UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Amendment No. 1)
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30,March 31, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto
M3-Brigade
(Exact name of registrant as specified in its charter)
Delaware | 001-40162 | 86-1359752 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
1700 Broadway, 19th Floor New York, NY | 10019 | |
(Address of principal executive offices) | (Zip Code) |
(212) 202-2200
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Units, each consisting of one share of Class A Common Stock, $0.0001 par value per share, and one-third of one redeemable warrant | MBAC.U | The New York Stock Exchange | ||
Class A common stock included as part of the units | MBAC | The New York Stock Exchange | ||
Warrants included as part of the units, each whole warrant exercisable for one share of | MBAC.WS | The New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
(Check one):
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
As of August
Explanatory Note
M3-Brigade Acquisition Corp. II (the “Company,” “we”, “our” or “us”) is filing this Amendment No. 1 to the Current Report on Form 10-Q/A (the “Amendment No. 1”), originally filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 27, 2021 (the “Original Filing”) to reflect changes to Note 2, Restatement of Previously Issued Financial Statements – Overallotment Liability.
Management determined that the over-allotment option granted to the underwriters is considered to be a freestanding financial instrument and meets the definition of a liability under ASC 480, “Distinguishing Liabilities from Equity” (ASC 480) and ASC 815 “Derivatives and Hedging” (ASC815). The determination was based on the understanding that the over-allotment option may be exercised subsequent to the transfer of the securities from the underwriters to the investors and that the option should be detached from the initial securities before it is exercised. The over-allotment option liability is measured at fair value at inception and subsequently until it is exercised or expires, with changes in fair value presented in the statement of operations. On April 17, 2021, the underwriters’ forfeited the option to purchase up to an additional 6,000,000 units. The over-allotment liability was extinguished upon the forfeiture of the unexercised option. In addition, we corrected the allocations of costs between operating costs and the costs of the funds raised.
Except as described above, this Amendment does not amend, update, or change any other items or disclosures in the Original Filing or Amendment No. 1 and does not purport to reflect any information or events subsequent to the filing thereof. As such, this Amendment speaks only as of the date the Original Filing and Amendment No. 1 was filed, and we have not undertaken herein to amend, supplement or update any information contained in the Original Filing or Amendment No. 1 to give effect to any subsequent events. Accordingly, this Amendment should be read in conjunction with the Original Filing, the Amendment No. 1 and our filings made with the SEC subsequent to the filing of the Original Filing, including any amendment to those filings.
M3-Brigade Acquisition II Corp.
Quarterly Report on Form 10-Q
Table of Contents
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Item 2. | 22 | |||||
Item 3. | 25 | |||||
Item 4. | 25 | |||||
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Item 1. | 26 | |||||
Item 1A. | 26 | |||||
Item 2. | 26 | |||||
Item 3. | 26 | |||||
Item 4. | 26 | |||||
Item 5. | 26 | |||||
Item 6. | Exhibits | 27 | ||||
28 |
i
PART I—FINANCIAL INFORMATION
CONDENSED BALANCE SHEETS
June 30, 2021 | December 31, 2020 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash | $ | 1,511,407 | $ | — | ||||
Prepaid expenses | 853,573 | — | ||||||
Total current assets | 2,364,980 | 0 | ||||||
Cash and marketable securities held in Trust Account | 400,020,665 | — | ||||||
Deferred offering costs | — | 25,000 | ||||||
Total Assets | $ | 402,385,645 | $ | 25,000 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 20,759 | — | |||||
Taxes payable | 2,250 | — | ||||||
Total current liabilities | 23,009 | — | ||||||
Warrant liability | 28,513,040 | — | ||||||
Deferred underwriters’ discount | 14,000,000 | — | ||||||
Total liabilities | 42,536,049 | — | ||||||
Commitments | 0 | 0 | ||||||
Class A Common Stock subject to possible redemption, 35,484,597 and 0 shares at redemption value, respectively | 354,849,594 | — | ||||||
Stockholders’ Equity: | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding | 0— | 0— | ||||||
Class A common stock, $0.0001 par value; 450,000,000 shares authorized; 4,515,403 and 0 issued and outstanding (excluding 35,484,597 and 0 shares subject to possible redemption), respectively | 451 | 0 | ||||||
Class B common stock, $0.0001 par value; 50,000,000 shares authorized; 10,000,000 and 11,150,000 shares issued and outstanding , respectivel y (1) | 1,000 | 1,150 | ||||||
Additional paid-in capital | 3,111,411 | 23,850 | ||||||
Retained earnings | 1,887,140 | — | ||||||
Total stockholders’ equity | 5,000,002 | 25,000 | ||||||
Total Liabilities and stockholders’ equity | $ | 402,385,645 | $ | 25,000 | ||||
March 31, 2021 | ||||||||
(Unaudited) (Restated) | December 31, 2020 | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash | $ | 1,964,964 | $ | — | ||||
Prepaid expenses | 977,384 | — | ||||||
Total current assets | 2,942,348 | — | ||||||
Investment and marketable securities held in Trust Account | 400,006,367 | — | ||||||
Deferred offering costs | — | 25,000 | ||||||
Total Assets | $ | 402,948,715 | $ | 25,000 | ||||
Liabilities, Redeemable Common Stock and Stockholders’ Equity (Deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 417,570 | — | |||||
Overallotment liability | 437,575 | — | ||||||
Taxes payable | 2,250 | — | ||||||
Total current liabilities | 857,395 | — | ||||||
Warrant liability | 31,734,472 | — | ||||||
Deferred underwriters’ discount | 14,000,000 | — | ||||||
Total liabilities | 46,591,867 | — | ||||||
Commitments and contingencies (Note 7) | ||||||||
Class A Common Stock subject to possible redemption, $0.0001 par value; 450,000,000 shares authorized 40,000,000 and 0 shares at redemption value, respectively | 400,000,000 | — | ||||||
Stockholders’ Equity (Deficit): | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | — | ||||||
Class B common stock, $0.0001 par value; 50,000,000 shares authorized; 11,500,000 shares issued and outstanding(1) | 1,150 | 1,150 | ||||||
Additional paid-in capital | — | 23,850 | ||||||
Accumulated deficit | (43,644,302 | ) | — | |||||
Total stockholders’ equity (deficit) | (43,643,152 | ) | 25,000 | |||||
Total Liabilities, redeemable common stock and stockholders’ equity (deficit) | $ | 402,948,715 | $ | 25,000 |
(1) | This number includes up to 1,500,000 shares of Class B common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (See Note |
See accompanying notes to unaudited condensed financial statements.
M3-Brigade
CONDENSED STATEMENTSSTATEMENT OF OPERATIONS
For the three and six months ended June 30,March 31, 2021
Six months ended June 30, 2021 | Three months ended June 30, 2021 | |||||||
Formation and operating costs | $ | 242,325 | 180,557 | |||||
Loss from operations | (242,325 | ) | (180,557 | ) | ||||
Other income/(expense) | ||||||||
Change in fair value of derivative liability | 3,820,577 | 3,221,432 | ||||||
Excess fair value of private placement warrants over consideration paid | (529,653 | ) | — | |||||
Transaction costs | (1,182,124 | ) | — | |||||
Interest income | 20,665 | 14,298 | ||||||
Total other income/(expense) | 2,129,465 | 3,235,730 | ||||||
Net Income | $ | 1,887,140 | 3,055,173 | |||||
Earnings per share: | ||||||||
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption | 22,156,990 | 35,179,080 | ||||||
Basic and diluted net income per share, Class A common stock subject to possible redemption | $ | 0.00 | $ | 0.00 | ||||
Basic and diluted weighted average shares outstanding, non-redeemable common stock(1) | 13,964,557 | 15,183,557 | ||||||
Basic and diluted net income per share,non-redeemable common stock | $ | 0.14 | $ | 0.20 | ||||
(Unaudited) (Restated)
Formation and operating costs | $ | 46,317 | ||
Loss from operations | (46,317 | ) | ||
Other income/(expense) | ||||
Change in fair value of derivative liability | 599,145 | |||
Change in fair value of overallotment option | 969,375 | |||
Excess fair value of private placement warrants over consideration paid | (529,653 | ) | ||
Transaction costs | (1,265,712 | ) | ||
Interest income | 6,367 | |||
Total other income/(expense) | (220,478 | ) | ||
Net Loss | $ | (266,795 | ) | |
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption | 10,222,222 | |||
Basic and diluted net income per share, Class A common stock subject to possible redemption | (0.01 | ) | ||
Basic and diluted weighted average shares outstanding, non-redeemable common stock (1) | 10,000,000 | |||
Basic and diluted net loss per share, non-redeemable common stock | $ | (0.01 | ) |
(1) | Excludes up to 1,500,000 shares of Class B common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (See Note |
See accompanying notes to unaudited condensed financial statements.
M3-Brigade
CONDENSED STATEMENTSSTATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) AND TEMPORARY EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30,MARCH 31, 2021
Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||
Shares | Amount | Shares (1) | Amount | |||||||||||||||||||||||||
Balance - December 31, 2020 | 0— | $ | 0— | 11,500,000 | $ | 1,150 | $ | 23,850 | $ | — | $ | 25,000 | ||||||||||||||||
Sale of 40,000,000 Units on March 8, 2021 net of warrant fair value | 40,000,000 | 4,000 | — | — | 379,442,036 | — | 379,446,036 | |||||||||||||||||||||
Offering costs | — | — | — | — | (21,508,580 | ) | — | (21,508,580 | ) | |||||||||||||||||||
Net loss – three months ended March 31, 202 1 | — | — | — | — | — | (1,168,033 | ) | (1,168,033 | ) | |||||||||||||||||||
Class A common stock subject to possible redemption at March 8, 2021 | (35,127,708 | ) | (3,513 | ) | — | — | (351,273,567 | ) | — | (351,277,080 | ) | |||||||||||||||||
Change in Class A common stock subject to possible redemption | (51,372 | ) | (5 | ) | — | — | (517,336 | ) | — | (517,341 | ) | |||||||||||||||||
Balance as of March 31, 2021 (Unaudited) | 4,820,920 | 482 | 11,500,000 | 1,150 | 6,166,403 | (1,168,033 | ) | 5,000,002 | ||||||||||||||||||||
Forfeiture of Class B Shares | (1,500,000 | ) | (150 | ) | 150 | |||||||||||||||||||||||
Change in Class A common stock subject to possible redemption | (305,517 | ) | (31 | ) | (3,055,142 | ) | (3,055,173 | |||||||||||||||||||||
Net income – three months ended June 30,2021 | 3,055,173 | 3,055,173 | ||||||||||||||||||||||||||
Balance as of June 30, 2021 (Unaudited) | 4,515,403 | $ | 451 | 10,000,000 | $ | 1,000 | $ | 3,111,411 | $ | 1,887,140 | $ | 5,000,002 | ||||||||||||||||
Common Stock Common Stock | Additional | Total Stockholders’ | ||||||||||||||||||||||||||
Class A | Class B | Paid-In | Accumulated | Equity | ||||||||||||||||||||||||
Shares | Amount | Shares(1) | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
Balance - December 31, 2020 | — | $ | — | 11,500,000 | $ | 1,150 | $ | 23,850 | $ | — | $ | 25,000 | ||||||||||||||||
Sale of 40,000,000 Units on March 8, 2021 | 40,000,000 | 400,000,000 | — | — | — | — | — | |||||||||||||||||||||
Fair value Public warrants at inception | (20,553,964 | ) | ||||||||||||||||||||||||||
Fair value overallotment option at inception | (1,406,950 | ) | ||||||||||||||||||||||||||
Offering costs | — | (21,440,443 | ) | — | — | — | — | |||||||||||||||||||||
Net loss | — | — | — | — | — | (266,795 | ) | (266,795 | ) | |||||||||||||||||||
Change in Class A common stock subject to possible redemption | — | 43,401,357 | — | — | (23,850 | ) | (42,377,507 | ) | (43,401,357 | ) | ||||||||||||||||||
Balance as of March 31, 2021 (Unaudited) | 40,000,000 | $ | 400,000,000 | 11,500,000 | $ | 1,150 | $ | 0 | $ | (43,644,302 | ) | $ | (43,643,152 | ) |
(1) | Includes up to 1,500,000 shares of Class B common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (See Note 6). |
See accompanying notes to unaudited condensed financial statements.
M3-Brigade
CONDENSED STATEMENT OF CASH FLOWS
For the sixthree months ended June 30,March 31, 2021
Cash Flows from Operating Activities: | ||||
Net income | $ | 1,887,140 | ||
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Interest earned on cash held in Trust Account | (20,665 | ) | ||
Excess fair value of private placement warrants over consideration paid | 529,653 | |||
Change in fair value of warrant liabilities | (3,820,577 | ) | ||
Transaction costs allocable to warrant liabilities | 1,182,124 | |||
Changes in operating assets and liabilities | ||||
Prepaid expenses and other assets | (853,573 | ) | ||
Accounts payable and accrued expenses | 23,009 | |||
Net cash used in operating activities | (1,072,889 | ) | ||
Cash flows from investing activities: | ||||
Investments and marketable securities held in Trust | (400,000,000 | ) | ||
Net cash used in investing activities | (400,000,000 | ) | ||
Cash flows from financing activities: | ||||
Proceeds from related party advances | 128,629 | |||
Repayment of related party advances | (128,629 | ) | ||
Proceeds from sale of Units, net of offering costs | 399,334,296 | |||
Proceeds from sale of Private Placement Warrants | 11,250,000 | |||
Payment of underwriters discount | (8,000,000 | ) | ||
Net cash provided by financing activities | 402,584,296 | |||
Net Change in Cash | 1,511,407 | |||
Cash, beginning of the period | 0— | |||
Cash, end of period | $ | 1,511,407 | ||
Supplemental Disclosure of Non-cash Financing Activities | ||||
Initial classification of Class A common stock subject to possible redemption | $ | 351,277,080 | ||
Change in value of Class A common stock subject to possible redemption | 3,572,478 | |||
Deferred underwriters’ discount payable charged to additional paid in capital | 14,000,000 |
Cash Flows from Operating Activities: | ||||
Net loss | $ | (266,795 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Interest earned on cash held in Trust Account | (6,367 | ) | ||
Excess fair value of private placement warrants over consideration paid | 529,653 | |||
Change in fair value of warrant liabilities | (599,145 | ) | ||
Change in fair value of overallotment option | (969,375 | ) | ||
Transaction costs allocable to warrant liabilities | 1,265,712 | |||
Changes in operating assets and liabilities | ||||
Prepaid expenses | (977,384 | ) | ||
Taxes payable | 2,250 | |||
Accounts payable and accrued expenses | 442,570 | |||
Net cash used in operating activities | (578,881 | ) | ||
Cash flows from investing activities: | ||||
Investments and marketable securities held in Trust | (400,000,000 | ) | ||
Net cash used in investing activities | (400,000,000 | ) | ||
Cash flows from financing activities: | ||||
Proceeds from related party advances | 128,629 | |||
Repayment of related party advances | (128,629 | ) | ||
Proceeds from sale of Units, net of underwriting discounts paid | 399,293,845 | |||
Proceeds from sale of Private Placement Warrants | 11,250,000 | |||
Payment of underwriter’s discount | (8,000,000 | ) | ||
Net cash provided by financing activities | 402,543,845 | |||
Net Change in Cash | 1,964,964 | |||
Cash, beginning of the period | — | |||
Cash, end of period | $ | 1,964,964 | ||
Supplemental Disclosure of Non-cash Financing Activities: | ||||
Deferred underwriters’ discount payable charged to additional paid in capital | $ | 14,000,000 |
See accompanying notes to unaudited condensed financial statements.
M3-BRIGADE
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS (RESTATED)
Note 1 — Organization and Business Operations
M3-Brigade
The Company has selected December 31 as its fiscal year end.
As of June 30,March 31, 2021, the Company had not commenced any operations. All activity for the period from December 16, 2020 (inception) through June 30,March 31, 2021 relates to the Company’s formation and the initial public offering (“IPO”), which is described below. The Company believes it will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will
The Company’s sponsor is
The registration statement for the Company’s IPO was declared effective on March 3, 2021 (the “Effective Date”). On March 8, 2021, the Company consummated the IPO of 40,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $400,000,000, which is discussed in Note 4 and Note 8.
The underwriters hadhave a
Simultaneously with the closing of the IPO, the Company consummated the sale of 7,500,000 Private Placement Warrants (the “Private Warrants”) to the Sponsor at a price of $1.50 per Private Warrants, generating total gross proceeds of $11,250,000.
Transaction costs of the IPO amounted to $22,690,704$22,706,155 consisting of $8,000,000 of underwriting discount, $14,000,000 of deferred underwriting discount, and $690,704$706,155 of other offering costs. Of the offering costs, $1,182,124$1,265,712 is included in transaction costs on the Statement of Operations and $21,508,580$21,440,443 is included in equity.
Following the closing of the IPO on March 8, 2021, $400,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO and the sale of the Private Warrants was placed in a Trust Account and was invested 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 meeting the conditions of Rule
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO, although substantially all of the net proceeds of the IPO are intended to be generally applied toward consummating a Business Combination with (or acquisition of) a Target Business. As used herein, “Target Business” must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing a definitive agreement in connection with the Company’s initial business combination. Furthermore, there is no assurance that the Company will be able to successfully consummateeffect a Business Combination.
The Company, after signing a definitive agreement for a Business Combination, will either (i) seek stockholder approval of the Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest but less taxes payable, or (ii) provide stockholders with the opportunity to sell their shares to the Company by means of a
If the Company holds a stockholder vote or there is a tender offer for shares in connection with a Business Combination, a public stockholder will have the right to redeem its shares for an amount in cash equal to itstheir pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest but less taxes payable. As a result, such shares of common stock will be recorded at redemption amount and classified as temporary equity upon the completion of the IPO, in accordance with FASB ASC 480, “Distinguishing Liabilities from Equity.”
The Company will only have 24 months from the closing date of the IPO (March 8, 2023) to complete its initial Business Combination. If the Company does not complete a Business Combination within this period of time, it shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the public shares of common stock for a per share pro rata portion of the Trust Account, including interest, but less taxes payable (less up to $100,000 of such net interest to pay dissolution expenses) and (iii) as promptly as possible following such redemption, dissolve and liquidate the balance of the Company’s net assets to its remaining stockholders, as part of its plan of dissolution and liquidation.
The initial stockholders have entered into letter agreements with the Company, pursuant to which they have waived their rights to participate in any redemption with respect to their initial shares; however, if the initial stockholders or any of the Company’s officers, directors or affiliates acquire shares of Class A common stock in or after the IPO, they will be entitled to a pro rata share of the Trust Account with respect to such acquired shares of Class A common stock upon the Company’s redemption or liquidation in the event the Company does not complete a Business Combination within the required time period.
In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per Unit in the IPO.
The Company’s Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a vendor 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 (i) $10.00 per public share or (ii) such lesser 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 taxes and working capital, except as 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 our indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Company’s Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company has not independently verified whether the Company’s Sponsor has sufficient funds to satisfy its indemnity obligations and the Company’s Sponsor may not be able to satisfy those obligations. The Company has not asked the Company’s Sponsor to reserve for such eventuality. The Company believes the likelihood of the Company’s Sponsor having to indemnify the trust account is limited because the Company will endeavor to have all vendors and prospective target businesses as well as other entities 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
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of
Liquidity and Capital Resources
As of June 30,March 31, 2021, the Company had approximately $1.5$2.0 million in its operating bank account and working capital of approximately ($2.3 million), including the deferred underwriting commission and warrant liability.
The Company’s liquidity needs priorup to the IPOMarch 31, 2021 had been satisfied through a payment from the Sponsor of $25,000 for the Founder Shares (see Note 6). Additionally, related parties paid $128,629 in offering costs and taxes. As of June 30,March 31, 2021, the outstanding balance of amounts due to related parties was $0.
In order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans to the Company (see Note 6). As of June 30,March 31, 2021, there were no amounts outstanding under any Working Capital Loans.
Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
Note 2 — RevisionRestatement of Financial Statements
In reviewing its financial statements for prior reporting periods, management of the Company has determined that the following modifications are appropriate to reflect a non-cash liability which has since been eliminated and make minor adjustments to the classification of certain offering costs:
● | In connection with the initial public offering (the “IPO”) of the Company, the underwriter was granted a customary overallotment option which permitted it to purchase up to an additional 15% of the Units sold in IPO within 45-days following the closing of the IPO. At the time of the IPO and in its financial statements for reporting periods thereafter which include that 45-day period, the Company failed to record a liability for the value of the overallotment option, as contemplated by FASB ASC 480, “Distinguishing Liabilities from Equity” (and to record the change in fair value of that liability as a component of other income when the overallotment option expired without being exercised on April 19, 2021). |
● | Adjustments to the classification of certain costs associated with the sale of Units from operating expenses. |
On April 12, 2021, the Staff of the Securities and Exchange Commission 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, dated as of March 3, 2021, between the Company and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (the “Warrant Agreement”). As a result of the SEC Statement, the Company reevaluated the accounting treatment of (i) the 13,333,333 redeemable warrants (the “Public Warrants”) that were included in the units issued by the Company in its initial public offering (the “IPO”) and (ii) the 7,500,000 redeemable warrants that were issued to the Company’s sponsor in a private placement that closed concurrently with the closing of the IPO (the “Private Placement Warrants” and, together with the Public Warrants, the “Warrants”, which are discussed in Note 4, Note 5 and Note 8). The Company previously accounted for the Warrants as components of equity.
The following tables summarize the effect ifhad the financial statements had been revised on each financial statement line item as of the date indicated:
As Previously Reported | Adjustment | As restated | ||||||||||
Balance Sheet at March 31, 2021 (unaudited) | ||||||||||||
Overallotment Liability | $ | — | $ | 437,575 | $ | 437,575 | ||||||
Total current liabilities | 419,820 | 437,575 | 857,395 | |||||||||
Total liabilities | 46,154,292 | 437,575 | 46,591,867 | |||||||||
Accumulated deficit | (43,206,727 | ) | (437,575 | ) | (43,644,302 | ) | ||||||
Total Stockholders’ Equity (deficit) | (43,205,577 | ) | (437,575 | ) | (43,643,152 | ) | ||||||
Statement of Operations – three months ended March 31, 2021 (unaudited) | ||||||||||||
Operating expenses | 61,768 | (15,451 | ) | 46,317 | ||||||||
Loss from operations | (61,768 | ) | 15,451 | (46,317 | ) | |||||||
Transaction costs | (1,182,124 | ) | (83,588 | ) | (1,265,712 | ) | ||||||
Change in fair value of overallotment option | - | 969,375 | 969,375 | |||||||||
Total other income (expense) | (1,106,265 | ) | 885,787 | (220,478 | ) | |||||||
Net loss | (1,168,033 | ) | 901,238 | (266,795 | ) | |||||||
Loss per share – three months ended March 30, 2021 (unaudited) | ||||||||||||
Basic and diluted loss per share – Class A common stock | $ | (0.05 | ) | $ | (0.01 | ) | ||||||
Basic and diluted loss per share – Class B common stock | $ | (0.05 | ) | $ | (0.01 | ) | ||||||
Statement of Cash Flows – three months ended March 31, 2021 (unaudited) | ||||||||||||
Net loss | (1,168,033 | ) | 901,238 | (266,795 | ) | |||||||
Transactions costs | 1,182,124 | 83,588 | 1,265,712 | |||||||||
Change in fair value of overallotment option | - | (969,375 | ) | (969,375 | ) | |||||||
Net cash flows used in operating activities | (594,332 | ) | 15,451 | (578,881 | ) | |||||||
Proceeds from sale of Units, net of underwriting discount paid | 399,309,296 | (15,451 | ) | 399,293,845 | ||||||||
Net cash provided by financing activities | 402,599,296 | (15,451 | ) | 402,543,845 |
As Previously Reported | Adjustment | As revised | ||||||||||
Balance Sheet at March 8, 2021 (audited) | ||||||||||||
Warrant Liability | $ | — | $ | 32,333,617 | $ | 32,333,617 | ||||||
Total liabilities | 15,604,218 | 32,333,617 | 47,937,835 | |||||||||
Class A common stock subject to possible redemption | 383,610,690 | (32,333,610 | ) | 351,277,080 | ||||||||
Class A common stock | 164 | 323 | 487 | |||||||||
Additional paid-in capital | 5,014,642 | 1,708,280 | 6,722,922 | |||||||||
Accumulated deficit | (15,948 | ) | (1,708,610 | ) | (1,724,558 | ) | ||||||
Total Stockholders’ Equity | 5,000,008 | (7 | ) | 5,000,001 |
Note 3 — 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
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Prospectus for its IPO as filed with the SEC on March 5, 2021. The interim results for the three and six months ended June 30,March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future interim periods.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (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 auditor 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 maycan elect to opt out of the extended transition period and comply with the requirements that apply
Use of Estimates
The preparation of unaudited condensed financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements.
Making estimates requires management to exercise significant judgement. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near term one or more future confirming events. 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 had approximately $1.5$2.0 million in cash as of June 30,March 31, 2021 and NaNnone at December 31, 2020. The Company had 0no cash equivalents (other than assets held in the Trust Account)Trust) at June 30,March 31, 2021 or December 31, 2020.
Marketable Securities Held in Trust Account
At June 30,March 31, 2021, the assets held in the Trust Account were substantially held in mutual funds that invest primarily in U.S. government securities.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation limit of $250,000. At June 30,March 31 2021 and December 31, 2020, the Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
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.” Class A common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, Class A common stock is classified as 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 the occurrence of uncertain future events. Accordingly, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.
Net IncomeLoss Per Common Stock
Net income (loss) per common stock is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for each of the periods. The calculation of diluted income (loss) per common stock does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, orand (ii) Private Placement Warrants becausesince the exercise of the warrants isare contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive. The warrants are exercisable to purchase 20,833,333 shares of Class A common stock in the aggregate.
The Company’s statements of operations include a presentation of income (loss) per share for Class A Common Stock subject to possible redemption in a manner similar to the
The underwriters hadhave a
Below is a reconciliation of the net
For the months | ||||
Numerator: total net loss | $ | (266,795 | ) | |
Redeemable Class A common stock: | ||||
Net loss allocated to Class A common stock | $ | (134,863 | ) | |
Weighted Average Redeemable Class A common stock – basic and diluted | 10,222,222 | |||
Basic and diluted net loss per share – Class A common stock | $ | (0.01 | ) | |
Class B common stock: | ||||
Net loss allocated to Class B common stock | $ | (131,932 | ) | |
Weighted Average Class B common stock – basic and diluted | 10,000,000 | |||
Basic and diluted net loss per share – Class B common stock | $ | (0.01 | ) |
For the six months ended June 30, 2021 | For the three months ended June 30, 2021 | |||||||
Common stock subject to possible redemption | ||||||||
Numerator: Net income allocable to Class A common stock subject to possible redemption | ||||||||
Accretion of interest income on marketable securities held in trust | $ | 20,665 | $ | 14,298 | ||||
Less: reserved for liquidation costs | (20,665 | ) | (14,298 | ) | ||||
Net income allocable to Class A common stock subject to possible redemption | 0 | $ | 0 | |||||
Denominator: Weighted Average Redeemable Class A common stock | ||||||||
Redeemable Class A Common Stock, Basic and Diluted | 22,156,990 | 35,179,080 | ||||||
Basic and Diluted net income per share, Redeemable Class A Common Stock | $ | 0.00 | $ | 0.00 | ||||
Non-Redeemable Common Stock | ||||||||
Numerator: Net loss minus Redeemable Net Earnings | ||||||||
Net Income | 1,887,140 | 3,055,173 | ||||||
Redeemable Net Earnings from above | 0 | 0 | ||||||
Non-Redeemable Net Income | 1,887,140 | 3,055,173 | ||||||
Denominator: Weighted Average Non-Redeemable Common Stock | ||||||||
Basic and diluted weighted average shares outstanding, common stock | 13,964,557 | 15,183,557 | ||||||
Basic and diluted net income per share, common stock | $ | 0.14 | $ | 0.20 |
Offering Costs associated with the Initial Public Offering
The Company complies with the requirements of the ASC
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature. The fair value of the warrant liabilities are discussed below.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. Derivative instruments are recorded at fair value on the grant date and
FASB ASC
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Income Taxes
The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statement and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were 0no unrecognized tax benefits and 0no amounts accrued for interest and penalties as of June 30,March 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company has identified the United States as its only “major” tax jurisdiction.
The Company may be subject to potential examination by federal and state taxing authorities in the areas of income taxes. These potential 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 Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Recent Accounting Standards
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
Note 4 — Initial Public Offering
On March 8, 2021, the Company consummated the IPO of 40,000,000 units (the “
The underwriters were granted
Warrants
Each whole warrant entitles the registered holder to purchase 1one whole share of the Company’s Class A common stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on the later of 12 months from the IPO or 30 days after the completion of the Company’s initial business combination.
Pursuant to the warrant agreement, a warrantholder may exercise its warrants only for a whole number of shares of Class A common stock. This means that only a whole warrant may be exercised at any given time by a warrantholder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least three units, you will not be able to receive or trade a whole warrant. The warrants will expire five years after the completion of the Company’s initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any shares of 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 shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying the Company’s obligations described below with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless 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. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the share of Class A common stock underlying such unit.
The Company has agreed that as soon as practicable, but in no event later than thirty (30) days, after the closing of the Company’s initial business combination, the Company will use 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 commercially reasonable efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective within 90 days after the closing of the Company’s initial business combination, warrant holders may, under the circumstances specified in the warrant agreement and until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis.
Once the warrants become exercisable, the Company may call the warrants for redemption:
● | in whole and not in part; |
● | at a price of $0.01 per warrant; |
● | upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and |
● | if, and only if, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date the Company sends to the notice of redemption to the warrant holders. |
If and when the warrants become redeemable by the Company, the Company may exercise the Company’s redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
The Company has established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and the Company issues a notice of redemption of the warrants, each warrant holder will be entitled to exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the Class A common stock may fall below the $18.00 redemption trigger price as well as the $11.50 warrant exercise price (for whole shares) after the redemption notice is issued without affecting the right of the Company to consummate such redemption.
If the Company calls the warrants for redemption as described above, the Company’s management will have the option to require any holder that wishes to exercise his, her or its warrant to do so on a “cashless basis.” In determining whether to require all holders to exercise their warrants on a “cashless basis,” the Company’s management will consider, among other factors, the Company’s cash position, the number of warrants that are outstanding and the dilutive effect on the Company’s stockholders of issuing the maximum
A holder of a warrant may notify the Company in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s actual knowledge, would beneficially own in excess of 9.8% (or such other amount as a holder may specify) of the shares of Class A common stock outstanding immediately after giving effect to such exercise.
If the number of outstanding shares of Class A common stock is increased by a stock dividend payable in shares of Class A common stock, or by a
In addition, if the Company, at any time while the warrants are outstanding and unexpired, payspay a dividend or makesmake a distribution in cash, securities or other assets to the holders of Class A common stock on account of such shares of Class A common stock (or other shares of the Company’s capital stock into which the warrants are convertible), other than (a) as described above, (b) certain ordinary cash dividends of which are dividends up to $0.50 per share per year, (c) to satisfy the redemption rights of the holders of Class A common stock in connection with a proposed initial business combination, (d) as a result of the repurchase of shares of Class A common stock by the company if the proposed initial business combination is presented to the stockholders of the Company for approval, or (e) in connection with the redemption of the Company’s public shares upon the Company’s failure to complete the Company’s initial business combination, then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each share of Class A common stock in respect of such event. No other adjustments will be required to be made including for issuing Class A common stock at below market price and/or exercise price.
If the number of outstanding shares of the Company’s Class A common stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Class A common stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of Class A common stock issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding shares of Class A common stock.
Whenever the number of shares of Class A common stock purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of shares of Class A common stock purchasable upon the exercise of the warrants immediately prior to such adjustment, and (y) the denominator of which will be the number of shares of Class A common stock so purchasable immediately thereafter.
In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of the Company’s initial business combination at an issue price or effective issue price of less than $9.20 per ordinary share (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 Company’s sponsor or its affiliates, without taking into account any founder shares held by the Company’s sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Company’s initial business combination on the date of the consummation of the Company’s initial business combination (net of redemptions), and (z) the volume weighted average trading price of the 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 the Company’s initial business combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
In case of any reclassification or reorganization of the outstanding shares of Class A common stock (other than those described above or any that solely affects the par value of such shares of Class A common stock), or in the case of any merger or consolidation of the Company with or into another corporation (other than a consolidation or merger in which the Company is are the continuing corporation and that does not result in any reclassification or reorganization of the Company’s outstanding shares of Class A common stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the holders of the warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the warrants and in lieu of the shares of the Company’s Class A common stock immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the warrants would have received if such holder had exercised their warrants immediately prior to such event. However, if such holders were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon such consolidation or merger, then the kind and amount of securities, cash or other assets for which each warrant will become exercisable will be deemed to be the weighted average of the kind and amount received per share by such holders in such consolidation or merger that affirmatively make such election, and if a tender, exchange or redemption offer has been made to and accepted by such holders (other than a tender, exchange or redemption offer made by the company in connection with redemption rights held by stockholders of the company as provided for in the company’s amended and restated certificate of incorporation or as a result of the repurchase of shares of Class A common stock by the company if a proposed initial business combination is presented to the stockholders of the company for approval) under circumstances in which, upon completion of such tender or exchange offer, the maker thereof, together with members of any group (within the meaning of
The warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and the Company. You should review a copy of the warrant agreement, which will be filed as an exhibit to the registration statement of which this prospectus is a part, for a complete description of the terms and conditions applicable to the warrants. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any mistake, including to conform the provisions of the warrant agreement to the description of the terms of the warrants and the warrant agreement set forth in this prospectus, or to correct any defective provision, but requires the approval by the holders of at least 50% of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants. A change affecting the terms of the private placement warrants will require the approval of holders of at least 50% of the private placement warrants.
The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by certified or official bank check payable to the Company, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of Class A common stock and any voting rights until they exercise their warrants and receive shares of Class A common stock. After the issuance of shares of Class A common stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.
Warrants may be exercised only for a whole number of shares of Class A common stock. No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, the Company will, upon exercise, round down to the nearest whole number the number of shares of Class A common stock to be issued to the warrant holder. As a result, warrant holders not purchasing an even number of warrants must sell any odd number of warrants in order to obtain full value from the fractional interest that will not be issued.
The private placement warrants (including the Class A common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of the Company’s initial business combination (except, among other limited exceptions as described under “Principal Stockholders— Transfers of Founder Shares and Private Placement Warrants,” to the Company’s officers and directors and other persons or entities affiliated with the sponsor) and they will not be redeemable by the Company so long as they are held by the sponsor or its permitted transferees. Otherwise, the private placement warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in the IPO. If the private placement warrants are held by holders other than the sponsor or its permitted transferees, the private placement warrants will be redeemable by the Company and exercisable by the holders on the same basis as the warrants included in the units being sold in the IPO.
If holders of the private placement warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering his, her or its warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. The reason that the Company has agreed that these warrants will be exercisable on a cashless basis so long as they are held by the Company’s sponsor and permitted transferees is because it is not known at this time whether they will be affiliated with the Company following a business combination. If they remain affiliated with the Company, their ability to sell the Company’s securities in the open market will be significantly limited. We expect to have policies in place that prohibit insiders from selling the Company’s securities except during specific periods of time. Even during such periods of time when insiders will be permitted to sell the Company’s securities, an insider cannot trade in the Company’s securities if he or she is in possession of
In order to finance transaction costs in connection with an intended initial business combination, the Company’s sponsor or an affiliate of the Company’s sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required. If the Company completes the Company’s initial business combination, the Company would repay such loaned amounts out of the proceeds of the trust account released to the Company. In the event that the Company’s initial business combination does not close, the Company may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from the Company’s trust account would be used to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible into warrants at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the private placement warrants, including as to exercise price, exercisability and exercise period. Except for the foregoing, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans.
Note 5 — Private Placement
Simultaneously with the closing of the IPO, the Sponsor and the Representatives purchased an aggregate of 7,500,000 Private Warrants at a purchase price of $1.50 per Private Unit, generating gross proceeds to the Company of $11,250,000. Except to the extent described in Note 4 above, theThe Private Warrants (and the underlying securities) are identical to the Warrants sold as part of the Units in the IPO. At the issuance date of March 8, 2021 the fair value of the Private Warrants was determined to be $11,779,653; $529,653 in excess of the $11,250,000 received by the Company. This excess fair value of $529,653 is recognized as an expense in the statement of operations.
Note 6 — Related Party Transactions
Founder Shares
On December 31, 2020, the Sponsor purchased 7,187,500 shares of Class B common stock (the “Founder Shares”) for $25,000, or approximately $0.003 per share. On February 11, 2021, the Company effected a stock split, by means of issuing an additional 1,437,500 founder shares, paid out of the Company’s share premium account and accordingly credited as fully paid, to the Company’s sponsor, resulting in 8,625,000 founder shares issued and outstanding. On February 19, 2021, the Company effected a further stock split, by means of issuing an additional 2,875,000 founder shares, paid out of the Company’s share premium account and accordingly credited as fully paid, to the Company’s sponsor, resulting in 11,500,000 founder shares issued and outstanding. All shares and associated amounts have been retroactively restated to reflect the stock splits (see Note 8). The Founder Shares are identical to the Class A common stock included in the Units sold in the IPO except that the Founder Shares are subject to certain transfer restrictions, as described in more detail below. Each Founder Share is automatically convertible to a share of Class A common stock on
The Company’s initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until the earlier of (A) one year after the completion of the Company’s initial Business Combination, or earlier if, subsequent to the Company’s initial Business Combination, the last sale price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within
Due to Related Party
The amount due to related parties prior to the closing of the IPO of
As of June 30,March 31, 2021, the amount due to related parties was $0.
Working Capital Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company 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 the working capital held outside the Trust Account to repay the Working Capital Loans but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of such Working Capital Loans may be convertible into warrants at a price of $1.50 per warrant agreement per warrant at the option of the lender. The warrants would be identical to the private placement warrants, including as to exercise price, exercisability and exercise period. At June 30,March 31, 2021 and December 31, 2020, 0no Working Capital Loans were outstanding.
Note 7 — Commitments and Contingencies
Registration Rights
The holders of the founder shares and private placement warrants and any warrants that may be issued upon conversion of working capital loans (and any Class A common stock issuable upon the exercise of the private placement warrants and warrants that may be issued upon conversion of working capital loans) will be entitled to registration rights pursuant to a registration and stockholder rights agreement to be signed prior to or on the effective date of the IPO. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company registerregisters such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s completion of the Company’s initial business combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriters Agreement
On March 8 2021, the underwriters were paid a cash underwriting discount of 2% of the gross proceeds of the IPO, or $8,000,000. The underwriters are entitled to a deferred fee of $0.35 per Unit, or $14,000,000 in the aggregate. The deferred fee will become
Note 8 — Stockholders’ Equity
Preferred Stock
Class A common stock — The Company is authorized to issue a total of 450,000,000 Class A common stock at par value of $0.0001 each. As of June 30,March 31, 2021 and December 31, 2020, there were 4,515,40340,000,000 and 0 shares of Class A common stock issued and outstanding, excluding 35,484,597 and 0 shares of Class A common stock subject to possible redemption, respectively.
A summary of the activity in the account is summarized as follows:
As originally presented | Adjustments | As restated | ||||||||||
Proceeds at issuance date (March 8, 2021), | $ | 400,000,000 | $ | 400,000,000 | ||||||||
Less: proceeds allocated to public warrants | (20,533,964 | ) | (20,553,964 | ) | ||||||||
Class A common stock issuance cost | (21,508,580 | ) | 68,137 | (21,440,443 | ) | |||||||
Fair value of overallotment option | - | (1,406,950 | ) | (1,406,950 | ) | |||||||
Plus: Revaluation to redemption value | 42,042,544 | 1,358,813 | 43,401,357 | |||||||||
Balance at March 8, 2021 and March 31, 2021 | $ | 400,000,000 | $ | 0 | $ | 400,000,000 |
Class B common stock
The Company’s initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until the earlier of (A) one year after the completion of the Company’s initial Business Combination, or earlier if, subsequent to the Company’s initial Business Combination, the last sale price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within
The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of our initial business combination on
With respect to any other matter submitted to a vote of our stockholders, including any vote in connection with our initial business combination, except as required by law, holders of our founder shares and holders of our public shares will vote together as a single class, with each share entitling the holder to one vote.
Note 89 — Recurring Fair Value Measurements
Investment Held in Trust Account
As of June 30,March 31, 2021, investment securities in the Company’s Trust Account consisted of a mutual funds that invest primarily in U.S. government securities in the amount of $400,020,665.$400,006,367. Since all of the Company’s permitted investments consist of treasury securities, fair values of its investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets.
Warrant Liability
At June 30,March 31, 2021, the Company’s warrants liability were valued at $28,513,040.$31,734,472. Under the guidance in ASC
Overallotment Option
Upon completion the IPO, the underwriters held an overallotment option which expired 45 days later. The overallotment option represents a financials instrument which was recognized at fair value as a liability instrument at inception. The principal assumptions going into the fair value computation at the IPO date were as follows: Term – 45 days; Unit price $10.00, risk free rate 0.04%, volatility 16.7%. Upon expiration, the change in fair value to zero was recognized in the Company’s statement of operations. The principal assumptions going into the fair value computation at March 31, 2021 were as follows: Term – 23 days; Unit price $10.00, risk free rate 0.04%, volatility 11.1%. Upon expiration, the change in fair value to zero was recognized in the Company’s statement of operations.
The change in the fair value of the overallotment liability for the period ended March 31, 2021 is summarized as follows:
Overallotment Option | ||||
Fair value at issuance March 8 2021 | $ | 1,406,950 | ||
Change in fair value | (969,375 | ) | ||
Fair Value at March 31, 2021 | $ | 437,575 |
Recurring Fair Value Measurements
The Company’s investments consist of mutual funds that invest primarily in U.S. government securities. Fair values of these investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets. The Company’s warrant liability is based on a valuation model utilizing management judgment and pricing inputs from observable and unobservable markets with less volume and transaction frequency than active markets. Significant deviations from these estimates and inputs could result in a material change in fair value. The fair value of the Warrant liability is classified within Level 3 of the fair value hierarchy.
The following table presents fair value information as of June 30,March 31, 2021 of the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
Carrying Value | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Assets: | ||||||||||||||||
Investments held in Trust Account – U.S. Treasury Securities Money Market Fund | $ | 400,006,367 | $ | 400,006,367 | $ | — | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Private Placement Warrants | 11,478,392 | 11,478,392 | ||||||||||||||
Public Warrants | 20,256,080 | 20,256,080 | ||||||||||||||
Overallotment option | 437,575 | 437,575 |
Carrying Value | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Assets: | ||||||||||||||||
Investments held in Trust Account – U.S. Treasury Securities Money Market Fund | 400,020,665 | $ | 400,020,665 | $ | 0 | $ | 0 | |||||||||
Liabilities: | ||||||||||||||||
Private Placement Warrants | 13,113,040 | 13,113,040 | ||||||||||||||
Public Warrants | 15,400,000 | 15,400,000 |
Measurement
The Company established the initial fair value for the Warrants as ofon March 8, 2021, which was the date of the consummation of the Company’s IPO, and onIPO. On March 31, 2021. On June 30, 2021 the fair value was remeasured. For the initialboth periods, neither the Public Warrants nor the Private Warrants were separately traded on an open market, but the Public Warrants did commence separate trading as of April 26, 2021.market. As such, the Company used a Monte Carlo simulation model to value the Warrants for the initial periods and valued the Public Warrants based upon market values for the June 30, 2021 remeasurement.Warrants. The Company allocated the proceeds received from (i) the sale of Units (which is inclusive of one share of Class A common stock and
The key inputs into the Monte Carlo simulation model for the Warrants were as follows at initial measurement and at June 30, 2021 for the private warrants:
Input | March 8, 2021 (Initial Measurement) | June 30, 2021 | ||||||
Risk-free interest rate | 1.00 | % | 0.97 | % | ||||
Expected term (years) | 5.7 | 5.57 | ||||||
Expected volatility | 24.2 | % | 26.0 | % | ||||
Exercise price | $ | 11.50 | $ | 11.50 | ||||
Probability of completing a business combination | 90 | % | 90 | % | ||||
Dividend yield | 0.0 | % | 0.0 | % |
Input | March 8, 2021 (Initial Measurement) | March 31, 2021 | ||||||
Risk-free interest rate | 1.00 | % | 1.07 | % | ||||
Expected term (years) | 5.7 | 5.6 | ||||||
Expected volatility | 24.2 | % | 24.4 | % | ||||
Exercise price | $ | 11.50 | $ | 11.50 | ||||
Probability of completing a business combination | 90 | % | 90 | % | ||||
Dividend yield | 0.0 | % | 0.0 | % |
The change in the fair value of the warrant liabilities for the period ended
Public Warrants | Private Warrants | Total Warrants | ||||||||||
Fair value at issuance March 8 2021 | $ | 20,553,964 | $ | 11,779,653 | $ | 32,333,617 | ||||||
Change in fair value | (297,884 | ) | (301,261 | ) | (599,145 | ) | ||||||
Fair Value at March 31, 2021 | $ | 20,256,080 | $ | 11,478,392 | $ | 31,734,472 |
Public Warrants | Private Warrants | Total Warrants | ||||||||||
Fair value at issuance March 8 2021 | $ | 20,553,964 | $ | 11,779,653 | $ | 32,333,617 | ||||||
Change in fair value | (5,153,964 | ) | 1,333,387 | (3,820,577 | ) | |||||||
Fair Value at June 30, 2021 | $ | 15,400,00 | $ | 13,113,040 | $ | 28,513,040 |
Note 910 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Except as described below, the Company did not identify any subsequent events that would have required adjustment or disclo
The underwriters have a 45-day option from the date of the IPO effectiveness date (March 3, 2021) to purchase up to an additional 6,000,000 units to cover over-allotments, if any. On April 17, 2021 the underwriters’ over-allotment option expired unexercised.
On August 16,May 25, 2021, the Company entered into an Agreement and Plan of Mergerreceived a notice from the New York Stock Exchange (the “Merger Agreement”“NYSE”) indicating that it is not in compliance with Syniverse Corporation, a Delaware corporation (“Syniverse”), and Blue Steel Merger Sub Inc., a Delaware corporation and wholly owned subsidiaryNYSE continued listing requirements under the timely filing criteria established in Section 802.01E of the NYSE Listed Company (“Merger Sub”), pursuant to which Merger Sub will merge with and into Syniverse, with Syniverse surviving the mergerManual as a wholly owned subsidiaryresult of its failure to timely file this report. By filing this report, the Company (the “Merger”).has remedied its non-compliance.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form
Overview
We are a blank check company incorporated as a Delaware corporation on December 16, 2020 and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We intend to consummate an initial business combination using cash from the proceeds of our Public Offering (the “Public Offering”) that closed on March 8, 2021 (the “Closing Date”) and the Private Placement, and from additional issuances of, if any, our equity and our debt, or a combination of cash, equity and debt.
Results of Operations
For the three months ended June 30,March 31, 2021, we incurred a loss from operations of $180,557,$46,317, including professional fees of $25,587, insurance expenses of $123,811$37,991 and other general operation expenses totaled $31,159. In addition to the loss from operations, we recorded a gain on the fair value of the warrants of $
Except for the withdrawal of interest to pay our taxes and up to $100,000 to pay dissolution expenses, if any, our amended and restated certificate of incorporation (the “Charter”) provides that none of the funds held in trust will be released from the Trust Account until the earliest of (i) the completion of an initial business combination; (ii) the redemption of any of the shares of Class A common stock included in the units sold in the Public Offering (the “Units”) properly submitted in connection with a stockholder vote to amend the Charter to modify the substance or timing of the Company’s obligation to redeem 100% of the common stock included in the Units being sold in the Public Offering if the Company does not complete an initial business combination within 18 months from the closing of the Public Offering or with respect to any other material provisions relating to stockholders’ rights or
Liquidity and Capital Resources
As of June 30,March 31, 2021, we had cash outside our Trust Account of $1,511,407,$1,964,964, available for working capital needs. We intend to use the funds held outside the Trust Account for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
On March 8, 2021, we completed the sale of 40,000,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units being offered, the “Public Shares”) at $10.00 per Unit, generating gross proceeds of $400,000,000.
Simultaneous with the closing of the Public Offering, we completed the sale of 7,500,000 warrants (the “Private Warrants”), at a price of $1.50 per Private Warrant, generating gross proceeds of $11,250,000.
In connection with the Public Offering, the underwriters were granted a
Following our Initial Public Offering and the sale of the Private Warrants, a total of $400,000,000 ($10.00 per Unit) was placed in the Trust Account. We incurred $22,690,704$22,706,155 in Initial Public Offering related costs, including $8,000,000 of underwriting fees, $14,000,000 of deferred underwriting discount and $690,704$706,155 of other costs with $1,182,124$1,265,712 which was allocated to the Public Warrants and Private Warrants, being included in the statement of operations and $21,508,580 being$21,440,443 included in stockholders’ equity.
As of June 30,March 31, 2021, we had marketable securities held in the Trust Account of $400,020,665$400,006,367 (including approximately $20,665$6,367 of income) consisting of mutual funds. Income on the balance in the Trust Account may be used to pay taxes. Through June 30,March 31, 2021, we did not withdraw any interest earned on the Trust Account to pay our taxes.
For sixthree months ended June 30,March 31, 2021, cash used in operating activities was ($1,047,889).$578,881. Net incomeloss of $1,887,140$266,795 was primarily offset by Public Offering costs of $1,182,124$1,265,712 and a
We intend to use substantially all of the funds held in the Trust Account, to acquire a target business and to pay our expenses relating thereto. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial 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.
Further, our sponsor, officers and directors or their respective affiliates may, but are not obligated to, loan us funds as may be required (the “Working Capital Loans”). If we complete a business combination, we would repay the Working Capital Loans. In the event that a business combination does not close, we 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. Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a business combination, without interest, or, at the lender’s discretion, or converted upon consummation of a business combination into additional Private Warrants at a price of $1.50 per Private Warrant. As of June 30,March 31, 2021, no Working Capital Loans have been issued.
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking
Off-Balance
We have no obligations, assets or liabilities which would be considered
We have not entered into any
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $14,000,000 in the aggregate. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires our 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 condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following as our critical accounting policies:
Warrant Liabilities
The Company’s Warrants meet the definition of a derivative and are recorded as derivative liabilities on the Balance Sheet and measured at fair value. At each reporting date changes in the fair value are recognized in the statement of operations in the period of change.
Overallotment Option Liability
The Company’s Overallotment Option meet the definition of a derivative and are recorded as a liability on the Balance Sheet and measured at fair value. At each reporting date changes in the fair value are recognized in the statement of operations in the period of change.
Redeemable Shares of Class A Common Stock
All of the 40,000,000 shares of Class A common stock included in the Units sold as part of the Public Offering contain a redemption feature as described in the prospectus for the Public Offering. In accordance with FASB ASC 480, “Distinguishing Liabilities from Equity”, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. The Charter provides a minimum net tangible asset threshold of $5,000,001. The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of the security at the end of each reporting period. Increases or decreases in the carrying amount of redeemable shares will be affected by charges against additional paid-in capital.
Net Loss per Common Stock
Net income (loss) per share of common stock is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for each of the periods. The calculation of diluted income (loss) per common stock does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) Private Placement Warrants since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.
The Company’s statements of operations include a presentation of income (loss) per share for Class A Common Stock subject to possible redemption in a manner similar to the
Recent accounting standards
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by
Item 4. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules
Our internal control over financial reporting did not result in the proper accounting classification of certain of the WarrantsOverallotment option and warrants we issued in March 2021 and the classification of certain offering related costs which, due to its impact on our financial statements, we determined to be a material weakness. This mistake in classification was brought to our attention only when the SEC issued a Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) dated April 12, 2021 (the “SEC Statement”). The SEC Statement addresses certain accounting and reporting considerations related to warrants of a kind similar to those we issued at the time of our initial public offering in March 2021.
Changes in Internal Control Over Financial Reporting
During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our final prospectus for our Initial Public Offering filed with the SEC on March 8, 2021. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our final prospectus for our Initial Public Offering filed with the SEC on March 8, 2021. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
On March 8, 2021, we consummated our Initial Public Offering of 40,000,000 Units. The Units were sold at an offering price of $10.00 per Unit, generating total gross proceeds of $400,000,000. Each Unit consisted of one share of Class A common stock of the Company, par value $.0001 per share, and
Simultaneously with the consummation of the Initial Public Offering, we consummated a private placement of 7,500,000 Private Placement Warrants to our Sponsor at a price of $1.50 per Private Placement Warrant, generating total proceeds of $11,250,000. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
The Private Placement Warrants are the same as the warrants underlying the Units sold in the Initial Public Offering, except that Private Placement Warrants are not transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants are exercisable on a cashless basis and are
Of the gross proceeds received from the Initial Public Offering and the Private Placement Warrants, $400,000,000 was placed in the Trust Account.
We paid a total of $8,000,000$22,000,000 underwriting discounts and commissions and $690,704$706,155 for other costs and expenses related to the Initial Public Offering. In addition, the underwriters agreed to defer $14,000,000 in underwriting discounts and commissions.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Quarterly Report.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
* | Filed herewith. |
** | Furnished. |
*** | To be filed by amendment. |
(1) | Previously filed as an exhibit to our Current Report on Form 8-K filed on March 10, 2021 and incorporated by reference herein. |
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
M3-BRIGADE ACQUISITION II CORP. | |||||||
Date: May 23, 2022 | |||||||
/s/ Mohsin Y. Meghji | |||||||
Name: | Mohsin Y. Meghji | ||||||
Title: | |||||||
Chief Executive Officer (Principal Executive Officer) | |||||||
Date: May 23, 2022 | /s/ Brian Griffith | ||||||
Name: | Brian Griffith | ||||||
Title: | |||||||
Chief Financial Officer (Principal Financing and Accounting Officer) |
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