☒ | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1034 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware incorporation or organization) | 86-2228751 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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, one-half of one redeemable warrant | AFACU | The Nasdaq Stock Market LLC | ||
Shares of Class A common stock | AFAC | The Nasdaq Stock Market LLC | ||
Redeemable warrants included as part of the units, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 | AFACW | The Nasdaq Stock Market LLC | ||
Shares of Class A common stock underlying redeemable warrants included as part of the units | AFAC | The Nasdaq Stock Market LLC | ||
Large accelerated | ☐ | Accelerated filer | ☐ | |||
Non-accelerated | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
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ITEM 1. | FINANCIAL STATEMENTS |
June 30, 2022 | December 31, 2021 | |||||||
(Unaudited) | (Audited) | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 159,389 | $ | 696,759 | ||||
Prepaid expenses - current | 368,696 | 344,104 | ||||||
Total current assets | 528,085 | 1,040,863 | ||||||
Prepaid expenses - non-current | 114,795 | 267,623 | ||||||
Investments held in Trust Account | 176,265,685 | 175,956,892 | ||||||
Total Assets | $ | 176,908,565 | $ | 177,265,378 | ||||
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit | ||||||||
Current liabilities: | ||||||||
Accrued expenses | 334,628 | 368,094 | ||||||
Accrued offering costs | $ | 591,576 | $ | 591,576 | ||||
Total current liabilities | 926,204 | 959,670 | ||||||
Initial stockholder loans | 3,450,000 | 3,450,000 | ||||||
Warrant liabilities | 1,404,650 | 7,037,500 | ||||||
Total Liabilities | 5,780,854 | 11,447,170 | ||||||
Commitments and Contingencies | 0 | 0 | ||||||
Class A common stock subject to possible redemption, 17,250,000 shares at redemption value of $10.20 per share | 175,950,000 | 175,950,000 | ||||||
Stockholders’ Deficit | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding | — | — | ||||||
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; NaN issued and outstanding (excluding 17,250,000 shares subject to redemption) | — | — | ||||||
Class B common stock, $0.0001 par value; 30,000,000 shares authorized; 4,312,500 shares issued and outstanding | 431 | 431 | ||||||
Additional paid-in capital | — | — | ||||||
Accumulated deficit | (4,822,720 | ) | (10,132,223 | ) | ||||
Total Stockholders’ Deficit | (4,822,289 | ) | (10,131,792 | ) | ||||
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit | $ | 176,908,565 | $ | 177,265,378 | ||||
September 30, 2021 | ||||
ASSETS | ||||
Current asset – Prepaid Expenses | $ | 25,000 | ||
Deferred offering costs | 829,520 | |||
Total Assets | $ | 854,520 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
Current liabilities | ||||
Accrued expenses | $ | 1,753 | ||
Accrued offering costs | 663,571 | |||
Promissory note – related party | 165,949 | |||
Total Current Liabilities | 831,273 | |||
Commitments and Contingencies (Note 6) | 0 | |||
Stockholders’ Equity | ||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding | 0— | |||
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; NaN issued and outstanding | 0— | |||
Class B common stock, $0.0001 par value; 30,000,000 shares authorized; 4,312,500 shares issued and outstanding(1)(2) | 575 | |||
Additional paid-in capital | 24,425 | |||
Accumulated deficit | (1,753 | ) | ||
Total Stockholders’ Equity | 23,247 | |||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 854,520 | ||
For the Three Months Ended | For the Six Months Ended | For the period from January 26, 2021 (inception) through June 30, 2021 | ||||||||||||||
June 30, 2022 | June 30, 2021 | June 30, 2022 | ||||||||||||||
General and administrative expenses | $ | 255,430 | $ | 567 | $ | 622,813 | $ | 1,499 | ||||||||
Income tax expense | 9,347 | — | 9,347 | — | ||||||||||||
Loss from operations | (264,777 | ) | (567 | ) | (632,160 | ) | (1,499 | ) | ||||||||
Other income | ||||||||||||||||
Change in fair value of derivative warrant liabilities | 2,071,850 | — | 5,632,850 | — | ||||||||||||
Income from investments held in Trust Account | 182,614 | — | 308,793 | — | ||||||||||||
Interest income | 6 | — | 20 | 0 | ||||||||||||
Net income (loss) | $ | 1,989,693 | $ | (567 | ) | $ | 5,309,503 | $ | (1,499 | ) | ||||||
Weighted average shares outstanding of Class A common stock, basic and diluted | 17,250,000 | — | 17,250,000 | — | ||||||||||||
Basic and diluted net income per share, Class A common stock | $ | 0.09 | $ | — | $ | 0.25 | $ | — | ||||||||
Weighted average shares outstanding of Class B common stock, basic and diluted(1)(2) | 4,312,500 | 3,750,000 | 4,312,500 | 3,750,000 | ||||||||||||
Basic and diluted net income (loss) per share, Class B common stock | $ | 0.09 | $ | (0.00 | ) | $ | 0.25 | $ | (0.00 | ) | ||||||
1. | The three-month period ended June 30, 2021 and the period from January 26, 2021 (inception) through June 30, 2021 exclude an aggregate of 562,500 shares that are subject to forfeiture to the extent that the underwriters’ over-allotment is not exercised in full (see Note 5). On November 15, 2021, the underwriters fully exercised their over-allotment option; thus, these shares are no longer subject to forfeiture. |
2. | In October 2021, the Company effected a share contribution back to capital resulting in the Sponsor and Founders holding 4,312,500 shares of Class B common stock. All shares and associated amounts have been retroactively restated to reflect the share contribution (see Note 5). |
Common Stock | Additional | Total | ||||||||||||||||||||||||||
Class A | Class B | Paid-in | Accumulated | Stockholders | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
Balance - January 1, 2022 | — | $ | — | 4,312,500 | $ | 431 | $ | — | $ | (10,132,223 | ) | (10,131,792 | ) | |||||||||||||||
Net Income | — | — | — | — | — | 3,319,810 | 3,319,810 | |||||||||||||||||||||
Balance - March 31, 2022 | — | — | 4,312,500 | 431 | — | (6,812,413 | ) | (6,811,982 | ) | |||||||||||||||||||
Net Income | — | — | — | — | — | 1,989,693 | 1,989,693 | |||||||||||||||||||||
Balance - June 30, 2022 | — | — | 4,312,500 | 431 | — | (4,822,720 | ) | (4,822,289 | ) | |||||||||||||||||||
Common Stock | Additional | Total | ||||||||||||||||||||||||||
Class A | Class B | Paid-in | Accumulated | Stockholders | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
Balance - January 26, 2021 (inception) | — | $ | — | — | $ | — | $ | — | $ | — | — | |||||||||||||||||
Issuance of Class B common stock to related parties (1)(2) | — | — | 4,312,500 | 575 | 24,425 | — | 25,000 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (932 | ) | (932 | ) | |||||||||||||||||||
Balance - March 31, 2021 | — | — | 4,312,500 | 575 | 24,425 | (932 | ) | 24,068 | ||||||||||||||||||||
Net loss | — | — | — | — | — | (567 | ) | (567 | ) | |||||||||||||||||||
Balance - June 30, 2021 | — | — | 4,312,500 | 575 | 24,425 | (1,499 | ) | 23,501 | ||||||||||||||||||||
Includes an aggregate of 562,500 shares that are subject to forfeiture to the extent that the underwriters’ over-allotment is not exercised in full (see Note 5). On November 15, 2021, the underwriters fully exercised their over-allotment option; thus, these shares are no longer subject to forfeiture. |
In October 2021, the Company effected a share contribution back to capital resulting in the Sponsor and Founders holding 4,312,500 shares of Class B common stock. All shares and associated amounts have been retroactively restated to reflect the share contribution (see Note 5). |
For the three months ended September 30, 2021 | For the period from January 26, 2021 (inception) through September 30, 2021 | |||||||
Formation costs | $ | — | $ | 932 | ||||
Other expenses | 254 | 821 | ||||||
Net Loss | $ | (254 | ) | $ | (1,753 | ) | ||
Weighted average shares outstanding, basic and diluted(1)(2) | 3,750,000 | 3,750,000 | ||||||
Basic and diluted net loss per common share | $ | 0.00 | $ | 0.00 | ||||
Common Stock(1) | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||
Shares | Amount | |||||||||||||||||||
Balance – January 26, 2021 (Inception) | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||
Issuance of Class B common stock to Sponsor(1)(2) | 4,312,500 | 575 | 24,425 | 0 | 25,000 | |||||||||||||||
Net loss | — | — | — | (1,499 | ) | (1,499 | ) | |||||||||||||
Balance – June 30, 2021 | 4,312,500 | $ | 575 | $ | 24,425 | $ | (1,499 | ) | $ | 23,501 | ||||||||||
Net loss | — | — | — | (254 | ) | (254 | ) | |||||||||||||
Balance — September 30, 2021 | 4,312,500 | $ | 575 | $ | 24,425 | $ | (1,753 | ) | $ | 23,247 | ||||||||||
For the Six Months Ended June 30, 2022 | For the period from January 26, 2021 (inception) through June 30, 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ | 5,309,503 | $ | (1,499 | ) | |||
Adjustments to reconcile net income to cash used in operating activities: | ||||||||
Change in fair value of derivative warrant liabilities | (5,632,850 | ) | — | |||||
Income from investments held in Trust Account | (308,793 | ) | — | |||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses | 128,237 | — | ||||||
Accrued offering costs and expenses | (33,467 | ) | 1,499 | |||||
Net cash used in operating activities | (537,370 | ) | 0 | |||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from note payable to related party | — | 115,886 | ||||||
Payment of deferred offering costs | — | (115,886 | ) | |||||
Net cash provided by financing activities | — | — | ||||||
Net change in cash | (537,370 | ) | 0 | |||||
Cash - beginning of the period | 696,759 | — | ||||||
Cash - end of the period | $ | 159,389 | $ | 0 | ||||
Supplemental disclosure of noncash financing activities: | ||||||||
Prepaid expenses paid by Sponsor in exchange for issuance of Class B common stock | $ | — | $ | 25,000 | ||||
Deferred offering costs included in accrued offering costs | $ | — | $ | 458,548 |
For the period from January 26, 2021 (inception) t September 30, 2021 | ||||
Cash flows from Operating Activities: | ||||
Net loss | $ | (1,753 | ) | |
Changes in operating assets and liabilities: | ||||
Accrued offering costs and expenses | 1,753 | |||
Net cash used in operating activities | 0 | |||
Cash flows from Financing Activities: | ||||
Proceeds from issuance of promissory note to related party | 165,949 | |||
Payment of deferred offering costs | (165,949 | ) | ||
Net cash provided by financing activities | 0 | |||
Net change in cash | 0 | |||
Cash – Beginning | 0 | |||
Cash – Ending | $ | 0 | ||
Supplemental disclosure of non-cash financing activities: | ||||
Deferred offering costs included in accrued offering costs | $ | 663,571 | ||
Prepaid Expenses paid by Sponsor in exchange for issuance of Class B ordinary shares | $ | 25,000 |
For the three months ended June 30, 2022 | For the six months ended June 30, 2022 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic and diluted net income per common stock: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income - basic and diluted | 1,591,754 | 397,939 | 4,247,602 | 1,061,901 | ||||||||||||
Denominator: | ||||||||||||||||
Basic and diluted weighted average common stock outstanding | 17,250,000 | 4,312,500 | 17,250,000 | 4,312,500 | ||||||||||||
Basic and diluted net income per common stock | 0.09 | 0.09 | 0.25 | 0.25 | ||||||||||||
For the three months ended June 30, 2021 | For the period from January 26, 2021 (inception) through March 31, 2021 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic and diluted net loss per common stock: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net loss - basic and diluted | — | 567 | — | 1,499 | ||||||||||||
Denominator: | ||||||||||||||||
Basic and diluted weighted average common stock outstanding | — | 3,750,000 | — | 3,750,000 | ||||||||||||
Basic and diluted net loss per common stock | — | 0.00 | — | 0.00 |
Gross proceeds | $ | 172,500,000 | ||
Less: | ||||
Proceeds allocated to Public Warrants | (9,487,500 | ) | ||
Issaunce costs related to Class A common stock | (4,416,724 | ) | ||
Share contribution back to capital transaction | (24,569 | ) | ||
Plus: | ||||
Accretion of carrying value to redemption value | 17,378,793 | |||
Class A common stock subject to possible redemption | $ | 175,950,000 | ||
Fair Value Measured as of June 30, 2022 | ||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Investments held in Trust Account - U.S. Treasury Securities | $ | 176,265,685 | $ | — | $ | — | $ | 176,265,685 | ||||||||
Liabilities: | ||||||||||||||||
Derivative warrant liabilities - Public warrants | $ | 862,500 | $ | — | $ | — | $ | 862,500 | ||||||||
Derivative warrant liabilities - Private placement warrants | $ | — | $ | — | $ | 542,150 | $ | 542,150 | ||||||||
Fair Value Measured as of December 31, 2021 | ||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Investments held in Trust Account - U.S. Treasury Securities | $ | 175,956,892 | $ | — | $ | — | $ | 175,956,892 | ||||||||
Liabilities: | ||||||||||||||||
Derivative warrant liabilities - Public warrants | $ | — | $ | — | $ | 4,312,500 | $ | 4,312,500 | ||||||||
Derivative warrant liabilities - Private placement warrants | $ | — | $ | — | $ | 2,725,000 | $ | 2,725,000 |
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Exercise price | $ | 11.50 | $ | 11.50 | ||||
Stock price | $ | 9.99 | $ | 9.87 | ||||
Volatility | 5.20 | % | 8.10 | % | ||||
Term (years) | 5.62 | 6.11 | ||||||
Risk-free rate | 2.97 | % | 1.35 | % |
Derivative liabilities as of December 31, 2021 - Level 3 | $ | 7,037,500 | ||
Transfer of Public Warrants to Level 1 Measurement | (4,312,500 | ) | ||
Change in fair value of derivative liabilities as of March 31, 2022 - Level 3 | (1,380,570 | ) | ||
Derivative liabilities as of March 31, 2022 - Level 3 | $ | 1,344,430 | ||
Change in fair value of derivative liabilities as of June 30, 2022 - Level 3 | (802,280 | ) | ||
Derivative liabilities as of June 30, 2022 - Level 3 | 542,150 | |||
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | EXHIBITS |
* | Filed herewith. |
** | Furnished. |
Date: | August 11, 2022 | Arena Fortify Acquisition Corp. | ||||||||
By: | /s/ Daniel Zwirn | |||||||||
Daniel Zwirn | ||||||||||
Chief Executive Officer | ||||||||||
Date: | August 11, 2022 | Arena Fortify Acquisition Corp. | ||||||||
By: | /s/ Kieran Goodwin | |||||||||
Kieran Goodwin | ||||||||||
Chief Financial Officer |