UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2021June 30, 2022
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-39939
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
| | 85-2693583 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
One North Lexington Avenue
White Plains, NY 10601
(Address of principal executive offices)
(914) 421-4900
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | | Trading Symbols | | Name of each exchange on which registered |
Units, each consisting of one share of Class A common stock and one-half of one redeemable warrant
| | FSSIU
| | The Nasdaq Stock Market LLC
|
| | | | |
Class A common stock, par value $0.0001 per share
| | FSSI
| | The Nasdaq Stock Market LLC
|
| | | | |
Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 per share
| | FSSIW
| | The Nasdaq Stock Market LLC
|
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer
| ☒ | Smaller reporting company | ☒
|
| | Emerging growth company | ☒
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
As of July 23, 2021,August 10, 2022, there were 25,875,000 shares of Class A common stock, $0.0001 par value and 6,468,750 shares of Class B common stock, $0.0001 par value, issued and outstanding.outstanding, respectively.
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2021JUNE 30, 2022
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Part I. Financial Information | |
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Part II. Other Information | |
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PART I - FINANCIAL INFORMATION
Item 1. | Interim Financial Statements. |
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
| | March 31, 2021 | | | December 31, 2020 | |
| | (Unaudited) | | |
| |
ASSETS | | | | | | |
Current assets | | | | | | |
Cash | | $ | 954,334 | | | $ | 107,601 | |
Prepaid expenses | | | 615,637 | | | | — | |
Total Current Assets | | | 1,569,971 | | | | 107,601 | |
| | | | | | | | |
Deferred offering costs | | | — | | | | 289,437 | |
Marketable securities held in Trust Account | | | 258,760,562 | | | | — | |
TOTAL ASSETS | | $ | 260,330,533 | | | $ | 397,038 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Current liabilities – Accrued offering costs | | | | | | | | |
Accrued expenses | | $ | 119,435 | | | $ | 3,952 | |
Accrued offering costs | | | 55,212 | | | | 222,038 | |
Promissory note – related party | | | — | | | | 150,000 | |
Total Current Liabilities | | | 174,647 | | | | 375,990 | |
| | | | | | | | |
Warrant liability | | | 14,078,750 | | | | — | |
Deferred underwriting fee payable | | | 9,056,250 | | | | — | |
Total Liabilities | | | 23,309,647 | | | | 375,990 | |
| | | | | | | | |
Commitments (Note 7)
| | | | | | | | |
| | | | | | | | |
Class A common stock subject to possible redemption 23,201,141 and no shares at redemption value at March 31, 2021 and December 31, 2020, respectively | | | 232,020,878 | | | | — | |
| | | | | | | | |
Stockholders’ Equity | | | | | | | | |
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding | | | — | | | | — | |
Class A common stock, $0.0001 par value; 300,000,000 shares authorized; 2,673,859 and no shares issued and outstanding (excluding 23,201,141 and no shares subject to possible redemption) at March 31, 2021 and December 31, 2020, respectively | | | 267 | | | | — | |
Class B common stock, $0.0001 par value; 30,000,000 shares authorized; 6,468,750 shares issued and outstanding at March 31, 2021 and December 31, 2020 (1)
| | | 647 | | | | 647 | |
Additional paid-in capital | | | 5,315,813 | | | | 24,353 | |
Accumulated deficit | | | (316,719 | ) | | | (3,952 | ) |
Total Stockholders’ Equity | | | 5,000,008 | | | | 21,048 | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 260,330,533 | | | $ | 397,038 | |
| | June 30, 2022
| | | December 31, 2021
| |
�� | | (Unaudited) | | |
| |
ASSETS | | | | | | |
Current assets | | | | | | |
Cash | | $ | 77,605 | | | $ | 661,275 | |
Prepaid expenses | | | 186,228 | | | | 302,159
| |
Total Current Assets | | | 263,833 | | | | 963,434 | |
| | | | | | | | |
Marketable securities held in Trust Account | | | 259,146,180 | | | | 258,778,573
| |
TOTAL ASSETS | | $ | 259,410,013 | | | $ | 259,742,007 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | |
Current liabilities
| | | | | | | | |
Accrued expenses and accounts payable | | $ | 1,467,674 | | | $ | 1,746,660 | |
Deferred legal fee | | | 225,476 | | | | 0 | |
Income taxes payable | | | 19,231 | | | | 0 | |
Total Current Liabilities | | | 1,712,381 | | | | 1,746,660 | |
| | | | | | | | |
Warrant liabilities | | | 2,578,423 | | | | 12,265,755 | |
Deferred underwriting fee payable | | | 4,980,937 | | | | 9,056,250 | |
Total Liabilities | | | 9,271,741 | | | | 23,068,665 | |
| | | | | | | | |
Commitments (Note 6)
| | |
| | | |
| |
| | | | | | | | |
Class A common stock subject to possible redemption; $0.0001 par value; 25,875,000 shares at redemption value at June 30, 2022 and December 31, 2021
| | | 258,826,900 | | | | 258,750,000
| |
| | | | | | | | |
Stockholders’ Deficit | | | | | | | | |
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued or outstanding | | | 0 | | | | 0 | |
Class A common stock, $0.0001 par value, 300,000,000 shares authorized; NaN issued and outstanding (excluding 25,875,000 shares subject to possible redemption) at June 30, 2022 and December 31, 2021 | | | 0 | | | | 0 | |
Class B common stock, $0.0001 par value; 30,000,000 shares authorized; 6,468,750 shares issued and outstanding at June 30, 2022 and December 31, 2021
| | | 647 | | | | 647 | |
Additional paid-in capital | | | 3,851,701 | | | | 0 | |
Accumulated deficit | | | (12,540,976 | ) | | | (22,077,305 | ) |
Total Stockholders’ Deficit | | | (8,688,628 | ) | | | (22,076,658 | ) |
| | | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | | $ | 259,410,013 | | | $ | 259,742,007 | |
(1) | At December 31, 2020, included up to 843,750 shares subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriters (see Note 6).
|
The accompanying notes are an integral part of the unauditedthese condensed financial statements.
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
CONDENSED
STATEMENTSTATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2021
(UNAUDITED)
Operating and formation costs | | $ | 189,500 | |
Loss from operations | | | (189,500 | ) |
| | | | |
Other income: | | | | |
Interest earned on marketable securities held in Trust Account | | | 10,562 | |
Transaction costs allocable to warrant liability | | | (536,079 | )
|
Change in fair value of warrants | | | 402,250 | |
| | | (123,267 | )
|
| | | | |
Loss before income taxes | | | (312,767 | ) |
Benefit (provision) for income taxes | | | — | |
Net loss | | $ | (312,767 | ) |
| | | | |
Basic and diluted weighted average shares outstanding, Class A common stock subject to redemption | | | 23,179,757 | |
| | | | |
Basic and diluted net income per share, Class A common stock subject to redemption | | $ | (0.00 | ) |
| | | | |
Basic and diluted weighted average shares outstanding, Non-redeemable common stock | | | 8,023,651 | |
| | | | |
Basic and diluted net loss per share, Non-redeemable common stock | | $ | (0.04 | ) |
| | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | 2022
| | | 2021
| | | 2022
| | | 2021
| |
Formation and operating costs | | $ | 239,419 | | | $ | 278,985 | | | $ | 646,091 | | | $ | 468,485 | |
Loss from operations | | | (239,419 | ) | | | (278,985 | ) | | | (646,091 | ) | | | (468,485 | ) |
| | | | | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | | | | |
Change in fair value of warrant liabilities | | | 3,621,297 | | | | (8,447,250 | ) | | | 9,687,332 | | | | (8,045,000 | ) |
Transaction costs incurred in connection with the Initial Public Offering | | | 0 | | | | 0 | | | | 0 | | | | (536,079 | ) |
Reduction of deferred underwriter fee | | | 146,712 | | | | 0 | | | | 146,712 | | | | 0 | |
Interest earned on marketable securities held in Trust Account | | | 343,005 | | | | 9,213 | | | | 367,607 | | | | 19,775 | |
Total other income (expense), net | | | 4,111,014 | | | | (8,438,037 | ) | | | 10,201,651 | | | | (8,561,304 | ) |
| | | | | | | | | | | | | | | | |
Income (Loss) before provision for income taxes | | | 3,871,595 | | | | (8,717,022 | ) | | �� | 9,555,560 | | | | (9,029,789 | ) |
Provision for income taxes | | | (19,231 | ) | | | 0 | | | | (19,231 | ) | | | 0 | |
Net income (loss) | | $ | 3,852,364 | | | $ | (8,717,022 | ) | | $ | 9,536,329 | | | $ | (9,029,789 | ) |
| | | | | | | | | | | | | | | | |
Weighted average shares outstanding, Class A common stock | | | 25,875,000
| | | | 25,875,000
| | | | 25,875,000 | | | | 21,729,282 | |
Basic and diluted net income (loss) per share, Class A common stock | | $ | 0.12 | | | $ | (0.27 | ) | | $ | 0.29 | | | $ | (0.32 | ) |
| | | | | | | | | | | | | | | | |
Weighted average shares outstanding, Class B common stock | | | 6,468,750
| | | | 6,468,750 | | | | 6,468,750 | | | | 6,333,564 | |
Basic and diluted net income (loss) per share, Class B common stock | | $ | 0.12 | | | $ | (0.27 | ) | | $ | 0.29 | | | $ | (0.32 | ) |
The accompanying notes are an integral part of the unauditedthese condensed financial statements.
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
CONDENSED
STATEMENTSTATEMENTS OF CHANGES IN STOCKHOLDERS’
EQUITYDEFICIT(UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED MARCH 31,JUNE 30, 2022
| | Class A Common Stock | | | Class B Common Stock | | | Additional Paid-in | | | Accumulated | | | Total Stockholders’ | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Deficit | | | Deficit | |
Balance — January 1, 2022 | | | 0 | | | $ | 0 | | | | 6,468,750 | | | $ | 647 | | | $ | 0 | | | $ | (22,077,305 | ) | | $ | (22,076,658 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | | — | | | | 0 | | | | — | | | | 0 | | | | 0 | | | | 5,683,965 | | | | 5,683,965 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance – March 31, 2022 | | | 0 | | | $ | 0 | | | | 6,468,750 | | | $ | 647 | | | $
| 0 | | | $ | (16,393,340 | ) | | $ | (16,392,693 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Remeasurement for Class A common stock to redemption amount | | | — | | | | — | | | | — | | | | — | | | | (76,900) | | | | 0 | | | | (76,900 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reduction of deferred underwriter fee
| | | — | | | | — | | | | — | | | | — | | | | 3,928,601 | | | | 0 | | | | 3,928,601 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | | — | | | | 0 | | | | — | | | | 0 | | | | 0 | | | | 3,852,364 | | | | 3,852,364 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance – June 30, 2022 | | | 0 | | | $ | 0 | | | | 6,468,750 | | | $ | 647 | | | $
| 3,851,701 | | | $ | (12,540,976 | ) | | $ | (8,688,628 | ) |
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021
(UNAUDITED)
| | Class A Common Stock | | | Class B Common Stock | | | Additional Paid-in | | | Accumulated | | | Total Stockholders’ | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Deficit | | | Equity (Deficit) | |
Balance — January 1, 2021 | | | 0 | | | $ | 0 | | | | 6,468,750 | | | $ | 647 | | | $ | 24,353 | | | $ | (3,952 | ) | | $ | 21,048 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Remeasurement for Class A common stock subject to redemption amount | | | — | | | | — | | | | — | | | | — | | | | (2,033,353 | ) | | | (21,413,041 | ) | | | (23,446,394 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash paid in excess of fair value for private warrants | | | — | | | | 0 | | | | — | | | | 0 | | | | 2,009,000 | | | | 0 | | | | 2,009,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss | | | — | | | | 0 | | | | — | | | | 0 | | | | 0 | | | | (312,767 | ) | | | (312,767 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance – March 31, 2021 | | | 0 | | | $ | 0 | | | | 6,468,750 | | | $ | 647 | | | $
| 0 | | | $ | (21,729,760 | ) | | $ | (21,729,113 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss | | | — | | | | 0 | | | | — | | | | 0 | | | | 0 | | | | (8,717,022 | ) | | | (8,717,022 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance – June 30, 2021 | | | 0 | | | $ | 0 | | | | 6,468,750 | | | $ | 647 | | | $
| 0 | | | $ | (30,446,782 | ) | | $ | (30,446,135 | ) |
| | Class A Common Stock | | | Class B Common Stock | | | Additional Paid-in | | | Accumulated | | | Total Stockholders’ | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Deficit | | | Equity | |
Balance — January 1, 2021 | | | — | | | $ | — | | | | 6,468,750 | | | $ | 647 | | | $ | 24,353 | | | $ | (3,952 | ) | | $ | 21,048 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sale of 25,875,000 Units, net of underwriting discounts, initial fair value of public warrants and other offering costs | | | 25,875,000 | | | | 2,588 | | | | — | | | | — | | | | 235,301,017 | | | | — | | | | 235,303,605 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash paid in excess of fair value for private warrants | | | — | | | | — | | | | — | | | | — | | | | 2,009,000 | | | | — | | | | 2,009,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A common stock subject to possible redemption | | | (23,201,141 | ) | | | (2,321 | ) | | | — | | | | — | | | | (232,018,557 | ) | | | — | | | | (232,020,878 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | (312,767 | ) | | | (312,767 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance – March 31, 2021 | | | 2,673,859 | | | $ | 267 | | | | 6,468,750 | | | $ | 647 | | | $ | 5,315,813 | | | $ | (316,719 | ) | | $ | 5,000,008 | |
The accompanying notes are an integral part of the unauditedthese condensed financial statements.
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
CONDENSED
STATEMENTSTATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2021
(UNAUDITED)
| | | Six Months Ended
June 30,
| |
| | | 2022
| | | 2021
| |
Cash Flows from Operating Activities: | | | | | | | | | |
Net loss | | $ | (312,767 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | |
Net income (loss) | | | $ | 9,536,329 | | | $ | (9,029,789 | ) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | | | | | | | | | |
Interest earned on marketable securities held in Trust Account | | (10,562 | ) | | | (367,607 | ) | | | (19,775 | ) |
Change in fair value of warrant liability | | (402,250 | ) | |
Change in fair value of warrant liabilities | | | | (9,687,332 | ) | | | 8,045,000 | |
Reduction of deferred underwriter fee
| | | | (146,712 | ) | | | 0 | |
Transaction costs incurred in connection with IPO | | 536,079 | | | | 0 | | | | 536,079 | |
Changes in operating assets and liabilities: | | | | | | | | | | | |
Prepaid expenses | | (615,637 | ) | | | 115,931 | | | | (517,178 | ) |
Accrued expenses | | | 115,483 | | |
Income Taxes Payable | | | | 19,231 | | | | 0 | |
Accrued expenses and accounts payable | | | | (53,510 | ) | | | 203,263 | |
Net cash used in operating activities | | | (689,654 | ) | | | (583,670 | ) | | | (782,400 | ) |
| | | | | | | | | | | |
Cash Flows from Investing Activities: | | | | | | | | | | | |
Investment of cash in Trust Account | | (258,750,000 | ) | |
Cash withdrawn from Trust Account to pay for franchise and income taxes | | | — | | |
Investment in Trust Account | | | | 0 | | | | (258,750,000 | ) |
Net cash used in investing activities | | | (258,750,000 | ) | | | 0 | | | | (258,750,000 | ) |
| | | | | | | | | | | |
Cash Flows from Financing Activities: | | | | | | | | | | | |
Proceeds from sale of Units, net of underwriting discounts paid | | 253,575,000 | | | | 0 | | | | 253,575,000 | |
Proceeds from sale of Private Placement Warrants | | 7,175,000 | | | | 0 | | | | 7,175,000 | |
Repayment of promissory note – related party | | (150,000 | ) | | | 0 | | | | (150,000 | ) |
Payment of offering costs | | | (313,613 | ) | | | 0 | | | | (363,825 | ) |
Net cash provided by financing activities | | | 260,286,387 | | | | 0 | | | | 260,236,175 | |
| | | | | | | | | | | |
Net Change in Cash | | 846,733 | | | | (583,670 | ) | | | 703,775 | |
Cash – Beginning of period | | | 107,601 | | | | 661,275 | | | | 107,601 | |
Cash – End of period | | $ | 954,334 | | | $ | 77,605 | | | $ | 811,376 | |
| | | | | | | | | | | |
Non-Cash investing and financing activities: | | | | |
Non-Cash Investing and Financing Activities: | | | | | | | | | |
Offering costs included in accrued offering costs | | $ | 55,212 | | | $ | 0 | | | $ | 5,000 | |
Initial classification of warrant liability | | $ | 14,481,000 | | |
Initial classification of Class A common stock subject to possible redemption | | $ | 246,278,570 | | |
Change in value of Class A common stock subject to possible redemption | | $ | (14,257,692 | ) | |
Deferred underwriting fee payable | | $ | 9,056,250 | | | $ | 0 | | | $ | 9,056,250 | |
Remeasurement of Class A common stock subject to possible redemption amount
| | | $ | 76,900 | | | $ | 0 | |
Reduction of deferred underwriter fee
| | | $
| (4,075,313 | ) | | $
| 0 | |
The accompanying notes are an integral part of the unauditedthese condensed financial statements.
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
JUNE 30, 2022
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
(Unaudited)
NOTE 1. | DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS |
Fortistar Sustainable Solutions Corp. (the “Company”) was incorporated in Delaware on August 25, 2020. The Company was formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”).
The Company is not limited to a particular industry or geographic region for purposes of consummating a 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 January 29, 2021,June 30, 2022, the Company had not commenced any operations. All activity through January 29, 2021June 30, 2022 relates to the Company’s formation the initial public offering (the “Initial Public Offering”), which is described below, and subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generategenerates non-operating income in the form of interest income from the proceeds derived frommarketable securities held in the Initial Public Offering.Trust Account (as defined below) and the change in fair value of its warrant liabilities.
The registration statements for the Company’s Initial Public Offering were declared effective on January 26, 2021. On January 29, 2021, the Company consummated the Initial Public Offering of 25,875,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), which includes the full exercise by the underwriter of its over-allotment option in the amount of 3,375,000 Units, at $10.00 per Unit, generating gross proceeds of $258,750,000, which is describeddescribed in Note 4.3. Each Unit consists of 1 share of Class A common stock, $0.0001 par value, and one half of one redeemable warrant (the “Public Warrants”).
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 7,175,000 warrants (each, a “Private Placement Warrant” and, collectively, the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to FSSC Sponsor LLC (the “Sponsor”), generating gross proceeds of $7,175,000, which is described in Note 5.4.
Transaction costs amounted to $14,667,473,$14,667,474, consisting of $5,175,000 of underwriting fees, $9,056,250 of deferred underwriting fees and $436,223$436,224 of other offering costs.
Following the closing of the Initial Public Offering on January 29, 2021, an amount of $258,750,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants waswere placed in a trust account (the “Trust Account”), located in the United States and invested only in 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 in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the funds held in 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 the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummatingcompleting a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete a Business Combination with one or more target businesses that together have an aggregate fair market value of at least 80% of the value of the Trust Account (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at the time of the agreement to enter into an initial Business Combination. The Company will only complete a Business Combination if the post-transactionpost-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). There is no assurance that the Company will be able to successfully complete a Business Combination.
The Company will provide its holders of the outstanding Public Shares (the “public stockholders”)stockholders 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. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law 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 “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or 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. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 6)5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction or don’t vote at all.Business Combination.
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company. The Sponsor has agreed (a) to waive its redemption rights with respect to its Founder Shares and Public Shares held by it in connection with the completion of a Business Combination, (b) to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination by January 29, 2023 and (c) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision 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. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period.Period (as defined below).
The Company will have until January 29, 2023 to complete a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the 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. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 7)6) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).
In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party 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, reduce the amount of funds in the Trust Account to below (1) $10.00 per Public Share or (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay our taxes. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as 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”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. 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 (except the Company’s independent registered public accounting firm), prospective target businesses or 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.
Risks and Uncertainties
Management is currentlycontinually monitoring and evaluating the potential impact of the COVID-19 pandemic and the Russia-Ukraine war on our Company, and thus far management of the Company has concluded that while it is reasonably possible that the virus and/or the Russia-Ukraine war 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 the financial statement. The condensed financial statement doesstatements do not include any adjustments that might result from the outcome of this uncertainty.these uncertainties.
NOTE 2. REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENT AS OF JANUARY 29, 2021
The Company previously accounted for its outstanding Public Warrants (as defined in Note 4) and Private Placement Warrants (collectively, with the Public Warrants, the “Warrants”) issued in connection with its Initial Public Offering as components of equity instead of as derivative liabilities. The warrant agreement governing the Warrants includes a provision that provides for potential changes to the settlement amounts dependent upon the characteristics of the holder of the warrant. In Addition, the warrant agreement includes a provision that in the event of a tender offer or exchange offer made to and accepted by holders of more than 50% of the outstanding shares of a single class of stock, all holders of the Warrants would be entitled to receive cash for their Warrants (the “tender offer provision”).
6
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021JUNE 30, 2022
(Unaudited)
Liquidity and Going Concern
On April 12, 2021,
As of June 30, 2022, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the Securities and Exchange Commission together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those containedCompany had $77,605 in its operating bank account, $259,146,180 in marketable securities held in the warrant agreement (the “Warrant Agreement”).
In further consideration of the SEC Statement, the Company’s management further evaluated the Warrants under Accounting Standards Codification (“ASC”) Subtopic 815-40, Contracts in Entity’s Own Equity. ASC Section 815-40-15 addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states thatTrust Account to be used for a warrant may be classified as a component of equity only if, among other things, the warrant is indexedBusiness Combination or to the issuer’s common stock. Under ASC Section 815-40-15, a warrant is not indexed to the issuer’s common stock if the terms of the warrant require an adjustment to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. Based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the Company’s Private Placement Warrants are not indexed to the Company’srepurchase or redeem its common stock in connection therewith, and a working capital deficit of $1,129,267, which excludes franchise and income taxes payable as such amounts can be paid from the manner contemplated by ASC Section 815-40-15 becauseinterest earned on the holderTrust Account. As of June 30, 2022, $396,180 of the instrumentamount on deposit in the Trust Account represented interest income, which is not an input intoavailable to be withdrawn to pay the pricingCompany’s tax obligations.
Until the consummation of a fixed-for-fixed optionBusiness Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on equity shares. In addition, based on management’s evaluation,prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination.
The Company will need to raise additional capital through loans or additional investments from its Sponsor, stockholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s audit committee, in consultation with management, concluded that the tender offer provision in the public warrants fails the “classified in stockholders’ equity” criteria as contemplated by ASC Section 815-40-25.
As a result of the above,working capital needs. Accordingly, the Company should have classified the Warrants as derivative liabilities in its previously audited balance sheet as of January 29, 2021 in the Form 8-K filed with the SEC on February 4, 2021. Under this accounting treatment,may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to measuretake additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the fair valuepursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through January 29, 2023, the date that the Company will be required to cease all operations, except for the purpose of winding up, if a Business Combination is not consummated. These financial statements do not include any adjustments relating to the recovery of the Warrants atrecorded assets or the end of each reporting period as well as re-evaluate the treatmentclassification of the warrants and recognize changes inliabilities that might be necessary should the fair value from the prior period in the Company’s operating results for the current period.Company be unable to continue as a going concern.
The Company’s accounting for the Warrants as components of equity instead of as derivative liabilities did not have any effect on the Company’s previously reported investments held in trust or cash.
| | As Previously Reported | | | Adjustments | | | As Revised | |
| | | | | | | | | |
Balance sheet as of January 29, 2021 (audited) | | | | | | | | | |
Warrant Liability | | $ | — | | | $ | 14,481,000 | | | $ | 14,481,000 | |
Class A Common Stock Subject to Possible Redemption | | | 246,278,570 | | | | (14,481,000 | ) | | | 231,797,570 | |
Class A Common Stock | | | 125 | | | | 145 | | | | 270 | |
Additional Paid-in Capital | | | 5,003,185 | | | | 535,934 | | | | 5,539,119 | |
Accumulated Deficit | | | (3,952 | ) | | | (536,079 | ) | | | (540,031 | ) |
NOTE 3. NOTE 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s prospectus for its Initial Public OfferingAnnual Report on Form 10-K as filed with the SEC on January 26, 2021, as well as the Company’s Current Report on Form 8-K, as filed with the SEC on January 29th, 2021 (see Note 2).March 30, 2022. The interim results for the three and six months ended March 31, 2021June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 20212022 or for any future periods.
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
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 a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statement with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the condensed financial statements in conformity with GAAP requires the Company’s 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. Accordingly,One of the more significant accounting estimates included in these condensed financial statements is the determination of the fair value of the warrant liabilities. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.
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 did not0t have any cash equivalents as of March 31, 2021June 30, 2022 and December 31, 2020.2021.
Marketable Securities Held in Trust Account
At MarchJune 30, 2022 and December 31, 2021, substantially all of the assets held in the Trust Account were held in money market funds which are invested primarily in U.S. Treasury securities. All of the Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in Trust Account in the accompanying condensed statements of operations. The estimated fair values of investments held in Trust Account are determined using available market information.
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 Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption isare classified as a liability instrument and isare measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that isare either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as a component of stockholders’ equity. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at January 29,June 30, 2022 and December 31, 2021, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equitydeficit section of the Company’s condensed balance sheets.
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stocks to equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount value. The change in the carrying value of redeemable Class A common stocks resulted in charges against additional paid-in capital and accumulated deficit.
At June 30, 2022 and December 31, 2021, the Class A common stock subject to possible redemption reflected in the condensed balance sheets are reconciled as follows:
Gross proceeds | | $ | 258,750,000 | |
Less: | | | | |
Proceeds allocated to Public Warrants | | | (9,315,000 | ) |
Class A common stocks issuance costs | | | (14,131,394 | ) |
Plus: | | | | |
Remeasurement of carrying value to redemption value | | | 23,446,394 | |
Class A common stocks subject to possible redemption, December 31, 2021 | | $ | 258,750,000 | |
Plus: | | | | |
Remeasurement of carrying value to redemption value | | | 76,900 | |
Class A common stocks subject to possible redemption, June 30, 2022 | | $ | 258,826,900 | |
Warrant LiabilityLiabilities
The Company accounts for the Public Warrants and Private Placement Warrants in accordance with the guidance contained in ASC 815-40-15-7D and 7F under which the Warrantswarrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Warrantswarrants as liabilities at their fair value and adjustadjusts the Warrantswarrants to fair value at the end of each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statementthe condensed statements of operations. The Private Warrants and the Public Warrants for periods where no observable traded price was available are valued using a binomial lattice model. For periods subsequent to the detachment of the Public Warrants from the Units, the Public Warrant quoted market price was used as the fair value as of each relevant date.date (see Note 9).
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Income Taxes
The Company follows the asset and liability method of accountingaccounts for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized forASC 740, requires the estimated future tax consequences attributable to differences between the financial statements carrying amountsrecognition 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 for both the expected impact of differences between the unaudited condensed financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances arevaluation allowance to be established when necessary, to reduceit is more likely than not that all or a portion of deferred tax assets to the amount expected towill not be realized. As of June 30, 2022 and December 31, 2021, the Company’s net deferred tax asset had a full valuation allowance recorded against it. The Company’s effective tax rate was 0.50% and 0.00% for the three months ended June 30, 2022 and 2021, respectively, and 0.20% and 0.00% for the six months ended June 30, 2022 and 2021, respectively. The effective tax rate differs from the statutory tax rate of 21% for the three months and six months ended June 30, 2022 and 2021, due to changes in fair value in warrant liability, transaction costs allocated to warrants, and the valuation allowance on the deferred tax assets.
FASB
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and a measurement attributeprocess for the financial statement recognition and measurement of a tax positionsposition taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than notmore-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no0 unrecognized tax benefits and no0 amounts accrued for interest and penalties as of March 31, 2021June 30, 2022 and December 31, 2020.2021. 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 has identified the United States as its only “major” tax jurisdiction. The Company is subject to income tax examinationstaxation by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The effectiveCompany’s management does not expect that the total amount of unrecognized tax rate differs frombenefits will materially change over the statutory tax rate of 21% for the three months ended March 31, 2021, due to the valuation allowance recorded on the Company’s net operating losses.next twelve months.
Net incomeIncome (Loss) per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income (loss) per common share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, excluding shares of common stock subject to forfeiture.
The Company’s statement of operations includes a presentation of income (loss) per share for common stock subject to possible redemption in a manner similar to the two-class method of income (loss) per share. Net income (loss) per common share, basic and diluted, for Class A common stock subject to possible redemption is calculated by dividing the proportionate share of income or loss on marketable securities held by the Trust Account, net of applicable franchise and income taxes, by the weighted average number of common shares outstanding for the period. The Company applies the two-class method in calculating net income (loss) per common share. Remeasurement associated with the redeemable shares of Class A common stock subject to possible redemption outstanding since original issuance.
Netis excluded from net income (loss) per common share basicas the redemption value approximates fair value.
The calculation of diluted income (loss) per common share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events. The warrants are exercisable to purchase 20,112,500 shares of Class A common stocks in the aggregate. As of June 30, 2022 and 2021, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stocks and then share in the earnings of the Company. As a result, diluted for non-redeemablenet loss per common stockshare is calculated by dividing the same as basic net income (loss), adjusted for income or loss on marketable securities attributable to Class A per common stock subject to possible redemption, by the weighted average number of non-redeemable common stock outstandingshare for the period.
Non-redeemable common stock includes Founder Shares and non-redeemable shares of common stock as these shares do not have any redemption features. Non-redeemable common stock participates in the income or loss on marketable securities based on non-redeemable shares’ proportionate interest.
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts):
| | Three Months Ended March 31, 2021 | |
Class A common stock subject to possible redemption | | | |
Numerator: Earnings allocable to Class A common stock subject to possible redemption | | | |
Interest earned on marketable securities held in Trust Account | | $ | 10,562 | |
Less: interest available to be withdrawn for payment of taxes | | | (10,562 | ) |
Net income attributable | | $ | — | |
Denominator: Weighted Average Class A common stock subject to possible redemption | | | | |
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption | | | 23,179,757 | |
Basic and diluted net income per share, Class A common stock subject to possible redemption | | $ | 0.00 | |
| | | | |
Non-Redeemable Common Stock | | | | |
Numerator: Net Loss minus Net Earnings | | | | |
Net loss | | $ | (312,767 | ) |
Less: Net income allocable to Class A common stock subject to possible redemption | | | — | |
Non-Redeemable Net Loss | | $ | (312,767 | ) |
Denominator: Weighted Average Non-redeemable Common stock | | | | |
Basic and diluted weighted average shares outstanding, Non-redeemable Common stock | | | 8,023,651 | |
Basic and diluted net loss per share, Non-redeemable Common stock | | $ | (0.04 | ) |
| | Three Months Ended June 30, 2022 | | | Three Months Ended June 30, 2021 | | | Six Months Ended June 30, 2022 | | | Six Months Ended June 30, 2021 | |
| | Class A | | | Class B | | | Class A | | | Class B | | | Class A | | | Class B | | | Class A | | | Class B | |
Basic and diluted net income (loss) per common share | | | | | | | | | | | | | | | | | | | | | | | | |
Numerator: | | | | | | | | | | | | | | | | | | | | | | | | |
Allocation of net income (loss) | | $ | 3,081,891 | | | $ | 770,473 | | | $ | (6,973,618 | ) | | | (1,743,404 | ) | | $ | 7,629,063 | | | $ | 1,907,266 | | | $ | (6,991,837 | ) | | $ | (2,037,952 | ) |
Denominator: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted weighted average shares outstanding | | | 25,875,000
| | | | 6,468,750 | | | | 25,875,000 | | | | 6,468,750 | | | | 25,875,000 | | | | 6,468,750 | | | | 21,729,282 | | | | 6,333,564 | |
Basic and diluted net income (loss) per common share | | $ | 0.12 | | | $ | 0.12 | | | $ | (0.27 | ) | | $ | (0.27 | ) | | $ | 0.29 | | | $ | 0.29 | | | $ | (0.32 | ) | | $ | (0.32 | ) |
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 Depository Insurance Coverage of $250,000. The Company has not experienced losses on these accounts.this account and management believes the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’sour condensed financial statements.
NOTE 4. PUBLIC OFFERING
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. (“ASU”) 2020-06 — “Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”)”, to simplify accounting for certain financial instruments ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
Pursuant to the Initial Public Offering, the Company sold 25,875,000 Units, inclusive of 3,375,000 Units sold to the underwriters on January 29, 2021 upon the underwriters’ election to fully exercise their over-allotment option, at a purchase price of $10.00 per Unit. Each Unit consists of one1 share of Class A common stock and one-half of one1 redeemable warrant (“Public Warrant”).warrant. Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at an exercise price of $11.50 per share (see Note 9)8).
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 7,175,000 Private Placement Warrants at a price of $1.00 per private Placement Warrant, for an aggregate purchase price of $7,175,000, in a private placement. Each Private Placement Warrant is exercisable to purchase one1 share of Class A common stock at a price of $11.50 per share. The proceeds from the Private Placement Warrants were 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 proceeds of the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless. There will be no redemption rights or liquidating distributions from the Trust Account with respect to the Private Placement Warrants. The difference between the initial fair value of $0.72 per share (or $5,166,000) of the Private Placement warrantsWarrants (see Note 10)8) and the purchase of $1.00 per share of $2,009,000 was recorded in additional paid-in capital.
capital.
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 6. NOTE 5. | RELATED PARTY TRANSACTIONS |
Founder Shares
On August 31, 2020, the Company issued an aggregate of 5,750,000 shares of Class B common stock (the “Founder Shares”) to the Sponsor for an aggregate purchase price of $25,000 in cash. On January 26, 2021, the Company effecteddeclared a 718,750 stock dividend, resulting which resulted in 6,468,750the issuance of 718,750 additional Founder Shares. Founder Shares outstanding.issued and outstanding at June 30, 2022 aggregated to 6,468,750 shares. The Founder Shares included an aggregate of up to 843,750 shares of Class B common stock that were subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment was not exercised in full or in part, so that the Sponsor will own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the Sponsor does not purchase any Public Shares in the Initial Public Offering).forfeiture. As a result of the underwriters’ election to fully exercise their over-allotment option on January 29, 2021, no0 Founder Shares are currently subject to forfeiture.
The Sponsor has agreed that, subject to certain limited exceptions, the Founder Shares will not be transferred, assigned, sold or released from escrow until the earlier of (A) one year after the completion of a Business Combination or earlier if (B) subsequent to a Business Combination, the closing price of the shares of Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination.
On January 14, 2021, FSSC Sponsor LLC transferred an aggregate of 25,000 shares of Class B Common Stock held by it to each independent director nominee (“Purchaser”) in consideration of the assignment of shares. The Founder Shares will automatically convert into shares of Class A Common Stock at the time of the Business Combination on a 1-for-one basis subject to adjustment pursuant to certain anti-dilution rights.
If the Purchaser does not become a director of the Company at the time of the Company’s initial public offering, is removed from office as director, or voluntarily resigns his position with the Company before a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company, all of the Purchaser’s Shares shall be returned to the Sponsor.
The sale of the Founders Shares to the Company’s independent director’s nominees is within the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The fair value of the 75,000 shares granted to the Company’s independent director nominees was $534,750 or $7.13 per share. The Founders Shares were granted subject to a performance condition (i.e., the occurrence of a Business Combination). Compensation expense related to the Founders Shares is recognized only when the performance condition is probable of occurrence under the applicable accounting literature in this circumstance. As of June 30, 2022, the Company determined that a Business Combination is not considered probable, and, therefore, 0 stock-based compensation expense has been recognized. Stock-based compensation would be recognized at the date a Business Combination is considered probable (i.e., upon consummation of a Business Combination) in an amount equal to the number of Founders Shares times the grant date fair value per share (unless subsequently modified) less the amount initially received for the purchase of the Founders Shares.
Administrative Services Agreement
The Company agreed, commencing on January 26, 2021 through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor a total of up to $10,000 per month for office space, utilities, secretarial support and administrative services. For the three and six months ended March 31,June 30, 2022, the Company incurred $30,000 and $60,000 in fees for these services, respectively, of which such amounts are included in accrued expenses in the accompanying condensed balance sheets. For the three and six months ended June 30, 2021, the Company incurred $20,968 and paid $20,968$50,968 in fees for these services, of which such amount isamounts are included in accrued expenses in the accompanying condensed balance sheet.sheets.
Promissory Note — Related Party
On August 31, 2020, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $300,000. The Promissory Note is non-interest bearing and payable on the earlier of (i) June 30, 2021 or (ii) the consummation of the Initial Public Offering. The outstanding balance under the Promissory Note of $150,000 was repaid at the closing of the Initial Public Offering on January 29, 2021. Borrowings under the Promissory Note are no longer available.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the initial stockholders or an affiliate of the initial stockholders 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”). If the Company completes a Business Combination, the Company would 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. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,000,000 of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants.As of June 30, 2022 and December 31, 2021 there were 0 Working Capital Loan amounts outstanding.
NOTE 7. COMMITMENTS
Registration Rights
Pursuant to a registration rights agreement entered into on January 26, 2021, the holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A common stock issuable upon the of such Founder Shares, exercise of the Private Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans)Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration and stockholder rights agreement requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to Class A common stock). The holders of the majority of these securities are entitled to make up to three3 demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration and stockholder 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. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
11
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021JUNE 30, 2022
Underwriting Agreement
The underwriters arewere entitled to a deferred fee of $0.35 per Unit, or $9,056,250 in the aggregate.aggregate at the closing of the Initial Public Offering. On June 30, 2022, one of the underwriters waived its entitlement to the payment of any deferred fee to be paid under the terms of the underwriting agreement and is no longer serving in an advisor capacity. As a result, the Company recognized $146,712 of income and $3,928,601 was recorded to additional paid-in capital in relation to the reduction of the deferred underwriter fee in the accompanying condensed financial statements. As of June 30, 2022 and December 31, 2021, the deferred underwriting fee payable is $4,980,937 and $9,056,250, respectively. 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.
NOTE 8. NOTE 7. | STOCKHOLDERS’ EQUITY |
Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $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. At March 31, 2021June 30, 2022 and December 31, 2020,2021, there were no0 shares of preferred stock issued or outstanding.
Class A Common Stock — The Company is authorized to issue 300,000,000shares ofClass A common stockwith a par value of $0.0001 per share.Holders of Class A common stock are entitled to one1 vote for each share.AtMarchJune 30, 2022 and December 31, 2021, there were 2,673,85925,875,000 shares of Class A common stock issued and outstanding, excluding 23,201,141 shares of Class A common stock subject to possible redemption. At December 31, 2020, there were no shares of Class A common stock issued or outstanding.redemption which are presented as temporary equity.
Class B Common Stock — The Company is authorized to issue 30,000,000 shares of Class B common stockwith a par value of $0.0001 per share.Holders of Class B common stock are entitled to one1 vote for each share.At March 31, 2021June 30, 2022 and December 31, 2020,2021, there were6,468,750 shares of Class B common stockissued andoutstanding.
Holders of Class B common stock will have the right to elect all of the Company’s directors prior to a Business Combination. Holders of Class A common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders except as required by law.
The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination on a one-for-one1-for-one basis, subject to adjustment. 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 sold in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such 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 the total number of all shares of common stock outstanding upon 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 a Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination). Holders of the Founder Shares may also elect to convert its shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment.
NOTE 9. WARRANTS
At June 30, 2022 and December 31, 2021, there were 12,937,500 Public Warrants — outstanding. Public Warrants may only be exercised for a whole number of shares. No fractionalshareswillbe issued uponexerciseof thePublic Warrants. The Public Warrants will become exercisable on the later of (a)30 days after the completion of a Business Combination or (b) one yearfrom the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlierupon redemption or liquidation.
The Company will not be obligated to deliver any Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable and the Company will not be obligated to issue a share of Class A common stock upon exercise of a warrant unless the share of Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
The Company has agreed that as soon as practicable, but in no event later than twenty business days after the closing of a Business Combination, the Company will use its commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the warrants. The Company will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of a Business Combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement; provided that if the Class A common stock is 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,elects, it will not be required to file or maintain in effect a registration statement, but the Company will use its commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th day after the closing of a 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, but the Company will use its commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00. OncethePublic Warrants become exercisable, the Company may redeem the Public Warrants (exceptwith respect tothe 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 the 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). |
If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if the Company are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00.Once thePublic Warrants become exercisable, the Company may redeem thePublic 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 based on the redemption date and the fair market value of the Class A common stock; |
• | ● | if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted); and |
• | ● | if the Reference Value is less than $18.00 per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above. |
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, except as described below, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. 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.
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 a Business Combination at an issue price or effective issue price of less than $9.20 per Class A common (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the 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 a Business Combination on the date of the consummation of a Business Combination (net of redemptions), and (z) the volume weighted averageweighted-average trading price of the Company’s Class A common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a 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 $10.00 and $18.00 per share redemption trigger prices will be adjusted (to the nearest cent) to be equal to 100% and 180% of the higher of the Market Value and the Newly Issued Price, respectively.
At June 30, 2022 and December 31, 2021 there were 7,175,000 Private Placement Warrants outstanding. The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon the 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 exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
13
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 10. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
| Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
| | |
| Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
| | |
| Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
At March 31, 2021, there were 12,937,500 Public Warrants and 7,175,000 Private Placement Warrants outstanding. At December 31, 2020, there were no Public Warrants and Private Placement Warrants outstanding.
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at MarchJune 30, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description | | Level | | | March 31, 2021 | |
Assets: | | | | | | |
Marketable securities held in Trust Account | | | 1 | | | $ | 258,760,562 | |
| | | | | | | | |
Liabilities: | | | | | | | | |
Warrant Liability – Public Warrants | | | 1 | | | | 9,056,250 | |
Warrant Liability – Private Placement Warrants | | | 3 | | | | 5,022,500 | |
Description | | Level | | | June 30, 2022 | | | December 31, 2021 | |
Assets: | | | | | | | | | |
Marketable securities held in Trust Account | | | 1
| | | $ | 259,146,180 | | | $ | 258,778,573 | |
| | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | |
Warrant Liability – Public Warrants | | | 1
| | | | 1,658,588 | | | | 7,891,875 | |
Warrant Liability – Private Placement Warrants | | | 3
| | | | 919,835 | | | | 4,373,880 | |
The Warrantswarrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on our accompanying March 31, 2021 condensed balance sheet.sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the condensed statementstatements of operations.
The Private and Public Warrants were initially valued using a lattice model, specifically a binomial lattice model incorporating the Cox-Ross-Rubenstein methodology. As of June 30, 2022, the Public Warrants were valued using the instrument’s publicly listed trading price as of the balance sheet date, which is considered to be a Level 1 measurement due to the use of an observable market quote in an active market.
The Private Placement Warrants were valued using a lattice model, specifically a binomial lattice model incorporating the Cox-Ross-Rubenstein methodology, which is considered to be a Level 3 fair value measurement. The binomial lattice model’s primary unobservable input utilized in determining the fair value of the Private Placement Warrants is the expected volatility of theour common stock. The expected volatility as of the IPO dateCompany’s common stock was derived from observable public warrant pricingdetermined based on comparable ‘blank-check’ companies without an identified target. The expectedthe implied volatility as of subsequent valuation dates was implied from the Company’s own public warrant pricing. For periods subsequent to the detachment of the warrants from the Units, the close pricePublic Warrants.
The key inputs into the binomial lattice model for the Private Warrants were as follows:
Input | | June 30, 2022 | | | December 31, 2021 | |
Market price of public shares | | $ | 9.81 | | | $ | 9.81 | |
Risk-free rate | | | 2.97 | % | | | 2.97 | % |
Dividend yield | | | 0.00 | % | | | 0.00 | % |
Volatility | | | 5.4 | % | | | 12.9 | % |
Exercise price | | $ | 11.50 | | | $ | 11.50 | |
Effective expiration date | | July 15, 2025 | | | June 26, 2026 | |
| | January 29, 2021 (Initial Measurement) | | | March 31, 2021 | |
Input | | Public Warrants | | | Private Warrants | | | Private Warrants | |
Market price of public shares | | $ | 9.64 | | | $ | 9.64 | | | | 9.71 | |
Risk-free rate | | | 0.51 | % | | | 0.51 | % | | | 0.97 | % |
Dividend yield | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % |
Volatility | | | 14.2 | % | | | 14.2 | % | | | 13.1 | % |
Exercise price | | $ | 11.50 | | | $ | 11.50 | | | | 11.50 | |
Effective expiration date | | 6/13/26 | | | 6/13/26 | | | 6/13/26 | |
One-touch hurdle | | $ | 18.12 | | | | | | | | | |
The following table presents the changes in the fair value of the Level 3 warrant liabilities:liabilities for the six months ended June 30, 2022:
| | Private Placement | | | Public | | | Warrant Liabilities | |
Fair value as of January 1, 2021 | | $ | — | | | $ | — | | | $ | — | |
Initial measurement on January 29th, 2021 | | | 5,166,000 | | | | 9,315,000 | | | | 14,481,000 | |
Change in valuation inputs or other assumptions | | | (143,500 | ) | | | (258,750 | ) | | | (402,250 | ) |
Fair value as of March 31, 2021 | | | 5,022,500 | | | | 9,056,250 | | | | 14,078,750 | |
| | Private Placement Warrants
| |
Fair value as of January 1, 2022 | | $ | 4,373,880 | |
Change in valuation inputs or other assumptions | | | (2,162,171 | ) |
Fair value as of March 31, 2022 | | $ | 2,211,709 | |
Change in valuation inputs or other assumptions | | | (1,291,874 | ) |
Fair value as of June 30, 2022 | | $ | 919,835 | |
Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. The estimatedThere were 0 transfers in or out of Level 3 from other levels in the fair value of the Public Warrants transferred from a Level 3 measurement to a Level 1 fair value measurementhierarchy that occurred during the three and six months ended March 31, 2021 was $9,056,250.June 30, 2022.
FORTISTAR SUSTAINABLE SOLUTIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 11. NOTE 10. | SUBSEQUENT EVENTS |
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that 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, except for matters previously discussed in Notes 2 and 10 above.statements.
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
References in this reportQuarterly Report on Form 10-Q (the “Quarterly Report”) to “we,” “us”“us,” “our” or the “Company” refer to Fortistar Sustainable Solutions Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to FSSC Sponsor LLC. References to our “Initial Public Offering” are to our initial public offering pursuant to the Registration Statement on Form S-1, declared effective on January 26, 2021 and consummated on January 29, 2021. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-QQuarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the completion of the Proposedproposed Business Combination (as defined below), the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, including that the conditions of the Proposedproposed Business Combination are not satisfied. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public OfferingAnnual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 30, 2022 and Item 1A of Part II of this Form 10-Q.Quarterly Report. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on August 25, 2020 for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.businesses (a “Business Combination”). We intend to effectuate our Business Combination using cash from the proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, our capital stock, debt or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from August 25, 2020 (inception) through March 31, 2021June 30, 2022 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account.Account and changes in fair value of the warrant liabilities. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended March 31,June 30, 2022, we had a net income of $3,852,364, which consists of changes in fair value of warrant liabilities of $3,621,297, reduction of deferred underwriter fee of $146,712 and interest earned on marketable securities held in the Trust Account of $343,005, offset by operating costs of $239,419 and provision for income taxes of $19,231.
For the six months ended June 30, 2022, we had a net income of $9,536,329, which consists of changes in fair value of warrant liabilities of $9,687,332, reduction of deferred underwriter fee of $146,712 and interest earned on marketable securities held in the Trust Account of $367,607, offset by operating costs of $646,091 and provision for income taxes of $19,231.
For the three months ended June 30, 2021, we had a net loss of $312,767,$8,717,022, which consists of incomeoperating costs of approximately $402,250 derived from the$278,985 and changes in fair value of the warrant liability and approximately $10,562 derived fromof $8,447,250, offset by interest incomeearned on marketable securities offset byheld in the Trust Account of $9,213.
For the six months ended June 30, 2021, we had a net loss of $9,029,789, which consists of operating costs of $468,485, transaction costs allocable toof $536,079 and changes in fair value of warrant liability of $536,079 and operation costs$8,045,000, offset by interest earned on marketable securities held in the Trust Account of $189,500.
$19,775.
Liquidity and Capital Resources
On January 29, 2021, we consummated the Initial Public Offering of 25,875,000 Units at $10.00 per Unit, generating gross proceeds of $258,750,000, which is described in Note 3.3 to the condensed financial statements. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 7,175,000 Private Placement Warrant at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds of $7,175,000, which is described in Note 4.
Following the Initial Public Offering, the full exercise of the over-allotment option, and the sale of the Private Units, a total of $258,750,000 was placed in the Trust Account. We incurred $14,667,473$14,667,474 in Initial Public Offering related costs, including $5,175,000 of underwriting fees $9,056,250 of deferred underwriting fees and $436,223$436,224 of other offering costs.
For the threesix months ended March 31, 2021,June 30, 2022, cash used in operating activities was $689,654.$583,670. Net lossincome of $312,767$9,536,329 was affected by interest earned on marketable securities held in the Trust Account of $10,562,$367,607, costs associated with the reduction of deferred underwriter fee of $146,712 and changes in fair value of warrant liability of $9,687,332. Changes in operating assets and liabilities provided $81,652 of cash for operating activities.
For the six months ended June 30, 2021, cash used in operating activities was $782,400. Net loss of $9,029,789 was affected by interest earned on marketable securities held in the Trust Account of $19,775, changes in warrant liability of $402,250$8,045,000 and transaction costs allocable to warrant liability of $536,079. Changes in operating assets and liabilities used $500,154$313,915 of cash for operating activities.
As of March 31, 2021,June 30, 2022, we had marketable securities held in the Trust Account of $258,760,562$259,146,180 (including approximately $10,600$396,180 of interest incomeincome) consisting of U.S. Treasury Bills with a maturity of 185 days or less. Interest income on the balance in the Trust Account may be used by us to pay taxes. Through March 31, 2021,June 30, 2022, we have not withdrawn any interest earned from the Trust Account.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less income taxes payable), to complete our Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of March 31, 2021,June 30, 2022, we had cash of $954,334.$77,605. 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 prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, or certain of our officers and directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,000,000 of such loans may be convertible into warrants at a price of $1.00 per warrant, at the option of the lender. The warrants would be identical to the Private Placement Warrants.
Liquidity and Going Concern
We do not believe we will need to raise additional capital through loans or additional investments from our sponsor, stockholders, officers, directors, or third parties. Our officers, directors and sponsor may, but are not obligated to, loan us funds, from time to time or at any time, in orderwhatever amount they deem reasonable in their sole discretion, to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so,working capital needs. Accordingly, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may neednot be able to obtain additional financing eitherfinancing. If we are unable to complete our Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our Business Combination, in which caseraise additional capital, we may issuebe required to take additional securitiesmeasures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all. These conditions raise substantial doubt about our ability to continue as a going concern through January 23, 2023, the date that we will be required to cease all operations, except for the purpose of winding up, if a business combination is not consummated. These financial statements do not include any adjustments relating to the recovery of the recorded assets or incur debt in connection with such Business Combination.the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2021.June 30, 2022. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of one of our executive officers a monthly fee of $10,000 for office space, utilities and secretarial and administrative support. We began incurring these fees on January 26, 2021 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.
The underwriters arewere entitled to a deferred fee of $0.35 per share,Unit, or $9,056,250 in the aggregate.aggregate at the closing of the Initial Public Offering. On June 30, 2022, one of the underwriters waived its entitlement to the payment of any deferred fee to be paid under the terms of the underwriting agreement and is no longer serving in an advisor capacity. As a result, we recognized $146,712 of income and $3,928,601 was recorded to additional paid-in capital in relation to the reduction of the deferred underwriter fee in the accompanying condensed financial statements. As of June 30, 2022 and December 31, 2021, the deferred underwriting fee payable is $4,980,937 and $9,056,250, respectively. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we completethe Company completes a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies/Estimates
The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Warrant LiabilityLiabilities
The Company accounts for the Warrantsits warrants in accordance with the guidance contained in ASC 815-40-15-7D and 7F, under which the Warrantswarrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company’s classifies the Warrantswarrants as liabilities at their fair value and adjustadjusts the Warrantswarrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statementcondensed statements of operations.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible conversionredemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” CommonASC 480. Shares of Class A common stock subject to mandatory redemption isare classified as a liability instrument and are measured at fair value. Conditionally redeemable common stock (including 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 our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, shares of Class A common stockshares subject to possible redemption isare presented at redemption value as temporary equity, outside of the stockholders’ equitydeficit section of our condensed balance sheets.
Net LossIncome (Loss) Per Common Share
Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. We apply the two-class method in calculating earnings per share. Netnet income (loss) per common share, basic and diluted for Class A common stock subject to possible redemption is calculated by dividingshare. Remeasurement associated with the interest income earned on the Trust Account, net of applicable taxes, if any, by the weighted average number ofredeemable shares of Class A common stock subject to possible redemption outstanding for the period. Netis excluded from net income (loss) per common share basic and diluted for and non-redeemable common stock is calculated by dividing net loss less income attributable to Class A common stock subject to possibleas the redemption by the weighted average number of shares of non-redeemable common stock outstanding for the period presented.value approximates fair value.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. (“ASU”) 2020-06 — “Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”)”, to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Not required for smaller reporting companies.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
UnderAs required by Rules 13a-15 and 15d-15 under the supervisionExchange Act, our Chief Executive Officer and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conductedChief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the fiscal quarter ended March 31, 2021, as such term is defined in Rules 13a-15(e)June 30, 2022. Based upon their evaluation, our Chief Executive Officer and 15d-15(e) under the Exchange Act. Based on this evaluation and in light of the material weakness in internal controls described below, our principal executive officer and principal financial and accounting officer haveChief Financial Officer concluded that during the period covered by this report, our disclosure controls and procedures were not effective. Oureffective, due to the material weakness in our internal control over financial reporting did notrelated to our accounting for complex financial instruments. As a result, in the proper accounting classification of the Private Placement Warrants and Public Warrants we issued in January 2021 which, dueperformed additional analysis as deemed necessary to its impact onensure that our financial statements were prepared in accordance with U.S. GAAP. Accordingly, management believes that the financial statements included in this Quarterly Report present fairly in all material respects our financial position, results of operations, and cash flows for the periods presented.
Management has implemented remediation steps to improve our disclosure controls and procedures and our internal control over financial reporting. Specifically, we determinedexpanded and improved our review process for complex securities and related accounting standards. We have improved this process by enhancing access to be a material weakness. This mistake in classification was broughtaccounting literature, identification of third-party professionals with whom to our attention only whenconsult regarding complex accounting applications and consideration of additional staff with the SEC issued a Staff Statement on Accountingrequisite experience and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) dated April 12, 2021 (the “SEC Statement”). The SEC Statement addresses certaintraining to supplement existing accounting and reporting considerations related to warrantsprofessionals.
18
Changes in Internal Control over Financial Reporting
During the fiscal quarter ended March 31, 2021, there has beenThere were no changechanges in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting. Management has identified a material weakness in internal controls related to the accounting for warrants issued in connection with our Initial Public Offering, as described above. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance our system of evaluating and implementing the accounting standards that apply to our financial statements, including through enhanced analyses by our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
PART II - OTHER INFORMATION
None
Factors that could cause our actual results to differ materially from those in this Quarterly Report includeare any of the risk factors describedrisks disclosed in the final prospectus for our Initial Public OfferingAnnual Report on Form 10-K, which was filed with the SEC. AsSEC on March 30, 2022. Any of the datethese factors could result in a significant or material adverse effect on our results of this Quarterly Report, there have been no material changes tooperations or financial condition.
The information presented below updates, and should be read in conjunction with, the risk factors disclosed in our final prospectus for our Initial Public OfferingAnnual Report on Form 10-K, which was filed with the SEC except for the below:on March 30, 2022.
Our WarrantsChanges in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our Business Combination and results of operations.
We are accounted for as liabilitiessubject to laws and theregulations enacted by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes in value of our warrants could have a material adverse effect on our financial results in the future.
On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) (the “SEC Statement”). Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business, combination, which terms are similar to those contained in the warrant agreement governing the Company’s warrants. As a result of the SEC Statement, the Company reevaluated the accounting treatment of the Warrants, and determined to classify the warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings. As a result, included on our consolidated balance sheet as of March 31, 2021 are derivative liabilities related to embedded features contained within our Warrants. ASC 815 provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statement of operations. As a result of the recurring fair value measurement, our consolidated financial statementsinvestments and results of operations may fluctuate quarterly, based on factors, which are outside of our control. Dueoperations. In addition, a failure to the recurring fair value measurement, we expect that we will recognize non-cash gainscomply with applicable laws or losses on our Warrants each reporting periodregulations, as interpreted and that the amount of such gains or losses could be material.
As a result of the recurring fair value measurement, our financial statements may fluctuate quarterly, based on factors which are outside of our control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our warrants each reporting period and that the amount of such gains or losses could be material.
We have identified a material weakness in our internal control over financial reporting as of March 31, 2021. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
Following this issuance of the SEC Statement, after consultation with our independent registered public accounting firm, our management and our audit committee concluded that, in light of the SEC Statement, we identified a material weakness in our internal controls over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timely basis.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.
If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
We, and following our initial business combination, the post-business combination company, may face litigation and other risks as a result of the material weakness in our internal control over financial reporting.
As a result of the material weakness in our internal controls over financial reporting described above, the change in accounting for the warrants, and other matters raised or that may in the future be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the material weaknesses in our internal control over financial reporting and the preparation of our financial statements. As of the date of this Form 10-Q, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not,applied, could have a material adverse effect on our business, results of operations and financial condition orincluding our ability to negotiate and complete our Business Combination and results of operations.
On March 30, 2022, the SEC issued proposed rules (the “2022 Proposed Rules”) relating to, among other items, enhancing disclosures in business combination transactions involving SPACs and private operating companies; amending the financial statement requirements applicable to transactions involving shell companies; effectively limiting the use of projections in SEC filings in connection with proposed business combination transactions; increasing the potential liability of certain participants in proposed business combination transactions; and the extent to which SPACs could become subject to regulation under the Investment Company Act of 1940 (the “Investment Company Act”). The 2022 Proposed Rules, if adopted, whether in the form proposed or in revised form, and certain positions and legal conclusions expressed by the SEC in connection with the 2022 Proposed Rules may materially adversely affect our ability to negotiate and complete our Business Combination and may increase the costs and time related thereto.
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our Business Combination.
If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
| ● | restrictions on the nature of our investments; |
| ● | restrictions on the issuance of securities; and |
| ● | restrictions on the enforceability of agreements entered into by us, each of which may make it difficult for us to complete our Business Combination. |
In addition, we may have imposed upon us burdensome requirements, including:
| ● | registration as an investment company with the SEC (which may be impractical and would require significant changes in, among other things, our capital structure); |
| ● | adoption of a specific form of corporate structure; and |
| ● | reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations. |
In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business is to identify and complete a Business Combination.Combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
The 2022 Proposed Rules under the Investment Company Act would provide a safe harbor for SPACs from the definition of “investment company” under Section 3(a)(1)(A) of the Investment Company Act, provided that they satisfy certain conditions that limit a SPAC’s duration, asset composition, business purpose and activities. The duration component of the proposed safe harbor rule would require a SPAC to file a Current Report on Form 8-K with the SEC announcing that it has entered into an agreement with the target company (or companies) to engage in an initial business combination no later than 18 months after the effective date of the SPAC’s registration statement for its initial public offering. The SPAC would then be required to complete its initial business combination no later than 24 months after the effective date of its registration statement for its initial public offering. Although the 2022 Proposed Rules, including the proposed safe harbor rule, have not yet been adopted, there is substantial uncertainty regarding the applicability of the Investment Company Act to a SPAC that does not complete its initial business combination within the proposed time frame set forth in the proposed safe harbor rule or otherwise falls outside of the other provisions of the safe harbor.
We do not believe that our principal activities currently would cause us to be deemed an investment company or subject us to regulation under the Investment Company Act. Although the 2022 Proposed Rules, including the proposed safe harbor rule, have not yet been adopted, and one or more elements of the 2022 Proposed Rules, including the proposed safe harbor rule, may not be adopted or may be adopted in a revised form, we do not have an agreement in place with a target for a Business Combination. Accordingly, we may not be able to complete our Business Combination within the 24-month period. If the 2022 Proposed Rules are adopted as proposed or in similar form, therefore, we may fall outside of the proposed safe harbor and the SEC could deem us to be subject to regulation as an investment company for purposes of the Investment Company Act. Nevertheless, we intend to comply with the terms of the proposed safe harbor rule, including the duration component of that rule. As a result, we do not believe that the SEC would deem us to be an investment company for purposes of the Investment Company Act. However, if we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to consummate a Business Combination. If we are unable to complete our Business Combination within the required period, we will redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, subject to certain adjustments. In such an event, our public shareholders may receive less than $10.00 per share upon such a distribution.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
None
On January 29, 2021, we consummated the Initial Public Offering of 25,875,000 Units. The Units were sold at an offering price of $10.00 per unit, generating total gross proceeds of $258,750,000. Credit Suisse Securities LLC and BofA Securities, Inc. acted as joint book-running managers of the Initial Public Offering. The securities in the offering were registered under the Securities Act on registration statement on Form S-1 (No. 333-251922). The Securities and Exchange Commission declared the registration statements effective on January 26, 2021.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 7,175,000 warrants (each, a “Private Placement Warrant” and, collectively, the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to FSSC Sponsor LLC (the “Sponsor”), generating gross proceeds of $7,175,000. Each Private Unit consists of one share of common stock (“Private Share”) and one-half of one warrant (“Private Warrant”). Each whole Private Warrant is exercisable to purchase one share of common stock at an exercise price of $11.50 per share. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
The Private Warrants are identical to the warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants are not transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.
On January 29, 2021, the underwriters exercised their over-allotment option in full, resulting in the sale of an additional 3,375,000 Units for gross proceeds of $33,750,000, less the underwriters’ discount of $675,000. In connection with the underwriters’ exercise of their over-allotment option, the Company also consummated the sale of an additional 675,000 Private Units at $1.00 per Private Unit, generating total proceeds of $675,000. A total of $33,750,000 was deposited into the Trust Account.
Of the gross proceeds received from the Initial Public Offering, the exercise of the over-allotment option and the Private Placement Warrants, an aggregate of $258,750,000 was placed in the Trust Account.
We paid a total of $5,175,000 in cash underwriting discounts and commissions, $9,056,250 in deferred underwriting fees and $436,223 for other costs and expenses related to the Initial Public Offering.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form 10-Q.
Item 3. | Defaults Upon Senior Securities |
None
None
None
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
No. | | Description of Exhibit |
| | Amended and Restated Certificate of Incorporation. |
| | Warrant Agreement, dated January 29, 2021, between the Company and Continental Stock Transfer & Trust Company. |
| | Investment Management Trust Agreement, dated January 29, 2021, between the Company and Continental Stock Transfer & Trust Company. |
| | Registration and Stockholder Rights Agreement, dated January 29, 2021, among the Company, the Sponsor and certain other security holders named therein. |
| | Private Placement Warrants Purchase Agreement, dated January 26, 2021, between the Company and the Sponsor. |
| | Administrative Services Agreement, dated January 26, 2021, between the Company and the Sponsor. |
| | Form of Letter Agreements, dated January 29, 2021, between the Company and each of its officers and directors, and the Sponsor. |
| | Form of Indemnity Agreements, dated January 29, 2021, between the Company and each of its officers and directors. |
| | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| | Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS* | | XBRL Instance Document |
101.SCH* | | XBRL Taxonomy Extension Schema Document |
101.CAL* | | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* | | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* | | XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE* | | XBRL Taxonomy Extension Presentation Linkbase Document |
(1) | Previously filed as an exhibit to our Current Report on Form 8-K filed on February 1, 2021 and incorporated by reference herein. |
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| FORTISTAR SUSTAINABLE SOLUTIONS CORP. |
| |
|
Date: July 23, 2021August 10, 2022 | By: | /s/ Nadeem Nisar |
| Name: | Nadeem Nisar |
| Title: | Chief Executive Officer |
| | (Principal Executive Officer) |
| |
|
Date: July 23, 2021August 10, 2022 | By: | /s/ Scott Contino |
| Name: | Scott Contino |
| Title: | Chief Financial Officer |
| | (Principal Financial and Accounting Officer) |
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