Deferred offering costs included in accrued deferred offering costs | $ | 125,000 | ||
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August 31, 2020 | ||||||||
Year Ended | (inception) through | |||||||
December 31, 2021 | December 31, 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income (loss) | $ | 17,631,175 | $ | (83,334 | ) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Interest earned on cash held in Trust Account | (29,521 | ) | ||||||
Underwriting discounts and transaction costs attributed to warrant liability | 1,321,353 | — | ||||||
Change in fair value of derivative liabilities | (20,102,701 | ) | — | |||||
Change in fair value of derivative forward purchase agreement | (430,057 | ) | — | |||||
Changes in operating assets and liabilities: | — | |||||||
Prepaid expenses | (522,200 | ) | — | |||||
Accounts payable and accrued expenses | 131,424 | 75,000 | ||||||
Other assets | (43,517 | ) | — | |||||
Franchise tax payable | 186,031 | — | ||||||
Net cash used in operating activities | (1,858,013 | ) | (8,334 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Investment of cash in Trust Account | (500,000,000 | ) | — | |||||
Net cash used in investing activities | (500,000,000 | ) | — | |||||
CASH FLOW FROM FINANCING ACTIVITIES | ||||||||
Proceeds from sale of Units, net of underwriting discounts paid | 489,746,182 | — | ||||||
Proceeds from sale of Private Placement Warrants | 13,220,000 | — | ||||||
Repayment of note payable – related party | (300,000 | ) | — | |||||
Payment of offering costs | 0 | (149,442 | ) | |||||
Proceeds from sale of Class B common stock | — | 25,000 | ||||||
Proceeds from issuance of note payable – related party | — | 300,000 | ||||||
Net cash provided by financing activities | 502,666,182 | 175,558 | ||||||
NET CHANGE IN CASH | 808,169 | 167,224 | ||||||
CASH, BEGINNING OF PERIOD | 167,224 | — | ||||||
CASH, END OF PERIOD | $ | 975,393 | $ | 167,224 | ||||
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES | ||||||||
Initial classification of derivative liabilities | $ | 36,919,501 | $ | — | ||||
Initial classification of derivative forward purchase agreement | $ | (327,414 | ) | $ | — | |||
Initial classification value of common stock subject to possible redemption | $ | 500,000,000 | $ | — | ||||
Remeasurement of Class A common stock subject to possible redemption | $ | 50,281,408 | $ | — | ||||
Deferred underwriting fees charged to additional paid-in capital | $ | 17,500,000 | $ | — | ||||
Deferred offering costs included in accrued deferred offering costs | $ | 0 | $ | 125,000 |
Organization and General
risks associated with early stage and emerging growth companies.
In December 2019, a novel strain of coronavirus was reported to have surfacedincorporated in Wuhan, China, which has and is continuing to spread throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” While the extent of the impact of the outbreakDelaware on the Company will depend on future developments, it could limit the Company’s ability to complete our initial business combination.
Sponsor and Initial Financing
August 31, 2020. The Company’s sponsor is Mason Industrial Sponsor, LLC, a Delaware limited liability company (the “Sponsor”“Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on January 28, 2021.
MASON INDUSTRIAL TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
MASON INDUSTRIAL TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay the Company’s taxes (less $100,000 to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
and Capital Resources
The Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the proceeds of $25,000 from the sale of the Founder Shares (Note 4), and a loan of $300,000 under an unsecured and noninterest bearing promissory note (Note 4). Subsequent from the consummation of the Initial Public Offering, the Company’s liquidity will be satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placementnot held outside of the Trust Account.
Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using the funds held outside ofin the Trust Account and available for paying existing accounts payable and accrued liabilities, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.working capital purposes. The Company does not believe it will need to raise additional funds in order to meet the expenditures required for operating the business. However, if the Company’s estimate of the costs of identifying a target business,
There If the Company is no assurance thatunable to complete the Business Combination because it does not have sufficient funds available, the Company will be forced to cease operations and liquidate the Trust Account.
MASON INDUSTRIAL TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
Note 2—Summary of Significant Accounting Policies
Basis of Presentation
The financial statements of the Company, are presentedand have been prepared in U.S. dollars in conformityaccordance with accounting principles generally accepted in the United States of America (“GAAP”GAAP”) and pursuant to the rules and regulations.
The preparation
Risks and Uncertainties
Management is continuing to evaluate the impactmaturities of the COVID-19 pandemic and has concludedTrust Account’s investments are regularly monitored by management.
Financial Instruments
The Company determines fair value based on assumptions that market participants would use in pricingbe received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the principal or most advantageous market. When considering market participant assumptions inmeasurement date (exit price). Certain financial assets and liabilities, such as the derivative liability, are measured at fair value measurements,on a recurring basis. Nonfinancial assets and liabilities, if any, are recognized at fair value on a nonrecurring basis.
Level 1 Inputs: Unadjusted quoted pricesactive markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Examples of Level 1 inputs include financial instruments in active markets.
Level 3 Inputs: Significant inputs into the valuation model are unobservable.
measurement.
Deferred Offering Costs
Deferred offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly relatedClass A common stock subject to the Initial Public Offering and that will be charged to stockholder’s equitypossible redemption upon the completion of the Initial Public Offering.
Net Loss PerIPO. The Company classifies deferred underwriting commissions as
Net loss perStock Subject to Possible Redemption
Income Taxes
The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition ofrecognizes deferred tax assets and liabilities for both the expected impact offuture tax consequences attributable to differences between the financial statementsstatement carrying amounts and income tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax lossbenefits of utilizing net operating losses, interest expense and tax credit carry forwards. ASC 740 additionally requires a valuation allowancecarryforwards, using enacted tax rates in effect for the taxing jurisdiction in which the Company operates for the year in which those temporary differences are expected to be establishedrecovered or settled. Unrecognized tax benefits represent potential future tax obligations for uncertain tax positions taken on previously filed tax returns that may not ultimately be sustained. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The Company classifies all deferred tax assets and liabilities as noncurrent.
ASC 740 also clarifies The Company considers all available positive and negative evidence when determining whether a valuation allowance is required. In making this assessment, the Company evaluates possible sources of taxable income that may be available to realize the deferred tax assets, including projected future taxable income, the reversal of existing temporary differences available and tax planning strategies. Deferred tax assets are then reduced by a valuation allowance if the Company believes it is more likely than not such deferred tax assets will not be realized.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2020.the fully retrospective method. The Company is currentlystill in the process of evaluating the impact of this new standard; however, the Company does not awarebelieve the initial impact of any issues under review that couldadopting the standard will result in significant payments, accrualsany changes to the Company’s statements of financial position, operations or material deviation from its position.
Recent Accounting Pronouncements
Managementcash flows.
Fair Value Measured as of December 31, 2021 | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
Assets: | ||||||||||||
Investments held in Trust Account (1) | $ | 500,029,521 | $ | — | $ | — | ||||||
Derivative forward purchase agreements (2) | $ | — | $ | — | $ | 102,643 | ||||||
Liabilities: | ||||||||||||
Derivative liabilities — Public Warrants (3) | $ | 11,000,000 | $ | — | $ | — | ||||||
Derivative liabilities — Private Placement Warrants (4) | $ | — | $ | — | $ | 5,816,800 |
(1) | The fair value of investments in Trust Account based on quoted market price. |
(2) | The fair value of derivative forward purchase agreement was based on the forward price formula. |
(3) | The fair value of derivative liabilities – Public Warrants based on quoted market price for MIT.W as of the reporting date. |
(4) | The fair value of derivative liabilities – Private Placement Warrants was based on a modified Black-Scholes model. |
Note 3—
Pursuant toWarrants and the Initial Public OfferingPrivate Warrants on February 2, 2021 was estimated using a Binomial Lattice and modified Black-Scholes valuation model, respectively. At their initial measurement, the Warrants were classified as Level 3 inputs due to the use of unobservable inputs.
February 2, 2021 | ||||
(Initial Measurement) | ||||
Strike price | $ | 11.50 | ||
Term (in years) | 5.2 | |||
Risk-free rate | 0.7 | % | ||
Volatility | 25.5 | % | ||
Dividend Yield | 0.0 | % | ||
Fair value of Public Warrants | $ | 1.41 | ||
Fair value of Private Placement Warrants | $ | 1.50 |
December 31, 2021 | ||||
Strike price | $ | 11.50 | ||
Term (in years) | 5.2 | |||
Risk-free rate | 1.3 | % | ||
Volatility | 11.6 | % | ||
Dividend yield | 0.0 | % | ||
Fair value of Private Placement Warrants | $ | 0.66 |
February 2, 2021 (Initial Measurement) | ||||
Stock price | $ | 10.00 | ||
Exercise price | $ | 10.00 | ||
Term (years) | 0.12 | |||
Risk free rate | 0.1 | % | ||
Volatility | 8.2 | % | ||
Dividend Yield | 0.0 | % | ||
Fair value of over-allotment option | $ | 0.11 |
Public Warrants | Private Warrants | Over-allotment Option | Total Derivative Liability | |||||||||||||
Derivative warrant liabilities at | $ | 0— | $ | 0— | $ | 0 | $ | 0— | ||||||||
Issuance of Public and Private Warrants | 23,500,000 | 13,220,001 | 0 | 36,720,001 | ||||||||||||
Issuance of over-allotment option | 769,500 | 769,500 | ||||||||||||||
Partial exercise of over-allotment option | (570,000 | ) | (570,000 | ) | ||||||||||||
Change in fair value of derivative | (12,500,000 | ) | (7,403,201 | ) | (199,500 | ) | (20,102,701 | ) | ||||||||
Derivative liabilities at December 31, | $ | 11,000,000 | $ | 5,816,800 | $ | 0 | $ | 16,816,800 |
(1) | During the 1 st quarter of 2021, the Public Warrants were transferred from Level 3 to Level 1 in the fair value hierarchy. |
(2) | On February 2, 2021, the IPO date, the over-allotment option was partially exercised for the purchase of 5,000,000 units and the option to purchase 1,750,000 additional units subsequently expired. |
FPA Asset (Liability) | ||||
Derivative forward purchase agreement at December 31, 2020 | $ | 0— | ||
Executed forward purchase agreement in connection with IPO | (327,414 | ) | ||
Change in fair value of the derivative forward purchase agreement | 430,057 | |||
Derivative forward purchase agreement at December 31, 2021 | $ | 102,643 |
No fractional shares will be issued upon separation of the Units and only wholeshares. The Public Warrants will trade. Each Warrant will become exercisable on the later of (a) 30 days after the completion of the Company’s Initiala Business Combination or (b) 12 months from the closing of the InitialIPO; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the Public OfferingWarrants and a current prospectus relating to them is available. The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company will use its best efforts to file with the U.S Securities and Exchange Commission a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the Public Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. Notwithstanding the foregoing, if a registration statement covering the shares of Class A common stock issuable upon exercise of the Public Warrants is not effective within a specified period following the consummation of Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9)
Once
In addition, once the Warrants become exercisable, the Company may redeem the outstanding Warrants in whole and not in part at a price of $0.10 per Warrant upon a minimum 30 days’ prior written notice, provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined based on the redemption date and the Fair Market Value and if, and only if the last sale price of the Company’s Class A common stock equals or exceeds $10.00 per share for any 20 trading days within a 30-trading
Note 4—Related Party Transactions
Gross proceeds | $ | 500,000,000 | ||
Less: | ||||
Offering costs and underwriting fees allocated to Class A common stock subject to possible redemption | (26,781,408 | ) | ||
Proceeds allocated to Public Warrants at issuance | (23,500,000 | ) | ||
Plus: | ||||
Remeasurement to Class A common stock subject to possible redemption | 50,281,408 | |||
Class A common stock subject to possible redemption | $ | 500,000,000 | ||
As used herein, unless the context otherwise requires, the Founder Shares shall be deemed to include the shares of Class A common stock issuable upon conversion thereof.
MASON INDUSTRIAL TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
The Company’s initial stockholders have agreed subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of the Initialinitial Business Combination or (B) subsequent to the Initialinitial Business Combination, (x) if the last sale price of the Company’s 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
Simultaneously
The Sponsor and the Company’s officers and directors will agree, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants are not transferrable, assignable or salable until 30 days after the completion of the Initialinitial
SimultaneouslyOperations
MASON INDUSTRIAL TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
In addition, in order to fund working capital deficiencies or finance transaction costs in connection with the Initialinitial Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s directors and officers may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”Loans”). If the Company completes the Initialinitial Business Combination, the Company would repay the Working Capital Loans. In the event that the Initialinitial Business Combination does not close, the Company may use a portion of the proceeds held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1.5 million of the Working Capital Loans may be convertible into warrants, at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants, including as to exercise price, exercisability and exercise period. To date, the Company has had no Working Capital Loans outstanding.
August 31, 2020 | ||||||||
Year Ended | (inception) through | |||||||
December 31, 2021 | December 31, 2020 | |||||||
Current income tax expense: | ||||||||
Federal | $ | 0 | $ | 0 | ||||
State | 0 | 0 | ||||||
0 | 0 | |||||||
Deferred income tax expense: | ||||||||
Federal | $ | (331,164 | ) | (17,500 | ) | |||
State | 0 | 0 | ||||||
(331,164 | ) | (17,500 | ) | |||||
Change in valuation allowance | 331,164 | 17,500 | ||||||
Income tax provision | $ | 0 | $ | 0 | ||||
December 31, | ||||||||
2021 | 2020 | |||||||
Statutory federal income tax rate | 21.0 | % | 21.0 | % | ||||
Change in fair value of derivative liabilities | (24.0 | )% | 0.0 | % | ||||
Change in fair value of FPA | (0.5 | )% | 0.0 | % | ||||
Transaction costs related to warrants | 1.6 | % | 0.0 | % | ||||
Meals and entertainment | 0.0 | % | 0.0 | % | ||||
Return to provision adjustment | (0.1 | )% | 0.0 | % | ||||
Change in valuation allowance | 2.0 | % | (21.0 | )% | ||||
Income tax provision | 0.0 | % | 0.0 | % | ||||
December 31, | ||||||||
2021 | 2020 | |||||||
Deferred tax asset | ||||||||
Net operating loss carryforward | $ | 32,874 | $ | 0 | ||||
Organizational/Start-up costs | 298,296 | 17,500 | ||||||
Total deferred tax asset | 331,170 | 17,500 | ||||||
Valuation allowance | (331,170 | ) | (17,500 | ) | ||||
Deferred tax asset, net of allowance | $ | 0 | $ | 0 | ||||
Note 5—Commitments and Contingencies
Registration Rights
The holders of Founder Shares and Private Placement Warrantsexpire. If a business combination is consummated, these net operating losses will be entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to shares of Class A common stock) pursuant tolimited by a registration rights agreement to be signed on or before the date of the prospectus for the Initial Public Offering. These holdersSection 382 limitation given there will be entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period for the securities to be registered. The Company will bear the expenses incurredhave been a change in connection with the filing of any such registration statements.
Underwriting Agreement
In connection with the closing of the Initial Public Offering on February 2, 2021, the Company paid an underwriting discount of 2.0% of the per Unit offering price to the underwriters, or $10.0 million, with an additional fee (the “Deferred Discount”) of 3.5% of the gross offering proceeds payable upon the Company’s completion of an Initial Business Combination. The Deferred Discount of $17.5 million will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its Initial Business Combination.
Note 6—Stockholder’s Deficiency
Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock 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 December 31, 2020, there were no shares of preferred stock issued or outstanding.
Class A Common Stock — The Company is authorized to issue 400,000,000shares of Class A common stock with a par value of $0.0001 per share. As of December 31, 2020, there were no shares of Class A common stock issued or outstanding.
If the Company enters into an Initial Business Combination, it may (depending on the terms of such an Initial Business Combination) be required to increase the number of shares of Class A common stock which the Company is authorized to issuecontrol at the same time as the Company’s stockholders vote on the Initial Business Combination to the extent the Company seeks stockholder approval in connection with the Initial Business Combination.
The shares of Class A common stockCompany.
MASON INDUSTRIAL TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
Class B Common Stock — The Company is authorized to issue 50,000,000 shares of Class B common stock with a par value of $0.0001 per share. 11,500,000 shares of Class B common stock were initially issued to the Sponsor on September 15, 2020, of which 1,500,000 shares are subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised. On January 28, 2021, the Company effected a stock dividend of 0.125 shares of Class B common stock, resulting in the Sponsor holding an aggregate of 12,937,500 Founder Shares (up to 1,687,500 Founder Shares of which are subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised), representing an adjusted purchase price of approximately $0.002 per share. On January 29, 2021, the Sponsor forfeited 437,500 shares of Class B common as a result of the underwriters’ election to partially exercise their over-allotment option.
The shares of Class B common stock shall automatically convert into shares of Class A common stock at the time of the Company’s Initial Business Combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustments pursuant to certain anti-dilution rights and certain transfer restrictions described in Note 4.
Holders of the Class A common stock and holders of the 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. Each share of common stock has one vote on all such matters. However, the holders of the Founder Shares have the right to elect all of the Company’s directors prior to the consummation of the Company’s Initial Business Combination.
In the event of a liquidation, dissolution or winding up of the Company after an Initial Business Combination, the Company’s stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. The Company’s stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that the Company will provide its stockholders with the opportunity to redeem their Public Shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, upon the completion of the Initial Business Combination, subject to the limitations described herein.
Note 7—Income Taxes
For the year ended December 31, 2020, the Company has no current or deferred tax expense. The Company’s net deferred asset is as follows:
December 31, 2020 | ||||
Deferred tax asset: | ||||
Startup expenses | $ | 17,500 | ||
|
| |||
Total deferred tax asset | 17,500 | |||
Valuation allowance | (17,500 | ) | ||
|
| |||
Net deferred asset | $ | — | ||
|
|
In assessing the realization of the deferred tax assets, management considers whetherbelieves it is more likely than not that some portion of all of thesuch deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance.
$331,164
The reconciliation of
| ||||
| ||||
| ||||
| ||||
positions.
Note 8—Subsequent Events
purchase 25,480,001 shares of Class A common stock in the calculation of diluted income (loss) per share, since the exercise of the warrants is contingent upon the occurrence of future events. As of December 31, 2021, the Company did not have any other dilutive securities or other contracts that could, potentially, be exercised or converted into shares of common stock and then share in earnings of the Company. As a result, diluted net income (loss) per common share is the same as basic net income per common share for the periods presented.
August 31, 2020 | ||||||||||||||||
Year Ended | (inception) through | |||||||||||||||
December 31, 2021 | December 31, 2020 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic and diluted net income (loss) per share | ||||||||||||||||
Numerator | ||||||||||||||||
Allocation of net income (loss) | $ | 13,830,979 | $ | 3,800,196 | $ | 0 | $ | (83,334 | ) | |||||||
Denominator | ||||||||||||||||
Weighted-average shares outstanding (1) | 45,616,438 | 12,533,562 | 0 | 11,250,000 | ||||||||||||
Basic and diluted net income (loss) per share | $ | 0.30 | $ | 0.30 | $ | 0 | $ | (0.01 | ) |
(1) | The weighted average shares outstanding for the period from August 31, 2020 (inception) through December 31, 2020 excludes an aggregate of up to 1,687,500 Class B common stock subject to forfeiture if the over-allotment option was 0t exercised in full or in part by the underwriters. The underwriters partially exercised their over-allotment shares on January 29, 2021; therefore, the Sponsor forfeited 437,500 Founder Shares as a result of the partial exercised of the over-allotment shares, while the remaining 1,250,000 shares were no longer subject to forfeiture and are included in the year ended December 31, 2021. |
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